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American Insurance Marketing Corp. v. 5 Star Life Insurance Co.

United States District Court, D. Maryland

July 26, 2013

AMERICAN INSURANCE MARKETING CORPORATION, et al.
v.
5 STAR LIFE INSURANCE COMPANY

For American Insurance Marketing Corporation, Brent J. Spyksma, Plaintiffs: Thomas J Schetelich, LEAD ATTORNEY, Ferguson Schetelich and Ballew PA, Baltimore, MD.

For 5 Star Life Insurance Company, Defendant: Scott Michael Trager, LEAD ATTORNEY, Semmes Bowen and Semmes PC, Baltimore, MD.

OPINION

Page 610

DEBORAH K. CHASANOW, United States District Judge.

MEMORANDUM OPINION

Presently pending and ready for review in this breach of contract case is the motion to dismiss for improper venue filed by Defendant 5 Star Life Insurance Company (" 5 Star" ). (ECF No. 10). The issues have been fully briefed, and the court now rules, no hearing being deemed necessary. Local Rule 105.6. For the following reasons, the motion to dismiss will be denied.

I. Background

This breach of contract case arises out of a series of relationships and events involving the sale of life insurance policies to Native Americans who belong to the First Nations Tribe. According to the complaint (ECF No. 2), Plaintiff American Insurance Marketing Corporation (" AIM" ) is an insurance brokerage company organized under Maryland law with its principal place of business in Maryland. Plaintiff Brent J. Spyksma is a general insurance agent and a resident of Iowa. 5 Star is a life insurance company that maintains its principal place of business in Virginia.

The complaint alleges that, in February 2008, Spyksma and 5 Star entered into a Sales Representative Agreement (" the 2008 SR Agreement" ). [1] Pursuant to the 2008 SR Agreement, Spyksma agreed to procure insurance applications on behalf of 5 Star. In exchange, 5 Star agreed to pay Spyksma commissions, calculated based on a percentage of premiums paid for policies that Spyksma procured. At some unspecified point in time, the ZWG Trust - an irrevocable trust that holds assets for the benefit of the First Nations Tribe - purportedly engaged the services of Spyksma and AIM to procure life insurance policies for Tribe members. AIM and Spyksma then approached 5 Star about underwriting and issuing the life insurance policies.

Page 611

The complaint alleges that, " by letters dated May 10, 2012, and May 17, 2012," 5 Star agreed to underwrite applications for up to 5,000 members of the First Nations Tribe. Based on this agreement, the ZWG Trust, Spyksma, and AIM began soliciting and accepting life insurance applications from First Nations Tribe members. The complaint also asserts that " 5 Star issued a Case Information Worksheet for the Trust confirming that AIM was to receive 85% of the commissions payable associated with the policies issued to the Trust and Spyksma was to receive 15%." ( Id. ¶ 11). 5 Star ultimately issued 1,097 policies to members of the First Nations Tribe, which were delivered on July 31 and August 22, 2012. Then, on September 26, 2012, 5 Star allegedly rescinded all 1,097 of the policies, without justification, and returned the premium payments. Plaintiffs allege that 5 Star has never paid them any commissions for the rescinded policies.

On December 10, 2012, AIM and Spyksma filed a complaint against 5 Star in the Circuit Court for Calvert County, Maryland, asserting three breach of contract claims. (ECF No. 2). On February 20, 2013, 5 Star removed the action to this court. (ECF No. 1). The notice of removal asserts that there is federal diversity jurisdiction over Plaintiffs' claims pursuant to 28 U.S.C. § 1332(a). [2] The notice also states that venue is proper pursuant to 28 U.S.C. § 1441(a) because the Southern Division of the United States District Court for the District of Maryland is the federal judicial district embracing the Circuit Court for Calvert County, Maryland ( i.e. , where Plaintiffs originally filed suit). ( Id. ¶ ¶ 3-4).

One week later, 5 Star filed a motion to dismiss for improper venue pursuant to Fed.R.Civ.P. 12(b)(3). (ECF No. 10). 5 Star argues that this action must be dismissed because of a mandatory forum selection clause contained in a contract entered into between 5 Star and AIM on July 30, 2012 (" the 2012 Producer Contract" ). The clause in question provides as follows:

18. CONSTRUCTION, MODIFICATION, AND VENUE This contract shall be governed by and construed in accordance with the laws of the state of Virginia . . . Any suit arising out of this contract shall be instituted in ...

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