Trip Mate, Inc. f/k/a Trip Mate Agency, Inc. v. Stonebridge Casualty Insurance Company et al
Filing
178
FINDINGS OF FACT, CONCLUSIONS OF LAW AND JUDGMENT entered by Judge Ortrie D. Smith. Associated Cases: 4:10-cv-00793-ODS, 4:11-cv-01097-ODS(Kanies, Renea)
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION
TRIP MATE, INC., formerly known as
Trip Mate Agency, Inc.,
Plaintiff,
vs.
STONEBRIDGE CASUALTY
INSURANCE COMPANY, et al.,
Defendants.
___________________________
UNIQUE VACATIONS, INC.,
Plaintiff,
vs.
TRIP MATE, INC., formerly known as
Trip Mate Agency, Inc., and
STONEBRIDGE CASUALTY
COMPANY,
Defendants.
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Case No. 10-0793-CV-W-ODS
Case No. 11-1097-CV-W-ODS
FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT
This case involves the consolidation of two lawsuits. In one, Unique Vacations
(“Unique”) asserts Trip Mate and Stonebridge Casualty Company (“Stonebridge”)
breached a contract. Trip Mate and Stonebridge filed cross-claims, alleging the other is
liable for any amounts they may owe to Unique. In the other suit Trip Mate asserts
Stonebridge breached a contract or is liable under a theory of unjust enrichment for
amounts Trip Mate paid to Avanti Destinations (“Avanti”), who is not a party to this suit.
As detailed below, the Court concludes:
1. Trip Mate is liable to Unique.
2. Stonebridge is not liable to Unique.
3. Stonebridge is liable to Trip Mate.
I. BACKGROUND
A bench trial was held on April 1 and 2 of this year. In addition to testimony and
other evidence offered at trial, the parties submitted testimony from a number of
witnesses via depositions. The Court has considered all of the evidence presented and
makes the following factual findings, all of which are supported by the preponderance of
the evidence. The Court has pointed to portions of the Record supporting some of its
factual findings, primarily when the support comes from depositions. However, the
parties are assured the Court has considered the entire Record, and that any
contradictions and other factual disputes have been resolved consistent with the Court’s
findings. The parties are also advised the Court has not specifically identified each and
every portion of testimony or piece of evidence that supports its factual findings.
In early 1989, Trip Mate began doing business in the travel insurance industry.
Trip Mate is not an insurance company: generally speaking, it has the right – on behalf of
the insurer – to market, administer, and sell (or bestow) the right to sell travel insurance
policies. As relevant to this suit, Trip Mate enters contracts with Travel Organizers,
which are businesses that combine various aspects of a travel package (transportation,
lodging, etc.) for sale to the general public. The contract between Trip Mate and a Travel
Organizer (“TO”) is known as a Travel Organization Agreement (“TOA”). The TOA
authorizes the TO to offer the traveler the option of buying travel insurance issued by the
insurer. The TOA specifies the premium that must be collected and remitted to Trip
Mate, and the TO is permitted to add an additional amount to cover its expenses and
provide it with profit. Upon collecting the purchase price from the traveler, the TO retains
the amount exceeding the premium and remits the premium to Trip Mate. Trip Mate
maintains all premiums in a Premium Trust Account where (as the account’s name
suggests) Trip Mate keeps the funds in trust for the insurer. Claims were paid out of a
separate account that was funded by the insurer.
Since its inception and until November 2009, Trip Mate operated on behalf of
various insurance entities from a “family” of insurance companies known as the AEGON
Group. The last such insurer/entity was Stonebridge Casualty Insurance Company
2
(“Stonebridge”), and for the sake of consistency and clarity the Court will use that name
for the insurance company (mindful that, in a given instance, the reference really should
be to a different member of the AEGON family). In 1997, Stonebridge purchased Trip
Mate; in March 2004, Trip Mate’s founders re-purchased the company and
simultaneously entered a Managing General Agent Agreement (“MGA”) with
Stonebridge. The MGA continued in effect until the parties terminated their relationship
in November 2009.
