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Who did what when they didn't get paid   Join TA  / Subscribe
Last updated July 2, 2009  "Best of TA"

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.

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