NOVAK v. NATIONWIDE MUTUAL INSURANCE COMPANY
Case Details
- Citation
- 235 Mich. App. 675
- Judge(s)
- Before: Mackenzie, P.J., and Gribbs and Wilder, JJ.
- Procedural Posture — the stage the case had reached
- summary judgment
- State
- Michigan
Related Laws
No specific laws identified for this ruling.
Claim Types
Outcome
The Court of Appeals affirmed summary disposition in favor of Nationwide Insurance. The court held that Novak's employment was terminable at will under the written contract, that the anti-redlining provisions of the Insurance Code did not apply to him as an employee (only independent agents), that his promissory estoppel and fraud claims failed, and that his civil rights claims were either time-barred or lacked standing.
Excerpt
NOVAK v NATIONWIDE MUTUAL INSURANCE COMPANY Docket No. 204162. Submitted February 2, 1999, at Detroit. Decided June 1, 1999, at 9:05 A.M. Leave to appeal sought. Terry Novak and Novak & Associates Insurance, Inc., brought an action in the Wayne Circuit Court against Nationwide Mutual Insurance Company and other Nationwide Insurance companies (hereinafter Nationwide) and Edward Malinowski, seeking damages for Nationwide’s allegedly illegal termination of Novak’s employment as an insurance sales agent. When plaintiff Novak took over plaintiff agency from his father, he signed an employment agreement with Nationwide that specified, among other things, that he would be enrolled in Nationwide’s agent development program upon successful completion of a training period, that he would begin to receive full commissions on his father’s former accounts if he successfully handled those accounts for two years, that he would not sell insurance for insurance carriers other than Nationwide unless directed to do so by Nationwide, and that the employment contract was terminable at will by either party. Less than two years later, Nationwide terminated Novak’s employment. Novak asserted that the termination of his employment was not subject to the employment-at-will provision of the employment agreement, that he was entitled to continued employment by reason of promissory estoppel or fraudulent and innocent misrepresentations, and that the termination of his employment was improper because it resulted in violations of the Insurance Code, the federal Fair Housing Act, and the Civil Rights Act. Nationwide moved for summary disposition, asserting that, notwithstanding the at-will provision of the employment agreement, Novak’s employment was terminated for cause. The court, Brian K. Zahra, J., granted summary disposition for Nationwide. Plaintiff Novak appealed. The Court of Appeals held: 1. Because the written employment contract contained both an express provision that Novak’s employment was at-will and an express provision that any modification of the contract must be in writing and signed by a representative of Nationwide, Novak’s allegation that he was told by one of Nationwide’s employees that the at-will provision would not apply to him, even if true, would not negate the express language of the written contract that he signed. Accordingly, the trial court properly granted summary disposition for Nationwide with respect to Novak’s common-law wrongful discharge claim. Further, because Novak failed to claim that Nationwide promised just-cause employment to its work force in general, the court properly dismissed Novak’s claim of a right to continued employment based on a legitimate expectation of just-cause employment. 2. Novak alleged that notwithstanding the employment contract’s at-will provision, Nationwide’s termination of his employment was precluded by the anti-redlining provision of § 209 of the Michigan Insurance Code, MCL 500.1209; MSA 24.11209. Subsection 3 of § 209, MCL 500.1209(3); MSA 24.11209(3), provides that a home or automobile insurer is prohibited from canceling an agent’s contract except for malfeasance, breach of fiduciary duty or trust, violation of the Insurance Code, failure to perform in accordance with the parties’ contract, or failure to submit at least twenty-five applications for insurance in the preceding twelve-month period. Subsection 4 of § 209, MCL 500.1209(4); MSA 24.11209(4), provides that subsection 3 is not to be construed as permitting termination of an agent’s authority where the termination is based primarily on the location of the agent’s insurance business or on the actual or expected loss experience of the agent’s business insofar as the loss experience is related to the geographical location of the agent’s business. Subsection 5, MCL 500.1209(5); MSA 24.11209(5), provides that subsection 3 does not apply with respect to an agent that is an employee of the insurer where the property rights in the renewal of insurance policies are owned by the insurer and the termination of the agent’s employment contract does not result in the cancellation or nonrenewal of any home or automobile insurance policy. 