Allen v. Great American Reserve Insurance Co.

ATTORNEYS FOR APPELLANTS

George M. Plews
Jeffrey A. Townsend
Indianapolis, Indiana





ATTORNEYS FOR APPELLEES

Patricia Polis McCrory
Mark W. Pfeiffer
Indianapolis, Indiana

Joseph H. Yeager, Jr.
Shawna Meyer Eikenberry
Indianapolis, Indiana
__________________________________________________________________


                                   IN THE



                          SUPREME COURT OF INDIANA

__________________________________________________________________

THOMAS G. ALLEN,                  )
JOE M. GILSTRAP, THOMAS G.   )
GRIER, JAMES H. NELSON,           )
DONALD K. OWENS, RICHARD K.  )
PATIERNO, RICHARD K.         )
PATIERNO, JR., SILVINE M.         )
PATIERNO and JOHN M. STONE,  )    Indiana Supreme Court
                                  )     Cause No. 29S05-0204-CV-222
      Appellants (Plaintiffs Below),    )
                                  )     Indiana Court of Appeals
            v.                    )     Cause No. 29A05-0003-CV-95
                                  )
GREAT AMERICAN RESERVE       )
INSURANCE COMPANY and        )
GLENN H. GUFFEY,             )
                                  )
      Appellees (Defendants Below).     )
__________________________________________________________________

                   APPEAL FROM THE HAMILTON CIRCUIT COURT
                   The Honorable Judith S. Profitt, Judge
                         Cause No. 29C01-9709-CP-751
__________________________________________________________________


                          ON PETITION FOR TRANSFER

__________________________________________________________________

                                April 2, 2002

BOEHM, Justice.

                      Factual and Procedural Background

       Plaintiffs[1]  are  insurance  agents  licensed  in  North  or  South
Carolina.  Each of them sold the Flex II, a tax-deferred annuity  issued  by
Jefferson National Life (“JNL”), to individual residents  of  those  states.
The plaintiffs were recruited by defendant Glenn H. Guffey, then a  resident
of South Carolina, and entered into contracts with JNL calling for  them  to
work under Guffey, who served as  JNL’s  general  agent.   JNL  subsequently
merged into defendant Great American Reserve Insurance Company (“GARCO”),  a
Texas life insurance company with  its  principal  office  in  Indiana,  and
GARCO succeeded to the  policies.   Each  plaintiff’s  contract  with  GARCO
contained a choice of law provision that the contract was to  be  “construed
in accordance with the laws of the State of Indiana exclusive of  choice  of
laws provisions.”  There was also a forum selection  clause  providing  that
venue “for any action between the parties arising under this Agreement”  was
to be in a court in Hamilton County, Indiana.
      In exchange for annual premiums, the Flex II promised  annuity  income
in the future.  Guffey trained the plaintiffs, and part of that  instruction
included telling the plaintiffs that the Flex  II  had  no  front-end  load,
meaning that no  commission  or  other  fees  would  reduce  the  amount  of
premiums used to build up the value of the policy.  In  fact,  the  Flex  II
did have a front-end load, and for most policyholders only 65% of the  first
year’s premium was applied to add to the value of  the  policy.   Just  over
85% was applied in years two through five, and only  in  year  six  did  the
entire premium go to enhance the value of the annuity.  After  some  of  the
plaintiffs’ customers complained about misrepresentations  in  the  sale  of
the Flex  II,  the  South  Carolina  Department  of  Insurance  launched  an
investigation.  As a result of the investigation,  most  of  the  plaintiffs
entered into consent decrees with the department  admitting  that  they  had
misrepresented the Flex II as to the existence of a front-end load.
      The plaintiffs first sued Guffey and GARCO in federal court  in  South
Carolina.  That suit was dismissed without prejudice for improper venue  and
lack of diversity of citizenship.  The plaintiffs then initiated  this  suit
in the Hamilton Circuit Court, asserting twelve counts against  both  Guffey
and GARCO.  The substance of many of these claims was  that  the  plaintiffs
incurred liability to their customers and costs  of  regulatory  proceedings
and defense of civil lawsuits, all as  a  result  of  Guffey’s  and  GARCO’s
misrepresentations that the Flex  II  had  no  front-end  load.   The  trial
court, applying  South  Carolina  law  to  the  entire  proceeding,  granted
partial summary judgment in favor of Guffey and GARCO on most of the  counts
on the ground that the plaintiffs, as licensed insurance agents,  could  not
have reasonably relied on the claimed misrepresentations.
      The Indiana complaint also asserted three Indiana statutory causes  of
action, and a  claim  for  negligence.   The  trial  court  granted  summary
judgment as to the  statutory  claims  on  the  ground  that  these  Indiana
statutes were not applicable to claims governed by South Carolina  law,  and
also on statute of limitations  grounds.   The  negligence  claim  was  also
dismissed on statute of limitations grounds.  Finally, two counts remain  in
the trial court while this interlocutory appeal proceeds.
      The Court of Appeals concluded that the plaintiffs’ Indiana  statutory
claims  and  the  claim  for  negligence  were  properly  preserved  by  the
Journey’s  Account  statute,  and  reversed  that  portion  of  the  summary
judgment order dismissing those counts,  but  agreed  that  the  plaintiffs’
status as experts in the field of insurance  precluded  recovery  under  the
misrepresentation counts.  The plaintiffs seek transfer to this Court.

