Opinion
Civil No. 03-5778 (DWF/SRN)
April 8, 2004
Thomas Victor Seifert, Esq., Vernon Jay Vander Weide, Esq., Head Seifert Vander Weide, Minneapolis, MN, for Plaintiff
Ansis V. Viksnins, Esq., David Lawrence Sasseville, Esq., Lindquist Vennum, Minneapolis, MN, for Defendants
MEMORANDUM OPINION AND ORDER
Introduction
The above-entitled matter came on for hearing before the undersigned United States District Judge on March 5, 2004, pursuant to Motions to Dismiss brought by Defendants United American Insurance Company ("UA"), Mark McAndrew, Daniel Shea, and Andrew King. For the following reasons, Defendants' Motions to Dismiss are granted in part and denied in part. In addition, Defendants' Motion to Strike the Affidavit of Brian P. Lucas is granted.
Background
UA is a Delaware corporation with its principal place of business in Texas. UA sells insurance products in various states. Defendant Mark McAndrew, an Alabama resident, is UA's president. At the times relevant to the facts of this case, Defendant Daniel Shea was one of UA's field vice presidents; Defendant Andrew King was president of UA's exclusive agency division. Both Shea and King are Texas residents.
According to the Complaint, prior to October 1, 1999, Plaintiff Lucas was a branch sales manager for Bankers Life and Casualty Company in Elgin, Illinois. In 1999, Shea and King discussed the possibility of Lucas leaving his job in Illinois to open a UA office in West St. Paul, Minnesota. Lucas contends that in their discussions with him, Shea and King represented that Lucas would be employed with a guaranteed minimum annual salary of $150,000 for at least three years, assuming minimum production targets were achieved, plus commissions on production that exceeded the minimum targets, plus reimbursement of out-of-pocket expenses through the "Z Account." ( See Complaint at ¶ 13.) Prior to Lucas's acceptance of the offer of employment, Lucas asserts that Shea and King represented that UA's Medicare Supplements had been approved by the State of Minnesota and that UA had applied for approval of its long-term care product in Minnesota. ( Id. at ¶ 22.) Lucas asserts, however, that UA was not willing to sell Medicare Supplements in Minnesota in the manner that they had been approved. Lucas also asserts that UA did not intend to sell its long-term care product in Minnesota. ( Id.)
According to the Complaint, UA had entered into consent orders with the Minnesota Department of Commerce on January 29, 1991, and September 13, 1993, related to allegations that UA had sold Medicare Supplements that were not approved or filed with the Department of Commerce. ( See Complaint at ¶¶ 19, 20.)
Ultimately, Lucas and UA entered into two written agreements on October 1, 1999: an Independent Agent's Contract and a Branch Manager's Contract. ( See Affidavit of Ansis V. Viksnins ("Viksnins Aff.") at ¶ 2, Exs. A ("Agent's Contract") and B ("Branch Manager Contract").) Relevant to this action, paragraph 4 of the Agent's Contract provided that "Agent shall at Agent's own expense furnish Agent's own means of transportation, office or place of business, advertisements, form letters, letterheads, circulars, lead programs and any other related expenses incurred in the solicitation of accident and health insurance for the Company." (Agent's Contract at 1.) Paragraph 5 of the Agent's Contract provided that UA would pay Lucas according to the attached Commission Schedule, and that "[r]ecognizing that the Agent's profit or loss is solely dependent upon Agent's degree of skill and effort, these commissions are to be in full satisfaction of all claims upon the Company on account of services and expenses under this Contract." (Agent's Contract at 1.) Paragraph 3 of the Branch Manager's Contract provides: "The Company agrees to pay the Manager, during the continuance of this contract, the compensation set forth in the Commission Schedule attached hereto, such compensation to be in full satisfaction of all claims upon the Company on account of services and expenses in performance of the Manager's duties." (Branch Manager's Contract at 1.) The Agent's Contract contains a final provision stating that the agreement "contains the entire understanding of the parties and supersedes or merges all prior and contemporaneous agreements and discussions between the parties. This Agreement may not be amended, modified or changed in any way, except by an instrument in writing, signed by Agent and Company." (Agent's Contract at 4.) Notably, neither of these agreements contains a provision guaranteeing Lucas a minimum annual salary or requiring UA to sell any particular types of insurance policies.
