401 F.Supp.3d 576
D. Md.2019Background
- Transamerica (two affiliated insurers) and Selman (broker/TPA) had multiple agreements governing TRICARE Supplement insurance: a 2002 ASMA, two 2010 agreements (ASA and Marketing Agreement) assigned to Selman in 2014, and a 2016 Amendment to the ASMA that added TRICARE accounts to Exhibit A.
- The Marketing Agreement contained an Exclusivity Clause granting Transamerica exclusive underwriting rights for Selman’s TRICARE payroll-plan business (subject to conditions) and a 180-day termination notice; the ASA contained a Confidentiality Clause protecting Transamerica’s proprietary information.
- Transamerica alleges Selman negotiated to move TRICARE Supplement business to Hartford and disclosed confidential information, breaching the Marketing Agreement’s exclusivity and the ASA’s confidentiality provisions; Transamerica sent a cease-and-desist that Selman ignored.
- Selman moved to dismiss under Rule 12(b)(6), arguing the 2016 Amendment to the ASMA effected a novation superseding and replacing the ASA and Marketing Agreement (and thus no breach claims lie).
- The district court reviewed the contracts and extrinsic allegations, found factual disputes and ambiguities about whether the Amendment extinguished the other agreements, and denied the motion to dismiss.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 2016 Amendment to the ASMA novated/superseded the ASA and Marketing Agreement | Amendment was intended only to update compensation rates and did not extinguish ASA/Marketing Agreement | Amendment (plus ASMA incorporation clause) and related 2014 agreements show intent to subsume/supplant the other contracts | Court: Not at motion-to-dismiss stage; ambiguity and disputed extrinsic facts preclude finding a novation now (motion denied) |
| Whether Selman breached the Marketing Agreement exclusivity by negotiating with Hartford | Selman’s negotiations and statement of intent to move business to Hartford violated exclusivity | If the ASA/Marketing Agreement were superseded, no breach; otherwise Selman acted under ASMA rights | Court: Complaint plausibly alleges breach; definite repudiation alleged — claim survives dismissal |
| Whether Selman breached the ASA confidentiality clause by sharing Transamerica’s proprietary information | Sharing Transamerica’s rate/experience/pricing during talks with Hartford violated confidentiality | Same novation/merger defense: confidentiality clause no longer applies if superseded | Court: Facts plausibly allege confidentiality breach; cannot resolve on 12(b)(6) due to disputed contract scope |
| Whether unjust enrichment claim is barred by existence of an express contract | Transamerica pleads unjust enrichment in the alternative because which contract governs is disputed | Selman: an express contract governs so quasi-contract claim barred | Court: Alternative pleading allowed at this stage given disputes; unjust enrichment claim survives for now |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must state a plausible claim)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (Twombly standard applies to all civil actions)
- Erie R.R. v. Tompkins, 304 U.S. 64 (1938) (federal courts apply state substantive law in diversity cases)
- Chew v. DeVries, 240 Md. 216 (Md. 1965) (later contract may supersede earlier one when covering same subject so completely they cannot coexist)
- I. W. Berman Properties v. Porter Bros., 276 Md. 1 (Md. 1975) (novation requires clear intent of all parties to extinguish prior obligation)