LIPPITT v. FARMERS INSURANCE EXCHANGE

LIPPITT v. FARMERS INSURANCE EXCHANGE
2010 OK CIV APP 48
233 P.3d 799
Case Number: 106229
Decided: 10/02/2009
Mandate Issued: 04/29/2010
DIVISION II
THE COURT OF CIVIL APPEALS OF THE STATE OF OKLAHOMA, DIVISION II

MICHAEL W. LIPPITT, Plaintiff/Appellee,
v.
FARMERS INSURANCE EXCHANGE, TRUCK INSURANCE EXCHANGE, FIRE INSURANCE EXCHANGE, MID-CENTURY INSURANCE COMPANY, FARMERS NEW WORLD LIFE INSURANCE COMPANY and FARMERS INSURANCE COMPANY, Defendants/Appellants.

APPEAL FROM THE DISTRICT COURT OF TULSA COUNTY, OKLAHOMA

HONORABLE DAMAN H. CANTRELL, TRIAL JUDGE

REVERSED

James P. McCann, Jon E. Brightmire, DOERNER, SAUNDERS, DANIEL & ANDERSON, L.L.P., Tulsa, Oklahoma, for Plaintiff/Appellee
Randall J. Snapp, Brooke S. Murphy, Amanda L. Maxfield Green, CROWE & DUNLEVY, Tulsa and Oklahoma City, Oklahoma, for Defendants/Appellants

DEBORAH B. BARNES, PRESIDING JUDGE:

¶1 Farmers Insurance Exchange, Truck Insurance Exchange, Fire Insurance Exchange, Mid-Century Insurance Company, and Farmers New World Life Insurance Company (collectively, Farmers)1 appeal the September 22, 2008 Order Granting Preliminary Injunction preventing Farmers from terminating its contract with Michael W. Lippitt (Lippitt) while the case proceeds on the merits.

FACTS AND PROCEDURAL BACKGROUND

¶2 Prior to entering into the contract at issue in this case, Lippitt was an insurance agent for Farmers. After a few years of sales, Farmers approached Lippitt about becoming a district manager. In September of 1966, Lippitt and Farmers entered into a District Manager's Appointment Agreement for Farmers District 08-04, a district composed of a number of rural counties in Northeast Oklahoma. In July of 1967, Lippitt and Farmers entered into a second District Manager's Appointment Agreement (the DMAA) for the same area. The DMAA superseded the 1966 agreement and is the contract at issue in this case. Lippitt's relationship with Farmers under the DMAA has been maintained for over 40 years.

¶3 On January 17, 2008, Gregor Scott, the Oklahoma State Executive Director of Farmers (Scott), met with Lippitt regarding his recent performance and offered Lippitt the opportunity to retire. When Lippitt declined, Scott provided him with a prepared letter dated January 17, 2008. This letter stated that the DMAA would terminate in thirty days, on February 18, 2008, "in accordance with Paragraph D" of the DMAA. Paragraph D provides that "[t]his Agreement . . . may be cancelled without cause by either [Lippitt] or [Farmers] on 30 days written notice . . . ."

¶4 On February 14, 2008, Lippitt filed a Petition in Tulsa County District Court naming Farmers as the defendant. The Petition states a claim for breach of contract and seeks temporary, preliminary and permanent injunctions to prevent Farmers' termination of the DMAA. Along with the Petition, Lippitt filed an Application for Temporary Restraining Order and Preliminary Injunction. In a Minute Order filed on February 21, 2008, the trial court granted Lippitt's Application for Temporary Restraining Order to prevent termination of the DMAA until the trial court could decide the issue of whether a preliminary injunction should be granted.

¶5 On April 4, 2008, the trial court heard arguments and evidence, including testimony, on Lippitt's Application for Preliminary Injunction. At the close of this hearing, the trial court ordered the parties to file post-hearing briefs. On July 29, 2008, the trial court filed its Order Granting Plaintiff's Motion for Preliminary Injunction to prevent Farmers' termination of the DMAA while the case proceeds on the merits. On September 22, 2008, the July 29, 2008 Order was converted, without any substantive changes, into the Order Granting Preliminary Injunction, which states, in part:

The Court finds that the uniqueness of [Lippitt's] contract and the speculative nature of the potential damages as a result of [Lippitt's] 40 year history in the District, as well as marketplace uncertainties and other factors discussed at trial warrant granting injunctive relief.

From this Order Farmers appeals.

