FARM BUREAU LIFE INSURANCE COMPANY and FARM BUREAU PROPERTY & CASUALTY INSURANCE COMPANY, Plaintiffs and Appellants,
RYAN DOLLY, Defendant and Appellee.
CONSIDERED ON BRIEFS ON JANUARY 8, 2018
FROM THE CIRCUIT COURT OF THE SEVENTH JUDICIAL CIRCUIT
PENNINGTON COUNTY, SOUTH DAKOTA THE HONORABLE MATTHEW M.
CASSIDY M. STALLEY of Lynn, Jackson, Shultz & Lebrun,
P.C. Rapid City, South Dakota Attorneys for plaintiffs and
E. BARON HOUY KELSEY B. PARKER of Bangs, McCullen, Butler,
Foye & Simmons, LLP Rapid City, South Dakota Attorneys
for defendant and appellee.
GILBERTSON, Chief Justice
Farm Bureau Life Insurance Co. and Farm Bureau Property and
Casualty Insurance Co. appeal the circuit court's partial
denial of their request for preliminary injunctive relief
against their former agent Ryan Dolly. They argue the court
erred by enjoining Dolly only from soliciting business from
Farm Bureau's existing customers without also enjoining
Dolly from selling to those customers. We affirm.
and Procedural History
On December 10, 2012, Dolly entered into two agency contracts
with Farm Bureau Life Insurance Co. and Farm Bureau Property
and Casualty Insurance Co. (collectively, "Farm
Bureau"). Under the contracts, Dolly operated as a
captive agent-an independent contractor limited to selling
insurance and financial products produced or approved by Farm
Bureau. Unlike an independent insurance agent, Dolly did not
obtain ownership of renewals on the policies he sold; Farm
Bureau retained ownership. Dolly's contracts with Farm
Bureau were terminated on January 12, 2017, after Dolly
notified Farm Bureau that he was leaving to work for a
competing insurer, American National Insurance Co.
The contracts at issue contain provisions that expressly
restrain Dolly's post-termination conduct. Paragraph 11
of the contracts states, in part:
It is hereby understood and agreed that upon the termination
of this . . . [c]ontract for any reason, [Dolly] will neither
sell nor solicit, directly or indirectly, or initiate
replacements or exchanges of any insurance or annuity
product, with respect to any policyholder of [Farm Bureau],
its subsidiaries or affiliates or any company with which
[Farm Bureau] has a marketing agreement, within any counties
in which [Dolly] sold or serviced any products pursuant to
this [c]ontract. . . . This provision will be enforceable for
a period of eighteen (18) months following the termination of
paragraph 18 states, in part:
In performing his . . . duties as an [a]gent, [Dolly] will
have access to and receive certain confidential or
proprietary information from or on behalf of [Farm Bureau]
(hereinafter "Confidential Information"). [Dolly]
shall take all reasonable steps necessary to protect the
confidential and proprietary nature of all Confidential
Information . . . . [Dolly] shall not directly or indirectly
disclose or make available to any third party any
Confidential Information. [Dolly] agrees not to appropriate
any Confidential Information for his . . . own use either
during the course of or subsequent to termination of this
[c]ontract. Confidential Information shall include, but not
be limited to, any information received by [Dolly] from or on
behalf of [Farm Bureau], including but not limited to
customer and consumer information.
Less than three months after leaving Farm Bureau, Dolly sold
American National insurance policies to clients to whom he
had previously sold Farm Bureau policies.
On April 7, 2017, concluding that Dolly had breached
paragraphs 11 and 18 of the agency contracts, Farm Bureau
filed an action against Dolly seeking damages and injunctive
relief. That same day, Farm Bureau also filed a motion
requesting a temporary restraining order and a preliminary
injunction. On April 11, the circuit court granted Farm
Bureau's request for a temporary restraining order and
enjoined Dolly from "selling or soliciting, or
initiating replacements or exchange of any insurance or
annuity product, directly or indirectly, to [Farm
Bureau's] policyholders within the counties Dolly sold
[Farm Bureau's] insurance products for a period of
eighteen months from January 12, 2017."
On April 18, 2017, the circuit court held an evidentiary
hearing to consider Farm Bureau's request for a
preliminary injunction. Dolly testified at the hearing. On
cross-examination, he admitted to having direct contact with,
and selling replacement policies to, Farm Bureau's
[Farm Bureau's attorney]: Okay. Since
leaving Farm Bureau, you've been posting to Facebook,
signing customers to American National, and you've had
direct contact with Farm Bureau policyholders; right?
[Dolly's attorney]: I'm going to
object. It's compound.
[Circuit court]: Sustained.
[Farm Bureau's attorney]: You've
texted, e-mailed, and contact-directly contacted Farm Bureau
[Dolly's attorney]: I'm going to
object to the extent the question is vague and doesn't
seek to clarify who initiated the contact.
[Circuit court]: Well, she said you have.
Set a time frame.
[Farm Bureau's attorney]: Since leaving