United States District Court, D. Maryland
TRANSAMERICA PREMIER LIFE INSURANCE COMPANY et al. Plaintiffs,
SELMAN & COMPANY, LLC Defendant.
Lipton Hollander United States District Judge.
breach of contract dispute, plaintiffs Transamerica Premier
Life Insurance Company and Transamerica Financial Life
Insurance Company (collectively, “Transamerica”)
have filed suit against defendant Selman & Company, LLC
(“Selman”). ECF 1 (“Complaint”).
Transamerica asserts the following causes of action: breach
of contract (Count I); anticipatory breach of contract (Count
II); and unjust enrichment (Count III). It also seeks
compensatory damages, special damages, and injunctive relief.
Id. at 23. Subject matter jurisdiction is founded on
diversity of citizenship. Id. ¶ 16.
has moved to dismiss under Fed.R.Civ.P. 12(b)(6), for failure
to state a claim. ECF 11. It is supported by a memorandum of
law (ECF 11-1) (collectively, the “Motion”), and
several exhibits. ECF 11-2 to ECF 11-8. Transamerica opposes
the Motion. ECF 17 (the “Opposition”). Selman has
replied. ECF 18 (“Reply”).
Motion is fully briefed and no hearing is necessary to
resolve it. See Local Rule 105.6. For the reasons
that follow, I shall deny the Motion.
is a national insurance company that underwrites an
assortment of insurance products. ECF 1, ¶ 1. It offered
several insurance products through Selman, a broker and
third- party administrator of insurance products.
Id. ¶ 2. Of relevance here, Transamerica
underwrote TRICARE Supplement policies which were offered
is the Department of Defense's health care insurance
program for over nine million active duty and retired
military members and their families. Id. ¶ 30.
A TRICARE Supplement is a voluntary benefit insurance plan
that covers out-of-pocket costs, such as co-payments or
excess charges, not covered by TRICARE. Id. ¶
31. Selman marketed and administered those plans.
sets of contracts govern the relevant terms of the business
relationship of the parties: (1) the 2002 Administrative
Service and Marketing Agreement (“ASMA”); (2) two
agreements Selman acquired from another administrator in
2014; and (3) a 2016 Amendment to the 2002 Administrative
Service and Marketing Agreement.
The Administrative Service and Marketing Agreement
and Selman entered into the ASMA (ECF 11-2), effective August
1, 2002. See ECF 1, ¶ 23. The ASMA defines
“the parties' rights and obligations concerning
Selman's management, administration, and marketing of a
series of insurance policies underwritten by
Transamerica.” Id. ¶ 24. Specifically,
the ASMA governs Selman's administration of the
Transamerica insurance policies identified in “Exhibit
A, ” which is appended to the ASMA. Id.
¶¶ 24-25. These policies include Medicare
Supplement products, term life products, and retiree medical
products, among others. Id. ¶ 25. When the
parties executed the ASMA in 2002, Exhibit A did not include
TRICARE Supplement policies and therefore the ASMA did not
govern them. See Id. ¶ 69.
recitals, the ASMA includes an incorporation clause providing
that the ASMA “supersedes and replaces all previous
agreements, written and oral, and amendments by and between
[Selman] and [Transamerica] with respect to the accounts
listed in Exhibit A attached hereto.” ECF 11-2 at 2.
Significantly, the ASMA does not contain an exclusivity
clause. ECF 1, ¶ 27; see also ECF 11-2. Rather,
it provides: “Nothing in this Agreement shall be
construed to prevent or restrict the ability of [Selman], the
policyholder or sponsor to terminate any particular
[Transamerica] insurance policy.” ECF 11-2 at 8.
Further, it provides that, in “the event of such
termination, ” Transamerica shall cooperate with
[Selman] in the transfer of coverage . . . to another
insurance company if requested by [Selman.]”
Id. The ASMA also provides that the “insured
records shall become the sole property of [Selman] upon
termination of this Agreement.” Id. at 9.
The Two Acquired Agreements
entered two agreements with the Association & Society
Insurance Corporation (“ASIC”), which took effect
on October 1, 2010: The Administrative Services Agreement
(ECF 11-5, the “ASA”) and the Marketing Services
and Marketing Developmental Allowance Agreement. ECF 11-6
(the “Marketing Agreement”). In March 2014, ASIC
assigned its rights and obligations under both agreements to
Selman, with Transamerica's consent. Id.
¶¶ 34, 44; see ECF 11-4.
The Administrative Services Agreement
to the ASA, Selman administers some Transamerica health
plans, including TRICARE Supplements. Id. ¶ 35.
Selman agreed to “process applications of prospective
insureds, issue certificates and policy documents, mail
premium notices and collect premium payments, retain all
records (including account documents, insurance applications,
advertising materials, etc.), and serve as claims
administrator.” Id. ¶ 36. In exchange,
Selman was entitled to 27% of premiums collected on the
TRICARE Supplement policies as well as other specified health
plans. Id. ¶ 40.
alleges that it provided Selman with significant confidential
and proprietary information to help Selman successfully meet
its contractual obligations. Id. ¶ 37.
Specifically, Transmerica provided “customer leads,
distribution channels, insured records, policy numbers,
pricing structure, risk analysis, premium information,
program performance reports, and other nonpublic information
pertaining to Transmerica's TRICARE Supplement insurance
policies and Transamerica's business operations[.]”
