F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
JUN 11 2002
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT
SDJ INSURANCE AGENCY, L.L.C.,
Plaintiff-Appellant,
STEVE JARVIS,
Plaintiff-Counter-Defendant-
Appellant,
v. No. 00-1441
AMERICAN NATIONAL
INSURANCE COMPANY,
Defendant-Appellee,
AMERICAN NATIONAL PROPERTY
AND CASUALTY COMPANY,
Defendant-Counter-Claimant-
Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
(D.C. No. 99-B-578)
Mark K. Osbeck of Yates & Leal, LLP, Denver, Colorado (Sandra Z. Brown of
Reinhart, Boerner, Van Deuren, Norris & Rieselbach, P.C., Denver, Colorado,
with him on the briefs), for Appellants.
Perry L. Glantz of Holland & Hart, LLP, Greenwood Village, Colorado, and Mark
E. Haynes of Pryor, Johnson, Montoya, Carney & Karr, P.C., Englewood,
Colorado (Arnold R. Thomas of Holland & Hart, LLP, Greenwood Village,
Colorado, and Robert W. Carney of Pryor, Johnson, Montoya, Carney & Karr,
P.C., Englewood, Colorado, with them on the brief), for Appellees.
Before TACHA, Chief Judge, McKAY and ANDERSON, Circuit Judges.
McKAY, Circuit Judge.
Appellants SDJ Insurance Agency and Steve Jarvis appeal the United States
District Court for the District of Colorado’s grant of summary judgment pursuant
to Rule 56 to the Appellees on Appellants’ breach of contract claim. Appellants
also challenge the district court’s grant of summary judgment to American
National Property and Casualty (ANPAC) on ANPAC’s counterclaim for the
repayment of advances made by ANPAC to SDJ Insurance Agency.
I. Introduction
Mr. Jarvis signed an agency agreement with American National Insurance
Company (ANICO) on December 30, 1997. Subsequently, on January 2, 1998,
Mr. Jarvis entered into an exclusive agency agreement with ANPAC. Both
contracts envisioned that either party could terminate the agreement unilaterally
by giving written notice to the other at least thirty days prior to the date fixed for
termination. The ANPAC Agent Agreement also permitted ANPAC to terminate
Mr. Jarvis’ binding privileges without notice.
-2-
On January 14, 1998, Mr. Jarvis and ANPAC signed an Agent Advance
Agreement (AAA). Pursuant to this agreement, ANPAC advanced SDJ $18,000 a
month to enable Mr. Jarvis to meet the expense of establishing insurance offices.
After signing the contracts, Mr. Jarvis opened insurance offices in Colorado
Springs, Castle Rock, Bennett, and Parker, Colorado, to facilitate the sale of
ANPAC and ANICO policies. ANPAC advanced SDJ a total of $108,000 under
the AAA.
ANPAC terminated Mr. Jarvis’ agreement in a letter dated June 30, 1998.
While termination was not effective until August 5, 1998, ANPAC immediately
withdrew Mr. Jarvis’ ability to bind new business. After termination, Appellants
brought suit for breach of contract in Colorado state court. Appellees removed
the case to the United States District Court for the District of Colorado and
brought a counterclaim for the repayment of advances made to SDJ. Appellees
moved for summary judgment on Appellants’ breach of contract claim and
Appellees’ counterclaim. The district court granted the Rule 56 motions;
Appellants appealed to this court.
II. Choice of Law
As a preliminary matter, we must determine which state’s law applies to the
current dispute. The Agency Agreement specifically states, “[T]he validity,
construction, and performance of this Agreement shall be controlled by and
-3-
construed under the laws of the State of Missouri.” Aplt. Rec. at 84. Colorado
applies the law of the state “chosen by the parties unless there is no reasonable
basis for their choice or unless applying the law of the state so chosen would be
contrary to the fundamental policy of a state whose law would otherwise govern.”
Hansen v. GAB Bus. Serv., Inc., 876 P.2d 112, 113 (Colo. Ct. App. 1994).
Because neither of the exceptions set forth in Hansen are present here, we would
normally apply Missouri law to this appeal.
However, neither party argued in the district court that Missouri law
applied. Furthermore, Appellants’ argument on appeal that Missouri law should
apply was equivocal and limited to a footnote in Appellants’ brief. See Aplt. Br.
at 9. Because the parties failed to argue that Missouri law applied at the district
court, that issue has been waived. See Mauldin v. Worldcom, Inc., 263 F.3d
1205, 1211-12 (10th Cir. 2001) (holding that weak protest against application of
Texas law amounted to waiver of argument that Nebraska law should apply).
Accordingly, we apply Colorado law to this appeal.
III. Discussion
There are two issues for us to resolve on appeal. The first issue is whether
the district court erred in granting summary judgment to Appellees on Appellants’
breach of contract claim. The second issue is whether the district court erred in
granting summary judgment on Appellees’ counterclaim that, under their contracts
-4-
with Appellants, Appellees could hold Mr. Jarvis personally liable for the
repayment of advances Appellees made to SDJ.
