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SUPREME COURT OF ALABAMA
OCTOBER TERM, 2007-2008 _________________________ 1060522 _________________________ Hilb, Rogal & Hamilton Company et al. v. Werner Beiersdoerfer Appeal from Jefferson Circuit Court (CV-01-1091) LYONS, Justice. Hilb, Rogal & Hamilton Company ("HRH"), Hilb, Rogal & Hamilton of Alabama, Inc. ("HRH Alabama"), and BDF-Meadows, Inc. ("BMI") (collectively referred to as "the HRH

corporations"), appeal from the trial court's order denying

1060522 their postjudgment motion in an action filed against them by Werner Beiersdoerfer. We reverse and remand.

I. Factual Background and Procedural History This is the second time this case has been before this Court. In the previous appeal, we affirmed the judgment in

part, reversed it in part, and remanded the cause for further proceedings. Beiersdoerfer v. Hilb, Rogal & Hamilton Co., 953 In Beiersdoerfer

So. 2d 1196 (Ala. 2006) ("Beiersdoerfer I"). I, we stated the pertinent facts as follows: "Substantive Facts "....

"On January 1, 1998, Beiersdoerfer, the sole shareholder of Beiersdoerfer-Meadows, Inc. ('BMI'), an insurance agency, sold all of the stock in BMI to HRH for $700,000 and executed a written stockpurchase agreement. In addition, Beiersdoerfer agreed to work for HRH for two years and executed a written employment agreement. In both the stockpurchase agreement and the employment agreement, Beiersdoerfer agreed that he would not compete with HRH for a specified period of time. As an employee of HRH, Beiersdoerfer continued to manage the accounts of BMI and to supervise subordinates. "In June 2000, Beiersdoerfer told Richard Simmons III, regional director of HRH, that Beiersdoerfer wanted to terminate his employment with HRH. Beiersdoerfer offered to repurchase BMI from HRH. Simmons told Beiersdoerfer that Simmons would have to discuss Beiersdoerfer's offer to purchase BMI with Mel Vaughn, the chief operating 2

1060522 officer of HRH, because Simmons did not have authority to accept or to reject such an offer on behalf of HRH. Vaughn rejected Beiersdoerfer's offer. "After Vaughn rejected Beiersdoerfer's offer to repurchase BMI, Beiersdoerfer and Simmons began discussing the possibility of Beiersdoerfer's continuing to manage the accounts of BMI for HRH as an independent broker instead of as an employee. Beiersdoerfer asked Simmons whether he had the authority to agree to such an arrangement without seeking approval from the home office of HRH in Richmond, Virginia. Simmons responded 'that he had the authority and the decision could be made locally and no Richmond.' (At trial, however, Vaughn testified that Simmons did not have such authority.) "Thereafter, Beiersdoerfer and Simmons met in mid-November 2000 ('the mid-November meeting'). Simmons asked Beiersdoerfer to go over his proposal to manage the accounts of BMI as an independent broker. Beiersdoerfer stated that he proposed to resign as an employee of HRH, to manage the accounts of BMI as an independent broker, and to split the commissions generated by those accounts with HRH. Simmons suggested that HRH should receive 60% of the commissions and Beiersdoerfer should receive 40%. Beiersdoerfer agreed and stated that he would pay all of his expenses out of his share of the commissions. Beiersdoerfer further stated that the arrangement would continue until HRH received an amount equal to the $700,000 it had paid Beiersdoerfer for the stock in BMI less any profits already received by HRH from the operation of BMI ('the monetary goal'). Finally, Beiersdoerfer stated that, under his proposal, any new business referred by HRH to BMI would remain with HRH when the arrangement ended and any new business generated by Beiersdoerfer or referred by outside brokers would go with him when the arrangement ended. At the end of this discussion, Simmons said: 'I 3

1060522 understand and I agree.' Simmons then told Beiersdoerfer that he was leaving at the end of the year to take another position, and he asked Beiersdoerfer to explain the arrangement to David Hobbs, the president of HRH Alabama. After the midNovember meeting, Beiersdoerfer made informal arrangements to sublease office space in another building where he planned to manage the BMI accounts as an independent broker; he arranged for a moving company; and he moved his office. "On November 21, 2000, Beiersdoerfer, Simmons, and Hobbs met to discuss Beiersdoerfer's managing the BMI accounts for HRH as an independent broker ('the November 21 meeting'). Beiersdoerfer recited the terms he and Simmons had discussed at the midNovember meeting. Hobbs complained that two BMI agents, Kevin Tangney and Heidi Parker, who is Beiersdoerfer's daughter, were planning to leave BMI without having signed covenants not to compete with HRH. Hobbs said that he could cause trouble for Parker and Tangney even though they had not signed a covenant not to compete. Beiersdoerfer said he would continue to manage the BMI accounts until HRH received $75,000 more than the monetary goal if Hobbs would refrain from causing trouble for Parker and Tangney. Hobbs stated: 'I agree.' Hobbs then told Beiersdoerfer that, because they were going to implement the independent-broker arrangement, Beiersdoerfer should take BMI's files to his office. Although Hobbs said that he wanted Simmons to reduce the terms of the agreement between Beiersdoerfer and HRH to writing, neither he nor Simmons indicated that the assent of HRH to the agreement was contingent on its being reduced to writing. Beiersdoerfer testified at trial that no details of the agreement remained unresolved at the end of the November 21 meeting. Simmons admitted at trial that neither he nor Hobbs told Beiersdoerfer at the November 21 meeting that any details of their agreement remained unresolved.