The MGA grants Trip Mate the power “to market, underwrite, and service the travel
insurance policies” for Stonebridge, subject to Stonebridge’s right to review and approve
advertisements and forms of contract. MGA, Article A.1. Premiums were to be
approved by Stonebridge, and Trip Mate was responsible for collecting those premiums.
MGA, Article B.2. Once collected, premiums were to be placed in the aforementioned
Premium Trust Account. MGA, Article C.2. Within thirty days of the end of each month,
Trip Mate was to remit all funds in the Premium Trust Account to Stonebridge, “net of the
agreed compensation determined by [Trip Mate and Stonebridge] to be paid to [Trip
Mate] for each specific Travel Program placed with [Stonebridge] for the services
performed under the terms of” the MGA. MGA, Article C.3. In accordance with this
limitation, the MGA later defines three circumstances in which Trip Mate could use funds
from the Premium Trust Account to pay Stonebridge’s debts. The parties agree the third
circumstance in not relevant to these proceedings and will not be discussed further. The
two circumstances at issue are (1) to “make refund of premiums to persons entitled to
them” and (2) to pay the agreed compensation for Trip Mate’s Services. MGA, Article
C.4.
Trip Mate’s compensation was addressed in a separate document and is not
specified in the MGA. MGA, Article F.1. The MGA specifies Trip Mate “is responsible
for paying all commissions or fees that may be due Marketing Representatives from the
compensation paid to” Trip Mate. MGA, Article F.2. Trip Mate was also “responsible for
all administrative expenses” it incurred “in connection with the solicitation, marketing . . .
sale, and administration of the Policies written under this Agreement. [Stonebridge] shall
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be responsible only for the expenses it has specifically agreed to assume as set forth
under” the MGA. MGA, Article F.3.
Sometime in the 1990s Trip Mate began making profit sharing available to a small
number of TOs. If the claims made by the TO’s customers fell below a certain
percentage of the net premium, the TO received a portion of that difference. For
instance, if the threshold was 75% of the net premium and the profit sharing percentage
was 85%, then the TO would receive 85% of the difference between 75% of the premium
and the claims actually made by travelers. Trip Mate first made profit sharing available
to certain TOs in the 1990s, before Stonebridge purchased Trip Mate in 1997. The
practice of offering profit sharing to certain TO’s continued after Stonebridge purchased
Trip Mate and after Stonebridge sold Trip Mate back to the founders.
The profit sharing was disseminated to TO’s in two steps. First, Trip Mate
frequently made an estimated payment of profit sharing. It was able to make these
estimates because under the MGA Trip Mate was also responsible for administering
claims on behalf of Trip Mate, so Trip Mate knew whether claims by a particular TO’s
customers fell below the necessary threshold. A subsequent payment was made to
provide the full amount due to the TO. Both the estimated payment and the final
payment were made from the Premium Trust Account. The profit sharing payments out
of the Premium Trust Account were reflected in the monthly reports Trip Mate provided to
Stonebridge. More specifically, those reports identified both the fact and the amount of
the profit sharing taken out of the Premium Trust Account, and this information was
reported for each TO. This is persuasively demonstrated by the reports themselves
(many of which were admitted as exhibits) as well as the testimony offered at trial. E.g.,
Tr. at 74, 84-87, 92-94, 160-61 (testimony of Bradley Finkle). Funds taken out of the
Premium Trust Account to pay profit sharing were placed in a Trip Mate account, and the
money was then disbursed to the TOs. Critically – and contrary to Stonebridge’s position
– profit sharing payments were separate and apart from the payments made from the
Premium Trust Account that constituted Trip Mate’s compensation. Put another way,
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these payments and entries were clearly not part of the “agreed compensation”
referenced in Articles C and F of the MGA.1
The Court also finds Stonebridge understood what the monthly reports divulged
about the existence and the amount of profit sharing, including the fact that the profit
sharing payments were not counted as part of Trip Mate’s compensation. For instance,
the Court notes the testimony (submitted via deposition) of Jeffrey Davidson. He
described an April 2004 meeting with Trip Mate where he asked if any profit sharing
payments were due to any TOs. Davidson Dep. at 15-16. He asked the question
because “a year prior we had been notified that there were profit sharing payments that
had been made by Trip Mate” and he was investigating to determine whether those
payments increased Trip Mate’s commissions. Davidson Dep. at 17. Davidson learned
of the prior profit sharing payments from Stonebridge’s finance department, which itself
learned of the profit sharing payments after reviewing Trip Mate’s monthly statements
documenting activity in the Premium Trust Account. Davidson Dep. at 37-38.