“We review the district court’s grant of summary judgment de novo,
applying the same legal standard used by the district court.” Simms v. Oklahoma
ex rel. Dep’t of Mental Health, 165 F.3d 1321, 1326 (10th Cir. 1999). “When
applying this standard, we view the evidence and draw reasonable inferences
therefrom in the light most favorable to the nonmoving party.” Id.
A. Breach of Contract Claim
The parties agree that the ANPAC Agent Agreement provides that either
party may terminate the agreement “without cause at any time by giving written
notice to the other party at least thirty (30) days prior to the date fixed for
termination.” Aplt. App. at 85. The ANPAC Agent Agreement also specifically
reserves the right of ANPAC to “withdraw or limit the Agent’s authority to bind
risks either in whole or in part.” Id. at 84. Appellants do not contest that
ANPAC gave them the requisite notice prior to unilaterally terminating the
agreement. Despite the contract’s explicit terms, Appellants challenge the district
court’s grant of Appellees’ motion for summary judgment on their breach of
contract claim on two grounds.
First, Appellants argue that they had been orally promised two years to
meet ANPAC’s production requirements before ANPAC would terminate the
-5-
agent agreement. Appellants assert that because of various statements made to
them by ANPAC’s representatives, ANPAC should be equitably estopped from
exercising its privilege to unilaterally terminate the agreement with thirty days
notice. Appellants specifically waived any promissory estoppel argument and are
precluded from asserting a promissory estoppel claim on appeal. See Aplt. Reply
Br. at 11. Instead, Appellants choose to pursue their claim as an equitable
estoppel claim.
“While the doctrine of promissory estoppel is applicable to promises, the
doctrine of equitable estoppel is applicable to misstatements of fact.” Board of
County Comm’rs v. DeLozier, 917 P.2d 714, 716 (Colo. 1996). Appellants’
equitable estoppel claim is essentially a tort claim for misrepresentation of facts.
Under Colorado law, equitable estoppel claims consist of two elements. “[T]he
party to be estopped must know the facts and either intend the conduct to be acted
on or so act that the party asserting estoppel must be ignorant of the true facts,
and the party asserting estoppel must rely on the other party’s conduct with
resultant injury.” Committee for Better Health Care v. Meyer, 830 P.2d 884, 891-
92 (Colo. 1992). Plaintiffs who premise their equitable estoppel claims on
promises relating to future events face an additional requirement of proving that
the party making the future promise had no present intent to fulfill the promise.
See DeLozier, 917 P.2d at 716; see also Mehaffy, Rider, Windholz & Wilson v.
-6-
Central Bank Denver, N.A., 892 P.2d 230, 237 (Colo. 1995); High Country
Movin’, Inc. v. U.S. West Direct Co., 839 P.2d 469, 471 (Colo. Ct. App. 1992).
Appellants argue that Jeffrey Johnson, a multiline general agent for
ANPAC and ANICO who recruited Mr. Jarvis on ANPAC’s and ANICO’s behalf,
promised Mr. Jarvis that he would be given two years to reach required
production levels despite the contract’s clear language permitting either party to
terminate the relationship at will. This two-year promise was allegedly affirmed
by other individuals acting on ANPAC’s behalf. See Aplt. Reply Br. at 13. In
defending Appellants’ breach of contract claim, Appellees rely on the contract’s
unambiguous provision that either party can terminate the parties’ relationship at
anytime with thirty days notice.
The district court rejected Appellants’ reliance upon this allegation as
sufficient to create an equitable estoppel claim because Appellants failed to
prove, as required under Colorado law, that Appellees had no intention of keeping
their promise to allow Appellants two years to reach required production levels
when that promise was made. See DeLozier, 917 P.2d at 716. We agree.
Appellants’ failure to submit any evidence showing Appellees’ present lack of
intent to fulfill its promises of future conduct is fatal to Appellants’ equitable
estoppel claim.
Appellants’ second basis for their breach of contract claim is that Appellees
-7-
breached the Agent Agreement by immediately revoking Appellants’ ability to
bind new business. Appellants argue that the provision regarding Appellees’
ability to withdraw Appellants’ binding authority is ambiguous and that the better
reading of the contract makes this clause subject to the thirty-day notice
requirement “since total withdrawal of binding authority . . . destroys the agent’s
ability to write new business.” Aplt. Reply Br. at 14.
The district court correctly determined that Appellees’ ability to withdraw
binding authority was unambiguous. Appellees specifically reserved the right
under the Agent Agreement to “withdraw or limit the agent’s authority to bind
risks either in whole or in part.” Aplt. Rec. at 96. As the district court indicated,
“[n]otably absent from this provision is any notice requirement.” Id. at 45. While
the ability to immediately bind a policy makes the sale of insurance easier, the
withdrawal of that ability does not make the sale of policies impossible. In fact,
many relationships between insurance agents and insurers begin without an agent
possessing the ability to immediately bind insurance policies. We reject
Appellants’ contention that Appellees breached the Agent Agreement by
immediately withdrawing binding authority.