                             Standard of Review

      On appeal, the standard of review of a grant or  denial  of  a  motion
for partial summary judgment is the same as that used in  the  trial  court:
summary judgment is appropriate only where the evidence shows that there  is
no genuine issue of material fact and that the moving party is  entitled  to
a judgment as a matter of law.  Bemenderfer v.  Williams,  745  N.E.2d  212,
215 (Ind. 2001).  All facts  and  reasonable  inferences  drawn  from  those
facts are construed in favor of the nonmoving party.  Id.

                          The Parties’ Contentions

      No  one  in  this  lawsuit  claims  that  because  the  policies  were
represented to contain no front-end load, the purchasers  were  entitled  to
that benefit.  Rather, all parties agree that the policies in  fact  carried
a front-end load.  The plaintiffs contend, in broad brush,  that  they  were
assured by Guffey that they were selling no-load  policies,  they  sold  the
policies on that basis, and they incurred losses as a result  of  the  false
assurances.  Because Guffey was GARCO’s general  agent,  plaintiffs  contend
GARCO is liable as principal as well as for its own actions.
      The defendants point out that the plaintiffs  admit  that  they  never
read the Flex II policies they sold.  The defendants contend that a  reading
of the policies discloses that the cash value of the  policy  is  less  than
the premiums paid until year seven.  They  also  note  that  the  plaintiffs
received commissions on the sale of the policies, and the money had to  come
from somewhere.  From this they  argue  that  no  licensed  insurance  agent
could reasonably conclude that the policies were no-load.   The  plaintiffs’
contentions are found in twelve different counts.  We  note  at  the  outset
that because the parties hail from different states,  and  because  many  of
the activities in question occurred in different states,  this  case  raises
significant choice of law issues.  In analyzing each of the  counts  of  the
plaintiffs’ complaint, it is first necessary to determine which state’s  law
applies to that count.  The answer may differ for different counts  and  may
differ between defendants as to a single count.  As  a  preliminary  matter,
except as to Count VI, no party argues for the application  of  the  law  of
North Carolina to any  claim.   Accordingly,  we  discuss  only  the  choice
between South Carolina and Indiana law as to each of the other counts.