After signing these agreements, Lucas moved to Minnesota and began working as branch manager of UA's West St. Paul office. Lucas asserts that even though he exceeded his minimum production targets in Minnesota in 2000, he was paid less than the $150,000 that was orally promised to him during his discussions with Shea and King. Lucas contends that he was not being reimbursed at the agreed-upon rate from the Z-Account and that he was not provided the materials to successfully run the West St. Paul office. Finally, Lucas asserts that because UA did not offer its long-term care product and because the Medicare Supplement product was deficient, Lucas was unable to offer the agents at the West St. Paul branch a sufficiently diversified product line to meet client needs. Ultimately, Lucas resigned from his position with UA on November 1, 2000.
According to the Complaint, on January 23, 2003, UA and the Minnesota Department of Commerce entered into a Cease and Desist Consent Order, whereby UA agreed to pay the Department $100,000 and agreed that it would not sell any Medicare Supplement policies to Minnesota residents for 30 months, and would not maintain a branch office in Minnesota for 30 months. ( See Complaint at ¶ 42.)
Lucas filed his Complaint on October 29, 2003. Lucas's Complaint asserts seven causes of action: (1) common law fraud/fraudulent inducement; (2) breach of contract; (3) violation of Minnesota Statutes §§ 181.14 and 181.171; (4) breach of covenant of good faith and fair dealing; (5) interference with contractual and business relationships; (6) "breach of implied covenant of lawful employment to sell insurance products that complied with Minnesota law;" and (7) promissory estoppel. Throughout the Complaint, Lucas asserts that Defendants' conduct was "willful" and "intentional." ( See Complaint at ¶¶ 1, 37, 39, 61-63, 67-69, 72, 78, 83, 86.)
At oral argument on this matter, Lucas's counsel clarified that Counts 4 and 6 of the Complaint are not directed at Defendants Shea and King.
UA has moved for judgment on the pleadings pursuant to Fed.R.Civ.P. 12(c). McAndrew has moved to dismiss the claims asserted against him based on lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2). Shea and King have moved to dismiss for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6).
Lucas does not oppose McAndrew's motion to dismiss for lack of personal jurisdiction. ( See Memorandum of Plaintiff in Opposition to Rule 12 Motions at 2.) Thus, the Court only will address the motion for judgment on the pleadings brought by UA and the motion to dismiss for failure to state a claim brought by Shea and King.
Discussion
I. Standard of Review
In deciding a motion to dismiss, the Court must assume all facts in the Complaint to be true and construe all reasonable inferences from those facts in the light most favorable to the complainant. Morton v. Becker, 793 F.2d 185, 187 (8th Cir. 1986). The Court grants a motion to dismiss only if it is clear beyond any doubt that no relief could be granted under any set of facts consistent with the allegations in the Complaint. Id. A motion for judgment on the pleadings under Rule 12(c) is decided under a similar standard of review. See Flora v. Firepond, Inc., 260 F. Supp.2d 780, 784 (D. Minn. 2003) (citing Allstate Fin. Corp. v. U.S., 860 F. Supp. 653, 655 (D. Minn. 1994)).
Because this is a motion to dismiss or for judgment on the pleadings, the Court will not consider the affidavit submitted to the Court by Lucas on March 12, 2004, after oral argument on this matter. Thus, Defendants' motion to strike Lucas's affidavit is granted.
II. Statute of Limitations
Minnesota Statute § 541.07(5) provides that a two-year statute of limitations applies to actions for "the recovery of wages or overtime or damages, fees or penalties accruing under any federal or state law respecting the payment of wages of overtime or damages, fees or penalties. . . ." The statute defines "wages" as "all remuneration for services or employment, including commissions and bonuses and the cash value of all remuneration in any medium other than cash. . . ." Minn. Stat § 541.07(5). If the non-payment of wages is willful, however, and not the result of mistake or inadvertence, then a three-year statute of limitations applies. See id.