STANDARD OF REVIEW

¶6 An injunction is an "extraordinary remedy, and relief by this means is not to be lightly granted." Amoco Production Co. v. Lindley, 1980 OK 6, ¶ 50, 609 P.2d 733, 745. The applicant must show entitlement to injunctive relief by clear and convincing evidence. CoxCom, Inc. v. Oklahoma Secondary Schools Athletic Association, 2006 OK CIV APP 107, 143 P.3d 525. "The standard of review imposed for the issuance of a temporary injunction is whether the trial court abused its discretion or entered a decision against the evidence." Brown v. Oklahoma Secondary School Activities Association, 2005 OK 88, ¶ 11, 125 P.3d 1219, 1225. (Footnote omitted.) In reviewing the decision, the appellate court will consider and weigh the evidence presented to the district court. Board of Regents of the University of Oklahoma v. National Collegiate Athletic Association, 1977 OK 17, ¶ 3, 561 P.2d 499, 502.

ANALYSIS

¶7 Title 12 O.S.2001 § 1382 states, in pertinent part, that a temporary injunction is warranted:

When it appears, by the petition, that the plaintiff is entitled to the relief demanded, and such relief, or any part thereof, consists in restraining the commission or continuance of some act, the commission or continuance of which, during the litigation, would produce injury to the plaintiff; or when, during the litigation, it appears that the defendant is doing, or threatens, or is about to do or is procuring or suffering to be done, some act in violation of the plaintiff's rights respecting the subject of the action, and tending to render the judgment ineffectual, a temporary injunction may be granted to restrain such act.

Oklahoma courts consider four criteria in determining whether to grant a temporary injunction: "(1) the applicant's likelihood of success on the merits, (2) irreparable harm to the party seeking relief if injunctive relief is denied, (3) the relative effect on the interested parties, and (4) public policy concerns arising out of the issuance of injunctive relief." CoxCom, Inc., at ¶ 10, 143 P.3d at 528. (Citation omitted.) Courts focus most heavily upon the irreparable harm requirement. Id.2

¶8 Lippitt argues that he will suffer irreparable harm if a preliminary injunction is not granted. "[I]njury . . . is irreparable when it is incapable of being fully compensated for in damages or where the measure of damages is so speculative that it would be difficult if not impossible to correctly arrive at the amount of the damages." Hines v. Independent School District No. 50, Grant County, Oklahoma,

(1) Lost Commission Overrides

¶9 Lippitt's compensation as a district manager consists of commission overrides. These commission overrides, paid to Lippitt by the 25 agents in his district, are generated by (1) renewal premiums on existing policies (renewal premiums), and by (2) premiums on new policies (new policy premiums).

¶10 Commission overrides generated by renewal premiums have been found to be a "predictable, quantifiable amount of future income." Hall v. Farmers Insurance Exchange,

¶11 Lippitt argues that, unlike renewal premiums, his compensation based upon new policy premiums is subject to "the independent and unpredictable performance" of the 25 agents in his district. Damages based upon new policy premiums are, in addition, subject to unforeseeable marketplace fluctuations. Therefore, Lippitt argues, his damages based upon new policy premiums are too difficult or impossible to calculate and, absent an injunction, would result in irreparable harm.

¶12 Damages based upon loss of commission overrides for new policy premiums are analogous to loss of future profits addressed by the Oklahoma Supreme Court in Bokoshe Smokeless Coal Co. v. Bray,

It is a matter of common knowledge and experience that persons who have an established business calculate with reasonable certainty the income derived and to be derived from their business and make their plans to live accordingly. In fact, the credit structure of the country rests largely upon the certainty of income from established business in all lines of business and industry, and certainly the value of an established business is not such a matter of speculation, nor the prospect of profits therefrom so remote, as not to form a basis for recovery of damages for injury to it . . . .

Firestone Tire & Rubber Co. v. Sheets

¶13 Lippitt's district is an established one: it has existed under Lippitt's management for over 40 years and has the second highest number of policies in Oklahoma. Lippitt's agents, numbering around 25, are a "dedicated" and, in part, multigenerational workforce. As stated by Lippitt, "[I'm] very proud of the agents within my district. They're dedicated. . . . That's why we have an old culture, an old tenure. I have eight second-generation agents in my district, one third generation."

¶14 These tangible facts include the following: on at least two occasions Lippitt communicated to Scott his intention of completing 50 years of service before retiring.

¶15 Although Lippitt's compensation that stems from new policy premiums may be dependent upon numerous and uncertain contingencies, such as the independent and unpredictable future sales of the agents in his district, Lippitt's district is an established one and there exist sufficient tangible facts from which a reasonable calculation of damages can be made. In regard to new policy premiums, termination of the DMAA would not result in irreparable harm.

