What the lawsuit is actually about

The central dispute

Colonial’s January 23, 2026 letter immediately terminated Bert van der Werff under cited for-cause provisions and accused him of causing an employer to believe Colonial coverage could not be obtained independently of a separate program. The plaintiffs deny that accusation and allege that Colonial possessed records contradicting it before the termination.

Timothy Vaughn received a separate notice described as a thirty-day, without-cause termination. The complaint alleges that access, account relationships, and practical earning ability were nevertheless removed immediately.

What the plaintiffs say the records show

• Employer emails described the separate non-insurance program as optional and distinct from Colonial enrollment.
• Signed election records showed employees electing Colonial coverage without any other program, including five of fourteen employees at the employer involved in the complaint.
• Colonial told van der Werff in writing that he did not need to prepare anything for the January 21 compliance call.
• Van der Werff invited correction and accepted Colonial’s clarified cancellation interpretation in writing before being terminated hours later.
• A later recorded call, as described in the complaint, confirmed that Colonial had reviewed the election forms before termination and did not dispute the independent Colonial enrollments.
• Compensation issues remained concerning commissions, renewals, vesting, chargebacks, offsets, recoupment, and account reassignment.

Termination authority is not the only issue

The plaintiffs do not contend that a carrier can never end a producer relationship. They contend that the method chosen, the stated for-cause accusations, communications made about those accusations, the implementation of notice, and the treatment of compensation and vested or earned rights present separate questions.

The DGA form Colonial filed appears to distinguish immediate termination for specified just-cause grounds from a separate provision permitting a company-wide elimination of DGA agreements without cause. Colonial’s letter did not invoke a company-wide elimination; it expressly relied on for-cause provisions. The ADM form Colonial filed contains a thirty-day termination provision. The parties dispute the legal effect, execution, and application of these documents.

The arbitration dispute

Colonial and the other defendants moved to stay the federal action and compel arbitration, or alternatively to dismiss. Plaintiffs oppose arbitration and dispute assent to the specific DGA and ADM arbitration clauses.

The DGA copy filed by defendants shows blank producer signature and date lines. The ADM copy contains a typed name and date on the producer side; Vaughn denies knowingly signing or authorizing it as an agreement to arbitrate, and plaintiffs contend that no electronic-signature certificate, audit trail, metadata, or witness with personal knowledge was produced. Defendants argue that a signature is not required and that the parties’ conduct established agreement to the contract terms.

Neither form designates an arbitration city or state. Each references AAA Commercial Arbitration Rules and contains a South Carolina choice-of-law clause. The court’s actual orders and the current ECF docket control the status of this dispute.

The claims pleaded

The Verified Complaint pleads defamation, injurious falsehood or business disparagement, tortious interference with existing and prospective business relations, breach of contract, breach of the implied covenant of good faith and fair dealing, declaratory relief, and an accounting. Defendants contest the claims and have raised legal and contractual defenses.

Public documents and docket

A free docket aggregator may be delayed or incomplete. Check the official ECF/PACER docket before stating that a motion is pending or that the court has ruled.