# Borders v. Crow

> Court of Appeals of Tennessee · July 13, 2000

URL: https://www.frixlaw.com/law-library/cases/1073628

## Case

- **Court:** Court of Appeals of Tennessee
- **Decided:** July 13, 2000
- **Precedential status:** Published
- **Opinion:** Opinion
- **Judges:** Judge W. Frank Crawford
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE

HARRY W. BORDERS, d/b/a RISK MANAGEMENT ASSOCIATES v.
RONNIE J. B. CROW, d/b/a RONNIE CROW INSURANCE SERVICE

A Direct Appeal from the Circuit Court for Davidson County
No. 96C-3472 The Honorable Hamilton V. Gayden, Jr., Judge

No. M1999-00985-COA-R3-CV - Decided July 13, 2000

This is a suit by employee for compensation allegedly due after discharge under oral contract
of employment. Upon finding that the discharge was for cause, the jury nevertheless returned a
verdict for the employee for post-discharge compensation. On the employer’s appeal, we vacate that
part of the judgment awarding post-discharge compensation.

Tenn.R.App.P. 3, Appeal as of Right; Judgment of the Circuit Court is Vacated and
Remanded.

CRAWFORD , P.J., W.S., delivered the opinion of the court, in which FARMER , J., and LILLARD , J.,
joined.

Dennis L. Tomlin, Hendersonville, For Appellant

Lee D. Anderson, Nashville, For Appellee

OPINION

The complaint of plaintiff, Harry W. Borders (Borders), filed September 23, 1996, alleges
that in September of 1994, both plaintiff and defendant, Ronnie J. B. Crow (Crow), are insurance
brokers associated with Liberty Insurance Agency, Inc., that Borders specialized in group health,
cancer, disability, and hospital insurance, and Crow handled primarily commercial property and
casualty insurance. The complaint avers that on or about September 24, 1994, Crow requested
Borders to assist Crow in handling the group health and other insurance programs for members of
the Teamsters Local 327. Borders avers that Crow orally agreed to pay fifty percent of all the net
commissions and fees earned by the defendant from the life, health, disability and related insurance
business that Crow obtained from the Middle Tennessee Teamsters trust fund account. The
complaint further avers that in reliance upon the oral agreement, plaintiff spent many days working
on the insurance needs, such as retaining a re-insurance company, a third party insurance

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administrator, obtaining various insurance rates from companies, structuring the insurance plans and
assisting Crow in convincing the administrator of the Teamsters trust and the employer companies
to allow Crow to write and administer the insurance program.

The complaint further avers that in about January, 1995, the Teamsters 327 and Middle
Tennessee Teamsters Trust agreed for Crow to provide the group insurance. Later on, two employer
companies, who had collective bargaining agreements with the union, agreed to allow Crow to
provide for employees’ insurance needs, specifically short and long term disability and cancer
insurance. Borders alleges that a short time after Crow started handling the trust fund insurance
business, he “maliciously and fraudulently” notified Borders that Borders would only receive a one-
third percent of the net commissions and fees earned instead of the fifty percent that they had
previously agreed upon, and that Crow “maliciously and fraudulently told Borders that he could take
one-third or leave it, or words to that effect.” The complaint further avers that the first policy period
was from March 1, 1995 through February 29, 1996. Borders avers that on or about October 9,
1995, Crow “maliciously and fraudulently” advised Borders that he was cancelling their contract
effective September 30, 1995, and that Borders would be paid through that date on the one-third
basis previously stated to him. The complaint then related various commissions and fees obtained
by Crow in amounts that should have been paid to Borders under the fifty percent basis, and on the
one-third basis. The complaint seeks commissions earned prior to termination, and the complaint
as amended seeks commissions and fees as follows:

The plaintiff avers upon information and belief that defendant
Crow because of the plaintiff’s work will receive fees and
commissions from various insurance policies from March 1, 1995 to
May 1, 2000 amounting to approximately $276,674.75 and that the
plaintiff is entitled to fifty (50%) of that amount totaling $149,301.85
plus interest and reasonable attorney fees. These figures are
assuming the group life and health partially self-funding policy
remain constant throughout the total period of the defendant’s
contract. If so, the balance due the plaintiff is $149,301.85 plus
interest and reasonable attorney fees. Had the defendant continued
to pay the plaintiff on a one-third (33.3%) basis the plaintiff would
have a balance due him amounting to $110,440.67 plus interest and
reasonable attorney fees.