B. ANPAC’S Counterclaim
ANPAC advanced to SDJ $108,000 pursuant to the AAA. Appellants
allege that the purpose of the advances was to enable Appellants to open offices
-8-
in several Colorado towns to facilitate the sale of Appellees’ policies. At the time
of termination, the district court found that Appellants had not yet repaid
$97,709.74 of the advances made to them. Appellees counterclaimed for the
unpaid advances arguing that the AAA obligated Mr. Jarvis to repay the
outstanding balance from his personal assets. The district court granted summary
judgment to the Appellees on their counterclaim.
Colorado law, similar to the law of the majority of the states, has adopted
the principle that “[r]egular advances to an agent are presumed to be in the nature
of compensation. In the absence of an express or implied agreement to the
contrary, advances in excess of earned commissions are not recoverable.”
Slabodnik v. Travelers Ins. Co., 489 P.2d 604, 605 (Colo. Ct. App. 1971); see
also 32 A.L.R.3d 802 (1970). Therefore, absent a contractual provision expressly
holding Mr. Jarvis personally liable for advances, Appellees must show that Mr.
Jarvis, by his conduct, exhibited an intent to be held personally liable for the
repayment of the advances. See Argonaut Builders, Inc. v. Dare, 359 P.2d 366,
368 (Colo. 1961) (“intent of the parties[] gathered from all of their dealings . . .
lead[s] to the contrary conclusion . . . that the defendant should be liable to the
extent that the charges exceeded the payments to him”).
The Agency Agreement as amended by the AAA contains two provisions
discussing the repayment of advances. The first provision, contained in the AAA
-9-
itself, states:
This Agent Advance Agreement may be terminated at anytime by the
Company with or without cause. The termination shall be effective
immediately upon the Company giving written notice to the Agent.
Said Agreement shall automatically be terminated when the advance
payment of compensation deficit is repaid in full.
Aplt. App. at 101. This provision in no way holds Mr. Jarvis personally liable for
advances left owing after termination. Instead, this provision simply indicates
that Appellees could terminate the agreement at anytime and that the agreement
would terminate on its own volition once the advances had been repaid in full.
Certainly once the entire amount of the advances had been deducted from
commissions Appellants earned, the need for the continued payment of advances
ceases.
The district court based its grant of summary judgment on Section C(7) of
the Agent Agreement, which reads in part, “You agree to repay to the Company,
on demand, any unearned commissions and all other compensation received by
you for or with respect to premiums or payments returned to policy or contract
owners by the Company for any reason.” Aplt. App. at 82. The district court held
this repayment provision contained two separate obligations. According to the
district court, the Appellants agreed to pay upon demand any unearned
commissions, which would include advances. Appellants, per the district court,
also agreed to reimburse Appellees for all other compensation received from
-10-
premiums eventually returned to policyholders.
Appellants contest this reading of the repayment provision of the contract.
Appellants argue that the entire provision refers only to premiums or payments
returned to policyholders by Appellees for any reason and has no application to
the repayment of advances. Under Appellants’ interpretation, Appellants agreed
to return the commissions they earned but were no longer entitled to because all
or part of the policy premium had been returned to policyholders by Appellees.
Additionally, Appellants agreed to return any other compensation (such as
bonuses, vacation trips, points towards retirement plans, etc.) given the
Appellants by Appellees based on premiums later returned to policyholders. The
district court rejected Appellants’ view of the repayment provision holding that
such a reading of the contract “would read the first clause out of the contract and
render it surplusage.” Aplt. Rec. at 48.
Absent a tortured reading of the plain language of the commission
repayment provision, we cannot read the contract in the manner indicated by the
district court. The phrase “received by you for or with respect to premiums or
payments returned to policy or contract owners by the Company” modifies the
Appellants’ duty to pay back any unearned commissions and all other
compensation. Advances made to SDJ were unrelated to any premium or payment
returned to policy or contract owners by Appellees.
-11-
At most, the repayment of commissions contract provision is ambiguous
and should be interpreted against the Appellees as the contract’s drafters. The
parties could have easily provided that Mr. Jarvis assume personal liability as a
borrower by so stating in the contract. Considering the contract as a whole, it
does not appear that the parties intended to hold Mr. Jarvis personally liable for
the advances made.
While our reading of the contract precludes the grant of summary judgment
to Appellees on their counterclaim, it does not foreclose the possibility that
Appellees could ultimately prevail. As noted previously, Colorado law provides
an exception to its general rule if Appellees can prove that Mr. Jarvis, by his
conduct, exhibited an implied personal liability to pay. Upon remand, the
Appellees should be permitted to put forth any evidence they may have regarding
Mr. Jarvis’ conduct that would imply assumption of a personal liability to repay.
IV. Conclusion
Reviewing the evidence in a light most favorable to the non-moving party,
we find that there are no genuine issues of material fact as to Appellants’ breach
of contract claim, and we AFFIRM the district court’s grant of summary
judgment to Appellees on that claim. However, we REVERSE the district
court’s decision regarding the repayment of advances and REMAND for further
disposition in accordance with the principles set forth in this opinion.
-12-
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
-13-