Wednesday, December 18, 2013

Protectors Insurance Service, Inc. v. United States Fidelity & Guaranty Company case brief

Protectors Insurance Service, Inc. v. United States Fidelity & Guaranty Company case brief summary
132 F.3d 612 (1998)

A jury in the United States District Court for the District of Colorado found that defendant principal breached a contract with plaintiff agent and that the agent lost $ 809,650 in future profits and received $ 35,000 less than the fair market value upon the sale of its business. The principal appealed.

An agent and a principal had a written contract authorizing the agent to solicit applications for the principal's insurance. The agent filed a lawsuit alleging that the principal breached the contract by not making a good faith effort at rehabilitation to avoid termination of the agreement.


  • The court held that the judgment awarded the agent an impermissible double recovery. 
  • Awarding the agent lost profit damages in addition to $ 35,000 for the going concern value of its business was an improper double recovery. 
  • The value of the business as a going concern had to take into consideration future profit-earning potential. 
  • The agent was made whole when it received the fair market value of the business. 
  • It was not entitled to sell the business, receive full compensation, and still receive the profits the business might have made over its reasonable work-life expectancy.

The portion of the judgment awarding an agent $ 809,650 in lost profit damages was vacated, the alternative award of $ 35,000 for diminution in market value was affirmed, and the case was remanded to the district court for entry of judgment in accordance with the court's opinion.

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