Filed: Jan. 29, 2004
Latest Update: Mar. 02, 2020
Summary: Opinions of the United 2004 Decisions States Court of Appeals for the Third Circuit 1-29-2004 A. H. Meyers Co v. CNA Ins Co Precedential or Non-Precedential: Non-Precedential Docket No. 03-2592 Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2004 Recommended Citation "A. H. Meyers Co v. CNA Ins Co" (2004). 2004 Decisions. Paper 1061. http://digitalcommons.law.villanova.edu/thirdcircuit_2004/1061 This decision is brought to you for free and open access by
Summary: Opinions of the United 2004 Decisions States Court of Appeals for the Third Circuit 1-29-2004 A. H. Meyers Co v. CNA Ins Co Precedential or Non-Precedential: Non-Precedential Docket No. 03-2592 Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2004 Recommended Citation "A. H. Meyers Co v. CNA Ins Co" (2004). 2004 Decisions. Paper 1061. http://digitalcommons.law.villanova.edu/thirdcircuit_2004/1061 This decision is brought to you for free and open access by ..
More
Opinions of the United
2004 Decisions States Court of Appeals
for the Third Circuit
1-29-2004
A. H. Meyers Co v. CNA Ins Co
Precedential or Non-Precedential: Non-Precedential
Docket No. 03-2592
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2004
Recommended Citation
"A. H. Meyers Co v. CNA Ins Co" (2004). 2004 Decisions. Paper 1061.
http://digitalcommons.law.villanova.edu/thirdcircuit_2004/1061
This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 2004 Decisions by an authorized administrator of Villanova
University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
NOT PRECEDENTIAL
IN THE UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________________________
No. 03-2592
______________________________
A. H. MEYERS & COMPANY,
Appellant
v.
CNA INSURANCE COMPANY; AMERICAN
CASUALTY COMPANY OF READING, PENNSYLVANIA;
CONTINENTAL CASUALTY COMPANY; TRANSCONTINENTAL
INSURANCE COMPANY; VALLEY FORGE INSURANCE COMPANY, j/s/a
____________________________________
On Appeal From the United States District Court
For the District of New Jersey
(D.C. No. 97-cv-06107)
District Judge: Honorable Joseph H. Rodriguez
_________________________________________
Argued January 12, 2004
Before: ALITO, CHERTOFF and BECKER, Circuit Judges.
(Filed January 29, 2004)
STEVEN E. ANGSTREICH, ESQUIRE (Argued)
THOMAS S. HARTY, ESQUIRE
PAUL N. BONAVITA, ESQUIRE
Levy, Angstreich, Finney, Baldante, Rubenstein
& Coren, P.C.
1616 Walnut Street
Fifth Floor
Philadelphia, Pennsylvania 19103
Attorneys for Appellant
MITCHELL A. LIVINGSTON, ESQUIRE (Argued)
SUSAN STRYKER, ESQUIRE
CHRISTOPHER E. TORKELSON, ESQUIRE
Sterns & Weinroth
50 West State Street
P.O. Box 1298
Trenton, New Jersey 08607-1298
Attorneys for Appellees
__________________________
OPINION OF THE COURT
_____________________________
BECKER, Circuit Judge.
This is an appeal by plaintiff A.H. Meyers & Company (“Meyers”), an insurance
agency which had entered into an agency agreement that allowed it to write policies
underwritten by defendant CNA Insurance Company (“CNA”) and its affiliated
companies (also defendants), from an order of the District Court dismissing the case.
Meyers appeals several rulings by the District Court that, taken together, left it without
any colorable theory of damages. We will affirm in all respects, though on somewhat
different grounds.
I.
The case was terminated under unusual circumstances, which raise a threshold
question of our appellate jurisdiction. The District Court excluded an expert report
proffered by plaintiff computing its damages, in the absence of which plaintiff was
unwilling to go to trial because it could not recover anything. Plaintiff therefore
requested dismissal so that it could appeal. Plaintiff made clear at oral argument before
2
us that if it does not prevail on appeal there is nothing that it wishes to proceed on in the
District Court. Plaintiff further represented that if it prevails here, the only claims that it
will pursue in the District Court are those covered by the contested expert report. Under
these circumstances, we are satisfied that the order of the District Court dismissing the
case is a final order and that we have appellate jurisdiction.
II.
A.
Meyers is an independent agent. It writes insurance policies underwritten by
various companies, but CNA accounted for about half of Meyers’s business. Meyers was
writing various forms of personal insurance (automobile, home, and universal security)
and also commercial insurance on behalf of CNA at all relevant times. CNA had at least
two types of standard-form agreements with its agents: a “standard preferred agency
agreement” and a more-lucrative “high performance agency agreement” (an “HPA
agreement”). Starting in 1983, CNA and Meyers entered into an HPA agreement; this
was renewed at five-year intervals (i.e., in 1988 and 1993).