Minnesota courts have interpreted the statute of limitations provision to apply broadly to claims where the alleged damages flow from a breach of the employment relationship. See Kulinski v. Medtronic Bio-Medicus, Inc., 112 F.3d 368, 371 (8th Cir. 1997); Portlance v. Golden Valley State Bank, 405 N.W.2d 240, 243 (Minn. 1987); Stowman v. Carlson Companies, Inc., 430 N.W.2d 490, 493 (Minn.Ct.App. 1998). Specifically, Minnesota courts have applied the two-year statute of limitations to claims for fraudulent inducement ( Stowman, 430 N.W.2d at 493), failure to pay wages pursuant to Minnesota Statute § 181.14 ( McGoldrick v. DatatrakInt'l, Inc., 42 F. Supp.2d 893, 898 (D. Minn. 1999)), breach of employment contract ( Kletschka v. Abbott-Northwestern Hosp., Inc., 417 N.W.2d 752, 755 (Minn.Ct.App. 1988)), and promissory estoppel ( Warner v. Armco. Inc., 1993 WL 771047, *3 (D. Minn. 1993)).
Defendants primarily assert that all of Lucas's claims, except for the tortious interference claim, should be dismissed as time-barred by the two-year statute of limitations imposed by Minnesota Statute § 541.07(5) because they flow from an alleged breach of his employment relationship with UA. Lucas, on the other hand, contends that Defendants' actions were willful and thus that Lucas's claims are subject to the three-year statute of limitations of section 541.07(5). Lucas relies on Levin v. C.O.M.B. Co., 441 N.W.2d 801 (Minn. 1989) and McGoldrick, 42 F. Supp.2d 893, for the proposition that a jury should determine the question of willfulness and whether the two-or three-year statute of limitations applies. Defendants respond by noting that even if the three-year statute of limitations applies, it would only pertain to Lucas's claims beginning on October 29, 2000, three years prior to when he brought his complaint. Lucas contends, however, that his claims constitute continuing violations that toll the running of the statute of limitations and thus encompass his claims from the beginning of his employment with UA.
First, the Court finds that because of the broad reading given by Minnesota courts to Minnesota Statute § 541.07(5), the statute applies to Lucas's claims, except for the tortious interference claim. Based on this finding, the Court then must determine whether the two-year or the three-year statute of limitations provision of the statute applies to these claims and when the statute of limitations accrued on Lucas's claims.
In his Complaint, Lucas has pled that UA willfully and intentionally failed to pay him according to oral representations made to him before he signed the Agent's Contract and Branch Manager's Contract. At this time, the Court finds that it would be difficult for Lucas to prevail if the question of willfulness was submitted to a jury, as there has been no showing of willfulness on the record, apart from general allegations of willful and intentional behavior interspersed throughout Lucas's Complaint. However, because the Court is deciding this issue at the Rule 12 stage, the Court need not make inquiries into whether Lucas can prevail on the merits of his claims. Given the Minnesota Supreme Court's decision in Levin, the Court finds that the question of whether the two-or three-year statute of limitations applies is a fact question to be determined by the jury. See Levin, 441 N.W.2d at 805 (Mam. 1989).
Regardless of whether the two-or three-year statute of limitations applies, the Court rejects Lucas's contentions that the continuing violations doctrine would apply to toll the running of the statute of limitations on his claims. Lucas does not dispute that he was paid exactly what was prescribed in the Agent's Contract and Branch Manager's Contract each time he was paid by UA. Rather, Lucas's claims relate to alleged misrepresentations and false promises that were made prior to Lucas signing these two written agreements, such promises which were not memorialized in the written agreements. Insofar as the claims relate to payments made to Lucas that were allegedly not in accord with these prior oral representations, each alleged failure to pay Lucas the agreed-upon salary was a separate and distinct wrongful act. Given the nature of Lucas's claims, the continuing violations or "continuous wrong" doctrine does not apply. Lucas's claims did not accrue at the time of his departure from UA. Rather, his claims accrued upon each instance of alleged failure of payment. See Levin, 441 N.W.2d at 803.
Because the Court has determined that even if a jury were to find that the three-year statute of limitations applies, the continuing violations or "continuous wrong" doctrine does not apply, the only claims that could remain viable are those that occurred three years prior to the date that Lucas brought this lawsuit. Lucas's employment with UA ended on November 1, 2000. This lawsuit was brought on October 29, 2003. The only claims that could remain are those for the distinct and separate acts that occurred between October 29, 2000, and November 1, 2000, when Lucas ceased his employment with UA.
