Commission Case Stays In Texas

Agents were supposed to get a high commission for the first year each policy was in force, and a small renewal commission in subsequent years, according to a brief filed by National Group.

The rate of the commission, which is in dispute, was either 88% or 110% of the first-year premium, along with a 27% production bonus NGU says.

Southern Security could charge back the unearned portion of commissions when policies lapse, but it also paid NGU a small percentage of the commissions in the form of an "override," NGU says.

Security National acquired Southern National in 1999. NGU sued Southern National in state court in March 2000 over what it said were problems with Southern National commission calculations.

Southern Security responded by accusing NGU of interfering with its relationship with insurance agents. It also asked the court to transfer the action to Utah, under a federal law that permits courts to transfer cases for the convenience of the parties.

"The moving party bears the burden of proving that transfer is appropriate," Judge Means wrote in his opinion.

Relevant factors include the plaintiffs choice of a forum, the convenience of parties and witnesses, the place of the alleged wrong, the location and cost of lawyers, and the relative congestion of the courts, the judge wrote.

NGUs preference is especially important, because it is the plaintiff, and its own principal place of business is in North Texas, the judge said.

Moreover, the judge wrote, leaving the case in North Texas should be convenient for most witnesses, because six of the seven key witnesses who live in Utah are employees of Security National or its subsidiaries.

Reproduced from National Underwriter Life & Health/Financial Services Edition, December 10, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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