By: AgencyEquity.com
A producer gave his independent insurance agency notice that he intended to resign. The agency terminated him almost immediately, and the two sides ended up facing off in court.
The agency was a subsidiary of a South Dakota association for farmers. It hired producers as independent contractors. In 2010, they signed a contract with the producer, authorizing him to act as an agent in a specific territory. They also entered into a contract for a “contract termination program.” This program promised him a contract termination benefit if his contract was terminated after 10 years of service and he was not terminated for cause.
After his first year, the agency began inviting him to join its annual trips for its top agents. The trips, a reward for exceptional production, were typically to tropical locations during the winter. He went on 13 of these trips.
One night during the 2022 trip, a manager for the North Dakota association’s agency targeted the producer. He “‘wrapped his arm around (the producer’s) neck, pulled him down off of the chair, and began taunting, … and using other cruel, foul language.’” The producer reported the incident, which he claimed ruined the trip for his wife and him, within minutes. However, the agency took no actions in response.
The couple attended the 2024 trip, as did one of the producer’s supervisors, a North Dakota sales director who happened to share the producer’s last name. One night at the hotel bar, the producer jokingly asked who was the best (person by that name) there. The sales director apparently did not find it funny. He “‘became irate, hostile, and aggressive towards’” the producer and physically threatened him.
The producer reported the incident to management after returning home and was told that they would investigate. After a month passed, he followed up with the manager who seemed surprised that he was serious about his complaint. Another manager advised him that pursuing the matter would be a waste of time. However, in January 2025 he reported it to an executive director who reported it to the chief executive officer. The CEO and another officer called him a few days later to hear his story.
A week later, the CEO called him and dismissed the incident as “locker room banter” that should not be a concern.
The next month, the producer and his wife met with the CEO and the other officer to voice their grievances and to tender his resignation. He offered to stay on beyond 30 days to ensure a smooth transition, and he offered to purchase his book of business.
Five days later, four managers arrived unannounced at his office and seized all his files and documents. They also cut off his access to his email account and the agency’s systems. Believing he had been terminated effective immediately, he began operating his own agency and notified his clients that he was no longer with the agency. He did not receive the contract termination benefit.
The agency sued him for breach of contract including the non-solicitation agreement. He countersued the agency for breach of contract and sued the sales director who threatened him, though that suit was eventually dropped. He sought to hold the agency liable for the director’s actions.
The judge declined to do so, finding that the director was not acting within the scope of his employment when he went on his tirade. He dismissed that claim. The dueling claims of breach of contract against both sides were not resolved in the November 17 decision and are still pending.
The judge’s opinion did tell the story behind these two episodes. The producer may have previously had interpersonal problems with these two men. Regardless, it appears that the agency did not handle these episodes well. They do not appear to have taken the producer’s reports seriously. This seems like an odd way to treat a producer who qualified for the winter trips 13 consecutive years. They may yet lose the breach of contract fight.
Agencies that want to avoid this type of litigation would do well to take human resources complaints seriously. Even if they eventually find no wrongdoing, an employee who feels respected is less likely to sue.
