A Republican state legislator and his Layton insurance company are accused of "illegal or wrongful conduct" in a 3rd District Court civil lawsuit filed by the son of another GOP lawmaker.

But Haven J. Barlow, president of Barlow Insurance Co., said he and his company have done nothing illegal or improper.Barlow and the company are named as defendants in a suit by G. LaMont Richards Jr. and Del Jean Johnson and their company, Dimension Insurance Co. Inc.

Richards, whose father is a state representative from Salt Lake City, stressed to the Deseret News that although Barlow is a state senator, the suit is strictly a business matter. "This is not politically motivated. This is a business decision."

The suit accuses the defendants of "illegal or wrongful conduct" including: "attempting to induce plaintiffs to `rebate' commissions or offering similar incentives to clients as an inducement to entering into an agency relationship," and "marketing and writing insurance policies in states where defendants are not licensed to do so."

Barlow denied the accusations. He said if the plaintiffs think they can prove professional violations they should take them to the state insurance commissioner. He said his company wrote a policy in Wyoming using Johnson's license, but that was perfectly legal.

Barlow said no commissions have been rebated and no incentives have been offered, although incentives were discussed. He does not view incentives as illegal.

"I think it's a lot of rhetoric is all. We're surprised as anything (by the lawsuit). We thought things had been worked out." Barlow said this is the first time in his company's more than 40 years of operation that he or the company have been sued. "You know, that tells you something."

Richards said he and Johnson plan to file a complaint before the week is out with the insurance commissioner, who, he agreed, is the person to handle questions of professional conduct. The court will settle such issues as alleged breach of contract, he said.

The suit grew out of an arrangement by which the plaintiffs agreed last March to sell their insurance business to the defendants in return for the defendants paying them $100,000 and providing them an employment agreement, errors and omissions and health insurance, suitable office space and support for servicing of accounts.

Richards and Johnson complain that besides being involved in illegal or wrongful conduct, the defendants stopped making payments in August and failed to meet terms of the bargain.

Barlow said the plaintiffs were supposed to turn over commissions on the accounts but did not, so his company stopped making payments.

The plaintiffs say that after they and the defendants agreed in August to rescind the deal, the defendants tried to change the rescission termsand denied them access to the accounts.

The plaintiffs seek punitive damages of at least $100,000, compensatory damages and injunctions to prevent the defendants from denying them access to the accounts.