Because the Court is not certain what claims will remain when the application of the statute of limitations is so limited, the Court will not address Defendants' further arguments in support of their motions to dismiss. In addition, the Court does not reach the issue of whether the damages related to this short time period could satisfy the amount in controversy requirements to confer subject matter jurisdiction on this Court.
III. Tortious Interference Claim
In his Complaint, Lucas contends that Defendants interfered with Lucas's ability to perform as an agent and branch manager and prevented Lucas from performing the job for which he was hired. ( See Complaint at ¶ 85.) Defendants assert that UA legally cannot interfere with its own contract and that Lucas's Complaint does not assert any facts regarding actual malice to maintain a claim.
In order to prevail on a tortious interference with contract claim, the plaintiff must demonstrate the existence of a contract, the alleged wrongdoer's knowledge of the contract, and an intentional procurement of its breach, without justification, that results in damage to the plaintiff. See Maness v. Star-Kist Foods, Inc., 7 F.3d 704, 709 (8th Cir. 1993) (citing Furley Sales and Associates, Inc. v. North American Auto. Warehouse, Inc., 325 N.W.2d 20, 25 (Minn. 1982). A party may not interfere with its own contract. See Petroskey v. Lommen, Nelson, Cole Stageberg, P.A., 847 F. Supp. 1437, 1449 (D. Minn. 1994) (citing Bouten v. Richard Miller Homes, Inc., 321 N.W.2d 895, 901 (Minn. 1982)). However, a corporate officer or agent may be liable for tortious interference with a contract if the agent's actions were outside the scope of his or her duties. Nordling v. Northern States Power Co., 478 N.W.2d 498, 505-06 (Minn. 1991). In order to determine whether a corporate officer was acting outside the scope of his or her duties, the court considers whether the officer or agent acted with actual malice. See id. at 507.
While the Court finds that UA cannot interfere with its own contract, the Court also finds that Lucas has alleged sufficient facts to sustain a claim against Shea and King for tortious interference. In his Complaint, Lucas alleges:
contrary to Defendants' duties, as described in the preceding paragraph, Defendants, and each of them, engaged in a course of conduct, with bad faith and malicious intent and purpose, to undermine and destroy, and interfere with, Plaintiff's ability to perform his job as the branch manager of the West St. Paul office for [UA], thereby interfering with, and frustrating, the contract between Plaintiff and [UA].
(Complaint at ¶ 83.) Defendants have provided the Court with no authority to support their position that actual malice need be specifically pled. Thus, Defendants' motion to dismiss on Count V is denied as to Defendants Shea and King.
Conclusion
It is not for this Court to decide, at this stage of the proceedings, whether or not Plaintiff will prevail at trial. However, in light of the Court's belief that it will be very difficult for Plaintiff to prevail on the abbreviated claims that remain, and in order to minimize the expense on the parties, the Court will continue to make Magistrate Judge Susan Richard Nelson available to assist in the negotiation of a settlement, should the parties find that such services would be helpful. If the Court may be of any assistance in this matter, the parties should contact Lowell Lindquist, Calendar Clerk for Judge Donovan W. Frank, at 651-848-1296, or Beverly Riches, Calendar Clerk for Magistrate Judge Susan Richard Nelson, at 651-848-1200.
For the reasons stated, IT IS HEREBY ORDERED:
1. Defendants' Motion to Strike Affidavit of Brian P. Lucas (Doc. No. 20) is GRANTED.
2. Defendants' Motions to Dismiss (Doc. Nos. 7 and 8) are GRANTED IN PART and DENIED IN PART, as follows:
a. Defendants' Motion to Dismiss requesting that the Court apply the two-year statute of limitations of Minnesota Statute § 541.07(5) is DENIED;
b. Defendants' Motion to Dismiss requesting that the Court reject Plaintiff's claims of continuing violations is GRANTED; and
c. Defendants' Motion to Dismiss the tortious interference with contractual and business relationships claim (Count V of Plaintiff's Complaint) is GRANTED as to Defendant United American Insurance Company and DENIED as to Defendants Daniel Shea and Andrew King.