Verdict Ruled for McMath Client; $1.6M Not Owed
MidCon Gathering LLC, represented by McMath Woods PA’s John D. Coulter and Preston T. Kamin of Gray Reed & McGraw LLP, received a defense verdict in a suit after Stephen Carleson and his company, Producers Credit Protection Group, Inc., alleged he developed a credit facility for the company but wasn’t paid $1.6 million he was owed. U.S. District Judge Brian S. Miller, of the U.S. District Court for the Eastern District of Arkansas, Western Division ruled that he didn’t have the necessary insurance license to carry out the deal.
It was ruled that the “credit facility” Carleson and his company, helped develop acted as a “credit insurance policy” issued by a third party for MidCon’s benefit. However, Carleson does not have a license to sell insurance in Arkansas. This resulted in a fatal problem.
“A contract made by one engaged in a particular occupation without a license cannot be enforced when a statute prohibits the person from engaging in that occupation without a license,” Judge Miller wrote. “The same rule applies to an implied contract, which is the type of contract at issue under a theory of unjust enrichment.”
The order for Stephen Carleson et al. v. MidCon Gathering LLC also noted that, “Carleson claimed MidCon agreed to pay him in exchange for introducing it to an insurance company that would issue it a satisfactory credit insurance policy. The fact that Carleson agreed to pay the premium for the credit insurance policy he designed for MidCon demonstrated that the credit insurance policy at issue was part of the credit facility for which he now seeks payment.”
“It is apparent that Carleson never explains what a ‘credit facility’ is or how it is distinguishable from a credit insurance policy because doing so would betray the fact that he was rendering insurance advice and selling and negotiating insurance without a license to do so, which prevents him from being compensated,” the order stated.
MidCon is a “midstream gathering” company, which means it uses credit to buy oil products it later sells. Credit is a barrier for business growth, however, and the order said that Stephen Carleson connected with people at MidCon to figure out a solution to expand the credit available to MidCon. According to the order, PCPG was formed in part to help with this problem.
