United States District Court, S.D. Ohio, Western Division, Dayton
AND ENTRY: (1) TERMINATING THE PARTIES' PREVIOUSLY FILED
MOTIONS FOR SUMMARY JUDGMENT (DOCS. 176, 177); (2) DENYING
DEFENDANT MICHAEL PAPANEK'S MOTION FOR SUMMARY JUDGMENT
(DOCS. 124, 168); (3) DENYING THE MOTION FOR SUMMARY JUDGMENT
FILED BY DEFENDANTS MELISSA PAPANEK AND PHOENIX INSURANCE AND
FINANCIAL GROUP, LLC (DOC. 185); (4) GRANTING IN PART AND
DENYING IN PART PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
(DOC. 195); (5) GRANTING DEFENDANTS' MOTION FOR LEAVE TO
SUPPLEMENT THE RECORD (DOC. 218); AND (6) GRANTING THE
PARTIES' MOTIONS FOR LEAVE TO FILE DOCUMENTS UNDER SEAL
(DOCS. 205, 208)
MICHAEL J. NEWMAN, UNITED STATES MAGISTRATE JUDGE
civil consent case, arising under the Court's diversity
jurisdiction, see 28 U.S.C. § 1332, concerns,
inter alia, breach of contract claims following the
termination of an exclusive agent agreement between Allstate
Insurance Company (“Allstate”) and its former
exclusive agent Melissa Papanek (“Melissa”).
Phoenix Insurance and Financial Group, LLC
(“Phoenix”), an independent insurance agency
founded by Melissa following her termination from Allstate,
is also a Defendant in the case. Melissa's father,
Michael Papanek (“Mike”), who was Melissa's
employee both while she remained an Allstate exclusive agent
and after she founded Phoenix, is also a Defendant.
before the Court are the following: (1) Mike's motion for
summary judgment (doc. 124), which was subsequently
supplemented by him (doc. 168); (2) the motion for summary
judgment filed by Melissa and Phoenix (doc. 185); and (3)
Allstate's motion for summary judgment (doc. 195) with
regard to counterclaims asserted by Melissa and
Phoenix. The parties filed appropriate memoranda in
opposition, as well as reply memoranda. The Court has
carefully considered all of the foregoing, as well as
evidence presented in support of summary judgment, and the
parties' motions are now ripe for decision.
motion for summary judgment should be granted if the evidence
submitted to the Court demonstrates that there is no genuine
issue as to any material fact and that the movant is entitled
to judgment as a matter of law. Fed.R.Civ.P. 56; see also
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986);
Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
247-48 (1986). “Summary judgment is only appropriate
‘if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to
any material fact and that the moving party is entitled to a
judgment as a matter of law.'” Keweenaw Bay
Indian Comm. v. Rising, 477 F.3d 881, 886 (6th Cir.
2007) (quoting Fed.R.Civ.P. 56(c)). “Weighing of the
evidence or making credibility determinations are prohibited
at summary judgment -- rather, all facts must be viewed in
the light most favorable to the non- moving party.”
“a motion for summary judgment is properly made and
supported, an opposing party may not rely merely on
allegations or denials in its own pleading[.]”
Viergutz v. Lucent Techs., Inc., 375 Fed.Appx. 482,
485 (6th Cir. 2010) (citation omitted). Instead, the party
opposing summary judgment has a shifting burden and
“must -- by affidavits or as otherwise provided in this
rule -- set out specific facts showing a genuine issue for
trial.” Id. (citation omitted). Failure
“to properly address another party's assertion of
fact as required by Rule 56(c)” could result in the
Court “consider[ing] the fact undisputed for purposes
of the motion.” Fed.R.Civ.P. 56(e)(2).
“there is no duty imposed upon the trial court to
‘search the entire record to establish that it is
bereft of a genuine issue of material fact.'”
Buarino v. Brookfield Twp. Trs., 980 F.2d 399, 404
(6th Cir. 1992) (citations omitted). Instead, “[i]t is
the attorneys, not the judges, who have interviewed the
witnesses and handled the physical exhibits; it is the
attorneys, not the judges, who have been present at the
depositions; and it is the attorneys, not the judges, who
have a professional and financial stake in case
outcome.” Id. at 406. In other words,
“the free-ranging search for supporting facts is a task
for which attorneys in the case are equipped and for which
courts generally are not.” Id.
the facts at issue in this case are disputed. In support of
their summary judgment motions, the parties cite to
deposition testimony, sworn statements, and numerous exhibits
attached to their respective memoranda in an effort to set
forth the relevant factual background. The Court has
carefully considered all of the proper Rule 56 evidence
submitted by the parties on summary judgment, see
Fed. R. Civ. P. 56(c)(1)(A), and unless otherwise stated
herein, the following are the undisputed facts of the case.
Relationship Between the Parties
1972, Mike opened an Allstate exclusive agency, which came to
be called the Papanek Agency, at 4048 Colonel Glenn Highway
in Beavercreek, Greene County. Doc. 161 at PageID 4001. In
2008, Melissa purchased Mike's economic interest in the
Papanek Agency. Doc. 158 at PageID 3358-59. As part of the
transfer of the Papanek Agency, Melissa entered into an
exclusive agency agreement (“EA Agreement”) with
Allstate on August 13, 2008. Doc. 185-1 at PageID 5065-74.