          Count I: Breach of Contract Accompanied by Fraudulent Act

      In this count, the plaintiffs allege that their  contract  with  GARCO
and their sub-agency relationship with Guffey implied a duty and  obligation
of good faith and fair dealing.  The plaintiffs claim that, with  fraudulent
intent and through fraudulent acts, GARCO and Guffey breached these  implied
covenants, and that those breaches are equivalent to breaches of contract.
      Ordinarily a choice of law issue will be resolved only if  it  appears
there  is  a  difference  in  the  laws  of   the   potentially   applicable
jurisdictions.  Here we are unclear whether this is the case as to these  or
potentially other issues raised by these claims after remand.   Accordingly,
we address choice of law as to this count.  Because these cases are  brought
in Indiana, Indiana choice of law  doctrines  control.   Hubbard  Mfg.  Co.,
Inc. v. Greeson, 515 N.E.2d 1071, 1073 (Ind. 1987).
      A.  As to GARCO
      The plaintiffs describe their claim in Count  I  against  GARCO  as  a
claim for breach of a covenant of good  faith  implied  in  their  contracts
with GARCO.  Indiana choice of law doctrine favors contractual  stipulations
as to governing law.  Hoehn v. Hoehn, 716 N.E.2d 479,  484  (Ind.  Ct.  App.
1999); Homer v. Guzulaitis, 567  N.E.2d  153,  156  (Ind.  Ct.  App.  1991),
trans. denied; Barrow v. ATCO Mfg. Co., 524  N.E.2d  1313,  1315  (Ind.  Ct.
App. 1988).   There  is  no  reason  here  to  disregard  that  presumption.
Accordingly,  the  contractual  provision  that  Indiana  law  governs   the
construction of the contract is controlling on  the  choice  of  law  issue.
Indiana law recognizes an implied  duty  of  good  faith  in  all  insurance
contracts requiring that  an  insurer  will  act  in  good  faith  with  its
insured.  Erie Ins. Co. v. Hickman by  Smith,  622  N.E.2d  515,  518  (Ind.
1993).  This duty results from the  unique  nature  of  the  insured/insurer
relationship, which may be at varying times arm’s-length, fiduciary,  and/or
adversarial.  Id.  But Indiana does not  imply  such  a  covenant  in  every
contract.  See First Fed. Sav. Bank v. Key Mkts., 559 N.E.2d 600, 604  (Ind.
1990) (not court’s province to require party acting pursuant to  unambiguous
contract to be “reasonable,” “fair,” or show “good faith” cooperation).   We
nevertheless think these agency agreements, though by professionals, are  in
the category of  agreements  that  carry  some  implied  covenants.   Agency
relationships generally carry with them the obligation of the  principal  to
exercise reasonable care to avoid placing the agent in  harm’s  way  in  the
course of carrying out the agency.  Montgomery Ward & Co., Inc. v.  Tackett,
163 Ind. App. 211, 217, 323 N.E.2d 242, 246 (1975).[2]  This is  essentially
what the plaintiffs allege was not done here.  Thus, if the  plaintiffs  can
establish that Guffey or GARCO allowed or caused them  to  misrepresent  the
“no-load”  feature,  with  knowledge  that  the  plaintiffs  believed  their
representation to  be  true,  and  plaintiffs’  reliance  on  a  defendant’s
actions or omissions was reasonable, then perhaps  a  breach  of  this  duty
would be established under Indiana law, which applies to GARCO by reason  of
the contract.
      B.  As to Guffey
      As to Guffey, who had no contract with any plaintiff, Count I  alleges
a breach of the duty of good faith and fair dealing arising from the  agency
relationship itself, apart from any claims of breach of contract.   However,
we do not believe such a claim against Guffey is governed by Indiana law  on
the facts of this case.
      This Court has not addressed the choice of law governing a  multistate
agency, apart  from  contract.   We  think  comment  f  to  the  Restatement
(Second) of Conflict of Laws (“Restatement”) section 291  accurately  states
the law applicable here: if “the agent is employed to do a  number  of  acts
on the principal’s behalf in a single state, the local  law  of  this  state
will usually determine the rights and  duties  owed  by  the  principal  and
agent  to  each  other.”   The  activities  conducted  under   this   agency
relationship were substantially all in South Carolina, and we  conclude  the
trial court correctly ruled that the law  of  South  Carolina  governs  this
claim against Guffey.
      The trial court, also applying South  Carolina  law,  determined  that
summary judgment was appropriate  on  this  count  because  the  plaintiffs’
“reliance on Guffey’s alleged misrepresentations was  not  reasonable  as  a
matter of law,” and thus no claim for fraud could lie.  We agree  that  this
claim requires reasonable reliance on the part of the plaintiffs.   Although
we find no directly relevant South Carolina authority, we  believe  that  to
the extent a claim asserts a breach of the  duty  of  good  faith  and  fair
dealing  has  been  accomplished  by  means  of  an   allegedly   fraudulent
misrepresentation, the resulting claim is in substance  a  claim  for  fraud
based  on  misrepresentation.   In  South  Carolina,  “[f]raud  based  on  a
misrepresentation   and   negligent   misrepresentation   both   include   a
requirement that the plaintiff  justifiably  relied  on  the  representation
made by the defendant.”  West v. Gladney, 533  S.E.2d  334,  338  (S.C.  Ct.
App. 2000).
      C.  Summary Judgment
      We do not agree that summary judgment is appropriate as to this  count
under either Indiana or South Carolina  law.   It  is  true  that  in  South
Carolina an insurance agent is deemed to be “an expert dealing in  a  highly
specialized business, with knowledge and means of  knowledge  not  possessed
by  the  average  applicant  for  insurance.”   Riddle-Duckworth,  Inc.   v.