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1060522 "The next day, Beiersdoerfer moved BMI's files from the offices of HRH to his new office. While he was at HRH's offices, he saw Simmons, who stated, 'I was glad that we were able to reach an agreement.' On December 1, Beiersdoerfer executed a sublease on his new office. "After the mid-November meeting and the November 21 meeting, Simmons instructed the comptroller of HRH to pay Beiersdoerfer 40% of the revenue of BMI as a commission after December 31. The comptroller then prepared a budget for the next year showing Beiersdoerfer as receiving 40% of the revenue of BMI as a commission. "On November 27 and 28, 2000, Simmons and Hobbs met with Vaughn at the home office of HRH in Richmond ('the November 27 and 28 meetings'). Vaughn said that 'there should be a one-year consulting agreement [with Beiersdoerfer] with a non-piracy agreement upon termination and that it should have a 30-day termination clause and that it was--should only be needed for 90- to [180] days.' Vaughn's plan was that Wayne Bowling, an HRH employee, would become familiar with the BMI accounts during this 90- to [180]-day period and the consulting agreement would then be terminated. No one told Beiersdoerfer about Vaughn's instructions at the November 27 and 28 meetings. "When Beiersdoerfer returned to his office after the New Year's Day holiday, he found an unsigned faxed letter from Hobbs dated December 29. The letter stated: "'The purpose of this letter is outline the terms of our agreement: "'1. Werner Beiersdoerfer from HRH effective January 1, At that time he will become an broker, serving the accounts 5 to

will retire 2000 [sic]. independent assigned to

1060522 him. See attached list. We agree that the long-term objective is to orderly transfer these accounts to an HRH producer. "'2. All Fees & Commissions will be paid to HRH. HRH will then pay Mr. Beiersdoerfer 40% of the commissions and fees generated by these assigned accounts. "'3. The files on these accounts will remain with Mr. Beiersdoerfer, but will be returned at any time to HRH at their request. "'4. HRH will not extend errors and omissions coverage to Mr. Beiersdoerfer. "'5. Mr. Beiersdoerfer agrees that at no time in the future will he work in collusion with his daughter, Heidi Parker, to solicit these assigned accounts. "'6. If at any time in the future, either Werner Beiersdoerfer or HRH becomes dissatisfied with this arrangement, either party can cancel this agreement with 30 days notice. At that time, Mr. Beiersdoerfer agrees to never contact or solicit these assigned accounts.' "On January 2, Beiersdoerfer telephoned Simmons and left a message on his answering machine. The message stated that Hobbs's December 29 letter was satisfactory except for the statement in paragraph 4 that HRH would not provide Beiersdoerfer with errors-and-omissions coverage and the statement in paragraph 6 that Beiersdoerfer would 'never contact' clients of BMI. Simmons acknowledged that he received the message and that he conveyed the information to Hobbs. That same day, Hobbs signed a payroll authorization form listing Beiersdoerfer's

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1060522 date of termination December 31, 2000. as an employee of HRH as

"On January 3, Hobbs showed Vaughn a copy of Hobbs's December 29 letter. Vaughn became angry and asked Hobbs if he understood that the letter amended the employment and stock-purchase agreements. Vaughn instructed Hobbs to 'get out' of the agreement with Beiersdoerfer. Hobbs and Fred Renneker, the chief executive officer of HRH Alabama, went to Beiersdoerfer's office on January 8. Hobbs gave Beiersdoerfer a letter signed by Hobbs and dated January 5. In pertinent part, the letter stated: "'I have made the terminate your employment as 2001. Since we have not arrangement (earlier faxed proposed offer is retracted decision to of February 9, finalized our to you), that as well.'