Davidson’s questions were answered during that 2004 meeting, and he understood (as
reflected in the monthly statements Trip Mate submitted) that Stonebridge’s profits were
affected by the profit sharing because they represented expenses of the program.
Davidson Dep. at 19, 34-35. Other evidence supports the conclusion that Stonebridge
was aware not only of the profit sharing, but the source of funds for the profit sharing.
E.g., Tr. at 179, 185 (testimony of Finkle); Tr. at 196-97, 204-05 (testimony of Robert
Currie).
The Court rejects as incredible all testimony intimating that Stonebridge did not
know or understand that profit sharing existed or how it was paid. The reports submitted
to Stonebridge clearly divulged that profit sharing was paid out of premiums that would
otherwise have been remitted to Stonebridge. Those same reports demonstrate the
profit sharing was not counted as part of Trip Mate’s “regular” compensation.
1
While this is not the sole basis for the Court’s conclusion, it should be noted that if
Stonebridge’s position is correct then the Court would have to believe that Trip Mate
overpaid itself for years with Stonebridge’s knowledge, yet Stonebridge did nothing to
correct the practice. The Court does not interpret the evidence in this manner.
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Nonetheless, nobody at Stonebridge admits to understanding (or caring) that
Stonebridge was effectively paying the profit sharing to the TOs. For instance, Davidson
testified he could not say whether the profit sharing was ultimately paid by Trip Mate or
Stonebridge. Davidson Dep. at 35-36.2 Stewart Allderige testified the reports from Trip
Mate documented the gross premium, subtractions from the gross premium, and the net
premium, and that profit sharing constituted a reduction to the net premium. Allderige
Dep. at 7, 10-11, 19-20. In addition to receiving the monthly reports, Stonebridge
audited Trip Mate approximately every eighteen months – yet never raised any issue
regarding the profit sharing payments from the Premium Trust Account. Tr. at 104-05.
Trip Mate and Stonebridge terminated their relationship in November 2009, and
memorialized the termination in a written document. Section 6 of the Termination
Agreement specifies that Articles C, D, and E of the MGA survived the termination.
Avanti’s TOA had a profit sharing provision that existed as early as 2004. The
previously-mentioned reports from Trip Mate disclosed to Stonebridge the existence of
and the accounting for the profit sharing payments. In July 2010, Trip Mate calculated
the amount of profit sharing that would due to Avanti for 2009; that figure exceeded
$146,000. There is no suggestion that the calculation is incorrect. However, there were
not sufficient funds in the Premium Trust Account to pay this amount, so Trip Mate paid
$100,000 to Avanti out of its own funds. Trip Mate has sought reimbursement of this
sum from Stonebridge, but Stonebridge has declined to pay because it believes the
obligation to pay profit sharing is Trip Mate’s and not Stonebridge’s. At issue in this case
is whether Trip Mate is entitled to reimbursement of the $100,000 payment from
Stonebridge
Starting in late 2004, Unique’s TOAs began including a profit sharing provision.
The amount owed to Unique is $324,827.30. There were not sufficient funds in the
Premium Trust Account to pay Unique, and Trip Mate opted not to pay Unique. There
are two issues relating to Unique: (1) whether Trip Mate, Stonebridge, or both are liable
2
While not designated by the parties, Davidson reiterates these points on page 53
of his deposition.
