Independent agent sues insurance companies for breach of contract

By Kelly Holleran | Apr 13, 2010

A Jefferson County insurance agent claims numerous insurance companies breached their contract with him in their attempts to extort money from him and to force him to sell additional insurance policies.

A Jefferson County insurance agent claims numerous insurance companies breached their contract with him in their attempts to extort money from him and to force him to sell additional insurance policies.

Gaines L. Wullenwaber filed a lawsuit March 31 in Jefferson County District Court against Jefferson County Farm Bureau, Texas Farm Bureau, Southern Farm Bureau Casualty Insurance Company, Farm Bureau County Mutual Insurance Company of Texas, Texas Farm Bureau Mutual Insurance Company, Texas Farm Bureau Underwriters, Southern Farm Bureau Life Insurance Company, Texas Farm Bureau Casualty Insurance Company, Texas Farm Bureau Mutual Brokerage Agency, Cody D. Woodul, Gary B. Workman and Texas Windstorm Insurance Association.

Wullenwaber claims he began working as an independent insurance agent selling various insurance policies to clients under a contract he entered into with the defendants. Under the terms of the contract, Wullenwaber should have been treated as an independent contractor and should have been allowed to control his daily activities, to decide who he would issue insurance policies to and to determine when and how often he would solicit insurance policies to clients, according to the complaint.

When Wullenwaber initially began working, Jefferson County Farm Bureau provided him with rent, services, office supplies and secretarial work at no cost, the suit states.

However, the longer Wullenwaber worked as an independent contractor, the more the companies began to demand from him.

For example, after initially providing Wullenwaber with free rent, Jefferson County Farm Bureau decided to start charging him $300 per month on Jan. 30, 2007, the complaint says.

Agency manager Woodul demanded Wullenwaber and other agents sell additional life insurance policies, but began to limit the number of property, casualty and homeowners' insurance policies Wullenwaber could write.

Wullenwaber claims such actions are a violation of his contract, which should have allowed Wullenwaber to determine when and how often he would solicit policies to his clients. In fact, district sales manager Workman threatened to terminate Wullenwaber if he failed to sell more life insurance policies, according to the complaint.

"Agents were recommended to write and pay for life insurance applications for their children with the agents own money which was a request known to be prohibited and illegal," the suit states.

Workman threatened to control the hours Wullenwaber worked, another violation of the contract that promised Wullenwaber the abiltiy to control his daily activities, the complaint says.

Wullenwaber also claims agents are the victims of a conspiracy under the Farm Bureau Insurance Companies. According to Wullenwaber's complaint, agency manager Woodul would terminate independent agents, then take over their clients and accounts, thus increasing his profit. Woodul and Workman began firing agents who arrived to meetings late or who did not meet a quota for selling a certain number of life insurance policies, according to the complaint.

"As such Defendant Cody D. Woodul had a clear and conflicting motive and profit interest to terminate other 'Independent Contractor' agents such as Plaintiff, as well as other agents," the suit states. "Despite the Farm Bureau Insurance Companies' and Farm Bureaus' knowledge of this type of conduct taking place, such Defendants did nothing to insure that such practices did not take place to the injury and damages of Plaintiff and other agents similarly situated."

In a further attempt to increase his own income, Woodul removed Wullenwaber from the duty roster at the offices of the Jefferson County Farm Bureau on March 16, 2009. Such a move manipulated the walk-in or phone call customers Wullenwaber could assist and increased Woodul's revenues instead, the complaint says.

Before his removal from the duty roster, Wullenwaber had already begun to receive less than his fair share of commissions on May 24, 2006, when Texas Farm Bureau Mutual began to deduct 6 percent for all wind insurance policies he sould and 3.5 percent for all mobile home policies sold, the complaint says.

"The deduction of such commissions for TWIA policies sold was not lawful or justified under any of the contracts signed by Plaintiff and was in violation of all Texas statutes, rules and regulations regarding TWIA," the suit says. "This conduct was unique to the Farm Bureau Insurance Companies as no other insurance companies in Texas engage in this type of conduct toward their agents that also sell TWIA windstorm policies."

In December 2007, Wullenwaber suffered a further commission loss when Woodul took away $7,500 worth of renewal property and casualty insurance business policies Wullenwaber sold. Woodul explained that Wullenwaber was being punished for his low life insurance sales production, the complaint says.

On Oct. 29, 2007, Woodul requested Wullenwaber provide him with a list of TWIA policies Wullenwaber had written, Wullenwaber claims. However, Woodul should never have requested such information because the accounts should have remained confidential, according to the complaint. Woodul then began to contact Wullenwaber's customers to solicit their business, the suit states.

"Plaintiff subsequently had his contacts with one or more of the Farm Bureau Insurance Companies unilaterally canceled in or about January 2010," the complaint says.

Wullenwaber alleges breach of contract; fraud; insurance code violations; Deceptive Trade Practices Act violations; tortious interference with existing contracts; tortious interference with prospective business relationships; promissory estoppel; theft of trade secrets; breach of fiduciary duties; conspiracy; assiting, encouraging, aiding and abetting; and Texas business and commerce code violations.

In his 13-count suit, Wullenwaber seeks actual, treble, punitive and exemplary damages, plus attorneys' fees, costs, pre- and post-judgment interest and other relief the court deems just.

Mark Faggard of Beaumont will be representing him.

The case has been assigned to Judge Bob Wortham, 58th District Court.

Jefferson County District Court case number: A186-436.

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