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Roth v. American Family Mutual Insurance Co.

September 23, 2008

BONNIE L. ROTH, D/B/A BONNIE ROTH AGENCY, AND CONNIE S. ROTH, D/B/A CONNIE ROTH AGENCY, PLAINTIFFS,
v.
AMERICAN FAMILY MUTUAL INSURANCE COMPANY, AMERICAN FAMILY LIFE INSURANCE COMPANY, AND AMERICAN STANDARD INSURANCE COMPANY OF WISCONSIN, DEFENDANTS.



The opinion of the court was delivered by: Judge Ronald A. Guzmán

MEMORANDUM OPINION AND ORDER

Bonnie L. Roth ("Bonnie") and Connie S. Roth ("Connie") have sued American Family Mutual Insurance Co., American Family Life Insurance Co. and American Standard Insurance Company of Wisconsin (collectively "American Family") for breach of contract and breach of the implied duty of good faith and fair dealing under Wisconsin law. Before the Court is defendants' (1) motion to confirm the arbitration award, for collateral estoppel effect of the arbitration award and for admission of the arbitration award as evidence; and (2) motion for summary judgment. For the reasons provided herein, the Court denies the former and grants the latter.

I. Motion to Confirm the Arbitration Award, for Collateral Estoppel Effect of the Arbitration Award, and for Admission of the Arbitration Award as Evidence

Defendants have moved: (1) to confirm an arbitration award dismissing a claim made by the Roths against American Family Securities, LLC, Daniel M. Coyne, Deborah R. Dudek and Tamera B. Montagna for breach of contract for their having defamed the Roths and defamation; (2) for a ruling that the arbitration award has a collateral estoppel effect on the issues in this case; and (3) for admission of the arbitration award as evidence in this case. The Court denies the motion in its entirety.

First, American Family Securities, LLC, Coyne, Dudek and Montagna are not parties to the instant lawsuit. Accordingly, they are free to file their own lawsuit to confirm the award pursuant to the Federal Arbitration Act, 9 U.S.C. § 9, but they may not do so within the context of this lawsuit.

Second, "[u]nder Wisconsin law, the collateral estoppel doctrine applies when an issue was actually litigated and decided and its resolution was necessary to the prior disposition." Schertz v. Waupaca County, 875 F.2d 578, 581 (7th Cir. 1989). Having reviewed the arbitration award in Roth v. American Family Securities, LLC, No. 07-497 (Jan. 18, 2008), it is impossible to determine whether the arbitration panel's resolution of the issue regarding defendants' alleged breach of the Roths' employment contracts was necessary to the arbitration panel's decision. Any one of the arbitration respondents' arguments, including that the claim violated Rule 10106 of the Code of Arbitration and that the statements in the Roths' Form U5 are absolutely privileged could have convinced the panel to rule in respondents' favor. Thus, the Court holds that collateral estoppel does not apply in this case.

Third, because the arbitration panel's ruling does not shed light on whether the respondents' affirmative defenses to the arbitrated claim carried the day, the arbitration award does not aid this Court in determining any of the issues in the instant litigation. Thus, the Court sees no need to admit the arbitration award as evidence into the summary judgment record.

II. Motion for Summary Judgment

A. Facts*fn1

Unless otherwise noted, the following facts are undisputed. From July 1997 until February 15, 2005, Connie was an agent of American Family. (Defs.' LR 56.1(a)(3) Stmt. Re: Connie ("Defs.' LR 56.1(a)(3) C.R.") ¶ 2.) From December 2002 until February 15, 2005, Bonnie was an agent of American Family. (Defs.' LR 56.1(a)(3) Stmt. Re: Bonnie ("Defs.' LR 56.1(a)(3) B.R.") ¶ 1.) Bonnie and Connie entered into agency contracts with American Family Mutual Insurance Co., American Family Life Insurance Co. and American Standard Insurance Company of Wisconsin*fn2 that included the following language in Section 6.h.2: "In no case shall notice of undesirable performance be required prior to termination if the performance in question involves a violation of Sec. 4.i. or any other dishonest . . . conduct . . . ." (Id. ¶¶ 6, 9; Defs.' LR 56.1(a)(3) C.R. ¶¶ 6, 9; Defs.' Ex. 16, Agency Agreements § 6.h.2.) Section 7.c of Bonnie and Connie's agency contracts states that "all provisions contained in the Company's Agent's Manuals and all changes to them shall be binding upon you." (Defs.' Ex. 16, Agency Agreements § 7.c.)

Richard Steffen is American Family Mutual Insurance Co.'s Sales Vice President for the Great Lakes Region and is responsible for terminating agency contracts in that region. (Defs.' LR 56.1(a)(3) C.R. ¶ 93; Defs.' LR 56.1(a)(3) B.R. ¶ 116.) On February 15, 2005, Steffen terminated Bonnie and Connie's agency contracts because performing as agents, they had engaged in dishonest activity in violation of paragraph 6.h.2. (Defs.' LR 56.1(a)(3) C.R. ¶ 102; Defs.' LR 56.1(a)(3) B.R. ¶ 116; Steffen Dep. 65-66 (stating that he terminated the Roths' insurance agent contracts because they had signed other people's signatures). Deborah Dudek, the Roths' District Manager, delivered the termination letter to the Roths. (Defs.' LR 56.1(a)(3) C.R. ¶ 107; Defs.' LR 56.1(a)(3) B.R. ¶ 119.)

B. Discussion

Summary judgment is to be granted "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). The court resolves all ambiguities and draws all reasonable inferences in favor of the nonmoving party. Michas v. Health Cost Controls of Ill. Inc., 209 F.3d 687, 692 (7th Cir. 2000). "A motion for summary judgment is not an appropriate occasion for weighing the evidence; rather, the inquiry is limited to determining if there is a genuine issue for trial." Lohorn v. Michael, 913 F.2d 327, 331 (7th Cir. 1990).

The Roths have sued American Family for breach of contract and for breach of the duty of good faith and fair dealing implied in all contracts under Wisconsin law. They argue that they have fully and satisfactorily performed their obligations under their agency agreements and American Family breached ...


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