3. There is no factual dispute that Novak was an employee of Nationwide or that Nationwide owned the property rights in the renewal of the policies issued to Novak’s customers. Although Novak suggests that the termination of his employment resulted in the cancellation or nonrenewal of home or automobile insurance policies, pointing to a slightly higher rate of cancellation of automobile policies than was usual following the termination, Novak failed to show a single instance in which a home or automobile policy cancellation resulted from the termination of his employment rather than from some legitimate reason. Further, Nationwide’s alleged inefficient servicing of the policies of Novak’s customers after the termination, even if it resulted in those customers seeking insurance with other insurers, does not constitute constructive cancellation of those policies so as to constitute a policy cancellation within the meaning of the language of subsection 5. Accordingly, the trial court properly concluded that the termination of Novak’s employment was subject to subsection 5 and was thus not subject to the restrictions found in subsection 3. 4. Subsection 4 is clearly intended to clarify the nature of the rights and restrictions set forth in subsection 3 and was not meant to stand alone or to create any rights separate and apart from those protected by subsection 3. Accordingly, the exclusionary reference to subsection 3 that is found in subsection 5 is equally applicable to subsection 4, and the trial court properly dismissed Novak’s claim insofar as it was based on § 209 of the Insurance Code. 5. Novak’s claim that the alleged statement by an employee of Nationwide that the at-will provision of the employment contract would not apply to Novak created a right to continued employment under the theory of promissory estoppel is without merit. Because the contract specifically provided that Novak’s employment was to be at-will and that all oral promises were integrated into the written agreement, the circumstances precluded an objective finding of a clear and definite promise of just-cause employment, and the trial court properly dismissed the promissory estoppel claim. 6. Novak’s claim based on fraudulent and innocent misrepresentation is without merit. Novak claimed that he was induced into signing the written agreement by Nationwide’s informing him that he would immediately begin to receive commissions on renewals of policies serviced by his father, that everything in Nationwide’s power would be done to transfer his father’s agency to him, that his office expenses would be paid directly to the creditors, that the at-will provision in the written contract did not apply to him, and that he would be allowed to sell insurance for companies other than Nationwide. 7. A claim of fraudulent misrepresentation requires a showing that a plaintiff suffered damages as a result of acting on a representation that a defendant knew or should have known was false and that was made by the defendant with the intention that the plaintiff act on the representation. Novak failed to establish the elements of a claim of fraudulent misrepresentation. Because Novak acknowledged that the statement concerning commissions was made after the employment contract was signed, it could not have induced Novak to sign the contract. The employment manual that Novak referred to in coqjunction with the allegation concerning the transfer of the agency provides that Nationwide would “sincerely endeavor” to facilitate the transfer if other conditions were met, and there is no evidence that Nationwide failed to do that. There was no showing that the promise with respect to office expenses was false when made, but, rather, the record shows that Nationwide was unable to pay Novak’s office expenses directly because of unforeseen billing difficulties and the apportioning of office expenses between Novak and his non-Nationwide office mate. The allegations relative to the at-will provision and the selling of other insurance were directly contrary to provisions in the written contract, and, thus, Novak could not have reasonably relied on either statement. 8. Novak’s claim that his firing resulted in racial discrimination that was actionable under the federal Fair Housing Act, 42 USC 3604 et seg., was not timely brought. The period of limitation for such a claim is two years. Because the basis of his claim was the economic effect resulting from his firing, the period of limitation began to run on the date of his firing. Thus, the claim under the Fair Housing Act was time-barred three months before Novak brought his action. 9. To the extent that Nationwide may have acted to deny insurance to minorities in violation of § 302 of the Civil Bights Act, MCL 37.2302; MSA 3.548(302), which prohibits racial discrimination in the provision of goods and services, Novak lacked standing to raise that claim. Although Novak may have had an economic interest, § 302 protects the persons who are denied goods and services, not those who are providing those services. Because the Civil Rights Act does not confer standing on insurance agents to bring an action on behalf of persons who are denied insurance by reason of race, Novak lacked standing to bring a claim under § 302 of the Civil Rights Act. Further, because Novak did not show that Nationwide had coerced, intimidated, threatened, or interfered with him as a result of his having aided or encouraged a minority person to exercise any right under the Civil Rights Act, Novak failed to plead a viable action under subsection f of § 701 of the Civil Rights Act, MCL 37.2701(f); MSA 3.548(701)(f). Moreover, because newly licensed drivers are not a protected class under the Civil Rights Act, any attempt by Nationwide to obstruct or to prevent Novak from issuing automobile insurance to newly licensed drivers could not constitute the obstruction or prevention of a person from complying with the act in violation of subsection e of § 701 of the Civil Rights Act, MCL 37.2701(e); MSA 3.548(701)(e). Affirmed. 