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Union Fidelity Life Insurance Co v. Wells Fargo Insurance

June 1, 2011


The opinion of the court was delivered by: Judge Sharon Johnson Coleman


Plaintiff Union Fidelity Life Insurance Company and defendant Wells Fargo Insurance were parties to a series of agreements that allowed Union Fidelity to market various forms of insurance to different segments of Wells Fargo's financial customer base. Although the agreements have expired, Union Fidelity claims that Wells Fargo has violated their surviving restrictions and state trade secret laws by efforts to sell competing insurance products to the Union Fidelity/Wells Fargo customers. In the motion at issue here, Union Fidelity seeks a temporary restraining order and a preliminary injunction prohibiting further Wells Fargo marketing to these customers pending ultimate resolution of its claims. The court finds that Union Fidelity has presented sufficient evidence to justify relief under the 2001 and 2004 agreements, and grants the motion as to certain solicitations of customers under those agreements. Union Fidelity's motion is otherwise denied.


The parties do not dispute the circumstances surrounding the creation of their relationship. In January 1997, Union Fidelity and Wells Fargo's predecessor, Norwest Insurance, entered into a "Service Agreement" that allowed Union Fidelity to market various forms of insurance to Norwest's mortgage loan customers. After Norwest gave Union Fidelity a list of its customers, Union Fidelity decided which of those customers to solicit, controlled the method of solicitation, signed interested customers to insurance policies, and handled policy service and claims. Union Fidelity identified its insurance buyers for Norwest, Norwest collected premium payments through its pre-existing relationships with the customers, premium payments were redirected to Union Fidelity, and Norwest kept a fee for the billing service. The agreement extended for a base period of three years; following the base period, it automatically extended for new one-year terms unless either party sent the other a written notice of cancellation sixty days before the end of the current term.

In November 1997, Union Fidelity and Norwest extended their arrangement to a new group of Norwest's customers: they executed another contract that permitted insurance sales to Norwest's credit card customers on terms virtually identical to those governing the earlier agreement for mortgage customers. The parties entered into a third similar contract for Norwest's checking account customers in October 1998.

Norwest merged with the parent company of Wells Fargo Insurance in November 1998, and Wells Fargo assumed the Norwest interests in the Union Fidelity contracts. In 2001, Union Fidelity and Wells Fargo executed a contract for the marketing and sale of additional insurance products to Wells Fargo checking account customers. This contract created rights and obligations similar to those established by the three earlier agreements, but was different in form and language from its predecessors. Union Fidelity and Wells Fargo entered into the last of the service agreements in December 2004, again using a slightly different contract form to extend their prior partnership to the marketing of different insurance policies to new Wells Fargo customers.

The 1997, 1998 and 2001 agreements included provisions that purported to govern ownership of confidential information. In addition to the service agreements, Union Fidelity and Wells Fargo also signed a "Master Confidentiality and Non-Disclosure Agreement" in 2002. This agreement was expressly intended to supplement the obligations of the 1997-2001 service agreements, whose continued validity was acknowledged by the parties. The 2004 service agreement, unlike its predecessors, provided that the parties' confidentiality obligations would be governed by the master agreement, and the parties re-executed the confidentiality agreement at the time of their signing of the 2004 service agreement.

All of the agreements remained in force until they were terminated by mutual agreement of the parties, effective January 31, 2005. Wells Fargo continued to serve as the billing agent for its customers who held active Union Fidelity insurance policies, and it continued to remit customer premium payments to Union Fidelity after retaining a portion of the customer's payment as fee for the billing service.

In August 2010, Wells Fargo informed Union Fidelity that some of the parties' mutual customers would be offered insurance with a new carrier, Minnesota Life. Wells Fargo also advised Union Fidelity that mortgage customers who had purchased insurance pursuant to the 2004 agreement would continue to have their premiums collected by Wells Fargo, but that those premiums would be sent to Minnesota Life instead of Union Fidelity. The parties exchanged communications on the propriety of Wells Fargo's plans, were unable to reach agreement, and Union Fidelity brought this suit.

Union Fidelity's Claims

Union Fidelity alleges that upon receipt of lists of Norwest and Wells Fargo customers who were potential targets for insurance solicitation, it performed costly proprietary analysis to determine which customers to approach. Union Fidelity does not allege that Wells Fargo has somehow misappropriated this proprietary analysis. It instead claims that the resulting lists of customers who actually purchased its insurance are trade secrets, and that Wells Fargo's proposed use of the insurance customer lists violates the confidentiality provisions of the marketing and Master Confidentiality agreements as well as trade secret laws of Illinois, Pennsylvania and Wisconsin. Union Fidelity seeks a declaratory judgment that Wells Fargo is not entitled to use the list to solicit policyholders to cancel their Union Fidelity policies or to purchase other insurance. It seeks injunctive relief to prohibit Wells Fargo from using the lists for those purposes, and from using or disclosing the lists for any purpose other than to perform its obligations under the marketing agreements. Since the provisions of the various contracts differ, assessment of Union Fidelity's claims requires analysis of the provisions of the individual agreements.

The 1997 and 1998 Agreements

The earliest agreements referenced by Union Fidelity's complaint are its November 1997 and October 1998 agreements with Norwest. The complaint does not refer to the January 1997 agreement. All of the Union Fidelity - Norwest agreements contain similar terms and are governed by Pennsylvania law.

Pennsylvania jurisprudence provides that unambiguous contract terms are to be interpreted by the court as a matter of law. Trizechahn Gateway LLC v. Titus, 601 Pa. 637, 653 (2009). The contract terms governing Union Fidelity's claims of trade secret protection for its policyholder lists are ...

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