795 F.3d 864
8th Cir.2015Background
- Falco was a Farmers insurance agent from 1990 until Farmers terminated his Agent Appointment Agreement in June 2011. The Agreement provided for a post-termination Contract Value calculated by formula.
- In 2006 Falco obtained a business loan from Farmers Insurance Group Federal Credit Union (Credit Union) and, under the Loan Agreement, assigned his Agent Agreement receivables (including Contract Value) to the Credit Union as security and granted the Credit Union a power of attorney to demand payments and tender his resignation on default.
- Falco defaulted on the loan in early 2010 and filed Chapter 7 bankruptcy in March 2010; his personal liability on the loan was discharged in February 2011. The Credit Union nonetheless exercised its power of attorney to terminate the Agent Agreement, and Farmers calculated and paid out the Contract Value—paying the Credit Union first and the remainder to Falco.
- Falco sued Farmers, Crossetti (an agency manager), and the Credit Union in state court asserting bankruptcy-law violations (including §524), tortious interference, breach of contract, breach of fiduciary duty, and civil conspiracy. The case was removed to federal court and Falco amended the complaint once.
- The district court granted summary judgment to Farmers and Crossetti on all claims and later granted summary judgment to the Credit Union on the remaining claims; on appeal Falco chiefly argued the Credit Union was a fiduciary (via the power of attorney) and breached duties, rendering its actions and the Loan Agreement unenforceable.
- The Eighth Circuit affirmed, declining to consider Falco’s breach-of-fiduciary-duty and public-policy arguments because they were not pleaded in the operative complaint or litigated below.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Credit Union’s lien/rights to collect Contract Value were extinguished by Falco’s bankruptcy discharge | Falco: discharge eliminated enforcement of the loan and secured rights; Credit Union could not use POA to terminate the Agency | Credit Union/Farmers: lien survived bankruptcy discharge; security interest and POA enforcement were valid | Held: Lien and secured interest survived discharge; summary judgment for defendants upheld |
| Whether Credit Union tortiously interfered with the Agent Agreement by tendering resignation | Falco: Credit Union improperly terminated the Agency for its own benefit | Defendants: Credit Union had contractual right to terminate under the Loan Agreement; Farmers/Crossetti were parties to the Agency Agreement so no improper interference | Held: No tortious interference; summary judgment for defendants |
| Whether Farmers breached the Agent Agreement in terminating it | Falco: termination breached contract rights to Contract Value | Farmers: termination was by valid resignation/consent under contract and secured assignment; no breach | Held: No breach of contract; summary judgment for Farmers |
| Whether civil conspiracy claim survives absent an underlying wrongful act | Falco: defendants conspired in wrongful termination/payment scheme | Defendants: no underlying wrongful or intentional tort established | Held: Civil conspiracy fails for lack of underlying wrongful act; summary judgment for defendants |
Key Cases Cited
- Brooks v. Roy, 776 F.3d 957 (8th Cir.) (standard for summary judgment review)
- Thomas v. Corwin, 483 F.3d 516 (8th Cir.) (mere allegations insufficient to defeat summary judgment)
- Campbell v. Davol, Inc., 620 F.3d 887 (8th Cir.) (issues not raised below generally not considered on appeal)
- Bearden v. Lemon, 475 F.3d 926 (8th Cir.) (appellate courts normally decline to consider issues district court did not rule upon)
- Jasperson v. Purolator Courier Corp., 765 F.2d 736 (8th Cir.) (issues not raised, briefed, or argued receive no appellate consideration)
- Northern States Power Co. v. Fed. Transit Admin., 358 F.3d 1050 (8th Cir.) (parties may not manufacture new claims late in litigation to avoid summary judgment)