1. Insurance — Insurance Code — Redlining — Constructive Cancellation op Insurance. Inefficient servicing by an insurer of the policies of its customers, even if such servicing results in those customers seeking insurance with other insurers, does not constitute constructive cancellation of those policies so as to constitute cancellation of a policy within the meaning of the language of subsection 5 of the anti-redlining provisions of § 209 of the Insurance Code (MCL 500.1209[5]; MSA 24.11209[5]) 2. Insurance — Insurance Code — Redlining. Subsection 4 of the anti-redlining provision of § 209 of the Insurance Code is clearly intended to clarify the nature of the rights and restrictions set forth in subsection 3 of § 209 and is not meant to stand alone or to create any rights separate and apart from those protected by subsection 3; accordingly, the exclusionary reference to subsection 3 that is found in subsection 5 of § 209 is equally applicable to subsection 4 (MCL 500.1209[3], [4], [5]; MSA 24.11209[3], [4], [5]). 3. Fraud — Misrepresentation — Reasonable Reliance on Misrepresentation. An actionable claim of fraudulent misrepresentation requires a showing that a plaintiff reasonably relied on the alleged misrepresentation. 4. Civil Rights — Racial Discrimination — Goods and Services — Insurance Agents — Standing. An insurance agent lacks standing to bring an action under the Civil Rights Act for an alleged attempt by an insurance company to deny insurance to minority customers of the agent; the Civil Rights Act protects the rights of persons who are being denied goods and services, not the economic interests of persons who attempt to provide the goods and services (MCL 37.2302; MSA 3.548[302]). 5. Civil Rights — Civil Rights Act — Insurance Agents — Coercion — Actions. An insurance agent that has not aided or encouraged a minority customer to exercise any right protected by the Civil Rights Act in response to the denial of insurance by an insurer may not maintain an action against the insurer under the provision of the Civil Rights Act prohibiting coercion or intimidation of a person who aided or encouraged another in the exercise or enjoyment of a right protected by the Civil Rights Act (MCL 37.2701 [f]; MSA 3.548[701][f|). James W. Bigelow, for the plaintiff. Harvey Kruse, P.C. (by Thomas F. Kauza and William F Rivard), for the defendants. Before: Mackenzie, P.J., and Gribbs and Wilder, JJ. Mackenzie, P.J. Plaintiff Terry Novak (plaintiff), who alleged that the Nationwide defendants (defendants) illegally terminated his position as an insurance sales agent because they found his Detroit-area clients economically undesirable, appeals as of right from an order granting defendants’ motion for summary disposition of his nine-count complaint. We affirm. FACTUAL BACKGROUND In August 1991, in anticipation of assuming responsibility for his father’s insurance agency, Novak & Associates Insurance, Inc., plaintiff signed an employment agreement with defendants. Among other things, the agreement specified that (1) if plaintiff successfully completed a training period, defendants would enroll him in their New Agent Development Program or New Business Agent Program, (2) if plaintiff successfully handled his father’s former accounts for two years, he would then begin to receive full commissions on those accounts, (3) plaintiff was not to sell insurance for any insurance carriers other than defendants unless defendants specifically directed him to do so, and (4) plaintiff’s employment with defendants was terminable at will by either party. In March 1993, defendants terminated plaintiff’s employment. Plaintiff filed suit, claiming, among other things, that the at-will provision in the employment contract was inapplicable to him and that defendants improperly terminated his employment on the basis of his reluctance to move his agency out of Wayne County. Defendants argued that notwithstanding the at-will provision, they properly terminated plaintiffs employment because he (1) commingled personal and business funds, (2) often remitted premium payments to them in an untimely fashion, and (3) allowed unauthorized individuals to sign insurance certificates. STANDARDS OF REVIEW Except for his claim under the federal Fair Housing Act (FHA), 42 USC 3601 et seq., discussed infra, all of plaintiffs claims were dismissed under MCR 2.116(C)(10). We review de novo a trial court’s grant of summary disposition under MCR 2.116(C)(10). Paul v Lee, 455 Mich 204, 210; 568 NW2d 510 (1997). Like the trial court, we