Chicago Business Litigation Lawyer Blog
Where an insurance agent’s contract with Allstate was terminated for failure to meet performance goals, and the insurance company subsequently denied the agent’s request to transfer the book of business to the agent’s husband, instead selling to the wife of the agent’s former supervisor, the trial court erred in dismissing agent’s claims for breach of contract and breach of the covenant of good faith and fair dealing.
In 2004, Ray McKnight, a territory manager for Allstate Insurance began recruiting Mary Slay to become an exclusive Allstate insurance agent in Lake City, Florida. Ray offered Mary the opportunity to purchase an existing book of business from a retiring agent, Rick Bringger. Ray, however, failed to disclose that he had a conflict of interest, as his wife, Faye McKnight, wanted to purchase an Allstate agent’s book of business and open up her own office in Lake City in direct competition with Mary. Ray also failed to disclose that Allstate was in the process of canceling approximately 30% of the policies in Bringger’s book of business and that Allstate had begun the process of non-renewing all mobile home policies, commercial policies, and landlord and rental policies in Florida.
In reliance on Ray’s representations, Mary retired from her job, obtained an $800,000 loan to purchase Bringger’s book of business, and signed an exclusive agency agreement with Allstate. Mary worked as an exclusive agent reporting directly to Ray, and she subsequently grew her book of business. A few months later, Ray’s wife Faye opened an exclusive Allstate agency, competing directly with Mary’s agency. Mary’s business was also harmed by the subsequent announcement by Allstate that it would no longer write commercial insurance policies in Florida and that it would not renew 95,000 homeowner insurance policies. Allstate also implemented substantial price increases, and in 2008 had its license to write new policies suspended by the Florida Insurance Commission due to its failure to comply with a subpoena. Continue reading ›