AON RISK SERVICES, INC. OF ARKANSAS v. JOHN MEADORS, Court of Appeals of Arkansas (2007)

FACTS: On May 1, 1997, John Meadors agreed to a five-year employment contract with Aon Risk Services Inc. of Arkansas (ARS Arkansas) to be a salaried plus commission Producer, responsible for attracting business and processing sales. ARS Arkansas, a branch of Aon Corporation, is an insurance brokerage in Little Rock, Arkansas managed by Mark Brockington who hired Mr. Meadors. Sometime between 1967 and 1972, Mr. Meadors began cultivating a business relationship with Dillards’ department stores in the hope of brokering insurance benefits for Dillard’s employees. In the fall of 1999, Mr. Meadors’ patience paid off when he put Dillards and Combined Insurance Combine, a subsidiary of Aon Corporation, in contact with each other. On March 24th, 2020, Combined Insurance and Dillard executed a five year agreement for Combine Insurance to sell their “Workplace Solutions” insurance package program to Dillard’s employees. However, on February 9th, 2000, Mr. Meadors obtained a copy of the “Interdependency Memo.” This memo, sent by Aon Corporation to all ARS managing directors including Mark Brockington, included information regarding a financial reward system if ARS brokerage offices entered a business relationship with Aon-affiliated companies. Under a section listed in the memo titled “Interdependency Compensation Agreements for 2000,” outlined a way for and regulations for ARS staffers to receive bonus pool monies commissions based on generated revenue. Enthused by the compensation program and structure, Mr. Meador believed he would be entitled to more than his basic employment contract compensation if agreed. However in March 2000, Combined Insurance placed no bonus pool money based on Dillard’s premiums. Mr. Brockington told Mr. Meadors, in order for Combined Insurance to place money into the bonus pool, Combined Insurance needed to buy out a broker or insurance company partnered with Aon for $1.6 million. Following negotiations after Dillards and Combined Insurance entered into an agreement, ARS Arkansas agreed to a $240,000 commission, which Mr. Meadors would be entitled to fifteen percent or up to $36,000. 

PROCEDURAL HISTORY: In 2005, Meadors sued Combined Insurance Combined, Aon Risk Services Inc. of Arkansas, and other companies associated with Aon Risk Services, alleging the Interdependency Memo was a unilateral contract and was breached when he received no bonus-pool money generated by Dillard’s agreement. Combined Insurance and the other companies associated with Aon were dismissed by summary judgment since they were third-party beneficiaries. Mr. Meadors claims of unjust enrichment, fraud, and breach of contract were also dismissed. However, the case against Aon Risk Services went to trial. The trial court jury found Aon Risk Services breached a contract, awarding Mr. Meadors $2,509,127.60 for damages in the breach of contract and $177,500 in attorney fees. In a post-trial proceeding, the trial judge reduced the damage awards to $1,281,930.90 for the breach of contract and $150,000 for attorney fees. In addition, the trial judge stated Mr. Meador’s awarded attorney fees would increase to $320,482.72 if ARS Arkansas appealed. ARS Arkansas filed an appeal arguing the trial court erred in not supporting its verdict by substantial evidence and subjecting it to enhanced attorney-fees if appealed case. John Meadors filed a cross-appeal arguing the trial court erred in reversing several summary judgments entered prior to trial and reducing the jury’s original amount of awarded damages. 

ISSUE(S): 

1. Whether a company wide memo detailing a new financial reward system and a compensation program could have clear and definite terms to constitute a contract offering. 

2. Whether a person may accept a contract by continuing to perform a part or all of their job duties stated in an employee contract. 

3. Whether two parties can agree to a valid contract without expressing their names in the contract.

HOLDING: 

1. A company wide memo detailing a new financial reward system and a compensation program is enough to have clear and definite terms to constitute a contract offering. 

2. A person can accept a valid contract by continuing to perform a part or all of their job duties stated in an employee contract. 

3. Two parties can agree to a valid contract without expressing their names in the contract.

REASONING: The Arkansas Court of Appeals disagreed with ARS Arkansas that the Interdependency Memo did not constitute a contract nor was not definite. The court determined the “Interdependency Memo” contained definite terms considered not as vague statements and outlined an outward manifestation to enter into a contract. By including “financial reward system has now been put in place with almost all Aon companies” and details pertaining to the contribution of a monetary bonus pool to ARS employees, the court contended this memo constituted an outward manifestation from ARS Corporation to form an unilateral contract with its employees. Since Mr. Meadors brokered the deal with Dillard’s and Combined Insurance prior to discovering the Interdependency Memo and did not attempt to alter or change it, the court supported the trial court jury’s verdict of Mr. Meadors being entitled to accept the terms of the memo by continuing his job duties and was not required to express acceptance verbally or in writing. In addition, because the memo outlined duties and requirements for ARS Corporation and its employees, the court agreed there was substantial evidence to conclude ARS Arkansas and Mr. Meadors agreed to the same terms. Therefore, the court concluded, ARS Corporation established a valid unilateral contract and ARS Arkansas breached the unilateral contract by withholding appropriate compensation to Mr. Meadors for the Dillard’s - Combined Insurance agreement.

JUDGMENT: The court affirmed the jury’s verdict in part and reversed & remand in the other part. The trial court judge initially awarded Mr. Meadors $1,255,825.90 in breach of contract damages and $177,500 in attorney fees. However, shortly after trial in a post-trial proceeding, the judge reduced the awarded attorney fees to $150,000, but stated that amount would increase to $320,482.73, in the event ARS Arkansas appealed. The Arkansas Court of Appeals affirmed a substantial portion of the trial court’s decision to award Mr. Meadors $1,255,825.90 for breach of contract damages against ARS Arkansas. The  court reversed and remanded the trial court’s awarded attorney fees to factor in time and effort spent on appeal, however, questioned if enhanced fee awards employed on a party’s appeal lie within the trial court’s discretion.