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for that amount, and (2) if only Trip Mate is liable to Unique, whether Stonebridge is liable
to Trip Mate.
II. DISCUSSION
A. Who is Liable to Unique?
For ease of discussion, the Court will begin with the easiest issue: who is liable to
Unique? There are only two parties to the TOA: Trip Mate and Unique. The TOA
clearly states it is an agreement between Trip Mate and the TO (in this case, Unique).
The Court thus concludes Trip Mate is obligated to pay the profit sharing to Unique.
However, the Court rejects Unique’s request for an award of prejudgment interest
pursuant to section 408.020 of the Revised Missouri Statutes. A prerequisite for an
award under that section is a demand by the creditor/plaintiff upon the debtor/defendant.
Unique points to Trip Mate Exhibit 24 to demonstrate this requirement was fulfilled.
However, Exhibit 24 is a letter from Trip Mate to Stonebridge. It is not a demand from
Unique and it is not a demand made to Trip Mate. Therefore, prejudgment interest is not
justified.
The critical question is whether Stonebridge is also obligated to Unique. Under
the TOA, Trip Mate authorizes Unique “to make available Travel Insurance policies
underwritten by [Stonebridge] and administered by Trip Mate” subject to terms and
conditions specified in the TOA. The sequence or chain of events can be described as
follows: (1) by entering the MGA with Trip Mate, Stonebridge gave Trip Mate the right to
sell insurance contracts issued by Stonebridge, and (2) by entering the TOA with Unique,
Trip Mate gave Unique the right to sell its customers insurance contracts issued by
Stonebridge. This arrangement does not make Stonebridge a party to the TOA (nor
does it make Unique a party to the MGA).
This is consistent with the extent of Trip Mate’s powers under the MGA. The only
contract Trip Mate could enter on behalf of Stonebridge was a contract to sell insurance
policies; those policies obligated Stonebridge to provide insurance coverage to the
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purchaser, which would be the traveler. If Stonebridge failed to pay on a policy, then the
traveler (but not the TO) would have a breach of contract claim – because only the
traveler was insured, and only the traveler was owed an obligation from Stonebridge.
While Trip Mate had the authority to market, underwrite, and service the policies, it had no
authority to bind Stonebridge to any contract other than the insurance policies
themselves.
Unique argues Trip Mate had actual authority to bind Stonebridge to the TOA.
The preceding analysis explains why this is not true. Given that (1) actual authority was
created, if at all, by the MGA and (2) the MGA is governed by Maryland law, the Court
analyzes the issue of actual authority through the lens of Maryland law. Actual authority
is created by written or spoken words or other conduct which reasonably causes the
agent to believe the agent is authorized to act on the principal’s behalf. E.g., Dickerson
v. Longoria, 995 A.2d 721, 735 (Md. 2010). The scope of authority includes the authority
explicitly granted and extends to those powers implied by the explicit grant of authority.
Department of Public Safety & Correctional Services v. ARA Health Services, Inc., 668
A.2d 960, 968-69 (Md. Ct. Spec. App. 1995). Nothing in the MGA explicitly gave Trip
Mate authority to bind Stonebridge to the TOA, and the power to promise profit sharing
was not necessary and incidental to the powers expressly granted to Trip Mate under the
MGA.
While acquiescence in the agent’s actions can sometimes expand the agent’s
authority, Dickerson, 995 A.2d at 735, the Court holds this did not happen here because
the TOA does not indicate Stonebridge is supposed to pay the profit sharing – so while
Stonebridge may have acquiesced in the TOA, doing so did not expand Trip Mate’s
authority to permit it to obligate Stonebridge to pay the profit sharing. Moreover, even if
actual authority existed, Trip Mate did not sign the TOA on behalf of Stonebridge and thus
did not purport to act in its capacity as an agent. Instead, Trip Mate executed the TOA in
its own capacity.