Sullivan, 171 S.E.2d 486, 490 (S.C. 1969).  It is also true that  “where  an
insurance agent or broker, with a view toward being compensated,  undertakes
to procure insurance for a member of the public, the law holds the agent  or
broker to the exercise  of  good  faith,  and  reasonable  skill,  care  and
diligence” in so doing.  Id.   We  think  these  authorities  establish  the
plaintiffs’ liability to their customers.  It does not  necessarily  follow,
however, that as between the plaintiffs and the general agent  (Guffey)  and
their principal (GARCO), the  plaintiffs’  reliance  on  representations  by
Guffey was unreasonable as a matter of law.  We are  directed  to  no  South
Carolina case that stands for  the  proposition  that  the  reliance  of  an
insurance agent, particularly where intentional  misrepresentations  may  be
involved, is to be measured by any standard other than that applied  to  any
other litigant.  In South Carolina, as a general rule, “issues  of  reliance
and its reasonableness . . . are preeminently factual issues for  the  trier
of facts.”  Unlimited Servs., Inc. v.  Macklen  Enters.,  Inc.,  401  S.E.2d
153, 155 (S.C. 1991).
      Indiana similarly requires reasonable reliance as an  element  of  any
recovery for alleged misrepresentation or failure  to  notify.   See,  e.g.,
Eby v. York-Div., Borg-Warner, 455 N.E.2d 623, 628-29 (Ind. Ct. App.  1983).
 As a general proposition under the law of both states,  the  reasonableness
of the plaintiffs’ reliance is usually a question for  the  trier  of  fact.
Unlimited Servs., 401 S.E.2d at 155; Biberstine  v.  N.Y.  Blower  Co.,  625
N.E.2d 1308, 1316 (Ind. Ct. App. 1993).  On  the  other  hand,  both  states
recognize that the reasonableness of reliance can in some  circumstances  be
determined as a matter of  law.   Biberstine,  625  N.E.2d  at  1316  (“When
confronted with representations which are ‘simply not the stuff  that  fraud
is made of,’” a  court  may  find  as  a  matter  of  law  either  that  the
representations are not actionable or that the plaintiff  had  no  right  to
rely as a matter of law. (quoting Plymale v. Upright, 419  N.E.2d  756,  763
(Ind. Ct. App. 1981))); Nine v. Henderson, 437 S.E.2d  182,  184  (S.C.  Ct.
App. 1993) (summary judgment appropriate against purchaser of home on  claim
that defendant misrepresented extent of  termite  problem  at  home  because
purchaser himself discovered additional termite  damage  prior  to  closing,
was provided at closing with expert reports  regarding  the  possibility  of
hidden termite damage, and chose not to postpone  closing  until  additional
tests could be performed).  The  issue  on  this  appeal  from  a  grant  of
summary judgment is whether the inflexible rule of law of  either  state  is
that a licensed agent may never rely on a general agent’s or  the  insurer’s
affirmative misrepresentations if  they  are  contradicted  or  called  into
question by an informed reading of the policy or  other  documentation.   We
think there are circumstances where that  reliance  may  be  reasonable  and
therefore conclude whether or not any such circumstances apply here  is  for
the trier of fact.  Therefore,  summary  judgment  on  this  basis  was  not
appropriate.
                         Count II: Common Law Fraud
      Allegations  of  common  law  fraud  assert  a  tort.    Indiana   has
traditionally followed lex loci delicti in its choice  of  law  as  to  tort
actions.  This is said to apply the substantive law of the state  where  the
tort was “committed.”  Hubbard Mfg. Co., Inc. v. Greeson, 515  N.E.2d  1071,
1073 (Ind. 1987).  In turn, a tort is deemed “to have been committed in  the
state where the last event  necessary  to  make  an  actor  liable  for  the
alleged wrong takes place.”  Id.  Here,  if  the  plaintiffs  have  a  valid
claim, the reliance and consequent damage incurred by the plaintiffs is  the
“last event” necessary to establish the elements of misrepresentation  of  a
material fact reasonably relied upon.  We think that South  Carolina  has  a
sufficient relationship to this  action  to  satisfy  traditional  lex  loci
delicti under Hubbard.  Even if this were not the case, as in  Hubbard,  and
some of the factors enunciated in the Restatement (Second)  of  Conflict  of
Laws are considered,  or  other  reasonable  choice  of  law  doctrines  are
applied, the result is the same.[3]  Accordingly,  we  conclude  that  South
Carolina law applies to this count as well.  As explained  with  respect  to
Count I, in South  Carolina,  “[f]raud  based  on  a  misrepresentation  and
negligent misrepresentation both include a requirement  that  the  plaintiff
justifiably relied on the representation made by the  defendant.”   West  v.
Gladney, 533 S.E.2d 334, 338 (S.C. Ct. App. 2000).   However,  as  we  noted
above, the trial court erred when it found the reliance  of  the  plaintiffs
to be unreasonable as a matter of law.  Therefore, summary judgment on  this
count was not appropriate.
               Counts III, IV, and V: Indiana Statutory Claims
      Counts III-V  of  the  plaintiffs’  complaint  are  based  on  Indiana
statutory causes  of  action.   Specifically,  the  plaintiffs  seek  treble
damages pursuant to the Crime Victims Relief  Act,  Ind.  Code  §  34-24-3-1
(1998), and damages for violations of  sections  35-43-5-3(a)(9)  (statutory
fraud),   35-43-5-3(a)(2)   (statutory   deception),   and   35-43-1-2(a)(2)
(criminal mischief).  The trial court granted summary judgment for GARCO  on
these counts because (1) the  plaintiffs’  claims  were  governed  by  South
Carolina law, and therefore the Indiana statutes were  not  applicable,  and
(2) these claims, as well as the plaintiffs’ claim for negligence, were  not
preserved by Indiana’s Journey’s Account statute and were  therefore  barred
