Ex-Allstate agent sues for $15M, alleges “hostile takeover” of his business

Veteran insurance agent Paul A. Mattus has filed suit against The Allstate Corp., claiming that the carrier had muscled him out of his book of business in order to pass it on to a newer, younger agent.

Veteran insurance agent Paul A. Mattus has filed suit against The Allstate Corp., claiming that the carrier had muscled him out of his book of business in order to pass it on to a newer, younger agent.
Mr. Mattus filed suit against the insurer and its subsidiary The Allstate Insurance Co. this Tuesday in the U.S. District Court for the Middle District of Pennsylvania, accusing the carrier of a slate of charges, including breach of contract, fraud and negligent infliction of mental distress.
He seeks $15 million for the value of his insurance practice, Paul A. Mattus Agency & Sons Inc., plus damages and legal fees. The firm sold a variety of Allstate coverage, including life and auto.
The tiff goes back to 2000, when Allstate allegedly terminated the employment contracts of some 6,500 captive agents, offering them an opportunity to become independent contractors if they signed an exclusive agency agreement with the insurer, according to the suit.
Despite becoming an independent contractor for Allstate, Mr. Mattus had been kept from selling competitors’ products, according to the complaint.
Mr. Mattus, who had been an agent with Allstate since 1983, claims that the agents were told that if they became independent contractors, they’d have a major stake in their own businesses.
Using his own funds, Mr. Mattus said he created his own insurance agency and covered all of his own business expenses. He also grew his block of business, generating some $4 million in annual insurance premiums and was recognized by Allstate as a “top 10 producer,” according to the lawsuit.
Nevertheless, Allstate sent him a termination letter on Jan. 14, 2011, citing Mr. Mattus’s “failure to achieve business objectives established by the company,” according to the complaint. The letter blocked the agent from engaging in any business and forced him to make a choice between selling the business to an approved buyer or to turn over his business to Allstate, Mr. Mattus alleges.
The agent claims that the insurer had tried to get rid of him when it discovered it could negotiate “more favorable” contractual terms with newer and younger agents.
“Allstate finds the suit to be totally without merit and will present its case in court,” said April Eaton, spokeswoman for the insurer.
The insurer “took all steps necessary to remove Mr. Mattus from Allstate in such a way as to retain his sizeable book of business to the benefit of Allstate and a newer, younger agent,” according to the complaint. “As an older agent, Mr. Mattus did not fit in with the new, improved Allstate.”
Jacqueline Jackson-DeGarcia, Mr. Mattus’s attorney, said that she has heard from other agents making similar claims.
“He’s not the only agent to whom this has happened,” said Ms. Jackson-DeGarcia, a partner at Dilworth Paxson LLP. “We have been contacted by others and will pursue them separately.”
Given the differences in the books of business for the agents, as well as the unique attributes of each practice, Ms. Jackson-DeGarcia will likely pursue the other cases separately instead of making them into a class-action suit.
She added that a second related class-action suit is currently pending and that that complaint includes an age discrimination allegation and claims related to employee benefits.
Currently, Paul A. Mattus Agency & Sons Inc. is listed on Allstate’s website as being up for sale.