Lincoln Benefit Life v. Wilson

Filing 240

MEMORANDUM AND ORDER - Defendant's motion for judgment as a matter of law is granted, and judgment will be entered by separate document generally providing that Defendant will recover from Plaintiff the sum of $1,575,023.39 plus taxable costs. Ordered by Senior Judge Richard G. Kopf. (GJG)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
LINCOLN BENEFIT LIFE,
Plaintiff,
v.
JAMES W. WILSON,
Defendant.

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4:13CV3210

MEMORANDUM
AND ORDER

This matter is before the court on Defendant’s Rule 50 motion for judgment as
a matter of law at the close of all the evidence. The motion will be granted and
judgment will be entered awarding Defendant damages for unpaid commissions and
bonuses.
In a Rule 50 motion for judgment as a matter of law, the inquiry is whether the
evidence presents a sufficient disagreement to require submission to a jury or whether
it is so one-sided that one party must prevail as a matter of law. Kinserlow v. CMI
Corp., 217 F.3d 1021, 1025 (8th Cir. 2000). “ Rule 50(a) allows the judge in a jury
trial to enter judgment against a party with respect to a claim or defense ‘that cannot
under the controlling law be maintained or defeated without a favorable finding on
that issue,’ when the party has been fully heard on the issue and ‘there is no legally
sufficient evidentiary basis for a reasonable jury to find for that party on the issue.’”
Id. (quoting Fed.R.Civ.P. 50(a)). The court must view the evidence in the light most
favorable to the nonmoving party and must not engage in a weighing or evaluation of
the evidence or consider questions of credibility. Id. The court should grant judgment
as a matter of law only when all of the evidence points one way and is susceptible of
no reasonable inference sustaining the position of the nonmoving party. Id.
Nevertheless, even under this exacting standard, the nonmoving party is only entitled
to the benefit of reasonable inferences. Id. (emphasis added). A reasonable inference
is one which may be drawn from the evidence without resort to speculation. Id. When

the record contains no proof beyond speculation to support the verdict, judgment as
a matter of law is appropriate. Id.
There is no dispute that the question of Plaintiff’s liability on Defendant’s
counterclaim for commission payments hinges upon the meaning of the following
provision of the 2004 Agent’s Agreement:
Compensation – Your compensation shall be based on your personal
production and the production of all agents assigned to you. You shall
be compensated according to the Schedule of Commissions, as amended
from time to time, for premiums received on policies issued by LBL for
applications secured under this Agreement. Payment of commissions and
service fees shall be made at such times and in the manner LBL
considers appropriate for the efficient administration of this Agreement.
The Schedule of Commissions is subject to change by LBL, but any
change shall not apply to business written prior to the effective date of
the change. The statements issued by LBL concerning agent’s
commissions and service fees paid and/or payable, advances and
indebtedness shall be conclusive unless, within thirty (30) days
following receipt of the statement, you notify LBL of a dispute regarding
any transactions reported on that statement. If a policy on which you are
receiving commission or service fees lapses for any reason, no further
commission or service fees will be paid to you unless the policy is
reinstated solely due to your actions. If, for any reason, LBL refunds any
premium on which you received a commission or service fee, you shall
immediately repay to LBL the commission or service fee received on
such premium.
(Defendant’s Exhibit 205, p. 4). It is also undisputed that an applicable provision of
the Schedule of Commissions states:
Term conversions. If a Term plan is exchanged for a universal life or
whole life policy within the first ten years, full first year commissions
will be paid on the premium actually paid by the policy owner up to the
target premium reduced by the conversion allowance, if any. If the
exchange occurs more than ten years after issue, all premiums for the
new policy will be commissioned at the renewal rate.
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(Defendant’s Exhibit 205, p. 17).
Plaintiff (LBL) contends Defendant (Wilson) is not entitled to payment of
commissions for conversion of the term policies to universal life or whole life policies
because he did not “produce” the universal life or whole life policies. I disagree and
conclude as a matter of law that the Agreement unambiguously provides1 that Wilson
is entitled to payment of commissions for conversion of the term policies that he sold
to the Lollytogs shareholders; no further actions were required on Wilson’s part to
“produce” universal life or whole life policies in order to earn commissions. Because
the term policies Wilson produced in 1999 contained enforceable conversion
provisions, Wilson became entitled to payment of commissions after the policyholders
exercised their conversion rights.
Secondly, and even accepting LBL’s interpretation of the agreement, it has been
proven, and no reasonable jury could conclude otherwise, that Wilson acted as the
policyholder’s insurance agent, as required by his agreement with LBL, at all relevant
times and was actively involved in the policyholder’s communications with LBL
regarding conversion rights. For example, he advised the shareholders groups and the
trustee who owned the policies how he thought they should proceed in securing the
conversion. Even more specifically, he commented upon and gave his advice
regarding a letter drafted by counsel for signature by the trustee seeking confirmation
of conversion rights and suggested various changes to the letter (Exhibit 210). In
short, Wilson “produced” the conversions within the meaning of his agreement with
LBL.
Thirdly, and even if I were to accept LBL’s interpretation of the Agreement,
the evidence conclusively establishes that LBL effectively prevented Wilson from
doing anything more to “produce” the universal life or whole life policies because it

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To the extent there is any ambiguity, the Agreement is construed against the
drafter, that is, LBL.
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took the position in 2007 that the conversion provisions in the term policies he sold
to the Lollytogs shareholders were inapplicable due to the insured’s age. The
policyholders were forced to sue LBL in 2009 to enforce their conversion rights. I
have previously ruled that because of the outcome of that lawsuit, LBL is collaterally
estopped from claiming that Wilson breached the Agreement and have also ruled that
certain conditions precedent for conversion (including submission of applications,
receipt of premiums, and exchanges of policies) were excused as a matter of law.
After hearing the evidence, LBL’s evidence is not sufficient to create a triable issue
of fact regarding Wilson’s performance.
In sum, Wilson proved a breach of contract and damages and no reasonable jury
could conclude otherwise. In that same vein, LBL’s affirmative defense of lack of
consideration fails as a matter of law and also because no reasonable jury could
conclude that there was a lack of or failure of consideration.
The parties have stipulated that if Wilson prevails on his counterclaim, he is
entitled to payment of $970,778.39 in commissions. It is undisputed that if Wilson is
entitled to a commission, he is also entitled to receive a bonus under a program
established by LBL. (See Defendant’s Exhibit 223.) The parties have stipulated that
the amount of the bonus in this case is $120,000.00.
Finally, I find that Wilson’s claims are liquidated because there is no reasonable
controversy either as to the amounts due or as to his right to recover, and that
prejudgment interest therefore is recoverable under Neb. Rev. Stat. § 45-1042. The
amount of prejudgment interest calculated pursuant to this statute, based on a total
sum of $1,090,778.39 ($970,778.39 + $120,000.00), from April 30, 2013, to date, is
$484,245.00.
Accordingly,
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It is undisputed that Nebraska law governs.
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IT IS ORDERED that Defendant’s motion for judgment as a matter of law is
granted, and judgment will be entered by separate document generally providing that
Defendant will recover from Plaintiff the sum of $1,575,023.39 plus taxable costs.
DATED this 11th day of January, 2017.
BY THE COURT:
s/ Richard G. Kopf
Senior United States District Judge

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