The EA Agreement authorized Melissa to sell Allstate
insurance products and prohibited her from “either
directly or indirectly, solicit[ing], sell[ing], or
servic[ing] insurance of any kind for any other company,
agent, or broker, or refer a prospect to another company,
agent, or broker, without the prior written approval of
[Allstate].” Doc. 195-2 at PageID 5696.
selling his economic interest to Melissa, Mike continued
selling insurance for the Papanek Agency as a Licensed
Service Provider (“LSP”),  and executed an
LSP Agreement with the Papanek Agency on October 26, 2008.
Doc. 130 at PageID 2639; doc. 130-2 at PageID 2700-01.
Allstate was a third-party beneficiary of the LSP Agreement,
an agreement in which Mike agreed to “not, either
directly or indirectly, solicit, sell or service insurance of
any kind for any other company, agent, or broker, or refer a
prospect to another company, agent, or broker without the
prior written consent of [Allstate].” Id.
Melissa's EA Agreement and Mike's LSP Agreement
provided for the protection of Allstate's confidential
information. Melissa's EA Agreement provided that
confidential information, such as “the names,
addresses, and ages of [Allstate] policyholders[, ]”
were “wholly owned” by Allstate. Doc. 195-2 at
PageID 5697, 5699. Melissa, however, was permitted
“use” of such confidential information, but
“only for the purposes of carrying out the provisions
of [the contract], ” i.e., “soliciting,
selling, and servicing insurance and other [Allstate]
Business[.]” Id. Substantially similar
provisions were set forth in Mike's LSP Agreement.
See doc. 130-2 at PageID 2700.
of the Relationship Between the Parties
March of 2013, Mike suffered a stroke; he did not work during
his recovery. Doc. 182 at PageID 4746. According to Allstate
records, the Papanek Agency terminated Mike's LSP
Agreement on March 4, 2013 after he suffered the stroke. Doc.
160 at PageID 3995. However, by November 2013, Mike's
health had substantially improved, and he returned to his job
as an LSP at the Papanek Agency. Doc. 182 at PageID 4746. The
parties point to no evidence, however, that Mike executed a
subsequent LSP Agreement upon his return in November 2013.
EA Agreement was terminable by either her or Allstate,
“with or without cause, upon providing ninety (90) days
prior written notice to the other” party. Id.
at PageID 5703. On September 2, 2014, Allstate exercised its
right under the EA Agreement and, both in person and in
writing, notified Melissa that it was terminating the EA
Agreement effective December 1, 2014. Doc. 195-3 at PageID
5707-08; doc. 195-4 at PageID 5710. According to Allstate, it
exercised its right to terminate Melissa's EA Agreement
because she admitted to improperly issuing auto and
homeowners policies without the customers' knowledge;
intentionally refusing to remove vehicles from customers'
auto policies; and delaying cancellation of certain policies
until after December 2013 in order to receive year-end
bonuses. Doc. 195-4 at PageID 5710.
and Duties Upon Termination
the EA Agreement, Melissa was permitted to “transfer
[her] entire economic interest in the business written under
[the EA Agreement] . . . by selling the economic interest in
the business to an approved buyer.” Id. at
PageID 5702. Upon notifying Melissa of termination, Allstate
reminded her of her ability to sell her economic interest so
long as the sale occurred by the termination date of December
1, 2014. Doc. 198-5 at PageID 6359. Under the EA Agreement,
however, Allstate “retain[ed] the right in its
exclusive judgment to approve or disapprove such a
transfer.” Id. Notably, “[a]pproval of a
proposed transfer” was “conditioned upon[,
]” inter alia, “the execution of a then
current agency agreement by the proposed transferee.”
Id. Melissa was unable to sell her economic interest
and, according to her, Allstate impeded her efforts in that
regard despite interested purchasers. See doc. 198
at PageID 6317-18.
to the EA Independent Contractor Manual, which was made part
of the EA Agreement between the parties, in the event Melissa
was unable to sell her economic interest, she could
“elect to receive [a] termination payment, subject to
the terms and conditions of the [EA] Agreement[.]” Doc.
158-1 at PageID 2538 (SEALED). Pursuant to the Supplement to
the EA Agreement, which was also incorporated as part of the
contract between the parties, termination payments “are
subject to compliance with the terms of the confidentiality
and non-competition provisions of the [EA Agreement], which
survive termination of the agreement.” Doc. 158-1 at
PageID 3553 (SEALED). Ultimately, Melissa accepted the
termination payments; a dispute exists as to whether such
choice was voluntary or whether such choice was forced upon
her by Allstate. Doc. 195-23 at PageID 5991; doc. 195-24 at
addition to the foregoing, upon termination of the EA
Agreement, Melissa Papanek was required to, inter
alia, “immediately return all property belonging
to [Allstate], or dispose of it in such manner as the Company
specifie[d]” and “immediately cease” using
all telephone numbers used to conduct business under the EA
Agreement. Doc. 195-2 at PageID 5703. Further, for “one
year following termination” of the contract, Melissa
Papanek was also prohibited from “solicit[ing] the
purchase of products or services in competition with those
sold by [Allstate]” to certain people, companies, or
organizations who were Allstate customers at the time of
termination. Doc. 195-2 at PageID 5704. Specifically, Melissa
Papanek could not solicit Allstate customers that: (1) she or
anyone working on her behalf sold Allstate products to; or
(2) whose identity was discovered because of access to
Allstate confidential information. Id. Finally, upon
termination of the agreement, Melissa Papanek agreed not to
solicit the purchase of products in competition with Allstate
products within a mile of the office in which she sold
Allstate products during the contract period. Id. at
PageID 5704. Mike's LSP Agreement had similar
prohibitions. Doc. 130-2 at PageID 2700-01.