An important term of the HPA agreement was the “110% guarantee.” This clause
reads, in relevant part:
We guarantee to provide an available market to you for a period of
five years from the effective date of this Agreement for those classes of
business contained in the various commission schedules attached to this
Agreement, subject to the maximum limits of liability and restrictions
contained in this High Performance Agency Binding Authority Schedule
attached to this Agreement, our existing underwriting rules, regulations, and
programs, all of the other terms and conditions of this Agreement, and the
3
terms and conditions of your Annual Market Plan and the premium volume
growth plans contained therein.
For each applicable line of business, the available market guarantee
for each year’s market plan volume (new written premium) shall not be less
than 110% of the prior year’s amount of actual net written premium paid to
us and contained in your Producer Experience Report for such year.
Just what the “110% guarantee” means is subject to some dispute (as the District
Court acknowledged). It certainly means that something is to be larger each year than it
was in the preceding year. The dispute turns on whether that “something” is the total
premium volume (including renewals) or is the volume of new sales. (The latter would be
better for Meyers because in 1992 it was experiencing 30%+ growth in total premium
volume.) At all events, the District Court found this to be a disputed issue of contract
interpretation, and declined to grant summary judgment on it. That issue, however, is not
before us.
The language quoted above makes reference to an “Annual Market Plan,” (an
“AMP”) which is the other key document defining the volume of policies that an agency
under an HPA agreement could sell. The AMPs were signed by Meyers and CNA. They
are in large part just columns of figures establishing how much (in number and total
premium value) insurance Meyers could write on behalf of CNA in each of a number of
categories. What is significant is that, for the years in question here, certain personal line
categories—principally automobile and universal security—were listed at “zero,”
meaning that there could be no growth in the number of policies written in those
categories. Moreover, each AMP has a clause immediately above the signature block that
4
reads:
To the extent any of the provisions of this Annual Market Plan change,
modify or supersede any other terms of the Agency Agreement, the
provisions contained in this plan shall control as respects business written
under this Plan.
We understand “the Agency Agreement” to refer to the HPA agreement that
Meyers and CNA had renewed in 1993. Although no date of signing is indicated on
either the HPA or any of the AMPs, both the HPA agreement renewal and the 1993 AMP
are dated “effective” January 1, 1993, and subsequent AMPs are dated “effective”
January 1, 1994 and 1995. Meyers for its part contends that it entered the AMPs under
economic duress from CNA, averring that CNA offered the AMPs to Meyers without
negotiation, and on a take-it-or-leave-it basis.
B.
The backdrop to these AMPs was the ongoing crisis in New Jersey’s automobile
insurance market. In the 1980s, premiums had risen so high that the State stepped in with
several successive plans for insuring the vast number of effectively uninsurable motorists
in the state. Insurance companies doing business in the state were, under some of these
arrangements, required to underwrite automobile insurance, an exposure they desperately
wanted to minimize. The dealings between CNA and Meyers that led to this suit were
sharply affected, if not triggered, by these events: CNA wanted to limit Meyers’s
premium volume in order to limit its exposure to the New Jersey automobile insurance
market.
5
Meyers remonstrates that the strictures of the AMPs were not commercially
reasonable. It explains that it cannot occupy a sales force that is the bread and butter of
an insurance agency if it is unable to write a new policy unless one of its existing policies
has been cancelled or not renewed. We sympathize with Meyers, but view the state of
affairs as one imposed on the market (and the carriers) by the New Jersey insurance laws
and regulations.
C.
Meyers filed this suit in New Jersey Superior Court in 1997, and CNA removed it
to the United States District Court for the District of New Jersey. The complaint
advanced six theories of recovery: (1) breach of contract; (2) breach of covenant of good
faith; (3) misrepresentation; (4) violation of the New Jersey Consumer Fraud Act (CFA);
(5) intentional interference with existing business relationships; and (6) intentional
interference with reasonable expectation of economic benefit.
The District Court granted summary judgment to CNA on the CFA claim, holding
that the CFA does not apply to this transaction. Meyers appeals this determination. The
District Court refused to grant partial summary judgment to either party on the
interpretation of the “110% guarantee,” holding instead that its interpretation would be a
jury issue. However, it went on to consider whether Meyers had, at all events, waived
that guarantee by entering into the AMPs, which provided for essentially no growth.
After citing a number of cases for the proposition that it is difficult, under New Jersey
law, to find waiver as a matter of law (i.e., it is a question of intent, usually for the finder
6
of fact to decide), the District Court nonetheless held that Meyers had waived the “110%
guarantee,” whatever it really meant, by entering into the zero-growth AMPs in 1993,
1994, and 1995. In coming to this determination, the District Court also rejected as a
matter of law Meyers’s claim that it entered into the AMPs under duress.1
The case came to a head with some skirmishes about reports prepared by Meyers’s
expert witnesses. In brief, it appears that those expert reports ignored the District Court’s
holding on zero growth, and computed damages based on one interpretation or another of
the “110% guarantee.” The District Court struck Meyers’s final expert report, and, as
noted above, Meyers sought a dismissal with prejudice so that it might appeal,
recognizing that it was not worth taking the case to trial without a viable damages theory.