* * *

It is anticipated that defendant Crow will keep the said
insurance coverage from March1, 1995 to May 1, 2000.

The complaint also seeks punitive damages and attorney fees.

The defendant’s answer denies the material allegations of the complaint and joins issue
thereon. Defendant further avers that plaintiff was terminated from his employment for cause as of

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August 1, 1995.

On May 5, 1999, the trial court entered an order granting partial summary judgment to
defendant “as to the causes of action for fraud, willful misrepresentation and deceit, and any other
cause of action relating to fraudulent conduct.” The order further provided: “that this action shall
proceed as a contract claim with no claim for punitive damages or attorney’s fees.”

Although the testimony in the record is sketchy as to details and terms of a contract, the
parties concede that an oral employment contract was made between the parties whereby Borders
would assist Crow in formulating and servicing the group health insurance program for members of
Teamsters Local 327 (herein referred to as “Teamsters” or “Teamsters Trust”). The Teamsters
participate in an ERISA health insurance trust known as Middle Tennessee Teamster’s Trust Fund.
At the time of the contract, both parties were in the insurance business, and both had an office at
Liberty Insurance Agency in Nashville.

The Teamsters’ group health insurance account was acquired by Crow and became effective
on March 1, 1995 and apparently expired April 30, 1996.1 Borders found a third party administrator
for the program. Sometime between September 29, 1995 and October 3 or 4, 1995, Borders learned
that he was being terminated by Crow. Borders has not received any monies from Crow since that
time. In September of 1996, Borders brought an action against Crow.

A jury trial was held May 10 -12, 1999. Ronald Hebert, owner of Liberty Insurance Agency,
testified on behalf of Borders. Hebert testified that Borders is an expert in life and health insurance
and that Crow primarily wrote property casualty insurance. Hebert knew that Borders was working
on the Teamsters’ account for Crow. Hebert believed that Crow had a general knowledge of health
insurance, but did not have expertise equal to that of Borders.

Borders testified that Crow approached him while they were both in business with Liberty
Insurance Agency and asked him to have lunch. Borders agreed, and during the lunch meeting,
Crow stated that he had an opportunity to write the partially self-funded group insurance program
for the Teamsters Trust. Borders testified that Crow asked him to look at the opportunity and tell
him what could be done. According to Borders, he advised Crow that there was quite a bit of
research to be done and told him what documentation he would need from the Teamsters. Crow
provided all the documentation from his client, the Teamsters, and Borders determined that the
account would be profitable. Borders prepared a quote and interviewed two third party
administrators, one of which was Adminitron. Adminitron acquired a reinsurance carrier to provide
a quote on the partial self-funded group insurance. Borders stated that he prepared a proposal for
presentation to the Teamsters in December of 1994, which demonstrated what their current program

1
The parties agree that the formulation of the insurance arrangements took place in early
1995. Crow testified that he had a written contract with the Trust Fund but had lost it. However,
he did introduce as evidence a contract between the Trust Fund and Crow dated May 1, 1996 and
to terminate May 1, 2000.

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did and provided information on two proposed plans that they could select for the Trust. Borders
conceded at trial that the Teamsters Trust account was procured by Crow and was Crow’s account.

Borders testified that the Teamsters Trust plan selected had a specific stop loss premium of
$21.08 per insured union member, per month, and an aggregate stop loss premium of 92 cents per
insured union member, per month. The average life premium was $4.01 per insured union member,
per month. The agent’s commissions and fees totaled approximately $5.00 per insured union
member, per month. The administrative cost of the plan was $21.13 per month, representing the
amount paid to the third party administrator for administering the program and managing the claims.
The proposal was entered as Exhibit No. 1.

In setting up the group health insurance account, Border stated that he and Crow put on
several meetings to present applications to the member companies. The applications were filled out
by the individuals, and Borders and/or Crow were present to answer questions. From the
applications they would prepare a report to be sent to the employer to enable them to setup payroll
deductions to pay the employees’ premiums. Borders testified that he also developed a cancer
program and disability program for the Teamsters Trust.