by the statute of limitations.  As to the second contention, we  agree  with
the Court of Appeals  that  the  claims  were  preserved  by  the  Journey’s
Account statute and summarily affirm the Court of  Appeals  on  that  issue.
Allen v. Great Am. Reserve Ins. Co., 739 N.E.2d 1080, 1085  (Ind.  Ct.  App.
2000).  As to the first contention, the question is not  which  state’s  law
applies to these claims.  There is no doubt that Indiana law  applies  to  a
claim under an Indiana statute.  Rather, the issue is whether  the  statutes
apply to  the  facts  alleged  to  support  these  claims,  given  that  the
allegations are based in significant part on acts that occurred  outside  of
Indiana.
      In Count III of their complaint, the plaintiffs allege that GARCO  and
Guffey provided them with “various  literature,  brochures,  handouts,  work
sheets and  prepared  sales  presentations,  indicating  that  the  Flex  II
annuities bore  no  Front  End  Load,”  and  that  the  provision  of  these
materials constituted the  dissemination  to  the  public  of  a  misleading
advertisement in violation  of  section  35-43-5-3(a)(9).   This  subsection
prohibits the dissemination to the public  of  “an  advertisement  that  the
person knows is false, misleading, or deceptive, with intent to promote  the
purchase or sale of property or the acceptance of employment.”  I.C.  §  35-
43-5-3(a)(9).  In Count IV, the plaintiffs allege that the provision of  the
same materials by GARCO and Guffey  amounted  to  the  making  of  false  or
misleading  written  statements  with  the  intent  to  obtain  property  in
violation of section 35-43-5-3(a)(2).  Finally, in Count  V  the  plaintiffs
allege that the actions of  GARCO  and  Guffey  knowingly  or  intentionally
caused the plaintiffs to suffer pecuniary loss by deception in violation  of
section 35-43-1-2(a)(2).
      Accepting these allegations as we must for summary judgment  purposes,
it is clear that if these Indiana statutes were violated by GARCO, the  acts
taken by GARCO to violate the statutes—the dissemination  of  the  allegedly
fraudulent materials, the making of allegedly false  or  misleading  written
statements, and deception that knowingly or intentionally  caused  pecuniary
loss—all occurred in Indiana.  We do  not  think  the  resulting  “pecuniary
loss” needs to occur in Indiana for the statutes to apply.  Section 35-41-1-
1(b) of the Indiana Code sets forth the circumstances under which  a  person
may be convicted under Indiana law.  The most common of these  circumstances
is when “either the conduct that is an element of the  offense,  the  result
that is an element, or both, occur in  Indiana.”   I.C.  §  35-41-1-1(b)(1).
Because the claims assert that GARCO’s conduct took  place  in  this  state,
these Indiana statutes are applicable  to  the  plaintiffs’  claims  against
GARCO.  It was error to grant summary judgment for GARCO on the  ground  the
statutes were inapplicable.
      Unlike GARCO, which operates in Indiana, if Guffey violated  the  same
statutes—by the dissemination of the  allegedly  fraudulent  materials,  the
making of allegedly  false  or  misleading  written  statements,  and/or  by
deception that knowingly or intentionally caused pecuniary loss—it was  only
by acts in South Carolina or a few other southern states, but  not  Indiana.
With regard to Guffey, both the conduct and the  result  of  any  wrongdoing
occurred outside of Indiana.  Thus, the Indiana statutes in question do  not
apply and do not support plaintiffs’ claims against Guffey.   We  note  that
the same would be true under an accomplice theory of liability, for even  if
Guffey aided and abetted GARCO  in  criminal  activity  in  Indiana,  Guffey
himself would be liable under the  criminal  law  of  Indiana  only  if  his
conduct occurred  in  Indiana.   As  Indiana  Code  section  35-41-1-1(b)(4)
points out, accomplice liability is available only where “conduct  occurring
in Indiana establishes complicity in the commission of . . . an  offense  in
another jurisdiction that also  is  an  offense  under  Indiana  law.”   The
plaintiffs have not alleged that Guffey and GARCO conspired to  violate  the
statutes, and that issue is not  preserved.   Guffey  was  properly  granted
summary judgment as to Counts III, IV, and V.
               Count VI: North Carolina Unfair Trade Practices
      In this count, the plaintiffs seek  damages  against  both  GARCO  and
Guffey under North Carolina’s general unfair trade practices  provisions  as
well as under the unfair trade  practices  provisions  of  North  Carolina’s
insurance laws.  Unlike the other plaintiffs, Allen is a resident  of  North
Carolina and sold Flex II annuities in that state.   The  Supreme  Court  of
North Carolina has held that there is no private cause of action for  unfair
trade practices under the insurance laws of North Carolina.  Pearce  v.  Am.
Defender Life Ins. Co., 343 S.E.2d 174, 179 (N.C. 1986).  Rather, a  private
remedy is available, if at all, only through an  action  under  the  state’s
general unfair trade  practices  provisions.   Id.   Non-consumer  insurance
relationships are subject to pervasive and  intricate  regulation  in  North
Carolina, and are therefore beyond the scope of the state’s  general  unfair
trade practices provisions.  It appears unlikely that the  plaintiffs  could
have maintained an  action  under  North  Carolina’s  general  unfair  trade
practices law.  The primary  purpose  of  North  Carolina’s  general  unfair
trade practices provisions is to  protect  consumers,  although  in  limited
situations businesses are protected as well.  Dalton  v.  Camp,  548  S.E.2d
704, 710 (N.C. 2001).  The plaintiffs certainly are not  consumers  per  se.
