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 Subagent
Sues Master Agent for $80,000, Wins & Then Garnishes Master Agent's
Carrier Commissions to Collect
(Rice v. American)
by
Dan
Baldwin, 7/2/2009 (Note: I'm not an attorney and this is not legal
advice.)
I ran across this
legal document while researching another story and it made me laugh
because I'd never heard of an agent garnishing a master agent's carrier
commissions to collect what was won in court. To date, I don't think I've
ever heard of an agent prevailing in court against a master agent or
carrier. This matter was adjudicated way back in 2000 & 2001.
Click here to view the garnishment appeal decision.
Archive PDF copy
In short, it appears
that the agent, CostWatch out of Colorado sued to master agents, American
Communications Consultants of North America, Inc., and Tele-Solutions,
Inc. based in North Carolina for $80,000 in unpaid commissions and won an
arbitration judgment in Colorado.
 It
would appear that the two north Carolina master agents elected not to pay
the judgment to the Colorado agent because the agent then filed a
garnishment in Oklahoma against Hertz which it is assumed was a carrier
for the two master agents and owed the two master agents commission.
The appeal filed by
Hertz stated that the money they were paying the two master agents was not
the master agent's to keep as it was to be further dispersed to the sub
agents of the two master agents.
Now everyone in the
industry understands how subagent money is supposed to be dispersed in a
perfect world and I'm sure both the two master agents and Hertz expected
the garnishment to be thrown out but instead the judge upheld it.
Unfortunately when I
tried to contact all the parties to this matter they all seem to have been
lost to the sands of time. I wanted to ask if CostWatch ever collected the
$80,000 and whether it was worth it in the end to sue the two master
agents and then go after Hertz. I've invited attorney Tom Crowe to share
his ideas on whether he thinks this case lays out a legal precedent for
agents collecting judgments they've won.
I'll add his
comments here when we receive them. My own thoughts on the matter are as
follows:
1. This looks like
the agent won an arbitrated matter in his own state of Colorado against
two master agents based in North Carolina. If this is correct then it
points out the importance of an agreement's legal venue and whether
disputes can be arbitrated.
2. What is not known
is why the master agents stopped paying CostWatch and what language was in
the agreement. CostWatch must have had a pretty subagent friendly agreement if
it enabled him to arbitrate it in his own state.
3. Also not known is
what happened to the master agent's other Hertz subagents if the two master agents lost
their Hertz commissions over several months through garnishment.
4. Finally, it shows
the importance of not signing an agreement that won't help you if you if
your master agent or carrier stops paying you. Whether you're direct with
a carrier or a master it's critical to make sure you have an attorney who
if familiar with telecom agency review your agreement.
What are your thoughts on this matter? Email printable comments to
Dan@TelecomAssociation.com.
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