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International Administrators Inc. v. Life Insurance Co.

January 24, 1985


Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 82 C 625 -- Milton Shadur, Judge.

Author: Cudahy

Before CUMMINGS, Chief Judge, CUDAHY, Circuit Judge, and GORDON, Senior District Judge.*fn*

CUDAHY, Circuit Judge. International Administrators, Inc. ("IAI"), appeals from an order of the district court granting summary judgment to the Life Insurance Company of North America ("LINA") in an action brought by IAI on several tort claims and a contract claim. IAI argues that various privileges the district court allowed LINA to invoke are not applicable here, and that the district court incorrectly applied the parol evidence rule to the contract claim. We affirm.


Beginning in 1976, IAI, an insurance broker, asked LINA, a Pennsylvania corporation, to underwrite various policies for the Iowa American Legion.*fn1 Premiums on the Iowa Legion policies were sent to IAI; IAI was to forward them to LINA within 45 days after the first day of the billing quarter. Beginning in June, 1980, and until March, 1981, IAI was, on average, 139 days late in remitting premiums on the various policies.

By mid-March of 1981 LINA had decided to bring its dealings with IAI to an end. Since under the terms of the various contracts the Iowa Legion was an IAI account, which LINA would presumably lose when dealings with IAI were terminated, LINA gave notice to officials of the Legion. LINA claims that it was concerned to give notice according to the terms of the policies, and that the policies required notice to be given thirty days before the anniversary date, the only permissible cancellation date. The district court found that, although there was some dispute on the issue, LINA's belief that May 1 was the anniversary date was reasonable and justified; this point is not contested on appeal.

On March 18, 1981, Sheldon Harrison, president of IAI, received an undated letter from LINA, which read:

Your account with [LINA] is considerably overdue. Our records indicate non-payment of premium for the [Iowa Legion] 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 remitted 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.

Shortly afterwards, on March 19, LINA sent the letter to the Iowa Legion in which it declared its intention to cancel the insurance policies because of the late payment:

We regret to inform you that we have not received certain premiums on policies issued to the Iowa American Legon 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 [LINA].

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.*fn2

Because of the March 19 letter the Iowa Legion, rather than permit its LINA policies to be cancelled, switched its business from IAI to one of three brokers whose names it had solicited from LINA.

IAI then sued, charging LINA with tortious interference with contractual relations and prospective advantage, with breach of contract and with defamation.*fn3 The district court granted LINA's summary judgment motion with respect to these counts, and IAI brought this appeal.


Because Illinois, alone among the states having contacts with this litigation, has a provision in its insurance code arguably immunizing LINA from liability for information conveyed in the letters of nonrenewal, there is a question of applicable law. IAI argues on appeal that Iowa law should apply.

Since the result we reach in this opinion is supported as well by the common law doctrine of conditional privilege, and since IAI has conceded that the law of Iowa does not differ from the law of Illinois on conditional privilege, application of Iowa law would not change the outcome. In that sense it is immaterial whether Illinois law or Iowa law is applied.

Nevertheless, on the record before us we are obliged to approve the district judge's choice of Illinois law. Neither party objected to that choice in the district court, and thus it is not open to us to reconsider ...

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