Vazirani v. Heitz

Citations: 876 F. Supp. 2d 1249; 2012 WL 2449854Docket: Civil Action Nos. 09-1311-MLB, 11-1032-MLB

Court: District Court, D. Kansas; June 27, 2012; Federal District Court

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Defendants filed a motion for summary judgment, with plaintiffs responding and defendants replying. The court established several undisputed facts relevant to the case. Anil Vazirani was an independent insurance agent contracted with life insurers, while Mark Heitz and Jordan Canfield held executive positions at Aviva, overseeing producer contracts, including those with Vazirani. Canfield managed independent distribution and left Aviva in August 2009. Justin Jacquinot, a regional vice president at Aviva, interacted with Vazirani in a sales capacity. 

Vazirani owned two entities: Secured Financial Solutions, LLC (SFS), a non-operational marketing name with no contractual ties to Aviva, and Vazirani Associates Financial, LLC, an independent marketing organization (IMO) that collaborated with multiple insurance companies. Aviva Life and Annuity Company (Aviva) utilized various marketing organizations but did not consider Vazirani’s organization as a key partner. Advisors Excel, a competing IMO, had been a key distribution partner since 2007. Annexus Distributors AZ, LLC, developed exclusive annuity products with Aviva and determined which IMOs could market these products. Only a select group of approximately 12 IMOs, including Financial Independence Group (FIG) and Advisors Excel, were authorized to market Aviva's Annexus products, excluding Vazirani, Vazirani Associates, and SFS. Creative Marketing International Corporation (CMIC) also served as a marketing organization for multiple life insurers.

CMIC, a subsidiary of Aviva, competed with Vazirani for downline agents. Innovation Design, a product development company, developed insurance products but did not market or sell them. Aviva had specific rules for Independent Marketing Organizations (IMOs), including a prohibition on recruiting agents from another IMO by offering higher commissions during the first six months of transfer. However, there were no restrictions on binding downline agents to non-compete agreements.

Vazirani was authorized under his contract with Aviva to sell life insurance and annuity products and to recommend additional agents for his downline. From 2005 to April 2009, he operated as an independent agent, generating significant commissions from personal sales and from agents in his downline, with about 100 downline producers contracted with Aviva, contributing approximately 40% of his income from Aviva annuities.

Vazirani was a top producer, generating almost $10 million in annuity premiums personally and nearly $100 million through his team from 2005 to 2008, with no consumer complaints or performance issues noted until 2008. In that year, Aviva began to observe potential issues regarding Vazirani's conduct.

Aviva prohibited side-deals involving payments for production with non-contracted organizations. In 2008, Aviva terminated a contract with a marketing organization over such concerns, and there were suspicions about Vazirani's possible similar arrangements with Covenant Reliance Producers (CRP) and its principal, Matt Rettick, despite Vazirani knowing Aviva did not wish to engage with CRP.

Jacquinot interrogated Vazirani regarding his dealings with Rettick/CRP. On September 6, 2008, Vazirani denied any commission arrangements with Rettick, despite having agreed to pay Rettick/CRP 50 basis points on all Aviva premiums generated. He estimated payments to Rettick/CRP at approximately $240,000 for 2008. Vazirani's associate, James Regan, also believed that CRP should not receive payments related to Aviva business, and he instructed in an email to avoid leaving a "paper trail" that could connect CRP to the Aviva contract. Vazirani further communicated with a CRP executive about maintaining confidentiality regarding their compensation agreement.

On August 19, 2008, Regan sent a blast email, misrepresenting himself as Phil Graham from FIG Marketing, promoting Aviva’s Annexus products. Graham had explicitly prohibited this email, fearing it could jeopardize FIG’s marketing authorization with Aviva. This incident prompted Advisors Excel to report it to Aviva and Annexus Distributors, alarming Ron Shurts, a principal at Annexus, who insisted on Vazirani's termination due to the email.

In early 2008, Vazirani attempted to recruit agent Lee Hyder from Advisors Excel by offering him a higher commission, which Advisors Excel reported to Jacquinot. Both Jacquinot and Canfield viewed this as a serious violation, leading to Vazirani facing disciplinary action instead of immediate termination. However, by early November 2008, Canfield decided to terminate Vazirani's contract due to ongoing issues with his business practices and complaints from key partners, including Advisors Excel and Annexus Distributors. Canfield informed Vazirani of the termination on or about November 6, 2008, which also affected the contracts of agents within Vazirani's downline.

