Tim McCoy & Assoc v. Natl States Ins Co

* Pursuant to 5TH CIR. R. 47.5, the Court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
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United States Court of Appeals
Fifth Circuit
F I L E D
June 23, 2005
Charles R. Fulbruge III
Clerk
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 04-50713
TIM MCCOY AND ASSOCIATES INC. doing business as, Neat Management
Group
Plaintiff - Counter Defendant - Appellee
versus
NATIONAL STATES INSURANCE CO.
Defendant - Counter Claimant - Appellant
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Appeal from the United States District Court
for the Western District of Texas, Austin
1:03-CV-433-LY
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Before GARWOOD, GARZA, and BENAVIDES, Circuit Judges.
PER CURIAM:*
Appellant National States Insurance Co. (“National States”)
appeals the district court’s denial of its motion for summary
judgment and the district court’s grant of Appellee Tim McCoy and
Associates, Inc. d/b/a NEAT Management Group’s (“McCoy”) motion
for summary judgment. After considering the record and the
parties’ briefs and arguments on appeal, we affirm the district
court’s judgment, principally for the reasons set forth in the

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district court’s good and well-reasoned opinion.
This action arises out of a dispute over the interpretation
of a contract between McCoy and National States. McCoy develops
and markets several different insurance products for various
carriers through independent agents specifically recruited by
McCoy. National States is an insurance company that sells life,
health, and accident insurance policies. On June 11, 1991,
National States entered into a General Agent’s Contract (the
“Contract”) with McCoy for McCoy to recruit independent agents to
market National States’ Final Expense insurance product to
consumers.
Pursuant to the terms of the Contract, McCoy was to recruit
individual agents who would enter into Managing General
Agreements with National States to solicit applications for
National States’ insurance policies. Upon receipt of premiums
paid for policies issued through the agents recruited by McCoy,
National States paid McCoy “override” commissions for the
difference between the amount of commission that National States
was obligated to pay McCoy and the amount of commission that
National States was obligated to pay its insurance agents. Under
the terms of the Contract, National States would continue to pay
commissions to McCoy as premiums were paid on policies that were
renewed (“renewal commissions”).
On or about April 23, 2003, McCoy sent a letter to National
States’ president, Thomas Green, informing National States that

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due to declining commissions from sales of existing products,
McCoy was developing other insurance products through other
carriers to compensate for its losses.
National States responded by letter dated April 25, 2003,
terminating the Contract with McCoy and instructing McCoy to
refrain from contacting any of National States’ agents “in an
effort to influence them to write business with [McCoy’s] new
carrier in place of National States.” National States also
discontinued payment of McCoy’s renewal commissions, which
totaled roughly $160,000 per month.
On May 14, 2003, McCoy filed suit against National States in
Texas state court seeking a declaratory judgment that 1) the
Contract does not prohibit McCoy from entering into new contracts
to market similar products through an agency field force which
includes independent agents recruited by McCoy and currently
contracted with National States; and 2) National States is
required to pay McCoy’s renewal commissions pursuant to the terms
of the Contract. National States filed a counterclaim seeking a
declaratory judgment that 1) McCoy may not contact any agents
currently with National States in an effort to influence them to
write business with other carriers in place of National States;
and 2) to do so forfeits the obligation of National States to pay
renewal commissions pursuant to the terms of the Contract.
National States removed the case to federal court on June 30,
2003.

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The parties filed cross motions for summary judgment in
September and October 2003.
On April 28, 2004, the district court granted McCoy’s Motion
for Summary Judgment and denied National States’ Counter Motion
for Summary Judgment. The district court found that McCoy did
not violate the terms of the Contract and that National States
was required to pay McCoy the disputed renewal commissions.
After the district court denied National States’ Motion for
Reconsideration, this appeal followed.
DISCUSSION
We review a district court’s grant of summary judgment de
novo. Facility Ins. Corp. v. Employers Ins. of Wausau, 357 F.3d
508, 512 (5th Cir. 2004). Summary judgment is appropriate if
there is no genuine issue as to any material fact, and the movant
is entitled to judgment as a matter of law. Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986).
We agree with the district court’s determination that McCoy
did not violate the terms of the Contract. Although it has been
advanced that McCoy could have breached the Contract by merely
harming National States’ business, the Contract actually requires
“interference.” We agree with the district court’s determination
that there was no actionable interference in this case.
Additionally, the Contract allowed National States to
terminate the Contract for cause if McCoy did “anything toward

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inducing or influencing agents of [National States] to leave its
service.” If the Contract had been terminated for cause, then
National States would not have had to continue paying renewal
commissions to McCoy. We agree with the district court that
McCoy did not violate the terms of the Contract by offering
independent agents the opportunity to sell the products of other
insurance companies. By doing so, McCoy did not induce or
influence agents to actually leave National States’ service. The
independent agents were at all times free to sell competing
insurance policies, so McCoy did not induce or influence them to
leave National States’ service by providing them with an
alternative product that they could sell.
Because we find that McCoy did not breach the Contract, we
agree with the district court’s conclusion that National States
must continue to pay renewal commissions to McCoy.
For the foregoing reasons, the district court’s judgment is
in all things AFFIRMED.

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