Borders presented copies of checks that he received from Crow and testified that they
represented one-third of the commissions and fees earned from the Teamsters’ account through July
31, 1995. Borders received five checks totaling $6,539.17, copies of which were admitted at trial
as exhibits: April 2, 1995 in amount of $542.35; June 17, 1995 in the amount of $1,116.41; July 7,
1995 in the amount of 1,339.54; August 22, 1995, in the amount of 1,825.57; and September 14,
1995, in the amount of $1,767.43. Borders explained that there was a two month lag between the
time that the commissions were earned and when he received his portion. Borders received the last
check from Crow on September 14, 1995 in the amount of $1,767.43, representing his share of the
premiums generated during July 1995. He was never paid for his work in the months of August and
September 1995.

Borders testified that Crow originally agreed to compensate him with one-half of the
commissions and fees earned from this business. Later, Crow unilaterally changed the agreement
so that Borders would receive only a one-third share.2 Borders claimed to have obtained all of the
insurance companies to write the necessary insurance polices and to have located an administrator
for the group life and health program. Borders claimed that when Crow began paying him on a one-
third basis, instead of the one-half basis verbally agreed to, he told Borders to “take it or leave it.”
Borders presented as Exhibit No. 5 copies of compensation statements paid to Crow by Adminitron,
the third party administrator, revealing that there were two checks every month from Adminitron to
Crow, one for commissions and one for fees.

2
The trial court instructed the jury that the agreement was one-third and not one-half of the
commissions and fees. This is quite unusual in light of the disputed testimony on this point.
However, Borders has not presented any issue concerning this instruction.

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Borders also presented a 1995 IRS 1099 miscellaneous form from Adminitron, Inc., to
Ronnie Crow Insurance in the amount of $15,552.46, and a 1996 IRS 1099 miscellaneous form
from Adminitron to Crow in the amount of $10,872.98, representing reinsurance commissions
earned in those years. Borders presented a 1995 IRS 1099 miscellaneous form from the Middle
Tennessee Teamsters Trust Fund to Ronnie Crow in the amount of $18,540.29, and a 1996 IRS 1099
miscellaneous form in the amount of 31,863.78 or 21,863.78 (the first digit is not legible),
representing administrative fees and agent fees for the group insurance program and life insurance
program earned during those years. Borders presented a 1995 IRS 1099 miscellaneous form from
National Travelers Life Company to Ronnie J. Crow in the amount of $7,594.72, and a 1996 IRS
1099 miscellaneous form in the amount of $14,532.49, representing commissions earned and paid
for the cancer coverage provided to members who were covered.

Using Crow’s IRS 1099 forms, Borders produced Exhibit 18, a computation of damages
representing one-half and one-third of the commissions and fees earned on the Teamsters’ account.
Borders’ calculations indicate that in September of 1995, Crow received commissions of $1,920.85
and fees of $3,109.60 totaling $5,030.45. Border states that he used the figure from September of
1995 in his damage calculations, because that was the last month that he was involved in this
business. Borders calculated his damages by taking the $5,030.45 figure, representing total fees and
commissions for group life and health insurance and for disability and cancer insurance, and
multiplying by 55, the number of months left under the contract with the Teamsters that ran to May
1, 2000. Borders calculated the gross projected total commissions and fees paid to Crow based on
the participation as of September 1995 at $276,674.75. Borders represented that the actual records
indicate that Crow received $29,502.93 from March 1, 1995 to October 1, 1995. The total actual and
projected group life and health plan commissions and fees for the whole contract was therefore
$306,177.68. Borders testified that based on the 1099 forms from National Travelers Life Insurance
Co., the cancer insurance carrier, and Phoenix Home Life Insurance, the disability insurance carrier,
Crow received $31,900.00 over a two-year period. However, Borders was unsure if this coverage
was still offered, so included no projected commission amount from National Travelers Life or
Phoenix Home Life in his calculations. Borders testifies that according to his figures, Crow’s total
commissions and fees from all sources, the group life and health, the administrative fees, the cancer
coverage, and the disability coverage, would total $338,072.39 over the whole period of the contract
with the Teamsters Trust. Since Borders had been paid $6,539.17, he claimed that his total
commission, figured at one half should be $162,000.00, and figured at one-third should be
$106,151.00. Borders pointed out that his calculations included no commissions due him for people
that were added to the plan after his termination.