To clarify the Court’s holding, the Court is not suggesting Trip Mate lacked the
authority to enter the profit sharing agreements with TOs. Such authority arguably exists
as part of Trip Mate’s authority to market and administer the policies. However, that
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power did not include the authority to bind Stonebridge to any contracts made in the
course of marketing the policies.
As an alternative position, Unique contends Trip Mate had apparent authority – or
is estopped from denying Trip Mate’s authority – to enter profit sharing agreements on
Stonebridge’s behalf. Apparent authority and agency by estoppel depend on the
principal’s representations, communications, and manifestations to a third party, not (as
with the case of actual authority) to the agent. E.g., Johns Hopkins Univ. v. Ritter, 689
A.2d 91, 96 (Md. Ct. Spec. App. 1996); Security Union Title Ins. Co. v. Citibank, Fl., 715
So.2d 973, 975 (Fla. Dist. Ct. App. 1998).3 An agent acts with apparent authority when
the apparent principal manifests consent to the exercise of authority, a person relied on
the facts and had reason to believe (and actually believed) the agent possessed such
authority, and the third-party relying on the appearance of authority acted to his detriment.
E.g., Hobdey v. Wilkinson, 94 A.2d 625, 629 (Md. 1953); Jackson v. 2109 Brandywine,
LLC, 952 A.2d 304, 322 (Md. Ct. Spec. App. 2008); Roessler v. Novak, 858 So.2d 1158,
1161-62 (Fla. Dist. Ct. App. 2003); Radison Properties, Inc. v. Flamingo Groves, Inc., 767
So.2d 587, 590 (Fla. Dist. Ct. App. 2000).
Unique argues that Stonebridge’s acquiescence in the profit sharing arrangements
manifested approval of Trip Mate’s actions on its behalf. The Court disagrees. First,
Unique was not aware of Stonebridge’s acquiescence because Unique never
communicated with Stonebridge. In addition, the facts do not demonstrate Trip Mate (or
anyone else) said anything suggesting Trip Mate was obligating Stonebridge to pay the
profit sharing, so Stonebridge’s actions (even if known to Unique) cannot be deemed
acquiescence to Trip Mate’s exercise of authority to bind Stonebridge.
3
Apparent authority and agency by estoppel depend on representations made to
Unique, so the MGA’s choice of law provision should not govern. In an abundance of
caution, and because the law is the same in either event, the Court has cited Maryland
law (because that is the place of Stonebridge’s principal place of business) and Florida
(because that is the place of Unique’s principal place of business).
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B. Is Stonebridge Liable to Trip Mate?
Trip Mate’s claims regarding its payment to Avanti and its obligation to Unique both
turn on the answer to the following question: as between Stonebridge and Trip Mate, who
is ultimately responsible for paying the profit sharing? Stonebridge contends profit
sharing is an expense of Trip Mate’s that must come out of Trip Mate’s compensation,
while Trip Mate contends it is to be paid out of the premiums collected for and otherwise
due to Stonebridge. The parties begin by presenting different interpretations of the MGA
and the Termination Agreement, but the Court is not persuaded either party’s position
should prevail.
Both the MGA (in Article J.4) and the Termination Agreement (in Section 14.7)
state they are governed by Maryland law. Numerous Maryland cases establish that
“[t]he cardinal rule of contract interpretation is to give effect to the parties’ intentions.”
E.g., Tomran, Inc. v. Passano, 891 A.2d 336, 344 (Md. 2006).
The starting point for
ascertaining that intent is the parties’ written agreement, and the language therein is to be
given its customary and ordinary meaning. E.g., Ocean Petroleum Co. v. Yanek, 5 A.3d
683, 690 (Md. 2010). However, if the contract is reasonably susceptible to more than
one interpretation, an ambiguity arises. In that case, the parties’ intent can be
ascertained through the use of extrinsic evidence. E.g.,100 Investment Ltd. Partnership v.
Columbia Town Center Title Co., 60 A.3d 1, 22-23 (Md. 2013).
