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Axiom Insurance Managers Agency, L.L.C v. Capitol Indemnity Corporation

June 8, 2011


The opinion of the court was delivered by: Judge Joan H. Lefkow


Axiom Insurance Managers Agency, L.L.C. filed a three-count complaint against Capitol Indemnity Corporation, Capitol Specialty Insurance Corporation, and Platte River Insurance Company (collectively, "Capitol") alleging claims arising from Capitol's failure to pay amounts due to Axiom under a profit sharing agreement. Count I alleges breach of contract. Count II alleges misappropriation of trade secrets in violation of the Illinois Trade Secrets Act, 765 Ill. Comp. Stat. 1065/2(d). Count III requests an accounting due to Capitol's refusal to share its books and records relating to the calculation of Axiom's profit sharing bonus. Capitol has moved to dismiss Axiom's complaint pursuant to Federal Rule of Civil Procedure 12(b)(3), arguing that Axiom's claims are subject to the forum selection clause contained in two related agency agreements. In the alternative, Capitol requests the court to order the parties to submit to arbitration and transfer this action to the United States District Court for the Western District of Wisconsin. For the following reasons, Capitol's motion [#17] will be granted and this case will be dismissed for improper venue.


Axiom is a program administrator that acts on behalf of insurers, such as Capitol, to provide underwriting and administrative services, including issuing policies.*fn1 In January of 2008, Axiom and Capitol entered into an agreement whereby Axiom was given authority to solicit, issue, and cancel insurance policies for restaurants, bars, and nightclubs. Axiom was also authorized to bill and collect insurance premiums. It would then receive a commission from Capitol based on the total premiums collected and remitted to Capitol. The arrangement between Axiom and Capitol is set forth in a General Agent Agreement that has an effective date of January 1, 2008 and a Program Administrator Agreement that has an effective date of January 7, 2008 (collectively, the "agency agreements"). The Program Administrator Agreement was executed by representatives of Capitol and Axiom on January 31 and February 7, 2008. The General Agent Agreement was executed by the parties' representatives on January 3 and 8, 2008. The text of the two agreements is nearly identical and the provisions that are relevant to Capitol's motion to dismiss are the same in each agreement.

The agency agreements include a governing law and forum selection clause, which provides:

In all matters concerning the validity, interpretations, performance, effect or otherwise of this Agreement, the laws of the State of Wisconsin shall govern and be applicable. The situs for any disagreement or legal action between [Axiom] and Capitol shall be Dane County, Wisconsin.

Program Administrator Agreement ("PAA") § 11.1 & General Agent Agreement ("GAA") § 11.1, included as Exs. A & B to Ogilvie Decl. The agreements also include an arbitration clause, which provides:

If any dispute or disagreement shall arise in connection with any interpretation of this Agreement, its performance or nonperformance, or the figures and calculations used, the parties shall make every effort to meet and settle their dispute in good faith informally. If the parties cannot agree on a written settlement to the dispute within thirty (30) days after it arises . . . then the matter in controversy shall be settled by arbitration . . . .

PAA/GAA § 14(a). The agreements include a merger clause that states that "[t]he provisions of this Agreement together with the Appendices and any Addendum or Addenda attached hereto, constitute the entire Agreement." PAA/GAA § 11.8.

Certain provisions in the agency agreements indicate that Axiom and Capitol may enter into additional agreements that will allow Axiom to receive compensation in the form of "profit sharing." Section 11, titled "General Provisions," provides that Axiom "shall make any required disclosures related to [Axiom's] potential receipt of any profit sharing commission pursuant to such agreements that may exist between Capitol and [Axiom]." PAA/GAA § 11.11; see also PAA, App'x III § 2(c)(a) & GAA, App'x III § 2(d) (stating that Axiom "shall not receive any commission, or other compensation, from Capitol on uncollected and/or uncollectible premium"). Section 10, which sets forth the termination procedures for the agreements, provides that "[u]pon termination of this Agreement, any profit sharing agreement, or other similar arrangement between the parties, shall terminate immediately and without notice effective as of the effective date of termination of this Agreement." PAA/GAA § 10.1.

Consistent with these provisions in the agency agreements, Axiom and Capitol entered into a profit sharing plan with an effective date of January 1, 2008. See 2008 Profit Sharing Plan ("2008 PSP"), included as Ex. 2 to Axiom's Opp. to Capitol's Mot. to Dismiss. The 2008 PSP is not signed by representatives of either Axiom or Capitol and the record is unclear as to when the terms of the plan were established. A second profit sharing plan went into effect on January 1, 2009 and stayed in effect during 2010. See 2009 Profit Sharing Plan ("2009 PSP") & Letters from Capitol to Axiom dated Nov. 21, 2008 & Nov. 24, 2009, included as Exs. A, B & C to Axiom's First Amended Complaint. On February 23, 2011, Capitol notified Axiom that it was terminating the second profit sharing plan effective August 27, 2011. The parties do not assert that any differences between the 2008 PSP and the 2009 PSP are significant for the purpose of resolving Capitol's motion to dismiss, and the provisions that are relevant to Capitol's motion are the same in each plan.

Section 1 of the profit sharing plan, titled "Plan," provides This Profit Sharing Plan . . . entitles Axiom . . . to receive from Capitol . . . additional compensation based upon the achievement of specified objectives as set forth herein. The Profit Sharing Bonus Period shall be on a calendar year basis, and shall become effective in the calendar year this Plan becomes effective as set forth above, and shall include, unless otherwise indicated by Capitol, all lines of business written by [Axiom] for Capitol during that calendar year. 2008PSP/2009 PSP § 1. As set forth in section 3 of the plan, Axiom's profit sharing bonus shall be calculated by multiplying the direct earned premium produced by Axiom by the applicable profit sharing payout percentage. 2008 PSP/2009 PSP § 3 & Ex. I. The plan's termination provision provides that it "shall automatically terminate as regards [Axiom] without further action by either party in the event any agency agreement between the parties terminates." 2008 PSP/2009 PSP § 5. The profit sharing plan further provides that "[a]ny bonus otherwise due . . . may, in the sole discretion of Capitol, not be paid if [Axiom] has not fully complied with the terms of any agency agreement with Capitol." 2008 PSP/2009 PSP § 6(C). The plan specifies that "[t]he interpretation of this Plan and determination of any application thereof by Capitol shall be absolute and binding upon [Axiom]." 2008 PSP/2009 PSP § 6(F).

Capitol does not contest that this dispute arises from its alleged failure to meet its obligations under the profit sharing plan. Axiom, in its first amended complaint, alleges a claim for breach of contract based on Capitol's failure to comply with the terms of the profit sharing plan. Axiom alleges that Capitol miscalculated the profit sharing bonus that it was due for the years 2009 and 2010 and failed to pay a separate bonus based on premium increases (the "premium growth bonus") during the same time period. Axiom also requests an accounting of Capitol's books and records that relate to Capitol's calculation of the bonuses due under the plans. In addition, Axiom asserts a claim under the Illinois Trade Secrets Act on the grounds that Capitol has used its trade secrets to provide insurance quotes to third parties and to compete with Axiom. Axiom ...

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