Aon Consulting v. Midlands Financial
| Decision Date | 09 May 2008 |
| Docket Number | No. S-06-1256.,No. S-07-034.,S-06-1256.,S-07-034. |
| Parties | AON CONSULTING, INC., Appellant and Cross-Appellee, v. MIDLANDS FINANCIAL BENEFITS, INC., Appellee and Cross-Appellant. Aon Consulting, Inc., Appellee and Cross-Appellant, v. William Pearson, Appellant and Cross-Appellee. |
| Court | Nebraska Supreme Court |
Richard J. Gilloon and Bradley B. Mallberg, of Erickson & Sederstrom, P.C., Omaha, for appellant Aon Consulting, Inc.
Mark A. Fahleson, of Rembolt Ludtke, L.L.P., Lincoln, for appellee Midlands Financial Benefits, Inc.
Frederick S. Cassman and Frank F. Pospishil, of Abrahams, Kaslow & Cassman, Omaha, for appellant William Pearson.
While employed by Alexander & Alexander Services Inc. (A & A) in 1981, William Pearson signed an agreement which restricted his ability to solicit business from certain customers of the firm for 2 years after leaving its employment. Aon Consulting, Inc. (Aon), merged with A & A in 1997, and Pearson remained as an officer and employee of Aon until 2001, when he resigned and joined a competitor, Midlands Financial Benefits, Inc. (Midlands). In his new employment, Pearson solicited business from Aon customers with whom he had personal business relationships while employed by Aon. Aon sued Pearson for breach of contract and was awarded a money judgment from which Pearson appeals. Aon cross-appeals from the dismissal of its breach of fiduciary duty claim against Pearson. In a separate case, Aon sued Midlands for intentional interference with a business relationship and appeals from a directed verdict of dismissal. We affirm the judgments of the district court in both cases.
Both cases arise from the same factual circumstances. In 1981, Pearson began working for A & A as an account executive selling and servicing group health insurance plans. Several months later, he signed a nonsolicitation agreement. The agreement provided in relevant part:
[I]f your employment with A & A should terminate for any reason, you will not, directly or indirectly, for a period of two (2) years after the date of such termination of your employment, in any capacity whatsoever (either as an employee, officer, director, stockholder, proprietor, partner, joint venturer, consultant or otherwise), solicit, sell to, divert, serve, accept or receive insurance agency, brokerage or consulting business ... from any customer or active prospect of A & A which you personally, alone or in combination with others, handled, serviced or solicited at any time during the two (2) year period immediately preceeding termination of your employment.
....
In the event of your termination (except for death, permanent or total disability or retirement), A & A agrees that it will pay you a sum equivalent to (a) one (1) month's salary computed as of the date of such termination if such termination takes place within one year from the date hereof or (b) two (2) month's salary computed as of the date of such termination if such termination takes place after one year from the date hereof.
In 1990, Pearson became the manager of A & A's Lincoln, Nebraska, office and was given the title of vice president. In 1994, he became the manager of the Omaha, Nebraska, office as well. In 1996, in anticipation of the merger, A & A requested that Pearson sign a new nonsolicitation agreement that expressly stated it was assignable without his consent. Pearson declined to sign this agreement.
In 1997, Aon merged with A & A. Pearson continued to work for the company in the same capacity and performed the same duties. In March 2001, Aon relieved Pearson of his managerial and supervisory duties, although he remained designated as a vice president. Aon corporate minutes show that he was officially designated a vice president by Aon's board of directors. The record indicates that over 200 Aon employees were designated as "Vice Presidents" and that approximately 125 more were "Senior Vice Presidents."
Pearson became dissatisfied with his employment at Aon, and in the summer of 2001, he sought legal advice regarding the validity of the nonsolicitation agreement. His attorney advised him that the agreement was not enforceable because he was no longer employed by A & A, but, rather, by Aon, and more than 2 years had elapsed since he was last employed by A & A. In June or July 2001, Pearson contacted and met with a co-owner of Midlands, a Lincoln firm engaged in the business of financial planning and employee benefits programs. They discussed the possibility of Pearson's becoming employed by Midlands. Pearson and his Aon coworker Cathy Dorenbach met with the co-owners of Midlands again in July and September to discuss employment opportunities at Midlands. During one of these meetings, Pearson showed Midlands the nonsolicitation agreement and informed Midlands that his attorney had opined that it was unenforceable. Midlands' co-owners testified that they did not recruit Pearson, nor did they expect him to solicit former Aon customers during his employment at Midlands. There is evidence that the sales goals which Midlands sets for its employees could have been met by Pearson without solicitation of Aon customers.
