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On September 1, 1985, petitioner, previously an insurance
agent, was appointed a district manager by a group of insurance
companies, Farmers Insurance Companies (the companies). To
accomplish the appointment, petitioner and the companies executed
a document entitled “District Manager’s Appointment Agreement”
(the agreement). As a district manager, petitioner could not
personally sell insurance policies but recruited, trained, and
supervised agents within his district to do so. As a district
manager, petitioner was not treated as an employee by the
companies.
Pursuant to the agreement, petitioner received a service
commission overwrite on all business produced by the companies’
agents within his district. A service commission overwrite is a
specified commission paid to a district manager based on each
insurance policy sold and on renewals of policies sold by the
supervised agents. The agreement states that either the
companies or petitioner can cancel it on 30 days’ written notice,
and any service commission overwrites unpaid as of the date of
cancellation are deemed unearned, with petitioner’s rights with
respect to such commissions being deemed waived.
Petitioner had completed 11 years of service as a district
manager when he received written notice that the companies were
canceling the agreement. The agreement was canceled as of
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