Conduct Immediately Following the Notice of
receiving the 90-day notice of termination from Allstate on
September 2, 2014, Melissa's reaction was to “get
Allstate” and she discussed with employees of the
Papanek Agency her desire to solicit Allstate customers away
to her independent agency. See doc. 158 at PageID
3379. Almost two months later, in late October 2014, Melissa
spent ten to twelve hours a day, for four straight days,
printing confidential information for hundreds of Allstate
customers with the specific intent of using such confidential
material to solicit them for her new insurance agency. Doc.
196-1 at PageID 6109-11. In fact, Melissa admits she printed
the voluminous amount of confidential information intending
“to take back the book” from Allstate.
Id. at 6111. Melissa acknowledges that printing the
confidential information was “a bad decision” and
testified in her deposition that, upon realizing her actions
were wrong, she shredded the documents. Id. at 6110.
also undisputed that Papanek hung a sign on the door of the
Papanek Agency after receiving the 90-day notice of
termination from Allstate. See doc. 158 at PageID
3401. The sign on the door read:
The Papanek Agency
Thanks You for your business
Mike & Melissa are opening an Independent Insurance
Agency at their previous North Dixie location, 3801 North
Dixie, in January.
If you have any questions you can reach Mike & Melissa at
Thank you for your business.
Doc. 195-25 at PageID 5995. Without dispute, the phone number
on the sign was Melissa Papanek's cell phone number. Doc.
158 at PageID 3401.
addition to these undisputed facts, Allstate points to other,
albeit disputed facts, that Melissa was accumulating Allstate
customer information and even contacting Allstate customers
to inform them of potentially cheaper rates beginning on
December 1, 2014, i.e., following her termination as
an Allstate agent. See doc. 195-1 at PageID 5655-56.
to Allstate, after learning of Melissa's activities
showing -- or at least suggesting -- her intent to solicit
Allstate customers following her termination as an Allstate
agent in violation of the EA Agreement, Allstate
representatives Ted Stefanov and Cathy Fouty arrived at the
Papanek Agency on October 31, 2014, read the termination
letter previously issued on September 2, 2014, and
“shut [the Agency] down.” Doc. 198-2. Notably,
under the EA Agreement, Allstate possessed to contractual
right, after giving Melissa Papanek 90-days written notice of
termination, to require her to “cease to act or
represent [her]self in any way as an agent or representative
of [Allstate][.]” Doc. 195-2 at PageID 5703.
termination of the EA Agreement on December 1, 2014, Allstate
began making termination payments to Melissa in January 2015.
Doc. 185-9 at PageID 5098. Melissa opened Phoenix in January
2015 at a former Papanek Agency location on North Dixie Drive
in Dayton, Ohio. Doc. 185 at PageID 5049. Allstate contends
that Melissa solicited Allstate customers after opening
Phoenix. See doc. 185-6 at PageID 5086-88. On May
15, 2015, Allstate sent Melissa's attorney a
cease-and-desist letter. See id. In November 2015,
Allstate began withholding installments of Melissa's
termination payments because of the issues involved in this
case. See doc. 185-8 at PageID 5096. Of the $692,
261.10 of termination payments supposedly due and owing to
Melissa, she has not been paid $374, 974.79. Doc. 185-8 at
PageID 5096; doc. 185-9 at PageID 5098.
filed this action against Defendants on July 6, 2015,
i.e., before it ceased making termination payments
to Melissa. Doc. 1. The operative pleadings before the Court
at this time are Allstate's first amended complaint (doc.
22) and the first amended answer and counterclaim by Melissa
and Phoenix (doc. 34).
first amended complaint, Allstate names three Defendants,
namely Melissa, Mike, and Phoenix. Doc. 22 at PageID 253.
Allstate specifically asserts the following claims: (1)
breach of contract (against Melissa); (2) breach of contract
(against Mike); (3) misappropriation of trade secrets
(against all three Defendants); (4) tortious interference
with contractual relationships (against Phoenix); (5)
tortious interference with business relationships (against
all three Defendants); and (6) unfair competition (against
all three Defendants). Doc. 22. Melissa asserts the following
counterclaims against Allstate: (1) breach of contract; (2)
tortious interference with contractual and business
relationships; (3) violations of Ohio's Deceptive Trade
Practices Act (“ODTPA”), Ohio Rev. Code §