                    United States Court of Appeals
                          FOR THE EIGHTH CIRCUIT
                                   ___________

                                   No. 03-2522
                                   ___________

Protective Life Insurance               *
Company, a Tennessee                    *
Corporation; Lincoln Benefit            *
Life Company, a Nebraska                *
Corporation,                            *
                                        *
            Appellees,                  *
                                        * Appeal from the United States
      v.                                * District Court for the Western
                                        * District of Missouri.
Jim Orr & Associates, Inc., a           *
Missouri Corporation,                   *
                                        *
            Appellant.                  *
                                   ___________

                             Submitted: March 5, 2004
                                Filed: October 7, 2004
                                 ___________

Before BYE, McMILLIAN, and RILEY, Circuit Judges.
                            ___________

RILEY, Circuit Judge.

    Jim Orr and Associates, Inc. (Orr) appeals the district court’s adverse grant of
summary judgment in this diversity action by Protective Life Insurance Company and
Lincoln Benefit Life Company (collectively, Lincoln1) to recover portions of
commissions Lincoln paid to Orr. We reverse and remand.

      Lincoln provides credit life and disability insurance to borrowers of loans for
expensive items such as automobiles and jewelry. Orr was an insurance agent for
Lincoln from March 1989 until November 1997. Lincoln required purchasers of
insurance to pay, up front, the entire premium for the life of the policy. If the insured
requested early cancellation of the policy, Lincoln would return a portion of the
prepaid premium. Concomitantly, Lincoln paid Orr a commission up front based on
a percentage of the entire premium paid by the purchaser, on the assumption the
policy would remain in effect for the intended policy period.

       During the time Orr acted as Lincoln’s insurance agent, Orr partially refunded
to Lincoln any commissions attributable to cancelled policies (“chargebacks” for
“unearned commissions”) via reductions in new commissions. The parties disagree,
however, whether the agency agreement between Lincoln and Orr actually required
Orr to pay those chargebacks, and if so, whether the requirement continued even after
Orr terminated its agency relationship with Lincoln. Specifically, in October 1999,
approximately two years after Orr terminated its relationship with Lincoln, Lincoln
demanded Orr repay $148,271.72 in commissions it had received for policies that had
been cancelled after Orr terminated the contract. When Orr refused, Lincoln filed the
instant breach-of-contract action.

      Both parties rely on the following contract language:




      1
        Protective Life Insurance Company purchased Lincoln’s credit life and
disability insurance business in 1997. The parties refer to plaintiffs collectively as
“Lincoln.”
                                           -2-
      Fiscal Responsibility

             The AGENT shall immediately pay to the COMPANY all monies
      received by him or his subagents on all applications obtained and
      policies and certificates issued. All such funds shall be segregated by
      the AGENT and held by him in trust, and shall not be used by him for
      any purpose.

             Should the COMPANY for any reason cancel a policy or
      certificate and return the premium, the AGENT shall promptly return all
      commissions received on such policy or certificate to the COMPANY.

        Lincoln moved for summary judgment and submitted numerous depositions
and affidavits indicating Lincoln regarded the Fiscal Responsibility clause as
implementing its policy of requiring agents to refund partial commissions on
cancelled policies--a policy Lincoln maintained was universal in the insurance field.
Jim Orr testified all other companies with whom he had worked specifically
addressed chargebacks in their contracts, and he had negotiated with Lincoln to
ensure no chargeback clause was included in his contract; however, Orr
acknowledged he had orally agreed to pay chargebacks while the contract was in
effect.

       The district court concluded the Fiscal Responsibility clause was unambiguous
and required Orr to repay the unearned commissions regardless when the agency
contract terminated, because no provision limited Orr’s duty to repay if the contract
terminated. Orr argues the agency contract unambiguously precluded any obligation
to pay, because, among other things, neither the contract’s Fiscal Responsibility
clause nor its Termination clause imposed a post-termination duty on Orr to refund
partial commissions. Alternatively, he argues, if the contract was ambiguous, and
resort to extrinsic evidence was appropriate, then Lincoln had not demonstrated any
industry practice and the proper interpretation of the Fiscal Responsibility clause was
governed by Jim Orr’s testimony.


                                          -3-
       We review de novo the grant of summary judgment, as well as the district
court’s interpretation of state law and the contract. See Centric Jones Co. v. City of
Kearney, Neb., 324 F.3d 646, 648-49 (8th Cir. 2003). The parties and the district
court applied Missouri law, and we do so as well.

       The Fiscal Responsibility clause does not mention early cancellations of
policies, partial returns of premiums, or partial refunds of commissions, and the
contract arguably is silent as to Orr’s duty to pay refunds after cancelling its agency
agreement. We conclude these omitted terms were not clearly implied-in-law terms
of the contract, cf. Pollock v. Berlin-Wheeler, Inc., 112 S.W.3d 73, 78-79 (Mo. Ct.
App. 2003) (implied-in-law terms include agent’s duty not to compete, employee’s
fiduciary duty, and implied-in-law warranty); Birdsong v. Bydalek, 953 S.W.2d 103,
120 (Mo. Ct. App. 1997) (every contract imposes general duty of good faith and fair
dealing), and thus we cannot agree with the district court that the clause
unambiguously required Orr to pay chargebacks on policies cancelled early, either
during the agency agreement or afterwards. We cannot agree with Orr, however, that
the contract unambiguously precluded any obligation to pay. Rather, we conclude the
contract is ambiguous.

      For example, the Termination clause, which provides, “[u]pon termination the
AGENT shall in no manner act for the COMPANY and shall promptly remit to the
COMPANY any monies then held for it” (emphasis added), could be interpreted to
demonstrate the parties did not agree to an ongoing duty to pay chargebacks. On the
other hand, the Termination clause could be interpreted not to qualify the Fiscal
Responsibility clause, which may or may not be conclusive as to Orr’s duty to pay.

      Given our conclusion a latent ambiguity exists, resort to extrinsic evidence is
appropriate. See State Farm Mut. Auto. Ins. Co. v. Esswein, 43 S.W.3d 833, 842
(Mo. Ct. App. 2000) (when contract is ambiguous, a court may resort to extrinsic
evidence to determine true intent of parties). Our review of the record, however,

                                          -4-
convinces us the parties’ intent cannot conclusively be determined from the available
extrinsic evidence. Thus, we remand so a factfinder may examine the contract
language and the evidence presented by the parties to determine whether Orr was
required to pay chargebacks during the life of the agreement, and whether any such
obligation survived termination of the agency relationship. See Vandever v. Junior
Coll. Dist. of Metro. Kan. City, 708 S.W.2d 711, 717 (Mo. Ct. App. 1986) (if court
cannot resolve ambiguity based on all circumstances, evidence, and rules of
construction, or if resolution of ambiguity requires weighing evidence, issue is for
jury).

      Accordingly, we reverse and remand for further proceedings.
                     ______________________________




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