Id. ¶ 37.
protect confidential information, each party agreed to a
confidentiality clause, providing that the parties would
“not use nor sell, duplicate, dispose of, disseminate,
publish, reproduce, disclose (either orally or in writing) or
otherwise make available in any manner whatsoever . . . any
Confidential Information belonging to the other party, unless
prior written permission to do so from an authorized officer
of the other party is first obtained.” ECF 11-5 at 12,
¶ 7.01(d) (“Confidentiality Clause”); ECF 1,
¶ 38. Further, each party acknowledged that a breach of
the Confidentiality Clause would “cause immediate and
irreparable harm to the other party” and entitle the
other party to seek injunctive relief. ECF 11-5 at 13, ¶
7.01(i); see also ECF 1, ¶ 39.
The Marketing Agreement
the Marketing Agreement, Selman is obligated to market and
sell health plans, including TRICARE Supplement plans.
Id. ¶¶ 45-46. Pursuant to the Marketing
Agreement, Selman is obligated to “solicit consumers
for enrollment in the TRICARE Supplement plans, distribute
promotional materials relating to the insurance plans
underwritten by Transamerica, and engage in all efforts to
market and grow Transamerica's TRICARE Supplement
business.” Id. ¶ 46. In exchange, Selman
is entitled to 2% of the premiums collected from all of
Transamerica's TRICARE Supplement policies. Id.
asserts that the parties negotiated an Exclusivity Clause
(ECF 11-6 at 4) as a material term of the Marketing
Agreement. Id. ¶ 51. It provides, ECF 11-6 at 4
following exclusivity provisions shall apply while this
Agreement is in force:
(a) [Selman] has the exclusive right to market the Tricare
employer payroll deduction and cafeteria plan (“Payroll
Plan”) business on behalf of [Transamerica's]
business unit known as Transamerica Affinity Services, Inc.
(“Transamerica”), provided [Selman] maintains a
minimum annualized premium in force of twenty million dollars
($20, 000, 000.00) of Tricare Payroll Plan business with
[Transamerica]. Transamerica agrees not to aid any other
business unit or other corporate affiliate that is competing
with [Selman] for any Tricare Payroll Plan business. This
exclusive right is granted only by Transamerica Affinity
Services, Inc., and does not apply to any other business
unit, division, or affiliated entity of [Transamerica];
(b) [Transamerica] shall have the exclusive right to
underwrite and provide coverage for [Selman's] Tricare
Payroll Plan business and [Selman] shall not engage directly
or indirectly with any other insurance carrier or other
entity to provide [Selman's] Tricare Payroll Plan
(c) Transamerica shall not, without the prior written consent
of [Selman], engage directly or indirectly with any other
entity or person for that entity or person to provide
[Selman's] Tricare Payroll Plan product for or through
(d) As long as the minimum annual premium requirement as
stated in paragraph 14(a) remains met, by mutual written
agreement that specifically includes consent by [Selman] to
the same, the Parties may agree upon terms and conditions
that permit a third party to administer [Selman's]
Tricare Payroll Plan business for Transamerica's client
groups. Such agreement may include provision for compensation
of [Selman] for consenting to the same for any coordination
or participation by [Selman] in the services or transition
to Transamerica, “the Tricare employer payroll
deduction and cafeteria plan” refers to TRICARE
Supplement plans for employers. ECF 1, ¶ 48.
Transamerica and Selman provide other TRICARE Supplement
plans to associations. Id. Therefore, the
Exclusivity Clause applies only to TRICARE Supplement plans
for employers and permits Selman to “market
[Selman's] other insurance products for other
carriers.” Id. ¶ 57.
Marketing Agreement includes a termination clause.
Id. ¶ 58. It provides: “Either party may
give written notice to the other terminating this Agreement,
without cause, effective one hundred and eighty (180) days
after the date of such notice. Unless otherwise terminated
this Agreement shall remain in effect.” ECF 11-6 at 5.
According to Transamerica, the parties intended the 180-day
period to allow them to plan for alternative arrangements.
Id. ¶ 60. Notice would allow Selman to identify
another carrier to underwrite its products and allow
Transamerica to find another entity to administer and market
its TRICARE Supplement plans. Transamerica alleges that the
180-day period was also intended to ensure that the
non-terminating party receives its share of the premiums
collected during the notice period. Id. ¶ 64.
Amendment No. 5 to the ASMA
2016, an internal third-party audit of Transamerica allegedly
revealed that Transamerica was paying Selman compensation
rates that were not reflected in the ASMA. Id.
¶ 79. As a result, Transamerica “prepared a
revised compensation schedule that included, among other
things, the TRICARE accounts that Selman purchased from ASIC
for which Selman was receiving commissions.”
Id. ¶ 80. As a result, the parties entered into
Amendment No. 5 to the ASMA, effective May 1, 2016.
Id. ¶ 81; ECF 11-8 (“Amendment”) at
2. The Amendment deleted ASMA's Exhibit A in its entirety
and replaced it with a new version. ECF 11-8, ¶ 1.
However, it also provided that “[a]ll other terms of
the [ASMA] shall continue to remain in full force and effect.
Id. ¶ 2. Further, it specified: “Except
as specifically amended hereby, the [ASMA] shall remain
unmodified and in full force and effect and is hereby
reaffirmed.” Id. ¶ 3.
alleges that the Amendment was intended only “to update
the compensation schedule attached as Exhibit A to the ASMA
to document all of the rates being paid to Selman.”
Id. ¶ 82. Plaintiff also alleges that the
parties did not intend to affect the ASA or the Marketing
Agreement or to “modify the ...