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MORGART v. UNION MUT. LIFE INS. CO.

September 30, 1986

JAMES C. MORGART and FINANCIAL ECOLOGY, INC., Plaintiffs,
v.
UNION MUTUAL LIFE INSURANCE COMPANY, UNIONMUTUAL STOCK LIFE INSURANCE COMPANY OF AMERICA, and UNIONMUTUAL STOCK LIFE INSURANCE COMPANY OF NEW YORK, Defendants



The opinion of the court was delivered by: STERN

 Plaintiff, James C. Morgart, was general agent in the State of New Jersey for Union Mutual Life Insurance Company from 1971 until 1983. The agency agreement between Morgart and Union Mutual contains a provision giving each party the right to terminate on thirty days notice. Morgart alleges that this provision was modified by several written representations, confirmed orally, that the company would not terminate as long as Morgart met his minimum sales quotas. On November 1, 1983, however, Union Mutual announced that all such general agency contracts would be terminated as of December 31, 1983. Morgart alleges in this suit that the termination was in breach of his contract with Union Mutual, and adds claims for breach of a promise enforceable by application of promissory estoppel, fraud and misrepresentation, breach of a franchise agreement, breach of the duty of good faith and fair dealing, negligence, and unjust enrichment.

 Jurisdiction in this matter is based on diversity of citizenship. Morgart is a citizen of New Jersey. He is the sole shareholder and president of Financial Ecology, Inc., which for a time served as a vehicle for his relations with Union Mutual. Financial Ecology is a New Jersey corporation with its principal place of business in New Jersey. Union Mutual is a Maine corporation with its principal place of business in Maine.

 Union Mutual has moved to dismiss and also for summary judgment. I previously ruled on the motion to dismiss; I now find that I must deny the motion for summary judgment.

 The Choice of Law Issue

 Before I turn my attention to the summary judgment motion, however, there is a preliminary matter I must address. On June 16, 1986, I heard oral argument on a motion to apply the substantive law of New Jersey to this lawsuit. The motion was made in response to a March 21, 1986 order of Magistrate Ronald J. Hedges that unless such a motion was made, the substantive law of Maine would apply.

 At argument I observed that neither party had pointed to a difference in the laws of Maine and New Jersey as they applied to this case. Applying the choice-of-law principles of the forum state, Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 85 L. Ed. 1477, 61 S. Ct. 1020 (1941), I denied the motion as premature, without prejudice to renew should a true conflict emerge. Rohm and Haas Co. v. Adco Chemical Co., 689 F.2d 424, 420 (3d Cir. 1982) (in cases of false conflict, "New Jersey conflicts of law rules permit the resolution of the case without a choice between the laws of the two states."); State Farm Insurance Company v. Simmon's Estate, 84 N.J. 28, 41 n.1, 417 A.2d 488 (1980) (if the same result would obtain by application of law of different states, "there would be no actual conflict of law between the two states, obviating the necessity to choose between them.")

 On August 13, 1986, Magistrate Hedges entered an order that "until the parties concretely establish a different outcome resulting from the application of a particular forum's choice of law, the law of Maine shall continue to govern the action, as per my Order of March 27, 1986."

 The Magistrate's order of August 13 was not made in connection with a "matter pending before the court," nor did I designate Magistrate Hedges to make any determination in regard to the choice of law issue. Under the Magistrate's Act, 28 U.S.C. § 636(b)(1)(A), therefore, Magistrate Hedges had no jurisdiction to enter his order of August 13, In re Morrissey, 717 F.2d 100, 102 (3d Cir. 1983).

 In order to clarify the record on this matter, I will vacate Magistrate Hedges' order of August 13, 1986, as having been entered without jurisdiction. I reiterate my decision of June 16: unless and until a true conflict arises, I will decide this matter in accordance with legal principles accepted by both Maine and New Jersey.

 The Motion for Summary Judgment

 Union Mutual moves for summary judgment on two grounds. First, it argues, Morgart was not terminated, but accepted early retirement voluntarily. Second, it points to an agreement entered into between Morgart and Union Mutual on January 3, 1984, and asserts that any surviving rights under Morgart's general agency agreement were merged into that agreement and have been extinguished.

 I. Voluntary Retirement

 Morgart learned on November 1, 1983 that his general agency contract was to be terminated on December 31, 1983. Before the termination date, Morgart requested and was approved for "early retirement," which was one of several options offered to the terminated agents, and which, Morgart claims, would have been available to him whether or not his agency had been terminated. The other options included continuing agency relationships with the company under new terms.

 As a result of his early retirement, Morgart was eligible for and on December 15, 1983 entered into a "Floored Commission Lending Agreement," or "Floored Oates" Agreement, with Union Mutual. The Floored Oates Agreement sets up an annuity account funded by the commission payments due to Morgart on insurance he had sold. It guarantees him a ...


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