As stated earlier, Section 6 of the Termination Agreement specifies that Article C of
the MGA survives the termination. This is significant because Article C addresses
various aspects of “Premium Collection,” including the proper disposition of funds in the
Premium Trust Account. Article C.4 says that Trip Mate “may make disbursements from
the Premium Trust Account on behalf of [Stonebridge] to pay (a) amounts necessary to
make refund of premiums to persons entitled to them [and] (b) the amount which
represents the agreed compensation for [Trip Mate’s] services.”4
4
As stated earlier there is a third permitted disbursement, but all parties agree that
it is not germane to this case.
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1. The Refund Provision
Trip Mate argues the profit sharing constituted a “refund of premium.” The Court
disagrees because profit sharing does not refund the premium to the party who paid it.
Travelers/customers paid the premium (plus additional charges) to the TO; the premium
passed through the TO, which remitted it to Trip Mate; Trip Mate held it in trust to be paid
to Stonebridge (subject to any disbursements permitted by the MGA). A refund of the
premium, then, would be expected to find its way back in the hands of the traveler
because it is the traveler that actually paid the premium – but of course, the proceeds of
profit sharing go to the TO and are not returned to the traveler. The TO physically remits
the traveler’s payment but it does not remit funds of its own, so the profit sharing is not a
“refund.” Nothing is “refunded” to the TO, so categorizing profit sharing paid to the TO as
a “refund of premium” is inconsistent with the customary and ordinary understanding of
that concept.
The evidence at trial supports this understanding: travelers had certain rights to
cancel their policies, and when they did so they would be due a refund of the premium
they paid. In other cases, a traveler might be incorrectly charged. In these
circumstances, Trip Mate took the premium (or other amount due to the traveler) from the
Premium Trust Account and returned it to the TO, which was then obligated to return the
money to the traveler. These are the circumstances the parties intended to be covered
by Article C.4’s reference to “refund of premiums to persons entitled to them,” and they
did not intend that phrase to apply to profit sharing.
2. The Compensation Provision
Stonebridge contends the profit sharing was to be paid out of Trip Mate’s
compensation in accordance with Article C.5, which dictates that Trip Mate (and not
Stonebridge) is responsible for compensation due to agents, brokers, or producers. As a
predicate to this argument, Stonebridge has gone to great lengths to establish that TOs
are “agents, brokers, or producers” so any payments owed to them are covered by Article
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C.5. The Court has no doubt that Stonebridge sincerely believes these propositions –
now. The Court also believes Stonebridge’s argument might have carried some force
when Trip Mate first started paying profit sharing out of funds otherwise due to
Stonebridge. However, the Court holds that by knowingly allowing Trip Mate to pay profit
sharing out of funds otherwise due to Stonebridge for more than a decade, Stonebridge
effectively agreed to an amendment of Article C.5 by creating an additional circumstance
under which payments from the Premium Trust Account were permitted.
Under Maryland law, a contract may be modified by the subsequent conduct of the
parties. E.g., University Nat’l Bank v. Wolfe, 369 A.2d 570, 576 (Md. 1977), Cole v.
Wilbanks, 171 A.2d 711, 712 (Md. 1961); Fantle v. Fantle, 782 A.2d 377, 382 (Md. Ct.
Spec. App. 2001); Mercantile-Safe Deposit & Trust Co. v. Delp & Chapel Concrete &
Constr. Co., 408 A.2d 1043, 1048 (Md. Ct. Spec. App. 1979). The determination of
whether such a modification has occurred is a question of fact. E.g., Wolfe, 369 A.2d at
576; Berringer v. Steele, 758 A.2d 574, 608 (Md. Ct. Spec. App. 2000). Such a
modification can occur even if the parties explicitly agreed that amendments could only
be made in writing, because such a requirement can be waived by the conduct of the
parties. E.g., Hovnanian Land Inv. Group, LLC v. Annapolis Towne Centre at Parole,
LLC, 25 A.3d 967, 983-84 (Md. 2011); Wolfe, 369 A.2d at 576.
