                                                                                                                           Opinions of the United
2005 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


4-18-2005

Dubrosky v. Colonial Life
Precedential or Non-Precedential: Non-Precedential

Docket No. 04-1994




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Recommended Citation
"Dubrosky v. Colonial Life" (2005). 2005 Decisions. Paper 1345.
http://digitalcommons.law.villanova.edu/thirdcircuit_2005/1345


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                                                              NOT PRECEDENTIAL

                     UNITED STATES COURT OF APPEALS
                          FOR THE THIRD CIRCUIT


                                    No. 04-1994


                               TERRY DUBROSKY

                                          v.

                          COLONIAL LIFE & ACCIDENT
                         INSURANCE COMPANY; UNUM
                          PROVIDENT CORPORATION,

                                          Appellants


     ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE
                WESTERN DISTRICT OF PENNSYLVANIA

                            (Dist. Court No. 01-cv-01261)
               District Court Judge: The Honorable Robert J. Cindrich *


                               Argued March 31, 2005

                Before: ALITO, SMITH, and FISHER, Circuit Judges

                           (Opinion Filed: April 18, 2005)


                                RICHARD L. McMONIGLE, JR. (Argued)
                                JENNIFER L. CORRY
                                Post & Schell, P.C.
                                Four Penn Center


      *
       The judgment of the District Court was entered by the Honorable Thomas W.
Hardiman, US District Judge, following the retirement of Judge Cindrich.
                                    1600 John F. Kennedy Boulevard
                                    Philadelphia, PA 19103

                                    Counsel for Appellant

                                    JOSEPH P. NIGRO (Argued)
                                    Nigro & Associates, LLC
                                    Two Gateway Center, Suite 1799
                                    Pittsburgh, PA 15222

                                    Counsel for Appellee




                                OPINION OF THE COURT


PER CURIAM:

       Because we write only for the parties, we do not set forth the facts of this case.

Colonial Life & Accident Insurance Company (“Colonial”) appeals the District Court’s

summary judgment against it in the amount of $115,000 and the denial of its own motion

for summary judgment. For the reasons that follow, we reverse and remand with

instructions to enter judgment for Colonial.

                                               I.

       We review an award of summary judgment de novo, applying the same test on

review that the District Court should have applied. In re Ikon Office Solutions, Inc., 277

F.3d 658, 665 (3d Cir. 2002). Summary judgment is appropriate when “the pleadings,

depositions, answers to interrogatories, and admissions on file, together with the

affidavits, if any, show that there is no genuine issue as to any material fact and that the

                                               2
moving party is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c). The

Court must view all reasonable inferences from the evidence in the light most favorable to

the non-movant and may not weigh the evidence or evaluate credibility. See Country

Floors, Inc. v. A P’ship Composed of Gepner & Ford, 930 F.2d 1056, 1061-62 (3d Cir.

1991). Since it is undisputed that South Carolina law governs the interpretation of the

parties’ Career Sales Representative Agreement (the “Agreement”), we turn to that state’s

law of contracts to determine whether DuBrosky was entitled to summary judgment.

                                             II.

       The District Court gave several reasons for reading the two-year limitation of

section IX of the Agreement into section VIII. The leitmotif of this reasoning was that

since both sections targeted the same forms of competitive conduct, it was reasonable to

assume that both sections operated subject to the same limitation. At the very least, the

District Court reasoned, any ambiguity as to the lifespan of section VIII should be

resolved against Colonial as the drafter of the document.

       We disagree with the District Court’s reasoning because we reject the premise that

sections VIII and IX are functionally equivalent. Both sections call for the forfeiture of

DuBrosky’s commissions if certain acts occur, but only section IX entitles Colonial to

injunctive relief, attorney’s fees, and costs. See Section IX.F, App. 105a. Since

DuBrosky’s competitive threat was likely to be at its peak in the years immediately

following his departure, it is not surprising that such extraordinary equitable relief would



                                              3
be reserved for that period. Section IX’s remedies also operate against a slightly broader

range of conduct. Under section IX.D, for example, DuBrosky may not “solicit or accept

insurance business from any Colonial customer or account with whom [he] had business

relations during the period he . . . was associated with Colonial.” App. 105a. This

conduct would not be impermissible under section VIII unless the sale came in an account

in which Colonial had payroll deduction privileges or DuBrosky attempted to induce the

policyholder to relinquish an existing Colonial policy. See App. 104a.

