Facts

Plaintiff James B. Shea, 52, was employed by defendant ABD Insurance and Financial Services from 1988-2002. Shea was a commissioned surety bond producer from 1995 to his termination in 2002. His main client and primary source of commission income was a single account, DPR Construction, a client he brought to ABD in 1990. In 2001, DPR Construction lost its long-term surety bonding program.

The defendants contended that as part of its efforts to assist DPR, and in response to feedback from surety carriers and ABD staff, ABD management reassigned some of Shea's duties on the account to the surety manager. Shea contended that DPR lost its surety bonding program due to the tightening of underwriting requirements and DPR’s substantial receivables. Shea further contended that pursuant to his agreement with ABD, he owned his accounts and could not perform his job as a surety producer without the ability to market accounts. The defendants contended that following ABD's decision, Shea became increasingly insubordinate and erratic in his behavior. He threatened co-workers, challenged the authority of his managers and refused to accept direction from ABD executives. Shea ultimately advised ABD that if it continued to prohibit him from marketing his accounts, ABD may as well just fire him. ABD fired him. Both Shea and ABD lost the DPR surety account.

Shea’s claim for breach of contract against ABD, as well as his claims for intentional and negligent misrepresentation against both ABD and Frederick de Grosz, were tried to the jury. Shea alleged that ABD executives, including Frederick de Grosz, engaged in a protracted scheme to keep him employed at ABD through misrepresentations with the aim of stripping him of his clients and then terminating him. Shea alleged that the accounts were his property and by prohibiting him from marketing the accounts that he owned, and involving the surety manager in marketing his accounts, ABD violated its 1995 Employment Agreement with him. Shea further alleged that de Grosz falsely promised Shea in November 2001 that he would be included in all communications with the DPR account, notwithstanding the prohibition on the marketing of accounts. Shea claimed that he relied on this promise in entering into a retention bonus agreement with ABD, a condition of which was signing a new employment agreement in March 2002. Shea alleged that his later employment agreements were induced by fraud. ABD maintained that it did not make false promises to Shea or single him out, but rather made decisions consistent with its later agreements with Shea and based on the best interests of the DPR account and other clients.

Settlement Discussions

The plaintiff demanded $4,475,510. The defendant offered $100,000.

Damages

The plaintiff's expert initially calculated damages of $3,933,570. These damages were projections based on what Shea had earned on certain accounts he owned, including the DPR account from 1998-2001. The plaintiff's expert projected those commissions out 17.5 years, based on work-life expectancy tables and the assumption that Shea should and would have been able to continue earning commissions on the accounts until retirement. The defendants brought a motion in limine to limit the damages put before the jury on the basis that they were entirely speculative. After reviewing the motion and holding a Cal. Evid. Code section 402 evidentiary hearing during which the plaintiff and defendants' experts testified, the Court limited the damages sought to a period of five years, and required Shea's expert to use actual data so far as it was available. After the Court's ruling, Shea's expert presented the jury with a figure of $847,405.

Other Information

Judge Steven Dylina ruled in limine that the 2002 Employment Agreement, signed by Shea as well as 544 other ABD employees, contained an illegal and unenforceable non-solicitation provision. Judge Dylina further ruled that this illegal and unenforceable non-solicitation provision was severable from the remaining portions of the 2002 Employment Agreement. The defense won two significant victories outside the presence of the jury. First, the defendants were successful in limiting the plaintiff's damages claims on the basis that they were speculative. Second, after the close of evidence, the Court granted the defendant's motion for a directed verdict on punitive damages on the ground that Shea had failed to present evidence sufficient to meet his burden of proof. The question of malice was never presented to the jury. According to plaintiff's counsel, the jury foreman noted that ABD’s agreements could have been much clearer, but that it felt the integration clause in the 2002 Employment Agreement negated Shea's claims concerning his contractual rights. The jury foreman noted that although the 2002 Employment Agreement contained an illegal and unenforceable non-solicitation provision, that provision was severable from the remaining provisions of the agreement. According to defense counsel, the jury noted that they had an easy time clearing Frederick de Grosz, the individual defendant, of any wrongdoing. The jurors believed that de Grosz had tried over the years to help Shea out of some career trouble and never sought to steal his clients. With respect to the contract claim, the jury felt that Shea had to have known he was giving up property rights in accounts, including the DPR account, when he signed the later employment agreements, and if he had a problem with that, he should have raised it at the time.

Deliberation

five hours

Poll

9-3 (breach of contract for ABD), 9-3 (intentional misrepresentation for ABD), 9-3 (negligent misrepresentation for ABD), 10-2 (intentional misrepresentation for de Grosz), 10-2 (negligent misrepresentation for de Grosz)

Length

16 days