PROTECTORS INSURANCE SERVICE, INC. V. UNITED STATES FIDELITY & GUARANTY COMPANY
132 F.3d 612 (10th Cir. 1998)
NATURE OF THE CASE: This was a damages dispute over a breach of contract. Fidelity (D)
appealed a jury verdict that D breached a contract with Protectors (P) and that P lost $
809,650 in future profits and received $ 35,000 less than the fair market value upon the
sale of its business.
FACTS: Protector (P) was a corporation formed with only one stockholder. P was an agent
of United States Fidelity (D) and had a written contract. If applications P made were
accepted, P would get a sales commission. P was an independent agent but had only two
insurance carriers and wrote 80% of its business with D from 1979 - 1992. In 1992, D
notified P that because of profitability concerns it was establishing a formal
rehabilitation program for P. The agreement called for such efforts to be in good faith. D
gave P a 180-day plan for his personal lines business that if not met would result in
termination; terminating his personal lines would put him out of business for the commercial
accounts even though the personal lines were only 20% of his business. P then decided to
sell his assets to Centennial Agency, Inc. on January 1, 1993. P was to receive $148,000. P
then sued D for breach of contract in not making a good faith effort. P got the verdict for
$844,650 all but $35,000 was for lost future profits. D appealed.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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