Crow disputed the fact that he agreed to pay Borders one-half of the commissions and fees
and testified that the agreement was to pay Borders one-third of the commissions and fees. Crow
acknowledged that with some help from Borders he gathered the necessary information needed to
generate a proposal, which was presented to the Teamsters Trust. Crow points out that the
Teamsters Trust was at all times his client.

Crow testified that he had complaints from the trustees of the Teamsters Trust regarding
Borders’ acquisition of a fax machine and his interfering in the trust’s business. He also noted that

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the Trust complained about Borders’s misrepresentation of coverage under a disability policy.

Crow testified that he had no choice but to terminate Borders because he had been given an
ultimatum by members of the Teamster’s Trust to get rid of Borders or they would get rid of him.
Crow stated he terminated Borders for cause in September of 1995 and that he owed him no more
commissions and fees.

Crow stated that he agreed to pay Borders one- third on the group health insurance; however,
Borders’s main responsibilities were for the disability and the cancer insurance. Crow discontinued
the disability and cancer coverage after he terminated Borders and went back to his original
position, agent and consultant for the Trust. Crow testified that he continues his duties as agent and
consultant on a daily basis, and he continues to be paid a monthly commission by the Teamsters
Trust.

Crow presented the testimony of Dave Hodgin, chairman of the board of the Middle
Tennessee Teamsters Trust, who stated that he had contacted Crow in late 1994 or 1995 upon his
lawyer’s advice that the trust needed a representative agent. Hodgin testified that he did not meet
Borders until about nine months to a year after he contacted Crow. Crow introduced Borders to
Hodgin when Hodgin expressed a need for cancer and disability insurance. Hodgin testified that in
a presentation, Borders told employees of two companies represented by the Teamsters Trust that
the disability and cancer insurance would be integrated with the workman’s compensation payments.
Problems arose when a worker was hurt on the job and was told by the insurance company that their
policy did not pay when he was off work receiving worker’s compensation, in other words, was not
an integrated policy. Hodgin contacted Crow about the problem he perceived had been caused by
Borders, and Crow was able to persuade the insurer to reissue the policies removing the exclusion.

Hodgin further testified to another incident in which Borders allegedly ordered a new fax
machine for the Teamsters Trust office that had not been approved. Hodgin stated that Borders was
causing problems, and that he told Crow that “Harry had to go.” Hodgin stated that at that point he
would have terminated the affiliation with Crow. Hodgin testified that the Teamsters Trust filed
a complaint alleging theft against Adminitron, the third party administrator obtained by Borders.

Crow presented the testimony of Jimmy Ray White, a business agent for the Teamsters and
a Trustee of the Middle Tennessee Trust. White testified that he was present during one of the
presentations made by Borders, and that Borders represented that the disability insurance would be
integrated with the worker’s compensation. White testified that he advised Crow in early 1995 that
he would be terminated if Borders was not terminated. White claimed that his reasons included
Borders’s misstatements regarding the integrated disability insurance, Borders’ ordering office
equipment without authorization, and his opinion that Borders was obnoxious.

After the presentation of proof, the judge found that there was an agreement between the
parties that Borders would receive one-third of the commissions and fees, not one-half, and that
Borders was entitled to one-third of commissions and fees up until the time that he was discharged
in October of 1995. The jury was so instructed. The judge also instructed the jury that they were

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to determine if Borders was discharged for cause and to determine if Borders is entitled to funds after
discharge. In instructing the jury, the trial court stated in pertinent part:

Now, ladies and gentlemen of the jury, a contract for
employment for an employee for an indefinite term is a contract at
will and it can be terminated by either party at any time without
cause. It is true, however, that when a person is working at will and
is a sales person, and is on what is known as what is called residual
commissions, may in some cases recovered all or a portion of residual
commissions alleged to be owed after the employment. In
determining the intention of the parties, one consideration is
circumstances of the parties at the time the contract was formed. An
unexpressed obligation may be implied where intended. The course
of conduct is the strongest evidence of the original intent. But you
may also consider such things, as I said before, the words of the oral
contract, the custom of the business, the relationship of the two
parties, and also to the customer involved in this lawsuit, who
procured the original business, who was responsible for the business,
who served the account and what time and what was the subject of
serving the account in relation to who got the business. In other
words, you may compare the act of serving the account, who got the
business relationship between these two people and the Teamsters
Trust.
You may consider the relationship between Teamsters Trust
and the two parties; you may consider malfeasance or negligence; you
may consider other misconduct and you may consider competence.