¶16 In regard to lost commission overrides in general, we find that, in the event Lippitt is successful at trial, his damages are "susceptible of ascertainment in some manner other than by mere speculation, conjecture or surmise, and by reference to some definite standard." Great Western Motor Lines, Inc., at ¶ 8, 417 P.2d at 578. (Citations omitted.) Therefore, the trial court abused its discretion when it found, by clear and convincing evidence, that the irreparable harm requirement was satisfied for purposes of granting a preliminary injunction.

(2) Damage to Reputation

¶17 Triers of fact are capable of calculating damages for injury to reputation. See Harolds Stores, Inc. v. Dillard Department Stores, Inc., 82 F.3d 1533 (10th Cir. 1996). Furthermore, an injunction is an extraordinary remedy that will not be lightly granted, especially when a legal remedy is available. Amoco Production Co., at ¶ 50, 609 P.2d at 745. We find that, in the event Lippitt succeeds on the merits at trial, any damage to his reputation, if supported by competent evidence, can be reasonably calculated into money damages.

(3) Loss of Profession

¶18 Lippitt's damage claim for loss of profession can be adequately compensated, in the event he succeeds at trial, by awarding Lippitt the loss of commission overrides in the manner described above. We find that any damage caused by the loss of his profession is compensable and will not result in irreparable harm to Lippitt.

(4) Loss of Efforts and Investment in Building District

¶19 In the event that he succeeds at trial, Lippitt claims that it would be too speculative to quantify damages attributable to the loss of over 40 years of personal efforts and investments in his district. However, Lippitt has already been compensated for his efforts and investments. Under the DMAA, Lippitt has been compensated for his work as the district manager by commission overrides "on all business produced by agents of, and written by [Farmers] in the District."

[Farmers' counsel:] . . . [Y]ou've been paid your commission override for the production within your district, correct?

[Lippitt:] And Farmers has made a wonderful profit of all the years, yes.

[Farmers' counsel:] And you have too?

[Lippitt:] Yes. It's a two-way street.

¶20 To the extent that any efforts to motivate the agents in his district, or to grow or maintain the number of policies in force in his district, have been successful, Lippitt has already reaped the benefits of those efforts and investments. In fact, Lippitt's compensation under the DMAA averaged $581,246.98 per year over the most recent five years. In the event that Lippitt succeeds at trial, we find that termination of the DMAA will not result in irreparable loss of the efforts and investment Lippitt has placed in his district over the years because he has already been compensated.

¶21 If the injury may be compensated by an award of monetary damages then an adequate remedy at law exists and no irreparable harm may be found as a matter of law. CoxCom, Inc. v. Oklahoma Secondary Schools Athletic Association,

CONCLUSION

¶22 "[A]ll four criteria . . . must be met before a temporary injunction is issued [and] courts tend to focus most heavily upon the 'irreparable harm' requirement." CoxCom, Inc., at ¶ 11, 143 P.3d at 528. (Citation omitted.) Lippitt has not demonstrated irreparable harm by clear and convincing evidence. Instead, the evidence indicates that any harm to Lippitt can be adequately compensated with money damages. Having found that Lippitt did not demonstrate irreparable harm, it is unnecessary for this Court to determine whether Lippitt met the other criteria for issuance of a preliminary injunction. See Id. at ¶ 17.

¶23 For the reasons set forth, we find that the trial court abused its discretion by granting a preliminary injunction.

¶24 REVERSED.

WISEMAN, V.C.J., and GOODMAN, J., concur.

FOOTNOTES

1 Farmers, as used herein, does not include Farmers Insurance Company because no such entity was a signatory to the contract at issue, and no entity exists with that precise name. Appellants' Brief-in-Chief, nt. 1; Pl.'s Exh. 14; Transcript (Tr.), at 18.

2 "Irreparable injury is the sine qua non for the grant of preliminary relief." Williams Exploration Co. v. U.S. Department of Energy, 561 F. Supp. 465, 469 (N.D.Okla. 1980). "The harm to be occasioned in absence of an injunction must be irreparable to the Plaintiff." Amoco Production Co., at ¶ 53, 609 P.2d at 746.

3 "In Hall, we held . . . that damages based upon the value of future renewal commissions were proper." Bigbie v. Bigbie, 1995 OK 72, ¶ 10, 898 P.2d 1271, 1273.

4 Tr., at 148-49.

5 Record (R.), 5, 6, 130.

6 Tr., at 104

7 Tr., at 105-106. The Petition itself, filed by Lippitt on February 14, 2008, around five years prior to what would be 50 years of service, reflects the calculability of damages based upon this five-year measure. The Petition seeks damages "in an amount difficult to determine but believed to be in excess of $3,000,000.00," reflecting Lippitt's reasonably consistent salary of $600,000 per year for five more years.

8 Tr., at 208.

9 R., at 164-166.