They were engaged in selling,  not  purchasing,  these  insurance  products.
The situations in  which  the  courts  of  North  Carolina  have  held  that
business activities are beyond the scope of these statutory provisions  have
often been those wherein the party allegedly violating  the  provisions  was
already  subject  to  “pervasive  and  intricate  regulation”  under   other
statutory schemes.  Skinner v. E.F. Hutton & Co., Inc., 333 S.E.2d 236,  241
(N.C. 1985) (securities transactions beyond scope of  the  provisions);  see
also Bache Halsey Stuart, Inc. v. Hunsucker, 248 S.E.2d 567, 570  (N.C.  Ct.
App. 1978)  (commodities  transactions  beyond  scope  of  the  provisions).
Accordingly, summary judgment  for  GARCO  and  Guffey  on  this  count  was
correctly granted.
              Count VII: South Carolina Unfair Trade Practices
      The plaintiffs seek damages against both GARCO and Guffey under  South
Carolina’s general unfair trade practices provisions as well as under  South
Carolina’s Insurance Trade Practices Act.  In South  Carolina,  “all  unfair
trade practices regarding  the  insurance  business  are  regulated  by  the
Insurance Trade Practices Act,” and are therefore exempt from  the  coverage
of the state’s general unfair trade practices  provisions.   Trs.  of  Grace
Reformed Episcopal Church v. Charleston Ins. Co., 868 F. Supp.  128,  130-31
(D.S.C. 1994).  Relying upon the general purposes of the insurance  laws  of
South Carolina,  as  well  as  upon  the  Insurance  Commissioner  of  South
Carolina’s statutory authority to enforce its provisions,  the  trial  court
determined that the  Insurance  Trade  Practices  Act  does  not  support  a
private cause of action.  Although this Court  is  aware  of  no  case  that
deals explicitly with that issue, a recent decision of the Court of  Appeals
of South Carolina at least implicitly supports a  private  cause  of  action
for violations of the Insurance Trade Practices Act.  In Cox v.  Woodmen  of
the World Ins. Co., 556 S.E.2d 397 (S.C. Ct. App. 2001), the court,  without
comment, allowed a private cause of action against  out-of-state  defendants
under the act.  Nor does the statute granting enforcement authority  to  the
Commissioner explicitly preclude a private cause of action.  S.C. Code  Ann.
§ 38-3-110 (Law Co-op. 2000).  And the Supreme Court of South  Carolina  has
recognized a private cause of action for wrongful termination of  an  agency
agreement under section 38-37-940(2) of the state’s insurance  laws.   Dixon
v. Nationwide Mut. Ins. Co., 316 S.E.2d 376, 377  (S.C.  1984).   For  these
reasons, we conclude that the Insurance Trade Practices Act does  support  a
private cause of action.  The presence or absence of reasonable reliance  by
the plaintiffs presents genuine issues of material fact as  to  whether  the
actions of GARCO and/or Guffey constituted unfair  and  deceptive  acts  and
practices.   Accordingly,  summary  judgment   on   this   count   was   not
appropriate.
                        Count VIII: Civil Conspiracy
      Allegations of conspiracy sound in tort.  For the  reasons  applicable
to the plaintiffs’ fraud claim, South Carolina law  governs  this  claim  as
well.  Unlike criminal conspiracy, “[t]he gist of a civil conspiracy is  not
the unlawful agreement, but the damage resulting from that  agreement.”   16
Am. Jur. 2d, Conspiracy, § 53 at 279 (1998).  For that  reason,  we  believe
the place where the injury occurred is both the  “last  event”  and  also  a
significant contact.  To prevail on a claim of  civil  conspiracy  in  South
Carolina, one must prove that “a combination of two or more  parties  joined
for the purpose of  injuring  the  plaintiff  thereby  causing  him  special
damage.”  Future Group, II v. Nationsbank, 478 S.E.2d 45,  50  (S.C.  1996).
As the trial court correctly noted, the plaintiffs  have  failed  to  allege
that Guffey and GARCO joined for the purpose  of  injuring  the  plaintiffs.
Accordingly, judgment for Guffey and GARCO on this count was appropriate.
        Count IX: Tortious Interference with a Business Relationship
      In this count, the plaintiffs allege that Guffey interfered  with  the
business relationship  the  plaintiffs  had  with  GARCO  and  with  annuity
holders who were customers of the plaintiffs by moving some of the  accounts
the plaintiffs had placed with GARCO to a different life insurance  company.
 The plaintiffs claim that they were damaged by this  transfer.   Plaintiffs
have not alleged, however, that GARCO was in any  way  responsible  for  the
transfer.  But even if the movement of  the  accounts  is  conceived  to  be
outside  South  Carolina  (where  the  owners  of  the  accounts  presumably
reside), its effect on the plaintiffs was felt in that state.   It  is  less
clear what lex loci delicti would require for such a tort, but the  business
relationship between the plaintiffs and  their  customers  was  centered  in
South Carolina, and its disruption, to the extent it  has  a  “locus,”  took
place there.   Even  under  the  Restatement,  as  elaborated  above,  South
Carolina law applies to this claim against Guffey.  In  South  Carolina,  to
establish an action for intentional interference with a  contract—the  rough
equivalent  of  tortious  interference  with  a  business   relationship—the
plaintiff  must  prove:  (1)  the  existence  of  the  contract;   (2)   the
wrongdoer’s knowledge of the contract; (3) the  intentional  procurement  of
its breach; (4) the absence of justification;  and  (5)  resulting  damages.
Todd v. S.C. Farm Bureau Mut. Ins. Co., 336 S.E.2d  472,  473  (S.C.  1985).
Because genuine issues of material fact exist as to whether Guffey’s  moving
the accounts constituted an unjustified intentional procurement of a  breach
