Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.


May 17, 1983


The opinion of the court was delivered by: Shadur, District Judge.


International Administrators, Inc. ("IAI") and its President Sheldon Harrison ("Harrison")*fn1 originally filed a 12-count Complaint against Life Insurance Company of North America ("LINA"), charging interference with IAI's contractual relationships, interference with prospective advantage, breach of contract and defamation. In turn LINA filed a motion to dismiss, which this Court granted only as to Count VIII. 541 F. Supp. 1080 (N.D.Ill. 1982)("Opinion I"). LINA has now moved under Fed.R.Civ.P. ("Rule") 56 for summary judgment as to the surviving counts. For the reasons stated in this memorandum opinion and order, LINA's motion is granted in its entirety.


Beginning in 1971 IAI was broker and administrator for various group insurance programs of the Department of Iowa of the American Legion and its Ladies Auxiliary (collectively "Iowa Legion"). In 1976 IAI solicited LINA to underwrite the AGL-270 policy*fn3 for Iowa Legion members. Then a few years later IAI selected LINA as underwriter for Iowa Legion's "Cancer" and "Wheels" policies.

During the preliminary negotiations as to IAI's commissions for securing Cancer and Wheels coverage, LINA Group Manager John Haffner sent a November 22, 1978 letter to former IAI President Richard Albert ("Albert"), providing "a synopsis of our continuing discussion on these risks." That letter (dealing with such insurance for both Iowa and Illinois Legions) confirmed LINA's willingness to pay IAI, as an inducement to place the Wheels business with LINA, a "contingent commission" supplementing any commissions IAI received directly from the Legion:

  We will allow an agency contingency on Iowa and
  Illinois Legion Wheels policies whereby we will
  take 20% for our expenses profit, etc., allow you
  25% commission takeover first year (30% new and
  20% renewal thereafter), subtract the paid claims
  and IBNR (15% premium at year end) and split the
  remainder 50/50 until you reach 10% total
  additional compensation. . . .

On January 9, 1979 LINA and IAI executed a written agreement establishing a commission schedule for Cancer and Wheels coverage for several policyholders, including Iowa Legion. That contract makes no mention of any contingency fee agreement. It did however improve on IAI's position under the November 22 letter "synopsis" in two ways:

    1. Its commission rates are higher than those
  contemplated in the letter.
    2. It provided a $50,000 advance on

Sometime in 1980 IAI replaced LINA with another insurance company as underwriter of Cancer and Wheels coverage for Iowa Legion subscribers. No other change in the relationship among IAI, LINA and Iowa Legion occurred until the fall of 1980, when IAI became more than 90 days delinquent in remitting Iowa Legion premiums in the "six figures" (Jackson Dep. 28).*fn4 That period of delinquency comports with neither industry custom (Roehr Dep. 33-34; Sweeney Dep. 24-25) nor IAI's past practice (Jackson Dep. 29; Harrison Dep. 60-61).*fn5 Indeed IAI was contractually obligated to transmit AGL-270 premiums within 45 days after the first day of the billing quarter (LINA Doc. 01809).

Through mid-March 1981 LINA repeatedly asked IAI to pay the delinquent premiums. Each time Harrison provided immediate payment (Jackson Dep. 28-29). In an undated letter received by Harrison March 18 (the "March 18 letter"), LINA Vice President Lowell Jackson ("Jackson") threatened suit if the premiums were not paid by March 23, 1981:

  Your account with I.N.A. is considerably overdue.
  Our records indicate non-payment of premium for
  the above accounts as far back as September of
  1980. In

  addition, much of this business was moved to
  other carriers without proper notification to us.
  We must insist that all past due premiums be
  remited to us immediately. If we do not receive a
  full accounting with the appropriate premiums by
  March 23, 1981, we shall begin legal action to
  collect these accounts.

By that time LINA had decided to discontinue its dealings with IAI. To accomplish that LINA realized it must also sever its relationships with any policyholder, such as Iowa Legion, represented by IAI. Termination of AGL-270 coverage required notice to Iowa Legion 30 days before the policy's "anniversary date" — the only permissible cancellation date.*fn6 Believing the anniversary date to be May 1,*fn7 LINA felt it had to act quickly to comply with the notice requirement. Consequently Jackson sent identically-worded letters (the "March 19 letters") to two Iowa Legion officials, one of whom was Adjutant John B. Brokens ("Brokens"):

  I.N.A. has provided Hospital Income coverage to
  members of the Iowa American Legion and its
  Auxiliary since May 1, 1976. During that time we
  have been very appreciative of our relationship
  with your organization. I.N.A. is a leading
  underwriter of American Legion insurance
  coverages and we value the business highly.
  We regret to inform you that we have not received
  certain premiums on policies issued to the Iowa
  American Legion that were due as far back as
  September, 1980. These premiums were collected by
  your broker, Mr. Sheldon Harrison of G & H
  Insurance Administrators, Inc., but have not been
  remitted to I.N.A.
  We must inform you that under these circumstances
  it is no longer possible for us to do business
  with Mr. Harrison. Since he is your appointed
  broker, we are in a position that forces us to
  terminate our relationship with your organization
  as long as he is your representative. We regret
  that this action is necessary and trust you can
  appreciate our situation. Please accept this
  letter as intent to cancel Policy # AGL-270 on
  May 1, 1981. We will, of course, cooperate with
  you in every way and see that individual claims
  are handled properly.

Jackson was mistaken in saying the outstanding premiums reached as far back as September 1980. Three days before the March 19 letter was written LINA had received the premiums due in September 1980, though premiums due in October 1980 remained unremitted as of March 19 (LINA Docs. 00901 and 01324; LINA Dep. Ex. 104).*fn8 However Jackson's deposition (wholly uncontroverted even inferentially) leaves no room for doubt the March 19 letters (including their mistaken assertion) were tendered in good faith:

    1. For the six months preceding March 19
  Jackson and other LINA officials had sought
  assiduously to resolve IAI's delinquency problems
  in an amicable manner (Jackson Dep. 29).
    2. LINA's March 19 letter simply sought to
  convey (and explain) to Iowa Legion LINA's
  intention not to renew the AGL-270 policy
  (Jackson Dep. 20). There is no hint the letters
  were stimulated by a desire to sabotage IAI's
  relationship with Iowa Legion.*fn9 Indeed
  Jackson had no idea "what would happen" as a
  result of the letters and in fact did not expect
  the Iowa Legion "would even contact [him]"
  (Jackson Dep. 26).
    3. In drafting the March 19 letters Jackson
  sought all possible sources of information on
  IAI, including up-to-date reports from LINA's
  Accounting Department (Jackson Dep. 32). That
  coupled with the close proximity in time (three
  days between LINA's receipt of the delinquent
  September premiums and Jackson's March 19
  letters) reconfirms the bona fides of Jackson's
  belief he was reporting IAI's delinquency

After receiving the March 19 letter Brokens telephoned Jackson and asked him to recommend a broker with whom LINA was willing to deal. Jackson "absolutely would not recommend" a specific replacement for IAI but instead suggested three possibilities, John P. Pearl and Associates, Ltd. ("Pearl")*fn11 and two others (Brokens Dep. 55-56, Jackson Dep. 25). After interviewing Pearl and at least one of the other two brokers, on April 1, 1981 Iowa Legion's Executive Committee chose Pearl as IAI's successor ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.