On December 12, 2008, Aviva’s attorney informed Vazirani’s lawyer of Aviva's intent to terminate the contract without cause, effective December 19, 2008. This date conflicted with a January 30, 2009 termination discussed by Canfield on November 6, 2008. Subsequently, on December 25, 2008, Aviva confirmed the new termination date of January 30, 2009, aligning with Vazirani's claims. On February 9, 2009, Aviva issued formal written notice of contract termination, effective April 1, 2009, to Vazirani and his downline agents. In a March 20, 2009 letter, Clendenin explained that the termination stemmed from a strategic shift in Aviva’s distribution approach due to market conditions affecting annuity sales, rather than any specific issues with Vazirani. Aviva sought to exert control over its annuity sales during a sales bubble and initiated widespread contract terminations, including those of groups with higher production than Vazirani. Although Vazirani speculated about the continuity of his contract beyond April 1, 2009, he believed it would remain in effect since no other contracts had been terminated. The document also references Heitz’s academic background at Washburn University and his fraternity affiliation, noting that other individuals mentioned graduated significantly later.

Callahan, Foster, and Thompson, members of the Sigma Phi Epsilon fraternity at Washburn University, co-founded Advisors Excel. In November 2008, Canfield was informed by Vazirani about the termination of Aviva’s contract but had not considered leaving Aviva at that time. It was only in April or May 2009 that Canfield began contemplating departure, later receiving several job offers before leaving Aviva in August 2009 to become CEO of Innovation Design, in which he and the Advisors Excel founders held equal shares. During its initial two years, Innovation Design operated from Advisors Excel's headquarters. 

The affiliation between Callahan, Foster, and Heitz through their fraternity was deemed unrelated to the contract termination of Vazirani, who was an independent contractor, not an employee, and had no contractual relationship with Heitz or Canfield. The case centers on Vazirani’s claim that Heitz and Canfield conspired outside their roles at Aviva to have Vazirani’s contract terminated for personal gain and to benefit Advisors Excel and its founders. 

Vazirani argues that this alleged conspiracy amounted to tortious interference with his contracts and business expectancies. Heitz and Canfield maintain that terminating Vazirani’s contract aligned with Aviva’s interests in reducing annuity sales and deny any personal benefits or financial interests in Advisors Excel or Annexus. Vazirani challenges these denials by referencing communications suggesting that Canfield acted on directives from Advisors Excel principals, including a specific instance where support was expressed for Canfield's actions. Additionally, Aviva’s legal counsel attributed the contract termination to a strategic shift rather than any individual actions.

Aviva terminated Mr. Vazirani and his downlines during the early phase of a deferred annuity sales surge, aiming to concentrate on core marketing groups to manage annuity sales. This decision was independent of Mr. Vazirani’s performance or any alleged communications involving CMIC or Annexus Group. Aviva's stated reasons for terminating Mr. Vazirani's contract are claimed to be false, as he was a 'B' level producer affiliated with the Financial Independence Group (FIG), a core group Aviva intended to prioritize. He was also recognized at the 'W' level under FIG for another distribution channel, suggesting his alignment with Aviva’s strategic focus. Significant backing from FIG’s Chief Sales Officer, Phil Graham, further supported Mr. Vazirani's position, indicating that his termination was unwarranted under Aviva's new marketing strategy.

Justin Jacquinot, Aviva’s Vice President of Sales and Recruiting, who had knowledge of issues concerning Mr. Shurts and Advisors Excel, did not recommend Mr. Vazirani's termination. However, Defendant Canfield instructed Jacquinot to proceed with the cancellation of Mr. Vazirani's contract. Canfield later left Aviva to co-found Innovation Design Group with principals of Advisors Excel.

Mr. Vazirani disputes several facts related to his dealings, asserting that his interactions with agent Lee Hyder were misrepresented, as Hyder was allegedly sent to undermine him rather than join his team. Moreover, Mr. Vazirani clarifies that he did not split commissions with Rettick/CRP but provided marketing reimbursements for support services. Additionally, SFS has no downline producers and has not experienced revenue loss due to the terminations.

