Jul 22, 2008 Robert A. Olson
Court of Appeal reverses judgment for prejudicial error in refusing to instruct on anticipatory repudiation in an insurance agent termination case

Pavey v. Fire Insurance Exchange (2008) 2008 Cal.App. Unpub. LEXIS 5884 (California Court of Appeal, Fourth Appellate District, Division One). [unpublished]. GMSR’s client, an insurer, terminated its agreement with one of its agents. The agreement called for the agent to turn over certain materials and rights and to refrain from soliciting existing policyholders for one year. The agreement also called for certain post-termination payments to the agent. When the carrier proffered the first of those payments, the agent indicated that he would not abide by his obligations. The trial court refused an anticipatory breach instruction, instead telling counsel that they could argue whether the plaintiff had adequately performed. The jury found for the plaintiff, awarding $158,000. On appeal the plaintiff attacked the validity of the post-termination obligations in the contract on grounds he did not urge at trial. The Court of Appeal held that the trial court erred in refusing the anticipatory breach instruction and found the error to be prejudicial given the closeness of the case and the arguments presented at trial. As GMSR urged, the Court of Appeal declined to address the newly-raised challenges to the contract’s post-termination provisions. GMSR was retained after the plaintiff filed his respondent’s brief, and wrote the reply brief and presented oral argument.