* * * * * *
[I]f you find that the plaintiff was owed money before he was
terminated, he’s entitled to those damages, period. As a matter of law
he’s entitled to those damages up until the time you find he was
discharged and whether or not he was actually paid for the date of
discharge, that is in dispute, as well as the date of discharge. As to
whether or not he’s entitled to any residual commissions, the total
amount claimed or any portion thereof, or none thereof, is entirely up
to you.

The record indicates that during deliberation, the jury asked two questions. The first question
was: “[c]an we have a legal definition of termination for cause as defined under the state statute?”
The trial judge responded “[t]here is no applicable definition for termination of cause. There are
many cases that decide whether a person was discharged or not discharged [for cause]....in this case,
the termination for cause is a question for you to decide. There is no definitive guideline.” The
second question was:

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[i]f we find that the plaintiff was terminated for cause, can we still
award commissions and fees from the time he was terminated. If so,
is there any set amount or must we still award commissions and fees
from the time he was terminated. If so, is there any set amount or
must we use a collective best judgment.

The trial judge responded:

[y]es, you still may award the plaintiff if you collectively and
unanimously feel he is entitled to commissions and fees. Likewise,
you may also determine that he is not entitled to fees and
commissions. But that decision must also be unanimous.
If you decide to award the plaintiff commissions and fees, it’s
totally up to you ...it’s not necessarily a fixed sum, but a sum you
collectively believe to be fair under the circumstances of the case.

After deliberation, the jury found in favor of Borders in the amount of $6,000.00 for
commissions and interest not paid before his termination.3 In addition, the jury found that Borders
was dismissed for cause, but was due one-third commissions and fees in the amount of $92,133.00
on the group life and health plan for the time period of October 1, 1995 to May 1, 2000. The jury
verdict totaled $98,133.00 in favor of Borders.

Thereafter, Crow filed a motion for a judgment notwithstanding the verdict, a new trial, or
a suggestion of remittitur. On July 15, 1999, the trial court ordered “that the verdict to the jury be
and is hereby reduced from $98,133.00 to $30,000.00, and if the plaintiff declines to accept this
remittitur, a new trial shall be allowed.” Borders filed a notice stating that “he will reluctantly accept
the suggestion of remittitur offered by the court if the defendant fails to appeal this case; otherwise,
the plaintiff will also appeal so that the jury verdict will be reinstated.” Both parties filed notices
of appeal on August 16, 1999. On October 13, 1999, this Court entered an order stating that an order
suggesting remittitur is provisional only and is not self-executing. Therefore, even though the
plaintiff had filed a qualified notice of acceptance as an acceptance under protest, the trial court had
not yet entered an order unconditionally reducing the amount of the judgment, and judgment was
not final. The trial court entered a final order on November 11, 1999 denying Crow’s motion for
judgment notwithstanding the verdict or for a new trial but finding that the $98,133.00 jury verdict
was outside the range of reasonableness, and thereby reduced the jury verdict from $98,133.00 to
$30,000.00 plus the costs. Both parties have appealed.

The issues raised on appeal by appellant Borders are, as stated in his brief:

I Did the Trial Court err in granting a remittitur from
$98,133.00 to $30,000.00?

3
Crow does not take issue with this part of the judgment.

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II Should the Court of Appeals reinstate the verdict of the jury and award
damages for the Defendant’s appeal?

In addition appellee Crow raises one issue on appeal, as stated in his brief:

III The trial court made three, key factual findings: (a) that Mr. Borders was Mr.
Crow’s employee at will who, (b) was terminated for cause and who,
( c) did not procure certain business in dispute. Given these
findings, did the trial court err as a matter of law in failing to
order a complete remittitur of jury’s verdict that Mr. Crow
owes Mr. Borders post-termination commission from the
disputed business?

