January 11, 2012 – The insurance agency headed by the president of the Massachusetts Urban Agents Association, Jason Calianos, has lost a bid to have the Superior Court rule that the agency’s ERP contract with Commerce Insurance continued in force after the establishment of the MAIP.
Jason Calianos d/b/a Calianos Insurance Agency, Inc. sued Commerce in October, 2010, on a number of grounds including breach of contract, unfair and deceptive business practices, breach of the implied covenant of good faith and fair dealing, and interference with advantageous business relations.
Judge Judith Fabricant, a judge of the Superior Court’s specialized Business Litigation Session, has ruled that Commerce is entitled to summary judgment on all of the claims brought by the agency.
Suit over whether ERP contract or MAIP Rules had priority
The Calianos Agency was assigned to Commerce as an ERP in 2006. The assignment as an exclusive representative producer was made under the then rules of Commonwealth Automobile Reinsurers (CAR) that required a separate and distinct contract between the ERP and the servicing carrier.
The contract the agency received from Commerce had a provision that stated it could only be amended “upon not less than one hundred and eighty (180) days notice.” After the MAIP became effective April 1, 2008, Commerce informed the agency that Commerce was not going to offer the agency a voluntary automobile appointment, and that, “by operation of” the rules of MAIP, “your authority to solicit and bind Commerce Insurance . . . will be reduced.” Effective April 1, 2009, Commerce began to “non-renew” all of the agency’s existing policies that did not meet the definition of Clean in Three.
The agency suit alleged that Commerce’s actions effectively amended or terminated the ERP contract without the required hundred and eighty day (180) notice. Usually, the failure to give the correct notice required by a contract is a breach that could entitle a party to the contract to damages. In this case, Commerce argued to the court that the establishment of the MAIP legally trumped any provisions of the contract regarding notice.
Court rules all ERP appointments terminated when MAIP commenced.
In her decision, Judge Fabricant found that the Calianos-Commerce agreement was both limited to the terms of CAR’s assignment of the agency to Commerce as an ERP and to CAR’s Rules of Operation, Manual of Administrative Procedures, and bulletins and instructions. Based on that finding the judge ruled that On April 1, 2009, when the MAIP replaced CAR, all ERP appointments, including Calianos’s appointment to Commerce, effectively ceased and that: “…. , the agreement that forms the basis of Calianos’s claim terminated by operation of law on that date.”
The court also ruled that the letter notifying the agency on January 23, 2009, that its authority would be terminated as of April 1, 2009, did not “effect any amendment to the agreement; it simply informed Calianos of his status under the new system established by law.”
Appeal period still open
The agency has until January 21, 2012, to file an appeal of Judge Fabricant’s decision to the Appeals Court. A check of the Superior Court docket did not show that any notice of appeal had yet been filed.