United States District Court, D. Colorado
R. BROOKE JACKSON, District Judge.
Before the Court is American Family Mutual, American Family Life, and American Standard's [hereinafter "defendants'] motion to dismiss Claim Three of plaintiff's amended complaint alleging negligent misrepresentation. [ECF No. 22.] The Court has jurisdiction pursuant to 28 U.S.C. §§ 1332, 1441, and 1446. The motion has been fully briefed by the parties and is ripe for review.
I. Factual Background
David Bartch, the plaintiff in this case, is a former insurance agent who sold policies on behalf of the defendants. Mr. Bartch first began working for the defendants in 1978, was appointed as a sales trainer in 1981, and returned to working as an agent in 1983. [ECF No. 20 at 2.] In 2007, Mr. Bartch relocated his family and his insurance agency to Greenwood Village, Colorado. He claims that one of American Family's managers, George Saponas, encouraged this move by promising that Mr. Bartch would receive a number of insurance policies at his new Greenwood Village location sufficient to replace any policies lost as a result of the move. [ECF No. 20 at 5.] The defendants' also promised, according to Mr. Bartch, to allow him to review the policies before transfer in order to verify that he could service them, and that they would generate sufficient revenue. Id. at 6. Apparently defendants failed to deliver on any of these assurances, and Mr. Bartch ended up stuck in Greenwood Village with a paltry number of policies. Id. Mr. Bartch's relationship with defendants ended in 2012, and this lawsuit followed.
As a part of his association with the defendants, Mr. Bartch entered into several written agreements. The latest agreement, and apparently the one that was in effect at the time of Mr. Bartch's move to Greenwood Village, is the so-called 1993 Agreement. This agreement established Mr. Bartch's role as an independent contractor of the defendants' and set out the parameters of that relationship.
Mr. Bartch brings claims related to various alleged breaches of that agreement, but for purposes of this motion to dismiss, only a few sections are arguably relevant. Perhaps it goes without saying, but the fact that Mr. Bartch signed any agreement at all is what gave rise to his ability to market American Family policies in the first place. The parties also identify several individual sections of the 1993 Agreement that are pertinent to the motion to dismiss.
First, Section 6.e, "Assigned Policies, " states that
[t]he renewal service fee will be withheld for twelve months following the date of the assignment of any Mutual policy and the renewal service fee will be withheld for a period of six months on any Standard policy assigned to you. There will be no service fees paid on assigned Life policies. The Company may reassign any policy assigned to you at any time.
[ECF No. 32, Ex. A at 4 (AMFAM 006755).]
Second, Section 6.w, "Partial Assignment, " explains the circumstances under which Mr. Bartch would be paid if he and defendants "agree[d] to reassign to another agent, a Mutual or Standard policy for which [Mr. Bartch] received new business commission...." Id. at 8 (AMFAM 006759). Third and finally, the notes from the Agent Compensation Schedule explain how reassigned policies will be counted for compensation purposes. Id. at 14 (AMFAM 006765).
The parties have not identified any provision of the agreement explaining whether defendants have an obligation to reassign policies for an agent who is relocating, how the defendants will determine whether to transfer policies, or what obligations defendant incurs after it agrees to transfer policies. Nor can the Court, after examining the agreement, find any such provision.
On July 2, 2013 Mr. Bartch filed a complaint in the Arapahoe County District Court. Defendants filed a notice of removal on July 19, 2013 under 28 U.S.C. §§ 1332, 1441, and 1446. Mr. Bartch's Second and Fourth Claims were dismissed without prejudice as moot at a September 30, 2013 scheduling conference. [ECF No. 15 at 2.] With leave from the Court, he then filed an amended complaint on November 21, 2013. [ECF No. 20.] Mr. Bartch eliminated some claims and revised others, but the important issue in this motion to dismiss is the new Third Claim for Relief that asserts negligent misrepresentation causing financial loss. American Family moved to dismiss this claim as being barred by the economic loss rule. [ECF No. 22.]
a. Standard of ...