of the contract between the plaintiffs and GARCO that  resulted  in  damages
to the plaintiffs, summary  judgment  for  Guffey  on  this  count  was  not
appropriate.  Summary  judgment  for  GARCO  on  this  count,  however,  was
appropriate because the plaintiffs have not alleged that GARCO  was  in  any
way responsible for the transfer.
                             Count X: Negligence
      This count alleges that Guffey was directly negligent in preparing and
presenting  materials  to  the  plaintiffs  that  failed  to  disclose   the
existence of the Flex II’s front-end load.   Because  Guffey  was  allegedly
acting within the scope of his agency relationship,  the  count  also  seeks
damages against GARCO on a theory of vicarious liability.  Because  this  is
a tort claim, South Carolina law applies to the  claim  against  Guffey  for
the reasons explained under Count II.  As  to  GARCO,  section  174  of  the
Restatement provides that  when  questions  of  vicarious  liability  arise,
“[t]he law selected by application of the rule of § 145  determines  whether
one person is liable for the tort of another person.”  Restatement  (Second)
of Conflict of Laws § 174 (1971).  Thus, South Carolina law applies  to  the
claim against GARCO as well.
      Before the plaintiffs can establish vicarious liability, however, they
must prove that Guffey was negligent.  To do so under  South  Carolina  law,
the plaintiffs must show: (1) a duty of care owed by the  defendant  to  the
plaintiff; (2) breach of that duty;  and  (3)  damages  resulting  from  the
breach. Arthurs v. Aiken County, 551 S.E.2d 579, 582 (S.C. 2001).  In  South
Carolina,  a  claim  for  negligence  will  be  barred  on   principles   of
comparative fault only if the plaintiff’s negligence is  greater  than  that
of the defendant.  Nelson v. Concrete Supply Co., 399 S.E.2d 783, 784  (S.C.
1991).  If there is more than one defendant, the plaintiff’s  negligence  is
compared to  the  combined  negligence  of  all  the  defendants.   Id.   As
explained above, the plaintiffs acknowledge that they never  read  the  Flex
II policies.  As such they appear to  bear  some  responsibility  for  their
failure to discern the  existence  of  the  front-end  load.   However,  the
relative fault of the parties is a matter for the trier  of  fact.   Because
genuine issues of material fact exist as to  the  extent  to  which  Guffey,
GARCO, and/or the plaintiffs acted negligently, summary judgment  for  GARCO
and Guffey on this count was not appropriate.
                          Count XI: Indemnification
      The plaintiffs  claim  that  under  common  law  principles  they  are
entitled to indemnification by GARCO and Guffey for all the costs they  have
incurred as a result of GARCO’s  and  Guffey’s  allegedly  fraudulent  acts.
The trial court granted summary judgment for GARCO, but not Guffey, on  this
count.  Thus, the plaintiffs’ claim against  Guffey  remains  in  the  trial
court.  As to GARCO, this count is based on the agency relationship  between
GARCO and the plaintiffs.  Although a provision of the contract between  the
parties provides for the indemnification of GARCO by the  plaintiffs,  there
is  no  provision  for  indemnification  of   the   plaintiffs   by   GARCO.
Accordingly, to the extent there is a claim for indemnity, it  arises  as  a
matter of law from  the  relationship  of  the  parties  and  not  from  the
contract.  For essentially the same reasons applied in Count  I  to  Guffey,
South Carolina law applies to this claim against GARCO.
      South Carolina  has  “long  recognized”  the  principle  of  equitable
indemnification.  Town of Winnsboro v. Wiedeman-Singleton, Inc., 414  S.E.2d
118, 120 (S.C. 1992).  Moreover, it has been many years  since  the  Supreme
Court of South Carolina first  announced  that  “[t]he  principal  impliedly
agrees to indemnify  his  agent  against  liability  for  loss  incurred  in
consequence of acts done in pursuance of the agency,” Gwathmey  v.  Burgiss,
82 S.E. 394, 396-97 (S.C. 1914), a sentiment shared by sections 439 and  458
of the Restatement (Second) of Agency.  Nonetheless, South Carolina  actions
for  equitable  indemnification,  like  those  in  most  jurisdictions,  are
subject to the proviso that no personal  negligence  of  the  plaintiff  may
have  contributed  to  the   injury   for   which   that   plaintiff   seeks
indemnification.  Atl. Coast Line R.R. Co. v.  Whetstone,  132  S.E.2d  172,
176 (S.C. 1963).  Whether the plaintiffs bear some responsibility for  their
failure to discern the existence of the front-end load is for the  trier  of
fact.  Accordingly, summary  judgment  for  GARCO  on  this  count  was  not
appropriate.
                            Count XII: Accounting
      The trial court denied summary judgment to GARCO on this count, so the
plaintiffs’ claim against GARCO remains in the trial court.  As  to  Guffey,
the trial court granted summary judgment in his favor, finding that  he  was
not a proper party against whom to  seek  an  accounting.   In  their  brief
before the Court of Appeals, the plaintiffs concede as much, and  we  agree.
As to Guffey, the judgment of the trial court is affirmed.
                                 Conclusion
      We affirm in part, reverse in part, and  remand  this  action  to  the
trial court for proceedings  consistent  with  this  opinion.   In  sum,  we
conclude that summary  judgment  for  defendant  GARCO  was  appropriate  on
counts VI, VIII, and IX of the  plaintiffs’  complaint,  and  for  defendant
Guffey on counts III-VI, VIII, and XII.  As to defendant GARCO, counts  I-V,
VII, X, XI, and XII remain viable at the trial court level.  As  to  Guffey,
counts I, II, VII, and IX-XI remain  viable.   This  case  is  remanded  for
further proceedings consistent with this opinion.