"After giving Beiersdoerfer this letter, Hobbs said, 'Mel [Vaughn] didn't like the agreement.' Beiersdoerfer responded that they had an agreement. Renneker then said that the agreement had not been reduced to writing and signed. Beiersdoerfer responded that oral agreements were binding in Alabama, that he intended to abide by the oral agreement they had reached, and that he expected HRH to abide by it as well. "A few days after this meeting, Beiersdoerfer's wife received a letter from HRH informing her of her right, under COBRA, to continue her health insurance coverage under the group plan for up to 18 months after the termination of Beiersdoerfer's employment on December 31, 2000. Later in January, HRH generated a payroll authorization form to reinstate Beiersdoerfer's pay and benefits as an employee through February 9, 2001. "Procedural Facts 7

1060522 "Alleging that Beiersdoerfer had violated the covenants not to compete in the stock-purchase and employment agreements, the HRH [corporations] sued him, alleging breach of contract, breach of fiduciary duty, and tortious interference with business relationships. Beiersdoerfer counterclaimed, alleging breach of contract, misrepresentation, suppression, defamation, defamation per se, conspiracy, and invasion of privacy. "As the factual basis of his breach-of-contract claim, Beiersdoerfer alleged that Beiersdoerfer and HRH had formed an oral contract at the mid-November and November 21 meetings and that HRH had breached that oral contract. As part of the factual basis of his misrepresentation claim, Beiersdoerfer alleged that, after September 2000 and before the midNovember meeting, Simmons had misrepresented to Beiersdoerfer '[t]hat Simmons possessed the authority to enter a contract on behalf of [HRH] regarding Beiersdoerfer's management of accounts' and '[t]hat the agreement regarding Beiersdoerfer's management of accounts could be made "locally," and did not require the "approval of Richmond."' In addition, Beiersdoerfer alleged that Simmons and Hobbs, at the November 21 meeting, had misrepresented the intent of HRH 'to be bound by the terms and conditions agreed upon,' 'to perform the terms and conditions for a time period sufficient to achieve the monetary goal agreed upon,' and 'to reduce the terms and conditions to writing.' As the factual basis of his suppression claim, Beiersdoerfer alleged that, between November 2000 and January 8, 2001, Simmons and Hobbs had suppressed the fact '[t]hat Simmons did not possess the authority to enter a contract on behalf of [HRH] regarding Beiersdoerfer's management of accounts'; the fact '[t]hat the agreement regarding Beiersdoerfer's management of accounts could not be handled 'locally'; the fact that such an agreement 'did require the "approval of Richmond"'; the fact 8

1060522 'that [HRH] did not intend to honor the terms and conditions agreed upon'; the fact 'that [HRH] formed an intent to repudiate the agreement reached within 90 to 180 days'; the fact 'that Mel Vaughn had instructed them that the most he could live with was a one-year consulting agreement terminable on 30day's notice with a non-piracy clause, and that he expected that it would only be needed for 90 to 180 days'; and the fact 'that [HRH] had no intention of allowing the parties to perform as agreed upon.' "The HRH [corporations] moved for a summary judgment on Beiersdoerfer's counterclaims. However, the trial court denied the summary-judgment motion, and the case proceeded to trial. The HRH [corporations], on the one hand, and Beiersdoerfer, on the other, moved for a JML [judgment as a matter of law] at the close of all the evidence. As grounds for a JML on Beiersdoerfer's breach-ofcontract claim, the HRH [corporations] asserted that Beiersdoerfer had not introduced substantial evidence tending to prove that the parties had mutually assented to all of the terms of the putative oral contract and substantial evidence tending to prove that the putative oral contract specified how it had modified the stock-purchase and employment agreements. As grounds for a JML on Beiersdoerfer's misrepresentation claim, the HRH [corporations] asserted that Beiersdoerfer had not introduced substantial evidence indicating that Simmons's representation was false, that Beiersdoerfer had relied upon Simmons's representation, and that Beiersdoerfer was damaged by relying upon Simmons's representation. As the ground for a JML on Beiersdoerfer's suppression claim, the HRH [corporations] asserted that Beiersdoerfer had not introduced substantial evidence indicating that the HRH [corporations] had suppressed any facts. "The trial court entered a JML in favor of the HRH [corporations] on all of Beiersdoerfer's claims 9

1060522 except his breach-of-contract, misrepresentation, and suppression claims. The trial court entered a JML in favor of Beiersdoerfer on all of the claims of the HRH [corporations] except their breach-ofcontract claim. The trial court then charged the jury on the HRH [corporations'] breach-of-contract claim and Beiersdoerfer's breach-of-contract, misrepresentation, and suppression claims. The trial court did not instruct the jury that it could not return a verdict for Beiersdoerfer on both his breach-of-contract claim and his misrepresentation claim. The verdict form the trial court gave the jury to be used if the jury found in favor of Beiersdoerfer allowed the jury to return a verdict for Beiersdoerfer both '[f]or breach of contract' and '[f]or fraud' without requiring the jury to specify whether a verdict for Beiersdoerfer '[f]or fraud' was a verdict on the misrepresentation claim only, a verdict on the suppression claim only, or a verdict on both of those claims. "Immediately after the trial court charged the jury and before the jury retired to consider its verdict, counsel for the HRH [corporations], outside the presence of the jury, stated on the record: "'It seems to me that Mr. Beiersdoerfer should

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