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Cox v. Mag Mutual Insurance Co.

United States District Court, E.D. Virginia, Richmond Division

April 9, 2015

THOMAS P. COX, Plaintiff,
v.
MAG MUTUAL INSURANCE COMPANY, et al., Defendants.

OPINION

JOHN A. GIBNEY, Jr., District Judge.

Thomas Cox, an insurance salesman, brings this suit because he thinks an insurance agency teamed up with an insurance carrier to steal some of his customers. Unfortunately, his factual allegations do not go beyond the speculative, so the Court must dismiss his case. Cox tries to state claims of conspiracy and tortious interference with his contract and with his business expectancies, but his complaint lacks any allegations that push his claim from guesswork to a plausible claim. Consequently, the Court GRANTS the defendants' motions to dismiss, filed under Federal Rule of Civil Procedure 12(b)(6).

I. Facts

Beside the plaintiff, this case contains three major characters: (1) MAG Mutual Insurance Company, an insurance carrier that provides medical malpractice insurance; (2) Riggs, Counselman, Michaels & Downes, Inc. ("RCMD"), an insurance agency that sells MAG insurance; and (3) Charles Lunsford Sons & Associates, another insurance agency that sells various brands of insurance in the medical field.

From 2005 until 2009, Cox worked for RCMD as a salesman. By his account, he built a number of customer relationships, and sold a great deal of MAG insurance. In 2009, RCMD fired Cox, who consequently could no longer sell MAG products.[1] Three years later, in 2012, the pendulum swung the opposite way, and MAG representatives met with Cox to discuss his reappointment as a MAG insurance agent. During these discussions, Cox gave MAG twelve letters or emails of recommendation from current or former Cox customers, ten of them current or former MAG customers, asking MAG to give Cox an appointment.

On February 1, 2013, MAG appointed Lunsford, Cox's then-current employer, as an authorized MAG agency. MAG and Lunsford signed a producer agreement giving MAG the right to "modify commission rates on 30 days prior written notice." The agreement allowed either party to terminate the agreement at will. Through Lunsford, Cox could now again sell MAG products.

The producer agreement also dealt with the concept of "agent of record." The agent of record services the policy and receives commissions when the policy renews. Typically, the insured picks his agent of record when he buys the policy, but sometimes customers later decide to change agents of record. The producer agreement recognized that agent-switching could occur, and said "changes in the agent-of-record for an insured will be recognized by the insurer at its sole discretion in accordance with its then-current policies, practices or procedures - or where applicable - as governed by state law or regulations." (Dk. No. 1-14 at ¶ 20.)

Almost as soon as he started to sell MAG policies through Lunsford, Cox procured letters from several of his old customers asking MAG to recognize Lunsford and Cox as agent of record, replacing RCMD. As one might expect, MAG wanted to encourage its agents to find new customers, rather than just going through the paperwork of changing agents. MAG told Lunsford that it planned to decrease the commissions on customers Lunsford secured by change of agent. Specifically, MAG planned to pay a 3 percent commission on customers who simply changed agents of record, rather than the usual 9 percent commission on all premiums. Although Cox had lined up several other customers to switch agents, at MAG's suggestion, he did not send in the paperwork. MAG did, however, suggest that Cox get two other customers-outside RCMD's area-to change agents of record.

During February 2013, the same period that Cox and MAG were working out the deal for him to become a MAG agent, Cox received some news about RCMD. Cox heard from MAG that RCMD was "livid to learn that Cox now had a MAG appointment." (Dk. No. 1-14 at ¶ 25.) At this time, Cox heard, for the first time, that MAG would change the commissions on premiums involving only a change of agent of record.

On April 29, 2013, Pratt Medical Center ("Pratt"), a MAG insured, delivered an agent of record letter to MAG changing its agent from RCMD to Cox. MAG honored the letter, even though Cox had not signed it (as generally required). On May 9 and 10, 2013, Cox attended a new producer meeting in Atlanta where Ed Lynch, the Senior Vice President of Business Development for MAG, told Cox not to send MAG any more change of agent letters. Cox received several change of agent letters, but chose not to sign them because of MAG's directions. Cox believes RCMD was behind Lynch's instructions, but makes no specific factual averments supporting this belief.

Pratt was a major customer of MAG insurance. After delivering the change of agent letter, Pratt decided to move coverage to a competitor. In June 2013, in an effort to win back the business, an RCMD representative, John McElroy, met with Pratt's CEO, and offered to reduce the premiums. RCMD's efforts failed and MAG did not win back Pratt's business. In the same month, MAG informed Lunsford the producer agreement would be canceled. And in July 2013, Cox ceased to be a MAG salesman.

II. Discussion[2]

Cox asserts two counts in his complaint: (1) civil conspiracy and (2) tortious interference.[3] In Count One, Cox argues that sometime between February and May 2013, MAG and RCMD "combined, associated, agreed or acted in concert for the purposes of willfully injuring Cox in his business and property, for the purpose of tortiously interfering with Cox's appointment with MAG and for the purpose of tortiously interfering with Cox's legitimate business expectancies." Cox alleges the parties' actions constitute a conspiracy in violation of the Virginia business conspiracy statute, Virginia Code § 18.2-499, and common law.

Both the statutory and common law conspiracy claims fail. The business conspiracy statute requires the alleged injury to be to a business or a business owner, not to an individual's employment interests. Cox's common law conspiracy claim fails because he fails to state a claim for tortious interference, the underlying tort to support his conspiracy claim. The conspiracy claim must also ...


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