      SHEPARD, C.J., and DICKSON, SULLIVAN, and RUCKER, JJ., concur.
-----------------------
[1] Plaintiff Thomas G. Allen is a resident of North  Carolina.   Plaintiffs
Joe M. Gilstrap, Thomas G. Grier, James H. Nelson, Donald K. Owens,  Richard
K. Patierno, Richard K. Patierno, Jr., Silvine  M.  Patierno,  and  John  M.
Stone are residents of South Carolina.
[2] This is not a claim that termination of the agency breached  an  implied
covenant of good faith.  Such a claim in Indiana would face case law to  the
effect that employment at will agreements carry no  such  implied  covenant.
See, e.g., N. Ind. Pub. Serv. Co. v. Dabagia, 721 N.E.2d 294, 300 (Ind.  Ct.
App. 1999), trans. denied.  If anything, an  independent  agent  would  seem
less entitled to special treatment than an employee who,  like  a  consumer,
may have little practical ability to negotiate the terms of the agreement.
[3] For an interesting display of varying points of view as to where  choice
of law stands today and where it should go,  see  Symposium:  Preparing  for
the Next Century—A New Restatement of Conflicts? 75 Ind.  L.J.  399  (2000).
Under  a  “state  interests”  analysis,  South  Carolina  clearly  has   the
strongest interest in maintaining the integrity of  its  insurance  markets.
To the extent choice of law should be informed  by  the  result  the  choice
produces, we perceive no clear effect on the result  in  this  case,  though
one  may  unfold  as  the  facts  develop.   South  Carolina  also   emerges
victorious under Section 148 of the  Restatement  (Second)  of  Conflict  of
Laws, which specifically addresses claims of  fraud  and  misrepresentation.
According  to  it,  where,   as   in   the   present   case,   the   alleged
misrepresentations and the reliance upon them  occur  in  different  states,
the following factors must be considered to determine which  state  has  the
most significant relationship to the occurrence and  the  parties:  (a)  the
place,  or  places,  where  the  plaintiff  acted  in  reliance   upon   the
defendant’s representations; (b) the place where the plaintiff received  the
representations;   (c)   the   place   where   the   defendant   made    the
representations;  (d)  the  domicile,  residence,  nationality,   place   of
incorporation and place of business of the parties; (e) the  place  where  a
tangible thing which is the subject of the transaction between  the  parties
was situated at the time; and (f)  the  place  where  the  plaintiff  is  to
render performance under a contract which he has been induced  to  enter  by
the  false  representations  of  the  defendant.   Restatement  (Second)  of
Conflict of Laws § 148 (1971).  With regard to  GARCO,  contacts  (a),  (b),
and (f) clearly point  to  South  Carolina,  and  only  contact  (c)  points
unequivocally to Indiana.  Contact (d) is evenly divided  between  the  two,
and contact (e) is largely irrelevant to  this  action.   As  comment  j  to
section 148 points out, when contacts (a), (b), and (f) are all in the  same
state, that state will “usually be the state of the  applicable  law.”   Id.
at cmt. j.  With regard to Guffey, all the section 148 factors  support  the
application of South Carolina law.