United States District Court, S.D. Ohio, Western Division
AND ENTRY: (1) GRANTING IN PART AND DENYING IN PART
PLAINTIFF'S MOTION TO RECONSIDER SUMMARY JUDGMENT (DOC.
303); (2) GRANTING IN PART AND DENYING IN PART
DEFENDANTS' MOTION TO RECONSIDER SUMMARY JUDGMENT (DOC.
305); (3) DEFERRING A RULING ON PLAINTIFF'S MOTION FOR
SANCTIONS UNTIL AFTER TRIAL (DOC. 224); AND (4) DENYING
DEFENDANTS' MOTION FOR SANCTIONS (DOC. 249)
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 (“EA
Agreement') between Allstate Insurance Company
(“Allstate”) and its former exclusive agent
Melissa Papanek (“Papanek”). Phoenix Insurance
and Financial Group, LLC (“Phoenix”), an
independent insurance agency founded by Papanek following her
termination from Allstate, is also a Defendant in the case.
Melissa's father, Michael Papanek, who was Melissa's
employee both while she remained an Allstate exclusive agent
and after she founded Phoenix, was previously a Defendant in
this case, but has been voluntarily dismissed by Allstate.
Docs. 256, 278.
case is presently before the Court on the parties'
cross-motions for sanctions (docs. 224, 229), as well as the
parties' second cross-motions for summary judgment (docs.
303, 305) --motions for summary judgment that the Court, for
the reasons set forth herein, construes as motions for
reconsideration of summary judgment. The Court has carefully
considered the foregoing, including all opposition and reply
memoranda, and these motions are now fully briefed and ripe
filed this action against Defendants on July 6, 2015. Doc. 1.
The operative pleadings before the Court now are
Allstate's first amended complaint (doc. 22) and the
first amended answer and counterclaim by Melissa Papanek and
Phoenix (doc. 34). In the first amended complaint, Allstate
asserted the following claims: (1) breach of contract against
Melissa Papanek; (2) breach of contract against Mike Papanek;
(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.
Papanek asserted 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 § 4165.011 et
seq.; (4) breach of the covenant of good faith and fair
dealing; and (5) unfair competition. Doc. 34. Phoenix joined
in Melissa's ODTPA and unfair competition counterclaims.
See doc. 34 at PageID 458-61.
engaging in a lengthy period of discovery, a period that
initially closed on February 28, 2018 (doc. 131), the parties
filed cross-motions for summary judgment and memoranda
supported by voluminous exhibits and deposition transcripts
(hereinafter referred to as the parties' first motions
for summary judgment”). See docs. 124, 168,
185, 195. After a careful and detailed review of the evidence
presented by the parties in support of their first motions
for summary judgment, the Court set forth the material facts
Contractual Relationship Between the Parties
In 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.
After 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.
Both 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.
Termination of the Relationship Between the
In 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
Melissa's 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.
Rights and Duties Upon Termination
Under 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
Pursuant 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
In 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.
Papanek Conduct Immediately Following the Notice of
Upon 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.
It is 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