Beginning sometime in the early 1990s, Trip Mate began making profit sharing
available to some TOs. From the beginning, it paid profit sharing out of the Premium
Trust Account separate and apart from its “regular” compensation. Reports
documenting this practice were submitted to Stonebridge. The reports were received by
Stonebridge, and the reports were understood by Stonebridge. Stonebridge audited the
Premium Trust Account on a regular basis. Stonebridge asked Trip Mate about the profit
sharing program. Stonebridge was fully aware of how the profit sharing worked,
including the critical fact that the profit sharing was paid out of the Premium Trust Account
with money that would have othewise gone to Stonebridge and was not paid out of Trip
Mate’s regular compensation. It must also be remembered that this practice (and
necessarily, knowledge of it) persisted while Stonebridge owned Trip Mate. Despite
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being armed with this knowledge and understanding of the profit sharing arrangement,
Stonebridge did nothing for more than a decade.
Assuming for the sake of argument that the MGA as written would have required
Trip Mate to pay profit sharing out of its compensation, Stonebridge’s knowing
acquiescence in Trip Mate’s actions constituted its agreement to modify the MGA.
Specifically, Stonebridge effectively agreed profit sharing was a debt it would pay out of
its share of the premiums. This amendment adds a new circumstance in which Trip
Mate was permitted to pay funds out of the Premium Trust Account. Through its
conduct, Stonebridge agreed to bear the ultimate financial responsibility for the profit
sharing.5 This amendment to Article C survived the Termination Agreement along with
the rest of Article C, so Stonebridge still bears financial responsibility for the profit sharing
payments. Thus, it is obligated to (1) reimburse Trip Mate for the $100,000 already paid
to Avanti and (2) reimburse Trip Mate for the $324,827.30 owed to Unique.6
The Court’s conclusion is not affected by Article F.1 of the MGA, the last sentence
of which declares “[n]o change or modification can be made to the designated
compensation levels set forth in writing without [the parties’] written approval.” Similarly,
Article J.9, a provision that purports to prohibit waivers, does not affect the Court’s
conclusion. As mentioned earlier, these provisions are themselves subject to waiver.
Here, the Court finds that these provisions – and any others that might be construed as
prohibiting the amendment described above – were waived. Given (1) the clarity with
5
It does not matter to the outcome, but the Court does not hold Stonebridge’s
conduct modified the meaning of the term “refund.” It is one thing for a party’s conduct to
modify the MGA but it is quite another to hold that a party has modified a contractual term
so that it means something other than its ordinary meaning. Moreover, the reports
documenting activity in the Profit Sharing Account are best understood as paying or
reimbursing Trip Mate for the profit sharing payments and not as evidencing a refund of
premiums.
6
In its post-trial filing, Trip Mate suggested it is entitled to attorney fees pursuant to
Article J.10 of the MGA. There are several reasons to reject this claim, including (1)
Article J did not survive the Termination Agreement and (2) Trip Mate did not present any
evidence at trial to substantiate the amount to be awarded for this component of
damages.
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which Trip Mate reported its actions, (2) Stonebridge’s actual understanding, and (3) the
length of time Stonebridge possessed that actual understanding, the Court concludes
Stonebridge waived any of its contractual rights to insist that amendments (both as a
general matter and those addressing Trip Mate’s compensation specifically) be in writing.
III. CONCLUSION
1. On Unique’s claim against Stonebridge, the Court finds in favor of Stonebridge.
2. On Unique’s claim against Trip Mate, the Court finds in favor of Unique and enters
judgment in the amount of $324,827.30.
3. On Trip Mate’s claim against Stonebridge, the Court finds in favor of Trip Mate.
The Court enters judgment in favor of Trip Mate and against Stonebridge in the
amount of $100,000, and holds Stonebridge must indemnify Trip Mate for the
$324,827.30 judgment described in the preceding numbered paragraph.
IT IS SO ORDERED.
/s/ Ortrie D. Smith
ORTRIE D. SMITH, SENIOR JUDGE
UNITED STATES DISTRICT COURT
DATE: April 16, 2013
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