DALLAS -- A Texas appeals court ruled Aug. 30 that an independent contractor with Aflac is not bound by a covenant not to sue in her defamation lawsuit against a previous client.
Dawn Richards had sued Burnco Texas LLC and its vice president Clifford Hahne, alleging tortious interference with a contract relationship and defamation after a contract between the two parties went bad.
Burnco was granted summary judgment in Dallas County Circuit Court, with the judges stating Richards was subject to a covenant not to sue. But Texas Fifth District Court of Appeals reversed that ruling.
“Because the termination of her independent contract status with Aflac released her from her contractual obligations, we reverse and remand,” the appeals court determined. Richards pointed out in her appeal that because she was not considered an associate of Aflac, she was not subject to the covenant not to sue. The appeals court agreed.
“We conclude the Burnco defendants failed to establish a matter of law that section 9.4 in the exchange rider provided for the continuation of the AA’s covenant-not-to-sue following the termination of the BAPA, or that the covenant not to sue was separable from the rest of the agreement,” the appeals court ruled. “Because the provision is subject to more than one reasonable interpretation, it is ambiguous, creating a fact issue on the parties’ intent.”
With this in mind, the appeals bench determined the lower court should not have granted the appellees their motion for summary judgment.
Aflac hired Richards in April 2006 as an independent contractor. She sold individual and group policies for the company and agreed to an associate’s agreement (AA) in March 2007, the suit states. In that agreement she was required to “solicit applications for insurance policies sold by Aflac,” according to the lawsuit.
Notably, the AA solidified Richards as an independent contractor for the insurance company. Later that year she opened a group policy for Gateway, that was later acquired by Burnco. Then, in July 2015, the suit states, Richards signed an Aflac “benefits advisers producer’s agreement (BAPA) to sell insurance policies for Aflac Benefits Advisors, Inc. (ABA) via the ABA Exchange.
Under this agreement, ABA or Richards could end the BAPA with a 30-day written notice. If said termination took place, Richards would no longer have access to or the greenlight to sell polices through the ABA Exchange.
This matter came into question in November 2015, when Richards received an e-mail from Burnco’s Hahne that Burnco would be ending its Aflac plan in December 2015. Hahne also asked Richards not to contact employees during business hours before he announced the change.
Richards allegedly did not take well to Hahne’s business move and said that the company’s new insurance broker only cared about money, and that the employee morale would take a huge dive. She also allegedly noted that she is a single mother and her livelihood was at risk. Hahne requested that Richards not attend the company Christmas party.
Although Richards said she did not attend the festivities, she allegedly was seen in the parking lot giving gifts to an employee to take to the Burnco owners. In the gifts was also a note from Richards stating that she wanted to inform the owners what was happening “because it was their money being affected by the decision,” according to the opinion. Still, Richards was met with a cease and desist letter that prevented her from not stepping on Burnco property or from reaching out to Burnco workers.
She then filed the lawsuit for defamation and tortious interference with a contract relationship. Burnco filed a motion for summary judgment, stating the Richards lawsuit was barred by a covenant not to sue. The lower court granted the motion but the appeals court reversed it.
Justice Lana Myers wrote the opinion. Justices Ken Molberg and Cory L. Carlyle concurred.