Pasant v. Jackson National Life Insurance

Citations: 52 F.3d 94; 1995 U.S. App. LEXIS 9535; 1995 WL 241772Docket: 94-10153

Court: Court of Appeals for the Fifth Circuit; April 26, 1995; Federal Appellate Court

Original Court Document: View Document

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James Pasant appeals the district court's decision that granted Jackson National Life Insurance Company (JNL) summary judgment while denying his cross motion for summary judgment. The court's ruling is partially reversed and partially affirmed.

JNL was established in 1961 by Anthanese J. Pasant, James's father, who retained leadership positions after JNL was acquired by Prudential PLC in 1986. Following the acquisition, Prudential entered into renewable one-year contracts with the Pasant family, including a written employment agreement with James Pasant on September 18, 1986 (the "1986 contract"). This contract stipulated that James would serve as vice-president and managing officer of JNL's Texas subsidiary, with a guaranteed minimum income of $200,000 and an $87,500 non-compete payment if terminated. The initial term was from November 25, 1986, to November 24, 1987, with potential for two renewals.

After Prudential's acquisition, the JNL Board of Directors established new committees, with A.J. Pasant and his sons serving on the executive committee. JNL renewed James's contract for a second term until November 24, 1988. Upon the conclusion of this term, James sought to renegotiate his contract, resulting in a notification from Prudential that he would remain in his role until a merger with the parent company and would receive a salary increase to $250,000.

Dissatisfied with the terms, James negotiated further with A.J. Pasant, leading to an amendment on November 21, 1988, which raised the non-compete payment to $175,000 and included a $150,000 relocation allowance. Additionally, a Deferred Compensation Agreement was created, providing James with $100,000 in quarterly payments over five years, but Prudential was not given a copy of this agreement.

A.J. Pasant executed a second amendment to a 1986 contract on November 28, 1988, which clarified that J. Pasant's title change to regional manager would not significantly impact his duties, guaranteed a minimum salary of $250,000, and extended the employment agreement until December 31, 1989. Prudential became aware of the amendments in early 1989. In October 1990, David Pasant informed J. Pasant that JNL would honor the second amendment but would not accept the modifications from the first amendment or the Agreement executed on November 21, 1988. J. Pasant was terminated from JNL in February 1991, and JNL refused to fulfill the first amendment or Agreement terms, including a non-compete payment of $87,500 from the original contract. J. Pasant filed a lawsuit in Texas state court in July 1991, which JNL removed to federal court based on diversity jurisdiction. JNL moved for summary judgment, claiming the first amendment and Agreement were unenforceable, while J. Pasant filed a cross-motion asserting they were ratified by JNL. The district court granted JNL's motion and denied J. Pasant's, ruling that A.J. Pasant lacked authority for the first amendment and Agreement, that they lacked consideration, and rejected J. Pasant's equitable estoppel defense. However, the court ordered JNL to pay the non-compete amount of $87,500. The review of the summary judgment is de novo, affirming no genuine issue of material fact existed. J. Pasant claimed A.J. Pasant had exclusive authority over his compensation matters since 1972, supported by evidence of salary increases and bonuses approved by JNL and Prudential, and that the second amendment was ratified by JNL through a letter from David Pasant.

Actual authority in Texas encompasses express and implied authority. Express authority occurs when a principal clearly communicates to an agent the desire for a specific action to be taken. Implied authority arises when no express authority exists, but circumstances suggest the agent was authorized, often inferred from indications of the principal, necessary implications of other authorized acts, or a prior course of dealing. A genuine issue of material fact exists regarding whether A.J. Pasant had the implied actual authority to negotiate and execute certain agreements. Evidence indicates that J. Pasant's negotiations were consistent with an ongoing course of dealing that suggested A.J. Pasant had such authority, despite Prudential's establishment of a compensation committee after a takeover. The committee's authority did not explicitly revoke A.J. Pasant's ability to negotiate compensation matters, and both Prudential and JNL continued to approve raises and bonuses awarded by A.J. Pasant.

J. Pasant claims that his future services as a regional manager for JNL constituted adequate consideration for the agreements in question, as he worked until February 1991 based on the first amendment and Agreement, despite the original contract expiring in November 1989. In Texas, consideration can be a benefit to the promissor or a detriment to the promisee, with the burden to prove a lack of consideration resting on the party making that claim. JNL argues that the compensation was merely a reward for past services, which is insufficient for valid consideration, citing A.J. Pasant's communications that referenced J. Pasant's long-standing efforts. The Agreement also acknowledges J. Pasant's valuable prior services to JNL.

A.J. Pasant's motivations included rewarding J. Pasant for past services, which, alongside a combination of gift and bargain, constitutes adequate consideration for the disputed amendments. The 1986 Contract expired in November 1989, making JNL's argument that J. Pasant's continued services were covered by that contract invalid. The services rendered from November 1989 until J. Pasant's termination in February 1991 provided sufficient consideration for the agreements. The district court's summary judgment on the issue of consideration is reversed. On appeal, J. Pasant raised issues of express authority, apparent authority, estoppel, and ratification, with the court agreeing that A.J. Pasant had neither express nor apparent authority, estoppel did not apply, and JNL's silence did not ratify the first amendment and Agreement. The court concludes by reversing the district court's judgment denying relief to J. Pasant regarding the enforceability of the first amendment and Agreement, remanding the claims for further examination of A.J. Pasant's implied authority and the consideration for the agreements, while affirming the district court's findings on other issues.