We perceive the dispositive issue to be whether the trial court erred in denying the motion
for judgment notwithstanding the verdict as to the claim for compensation after the date of
termination. Or to put it another way in the particular stature of this case, is there any material
evidence to support the jury verdict for post-discharge compensation.

The rules for considering post-trial motion for a judgment notwithstanding the verdict are
well known.

A post-trial motion for the entry of judgment in accordance
with a motion for a directed verdict made during the trial must be
gauged by the usual rules relating to directed verdicts. Those rules
require that the trial judge, and the appellate courts, take the strongest
legitimate view of the evidence in favor of the opponent of the
motion, allow all reasonable inferences in his or her favor, discard all
countervailing evidence, and deny the motion where there is any
doubt as to the conclusions to be drawn from the whole evidence. A
verdict should not be directed during, or after, trial except where a
reasonable mind could draw but one conclusion.

Holmes v. Wilson, 551 S.W.2d 682, 685 (1977).

While the record does reflect that there was an agreement between the parties for Borders to
assist Crow in formulating and servicing the insurance needs of the Trust and was to be either at the
rate of fifty percent of Crow’s fees and commissions or a one-third of Crow’s fees and commissions
for this service, the record is void of any evidence of any other terms of the contract. The trial court
instructed the jury that the contract between Borders and Crow was a contract terminable at will, and
that it could be terminated by either party any time with or without cause. It is undisputed that the
business itself was procured by Crow, and the evidence reflects that Borders was hired for his
expertise in servicing and administration of the requirements of Crow’s contract with the Trust Fund.
We need not consider whether in a contract terminable at will Borders would be entitled to
compensation from and after his discharge, because in the present case the jury determined that

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Borders was discharged for cause.

In Nelson Trabue, Inc. v. Professional Management-Automotive, Inc., 589 S.W.2d 661
(Tenn. 1979), the question involved was whether a corporate manager employee is entitled to
compensation for services for the full term of its contract, even though there was a discharge for
cause by the employer. Id. at 661. In holding that the corporate manager was not entitled to the
balance of the annual compensation through the term of the contract, the Court said:

The general rules with regard to contracts of employment are
well settled. They are stated in the case of Little v. Federal
Container Corp., 61 Tenn. App. 26, 452 S.W.2d 875 (1969) as
follows:

“Generally, a contract of employment for an
indefinite term is a contract at will and may be
terminated by either party. [citations omitted].
Whereas, a contract for a definite term may not be
terminated before the end of the term, except for
cause or by mutual agreement, unless the right to do
so is reserved in the contract. 56 C.J.S. Master and
Servant § 30, p. 411.

“An employer has the right to discharge an
employee at any time for just cause. The fact the
employer bears with the incompetency or
irregularities of such employee for a time does not
estop the employer from discharging the employee for
such incompetency if it continues.” 61 Tenn. App. at
31-32, 452 S.W.2d at 877-78.

In the earlier case of Jackson v. The Texas Company, 10
Tenn.App. 235, 244 (1929), it was held that even where an agency is
for a definite term, the principal has a right to revoke it before the
expiration of the term without incurring liability for damages because
of the failure of the agent faithfully to perform his express or implied
undertakings.

Id. at 663.

If, as held in Nelson Trabue, an employee in a contract for a definite term is not entitled to
post-discharge compensation if discharged for cause, it necessarily follows that in a contract
terminable at will, a discharge for cause precludes post-discharge damages. Although the trial court
incorrectly instructed the jury in this regard, neither party has raised the incorrect jury instruction
as an issue for review.

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Accordingly, we find that there is no material evidence to support the jury verdict awarding
plaintiff damages for post-discharge compensation. Therefore, that part of the judgment awarding
post-discharge damages is vacated, and the case is remanded to the trial court for entry of a judgment
on the jury verdict in the amount of $6,000.00 for compensation due to the date of termination.
Costs of the appeal are assessed one-half to appellant, Harry Borders, and one-half to appellee,
Ronnie J. B. Crow.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/1073628. Public record. Not legal advice.