JAY COCHRAN FBFS, INC., a Montana corporation, Plaintiff and Appellee,
KURT JAMES FAUTH and SY SALES, LLC, a Montana limited liability company d/b/a FAUTH AGENCY, Defendants and Appellants.
Submitted on Briefs: February 20, 2019
FROM: DISTRICT COURT OF THE THIRTEENTH JUDICIAL DISTRICT, IN
AND FOR THE COUNTY OF YELLOWSTONE, CAUSE NO. DV-17-0075
HONORABLE GREGORY R. TODD, PRESIDING JUDGE.
Appellants Ben Sather, Sather Law, PLLC, Billings, Montana
Appellee Stephen C. Mackey, Towe, Ball, Mackey, Sommerfeld
& Turner, PLLP, Billings, Montana
Pursuant to Section I, Paragraph 3(c), Montana Supreme Court
Internal Operating Rules, this case is decided by memorandum
opinion and shall not be cited and does not serve as
precedent. Its case title, cause number, and disposition
shall be included in this Court's quarterly list of
noncitable cases published in the Pacific Reporter and
Defendants Kurt James Fauth and SY Sales, LLC, d/b/a Fauth
Agency (Fauth) appeal from the Thirteenth Judicial District
Court's: May 3, 2017 order denying Fauth's motion for
summary judgment; January 17, 2018 order denying Fauth's
motion for summary judgment and combined motions in limine;
May 1, 2018 findings of fact, conclusions of law, and
judgment; June 29, 2018 order amending; and July 17, 2018
final judgment. We affirm in part, and reverse and remand in
part for further proceedings consistent with this opinion.
The crux of the parties' dispute centers around the
meaning of the language used in a November 3, 2008
appointment agreement (Agreement) between Fauth and Farm
Bureau Mutual Insurance Company and/or Farm Bureau Life
Insurance Company (Farm Bureau).
Cochran is a financial services provider administering the
sale of property, life, casualty, and other insurance
products underwritten and insured by Farm Bureau. In 2008,
Cochran hired Fauth as an employee. Fauth later became an
independent contractor. No written employment or independent
contractor agreement ever existed between Fauth and Cochran.
The Agreement between Fauth and Farm Bureau enabled Fauth to
sell Farm Bureau insurance products and is the only written
agreement between Fauth and Farm Bureau.
The Agreement contained a confidentiality clause prohibiting
Fauth from appropriating any confidential information,
including customer data, for his own use at any time. The
Agreement further contained a non-solicitation clause
prohibiting Fauth from selling or soliciting replacements or
exchanges of insurance products:
with respect to any policyholder of [Farm Bureau], their
subsidiaries or affiliates, or with any company with whom
[Farm Bureau has] a marketing agreement, within any counties
in which Appointee sold or serviced any products pursuant to
this [Agreement] . . . enforceable for a period of eighteen
months following the termination of this [Agreement].
a section of the Agreement titled "FOR HOME OFFICE USE
ONLY" was a listing of three distinct Farm Bureau
subsidiary companies and three distinct checkable boxes. On
the executed Agreement, the only box checked was the box next
to the heading for Farm Bureau Life Insurance Company. The
box next to the heading for Farm Bureau Mutual Insurance
Company was not checked.
On September 19, 2016, Fauth left Cochran to start his own
insurance agency. Prior to doing so, Fauth removed
confidential information from Cochran's business. In
early October 2016, legal counsel for Farm Bureau, Randall G.
Nelson, requested by letter (Nelson letter) that Fauth return
the confidential information. On October 27, 2016, Fauth
returned the confidential information to Cochran. Fauth then
requested that Farm Bureau clarify whether Fauth could sell
insurance products to Farm Bureau insurance policy holders.
In response, Fauth received a November 4, 2016 letter
(Swinton letter) from Farm Bureau Financial Services
attorney, Paul Swinton, stating that the Agreement only
limited Fauth from selling life insurance to
existing Farm Bureau life insurance policy holders.
After leaving Cochran, Fauth did not sell life insurance to
Farm Bureau life insurance policy holders. Swinton therefore
opined that Fauth had not violated the Agreement.
On January 12, 2017, Cochran filed a complaint against Fauth
alleging: (1) breach of contract; (2) breach of the covenant
of good faith and fair dealing; (3) conversion of customer
information; (4) misappropriation of trade secrets and
confidential information; (5) interference with contractual
relationships or prospective contractual relationships; (6)
unjust enrichment; and (7) fraud. Specifically, Cochran
sought to enforce the Agreement as a third-party beneficiary,
asserting the Agreement precluded Fauth from selling life
insurance and casualty and property insurance to
Farm Bureau life insurance and casualty and property
insurance policy holders. Fauth filed a brief and motion for
summary judgment asserting Cochran was not a party to the
Agreement and ...