Arbitration / Lawsuit Question

Discussion in 'General Insurance Agent Discussions' started by RK38, Aug 12, 2017.

  1. RK38
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    RK38 Member

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    I wanted to know if there is any legal action I can take vs. another agent for fixed insurance business?

    I used to work for a captive agency and was working with another agent on a case. We agreed that we would split the business 50/50 if I did the leg work (his referral and contact). I designed the case and sold it. It resulted in a sizable life insurance sales as well as a SPIA sale. The day of the sale, the other agent went to client and had signed the papers without putting me down for 50% because he knew I was leaving to go independent and thought he could cut me out. I have all illustrations, emails, notes of work I did for the client as well as communications between the other agent as well as the client.
     
  2. adjusterjack
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    adjusterjack Well-Known Member

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    The "legal action" you can take is called a lawsuit. If the money involved is within your state's small claims court limit, you can sue in small claims court for your share of the commission.

    Understand that you don't have to sign a contract to have a contract and that oral agreements are just as enforceable as written agreements, just harder to prove.

    Your communications with the other agent as to the 50% agreement would be useful in court.

    I wouldn't bother with arbitration if this fits into small claims court.

    What state are you in and how much money is involved?
     
  3. DHK
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    DHK Well-Known Member

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    I don't know if this captive agency allows the agent to split with brokers or not. Sometimes if the agent is on 'financing' plans, they can't split with independents (I think?).

    Anyway, you can give him one of two choices:
    1) Have it corrected for 50% of the commissions generated
    2) Have him write you a check for that amount and issue a 1099 at the end of the year. (Option 2 is clearly more beneficial for him because he won't lose any conference/sales credits with the home office.)

    If not, then you can take it up with an attorney for legal action.
     
  4. RK38
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    RK38 Member

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    New York. Commissions were about 40K from my portion of it. Trying to determine what type of lawyer would be best suited for this. Surprisingly, I called about four securities attorneys and only one sounded like they knew the insurance side of the business. However, that specific attorney's retainer was extremely high compared to the others.
     
  5. adjusterjack
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    adjusterjack Well-Known Member

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    $40K is certainly beyond NY's small claims court limit and it's not a lawsuit you want to try on your own.

    I'm not sure that the insurance or securities angle is the way to go. You had a contract for commission. Shouldn't make any difference that the product was insurance or a widget.

    This is more of a contracts issue and it should take a contracts (general business) attorney who can look at your evidence and determine if an enforceable contract actually existed.

    Yes, you are likely to have to pay an attorney by the hour with a retainer and you need to be willing to spend the money to pursue the lawsuit if you have to, although a scary letter from an attorney might get your enemy to hand over the money.

    Hope for the best, plan (and budget) for the worst.
     
  6. RK38
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    RK38 Member

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    I'm curious to know if there are any statues of limitation with regards to this.
     
  7. VolAgent
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    VolAgent Well-Known Member

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    Yes, varies by state and I do not know for NY. You should look it up versus take our word for it.

    Somethings are a short as one year, while others can be 5 or even 7 years.

    Again, you should find out yourself, but I bet the clock started as soon as the application was signed.
     
  8. adjusterjack
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    adjusterjack Well-Known Member

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    6 years (to file a lawsuit) from the date of the breach of a written or oral contract.

    Civil Practice Law & Rules - Article 2 - § 213 Actions to be commenced within six years: where not otherwise provided for; on contract; on sealed instrument; on bond or note, and mortgage upon real :: 2016 New York Laws :: US Codes and Statutes :: US

    That you have 6 years doesn't mean you should wait 6 years. If you are going to sue, get started ASAP, before the trail goes cold.

    :yes:

    ----------

    The SOL starts running at the breach which appears to be when the colleague reneged on paying as agreed.
     
  9. VolAgent
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    VolAgent Well-Known Member

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    Yes, but was the breach not splitting credit on the app, or not paying him the commission once received? To quote "...putting me down for 50%...". So when was the breach, at time application was signed, or when the other party did not pay out half the commission once received?

    Which goes back to your earlier comment about not waiting. I would err on the side of caution and assume the breach happened as early as possible. Plus, all memories and records are fresher the soon you file suit.
     
  10. adjusterjack
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    adjusterjack Well-Known Member

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    The agreement was to split the commission. That's the only agreement that makes sense: to split the money, not just to put RK38 on the app because the colleague would owe the 50% regardless. The breach occurred when the colleague was paid the commission and failed to pay half to RK38.

    But let's look at it another way. If the agreement was only to put RK38 on the app so that the company would pay RK38 his half direct and his name was on the app but the company refused to pay him and sent the entire commission to the colleague anyway, RK38 would have no cause of action against the colleague if the colleague's only obligation was to just write in the name. "I didn't agree to pay you I just agreed to write your name. Your beef is with the insurance company."

    Illustrates the danger of oral agreements.

    With regard to the SOL, hopefully nobody is going to wait 6 years to file suit over something like this, but let's say they did.

    Today is 8/16/17, the app was written 8/1/11, the commission paid 8/31/11.

    If the breach was 8/1/11 the lawsuit would be time barred and RK38 would be out of luck. If the breach was 8/31/11 RK38 would still have a couple of weeks to file the lawsuit.
     

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