Dorenbach testified that she and Pearson began discussing their mutual unhappiness at Aon during the summer of 2001. On September 28, 2001, both Pearson and Dorenbach resigned from Aon and joined Midlands. Prior to resigning, both informed Aon customers with whom they worked that they would soon be leaving Aon. In some instances, they indicated that they would be employed by Midlands. Either just prior to or immediately after leaving, Pearson and Dorenbach helped customers prepare broker of record letters changing those customers' affiliations from Aon to Midlands. Dorenbach testified that she and Pearson independently made the decision to leave Aon, but that after the decision was made, they coordinated the time and date of their leaving. Dorenbach testified that Pearson was aware of her plans to leave Aon and was aware that she was contacting Aon customers and telling them of her plans prior to leaving. Pearson admitted that despite this knowledge, he did not inform anyone at Aon of Dorenbach's plans.
As employees of Midlands, both Pearson and Dorenbach were paid a commission of 50 percent of all revenues generated. Ultimately, 12 customers Pearson had served at Aon transferred their business to him at Midlands. Approximately 25 other Aon customers served by Dorenbach also transferred their business to her at Midlands. By January 2002, Midlands' management was aware that most of Pearson's business was being generated from former Aon customers.
Aon sued Pearson in the district court for Douglas County, alleging, inter alia, that he had breached the nonsolicitation agreement and breached his fiduciary duty. Pearson answered, denying Aon's material allegations and specifically alleging that the nonsolicitation agreement was not enforceable by Aon. On cross-motions for summary judgment, the district court determined that the nonsolicitation agreement was valid and enforceable as an asset of A & A which became an asset of Aon following the merger. The court entered summary judgment for Aon on the issue of liability with respect to claims involving breach of the agreement. The court entered summary judgment in favor of Pearson with respect to Aon's claim alleging breach of fiduciary duty. The matter proceeded to a bench trial on the issue of damages, and the court entered judgment in favor of Aon in the amount of $123,063. After both parties' motions for new trial and motions to alter or amend the judgment were overruled, Pearson appealed, and Aon cross-appealed. That matter is before us as case No. S-07-034.
Aon filed an action in the same court against Midlands, alleging that by hiring Pearson with knowledge of the nonsolicitation agreement, it "unjustifiably and intentionally acted to interfere with, and to assist Pearson to breach" the agreement. In its answer, Midlands asserted a general denial and, in an affirmative defense, alleged that it had relied on Pearson's representation that "he had received a legal opinion that such Non-Solicitation Agreement was no longer valid or enforceable." Pursuant to a stipulation of the parties, the court consolidated the case with Aon's action against Pearson for both discovery and trial. At the consolidated trial, the court granted Midlands' motion for a directed verdict at the close of Aon's evidence and dismissed the action. Aon appealed, and Midlands cross-appealed. We moved this appeal and case No. S-07-034 to our docket pursuant to our statutory authority to regulate the caseloads of the appellate courts of this state.1
Although the two appeals were argued separately, we address and resolve both in this opinion.
In case No. S-07-034, Pearson assigns, restated and consolidated, that the trial court erred in (1) finding that the nonsolicitation agreement was enforceable by Aon, (2) admitting the opinion of Aon's expert witness on lost profits, (3) calculating Aon's net lost profits, and (4) failing to allow it to amend its answer to conform to the evidence.
On cross-appeal in case No. S-07-034, Aon assigns that the trial court erred in (1) overruling its motion for summary judgment on the claim that Pearson breached his fiduciary duty as an officer of Aon, (2) dismissing its action against Pearson for breach of his fiduciary duty, (3) limiting its evidence of damages to the 2-year period identified in the nonsolicitation agreement, and (4) calculating damages by counting certain expenses twice and using the wrong ratio of expenses to revenue to calculate net lost profits.
In case No. S-06-1256, Aon assigns that the district court erred in (1) sustaining...
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