Defendants assert that they have contracts with Plaintiffs' downline agents, contradicting claims that SFS lacked a business expectancy to interfere. Following Aviva's termination of Mr. Vazirani's producer contract, numerous downline agents have severed ties with SFS, complicating recruitment efforts and damaging SFS’s brand reputation, leading to substantial damages for both Mr. Vazirani and SFS. The court will evaluate whether Vazirani's responses to Heitz and Canfield create trial issues, although the relevance of the 'Metro' contract termination is unclear. Relationships among individuals mentioned, such as Callahan and Canfield, are deemed irrelevant. Claims regarding the 'falsity' of the Clendenin letter lack factual support, and Vazirani does not dispute Aviva's broader termination strategy affecting multiple producers. His assertion that Jacquinot did not recommend his termination is countered by evidence that Canfield left Aviva to start a competing business, with no support for claims of financial interest by Heitz and Canfield in the termination or related companies. Vazirani's denials of specific defendants' facts are seen as admissions lacking factual backing. The applicable law for summary judgment states that a party is entitled to judgment if there are no genuine issues of material fact. Under Arizona law, corporate officers cannot interfere with their corporation's contracts unless their actions are motivated by personal interests. The court previously denied a motion to dismiss Vazirani's tortious interference claims, allowing the case to proceed if Plaintiffs can demonstrate the defendants acted contrary to Aviva’s interests.

Plaintiffs claim they successfully sold millions of dollars in policies for Aviva without receiving customer complaints. Despite defendants arguing that plaintiffs were no longer part of Aviva’s business model, the court must view the facts favorably towards plaintiffs. The court finds that defendants acted contrary to Aviva’s interests and that they had personal motivations for their actions. Specifically, plaintiffs allege that Canfield benefited financially after leaving Aviva to work for Advisors Excel, while Heinz sought to transfer business to associates in his fraternity. These claims suggest that defendants’ actions were driven by self-interest.

Under Arizona law, intentional and improper interference with a contract requires that a defendant intentionally causes or knows their actions will likely result in contract termination. Plaintiffs have adequately alleged that defendants intended to induce Aviva to terminate their contract and engaged in improper conduct, such as recording conversations and attempting to damage plaintiffs’ relationships with Aviva, alongside allegations of racial bias against Vazirani.

Defendants argue that plaintiffs cannot claim tortious interference because they lacked a future interest in their at-will contract. However, Arizona law allows for such claims even with at-will contracts, as long as they are ongoing until termination. The court notes that Vazirani's assertions of intentional interference, based on a letter claiming Aviva's termination reasons were false, do not implicate Heitz or Canfield since they were not mentioned in the letter and there is no evidence they were aware of it. Vazirani’s argument that Aviva had "no cause" to terminate his contract is undermined by the fact that the contract did not require cause for termination and that his conduct provided sufficient grounds for Aviva to act as it did.

Vazirani's claim of intentional interference centers on what he terms a 'quid pro quo' involving Canfield's formation of Innovation Design in August 2009 with members of Advisors Excel, while Heitz is not included in this claim. Vazirani argues that this was in exchange for Canfield's protection of Advisors Excel and the termination of his contract. However, there is no factual evidence to support this assertion, nor any link between Canfield's earlier decisions regarding Vazirani and his actions concerning Innovation Design. Furthermore, Vazirani's claim that defendants' affiliations with a university and fraternity compromised Aviva's interests in retaining him lacks substantiation, as there is no evidence of Canfield's fraternity connections or any relevant relationship with Heitz.

The court notes that despite allowing Vazirani some leeway in denying the defendants' motion to dismiss and providing guidance on necessary proof under Arizona law, he has only presented unsupported allegations and conclusory statements. He has not contested Aviva's business model changes impacting his contract or shown that these changes were aimed specifically at terminating his employment, nor has he proved any financial benefit to Canfield from leaving Aviva. Consequently, the court finds no evidence that Canfield or Heitz acted with improper intent regarding Vazirani's contract.

Vazirani's conspiracy and aiding and abetting claims rely on the survival of his tortious interference claims, which the court has determined do not hold. Therefore, these claims are also dismissed. The court grants the defendants' motion for summary judgment and instructs the clerk to enter judgment in their favor. It also notes that any motion for reconsideration must comply with specific page limits and standards. Additionally, Vazirani's assertion of retaliation for whistleblowing activities is not considered, as it was not part of the pretrial order.

Canfield and Callahan were not shown to be 'fraternity brothers,' as Jacquinot's testimony indicated he did not make any recommendation about them. The court acknowledged the plaintiffs' claims of interference with a contract and interference with a business expectancy, noting that Arizona law treats these claims similarly. Consequently, the court combined the analysis for both claims. The information from the complaint was found to be inaccurate, particularly regarding Canfield's employment status—he left Aviva to become the CEO of Innovation Design. The supporting evidence, an email expressing approval of Jordo, did not reference Vazirani. The court upheld the defendants' motion for summary judgment on SFS’ claim of tortious interference, determining that SFS lacked a contract with Aviva and that the plaintiffs failed to demonstrate that the defendants acted outside their employment scope in terminating any business expectancy.