       Because each section has independent meaning, there is no basis for the District

Court’s fear that a limitless section VIII would render section IX’s two-year limit

“essentially meaningless.” Op. at 10. To the contrary, an interpretation that made the two

sections coextensive would make much of section VIII surplusage. This interpretation

must be rejected under the cardinal principle that each term of a contract should be given

meaning so that no term is superfluous. See, e.g., Friedheim v. Walter H. Hildic Co., 89

S.E. 358, 359 (S.C. 1916); 11 Williston on Contracts § 32:5, at 427 (Richard A. Lord ed.,

4th ed. 1999).

       We believe section VIII should instead be interpreted according to its plain

language. That plain language provides that a prohibited act will result in the forfeiture

of commissions if it occurs “during the term of this Agreement or at any time thereafter.”

App. 104a (emphasis added). Since the Agreement entitles Colonial to terminate

DuBrosky’s commissions even if he commits a prohibited act beyond the two-year



                                             4
horizon of section IX, the District Court erred in awarding him summary judgment.1

                                            III.

       We next consider whether Colonial’s own motion for summary judgment was

erroneously denied. Were the record hotly disputed, a remand at this point would be the

appropriate course, but the parties’ accounts of the underlying events are virtually

identical. It is undisputed that DuBrosky sat down with each employee of Toyota of

Greensburg and Ford of Greensburg, discussed competing policies with them, and

explained to them the benefit of the payroll deduction system, which could only be used

with the competing policies. It is also undisputed that some of these employees were

insured by Colonial and that some of them decided to drop their Colonial insurance and

assume coverage with one of Colonial’s competitors after meeting with him. On this

record, we believe a reasonable factfinder would be compelled to find both that DuBrosky

“[s]olicit[ed] or accept[ed] sales of competing products in an[] account in which Colonial

has payroll deduction privileges” and that he “[a]ttempt[ed] to induce or induce[d]

Colonial policyholders to relinquish their Colonial policies.”

       DuBrosky denies that any of his conduct amounted to a prohibited act within the

meaning of section VIII of the Agreement. In light of his other admissions, this



       1
         DuBrosky has not squarely challenged the enforceability of section VIII under
state or federal competition law, so we need not address this issue. We note, however,
that the Court in Wolf v. Colonial Life & Accident Insurance Co., 420 S.E.2d 217, 223
(S.C. Ct. App. 1992), enforced an identical, or nearly identical, agreement under South
Carolina law.

                                             5
conclusory denial rings hollow and cannot forestall summary judgment. See In re Paoli

R.R. Yard PCB Litig., 916 F.2d 829, 860 (3d Cir. 1990). He also insists that none of the

employees with whom he discussed competing policies should be deemed Colonial

policyholders, since the dealerships had already notified Colonial of their intention to

switch providers. At argument, however, he conceded that the dealerships’ decision was

effective July 1, 1999 – after he had met with their employees. In any case, an employer’s

decision to sever its relationship with Colonial would not affect the status of its

employees as Colonial policyholders. The conclusion that DuBrosky committed an act

prohibited under section VIII of the Agreement, and that Colonial was therefore entitled

to terminate his renewal commissions, is irresistible.

                                             IV.

       After carefully considering the arguments of both parties, we conclude that section

VIII of the Agreement remained in force beyond the two-year period specified in section

IX. We further conclude that no triable issue exists as to whether DuBrosky committed a

prohibited act within the meaning of section VIII. It follows that summary judgment was

erroneously granted to DuBrosky and erroneously denied to Colonial. On remand, the

District Court shall enter an appropriate judgment for Colonial.