look at the entire record, view the evidence in favor of the nonmoving party, and decide if there exists a relevant factual issue about which reasonable minds might differ. Id. If, as in the instant case, the nonmoving party would bear the burden of proof at trial, that party, in order to avoid summary disposition, must provide documentary evidence showing the existence of a disputable issue. Quinto v Cross & Peters Co, 451 Mich 358, 362; 574 NW2d 314 (1996). The trial court dismissed plaintiff’s FHA claim under MCR 2.116(C)(7) because it concluded that the period of limitation for the claim had run. We review a grant of summary disposition under MCR 2.116(C)(7) de novo. Iovino v Michigan, 228 Mich App 125, 131; 577 NW2d 193 (1998). We consider all documentary evidence submitted by the parties and accept the plaintiff’s well-pleaded allegations, except those contradicted by documentary evidence, as true. Id.; Patterson v Kleiman, 447 Mich 429, 433-435; 526 NW2d 879 (1994). We view the uncontradicted allegations in favor of the plaintiff and determine whether the claim is time-barred. Id. WRONGFUL DISCHARGE AND BREACH OF LEGITIMATE EXPECTATIONS Plaintiff argues that the termination of his employment violated an implied just-cause employment agreement and that the trial court therefore should not have summarily disposed of his wrongful discharge and breach of legitimate expectations claims. He bases this argument on an alleged oral statement by one of defendants’ employees that the at-will termination provision in the written employment contract would not apply to him. This alleged oral statement, however, did not negate the at-will provision in the written contract, which also contained a provision requiring that modifications of the contract be in writing and be signed by a company representative. When an employment contract expressly provides for employment at will, a plaintiff, by signing the contract, assents to employment at will and cannot maintain a cause of action based on a prior oral agreement for just-cause employment. Nieves v Bell Industries, Inc, 204 Mich App 459, 463; 517 NW2d 235 (1994); see also Stopczynski v Ford Motor Co, 200 Mich App 190, 193; 503 NW2d 912 (1993). Thus, the trial court properly dismissed plaintiff’s wrongful discharge claim. The court also properly dismissed plaintiff’s breach of legitimate expectations claim, because a claim based on legitimate expectations rests on the employer’s promises to the work force in general — for example, promises contained in a company handbook — rather than on promises made to an individual employee, and because plaintiff made no claim that defendants promised just-cause employment to the work force in general. Nieves, supra at 464; see also Dolan v Continental Airlines/Continental Express, 454 Mich 373, 384, 386-387; 563 NW2d 23 (1997). INSURANCE CODE ANTI-REDLINING PROVISIONS Plaintiff argues that notwithstanding the employment contract’s at-will provision, defendants nevertheless improperly terminated his employment because the Insurance Code precludes the termination of an agent’s employment for certain specified reasons even if an employment contract otherwise allows for it. Specifically, plaintiff claims that there was a question of fact regarding whether defendants discharged him because of the loss history and geographic location of his Wayne County agency and thereby violated the anti-redlining provisions contained in § 209 of the Michigan Insurance Code, MCL 500.1209; MSA 24.11209, which states, in pertinent part, as follows: (3) As a condition of maintaining its authority to transact insurance in this state, an insurer transacting automobile insurance or home insurance in this state shall not cancel an agent’s contract. . . except for 1 or more of the following reasons: (a) Malfeasance. (b) Breach of fiduciary duty or trust. (c) A violation of this act. (d) Failure to perform as provided by the contract between the parties. (e) Submission of less than 25 applications for home insurance and automobile insurance within the immediately preceding 12-month period. (4) Subsection (3) shall not be construed as permitting a termination of an agent’s authority based primarily upon any of the following: (a) The geographic location of the agent’s home insurance or automobile insurance business. (b) The actual or expected loss experience of the agent’s automobile or home insurance business, related in whole or in part to the geographical location of that business. * * * (5) Subsection (3) . . . shall not apply with respect to an agent who is an employee of an insurer ... if the property rights in the renewal are owned by the insurer . . . and the cancellation or termination of the agent’s contract does not result in the cancellation or nonrenewal of any home or automobile insurance policy. [Emphasis added.] Plaintiff argues that he did not fall within the parameters of subsection 5 — and that he was therefore protected by subsections 3 and 4 — because his discharge resulted in the cancellation of home and automobile insurance policies. He additionally argues that even if subsection 5 had
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