On appeal, then, Meyers challenges both the CFA ruling and the waiver ruling on which
the District Court barred its expert’s liability computation.
II.
A.
We consider the CFA claim first. The New Jersey CFA provides that the
following is an unlawful business practice:
The act, use or employment by any person of any unconscionable
commercial practice, deception, fraud, false pretense, false promise,
1
1 We agree with the District Court that the claim of duress is without merit, and will
2 affirm on that issue. Any business pressures to which Meyers perhaps succumbed in
3 entering the AMPs are a far cry from the wrongful compulsion required under New Jersey
4 law for a finding of economic duress. See Continental Bank v. Barclay Riding Academy,
5 Inc., 459 A.2d 1163, 1174-79 (N.J. 1983).
7
misrepresentation, or the knowing[ ] concealment, suppression, or omission
of any material fact with intent that others rely upon such concealment,
suppression or omission, in connection with the sale or advertisement of any
merchandise or real estate . . . .
N.J. Stat. Ann. § 56:8-2 (emphasis added). This is the provision that the District Court
quoted (with the same emphasis) in dismissing Meyers’s CFA claim. The District Court’s
analysis is thorough and correct. Our precedent in J & R Ice Cream Corp. v. California
Smoothie Licensing Corp., 31 F.3d 1259 (3d Cir. 1994), is indistinguishable from this
case, and no intervening decision from the New Jersey Supreme Court has cast doubt on
the correctness of that case.
In J & R Ice Cream, this Court considered the applicability of the CFA to a
franchise agreement, and concluded that it did not apply. The facts were a fairly typical
franchising arrangement: The licensing company (the defendant) made a number of
promises to the franchisee (the plaintiff) about gross sales and so on. The franchisee
purchased the franchise (for a smoothie shop) and sales were not as good as promised, so
the franchisee sued. The franchise agreement provided that New Jersey law would apply,
and the case was tried to a jury in federal court. On appeal, this Court held that although
the CFA was intended to be applied expansively, it did not apply to a franchising
transaction between a franchise licensing company and a franchisee. We reached that
conclusion by holding that the term “merchandise” (which is defined by the CFA to
include “any objects, wares, goods, commodities, services or anything offered, directly or
indirectly to the public for sale,” N.J. Stat. Ann. § 56:8-1(c), does not encompass the sale
8
of franchises. J & R Ice Cream, 31 F.3d at 1270-74.
Even without repeating the extensive analysis in J & R Ice Cream, it should be
clear that there is no meaningful way to distinguish a franchise arrangement from an
agency arrangement. As we explained in J & R Ice Cream:
[franchises] are not covered by the Consumer Fraud Act because they are
businesses, not consumer goods or services. They never are purchased for
consumption. Instead they are purchased for the present value of the cash
flows they are expected to produce in the future and . . . bear no
resemblance to the commodities and services listed in the statutory
definition of “merchandise” or the rules promulgated by the Division of
Consumer Affairs.
31 F.3d at 1274 (footnotes omitted). The same can surely be said of insurance agency
relationships. Thus we affirm the District Court’s dismissal of Meyers’s CFA claim.
B.
Meyers’s second objection concerns the District Court’s striking of its expert’s
report, a result that flowed from that Court’s holding on waiver. We find the waiver
analysis unhelpful. We view the matter as one of contract interpretation. Looking closely
at the language of the HPA agreement and the AMPs, it becomes clear that neither is a
complete contract; rather, they make reference to each other: The HPA agreement
contemplates that it will be “subject to” the AMPs, and the AMPs themselves indicate
that they may “change, modify or supersede . . . terms” of the HPA agreement. Thus we
must view the contract between Meyers and CNA as a two-part contract, with the HPA
agreement sketching the rough outline of their long-term relationship, and the AMPs
serving to fill in detailed terms of their short-term relationship.
9
Looked at from this point of view, we see the case as a matter of unambiguous
contract interpretation: Meyers’s expert reports did not conform to the allocations
established in the AMPs, and we conclude that the District Court properly barred those
reports. That is because the zero growth entry in the AMP plainly means what is
said—zero. Plaintiff also remonstrates that the District Court’s earlier conclusions about
this being a jury issue—i.e., remitting to a jury the question whether the 110% guarantee
referred to growth in total volume or to growth in new sales volume—are inconsistent
with the Court’s ultimate conclusion. That may be so, but the conclusion reached by the
District Court pretermitted this jury issue and, moreover, was the right result.
To recapitulate, the AMPs knowingly executed by Meyers clearly limited it to zero
growth in the years in question. Consequently, the expert report, which calculates
Meyers’s damages on the basis of a growth scenario, drawn from the HPA agreement
without reference to the AMP, was properly excluded from evidence. Accordingly, the
order of the District Court dismissing the plaintiff’s action will be affirmed.
10
TO THE CLERK:
Kindly file the foregoing opinion.
/s/ Edward R. Becker
Circuit Judge
11
12
