Mears v. Nationwide Mut. Ins. Co. - 91 F.3d 1118 (8th Cir. 1996)

Rule:

In order to be binding, a contract must be reasonably certain as to its terms and requirements. A contract is sufficiently certain if it provides a basis for determining the existence of a breach and for giving an appropriate remedy. The law does not favor the destruction of contracts because of uncertainty. 

Facts:

Nationwide Mutual Insurance Company (Nationwide) traditionally holds a regional convention for its employees every three years. The conventions were intended to boost employee morale by recognizing workplace achievements. Nationwide planned to have a regional convention for the South Central Regional Offices (SOCRO) in July 1994. To organize and plan the convention, Nationwide created an Executive Convention Committee and six subcommittees. One committee, consisting of Linda McCauley, Mary Peterson, and Jeff Handy, was responsible for selecting a convention theme. They decided to have a theme contest and disseminated an announcement that the winner could win a pair of Mercedes, an all expense paid trip for two around the world, and additional prizes. David Mears, who worked out of his home as a claims adjuster for Nationwide from October 1985 to September 1993, decided to enter the contest and submitted several themes. Several months after submitting his theme, Mears left the employment of Nationwide. In October 1993, Peterson notified Mears that his theme had been chosen for the 1994 convention. Mears claims that Peterson also told him that he had won two Mercedes-Benz automobiles, a fact that Peterson disputes. In January 1994, Mears spoke with Peterson again to inquire about the status of the Mercedes. Peterson warned him that he might not receive the automobiles for three reasons: first, Nationwide might change the convention theme; second, Mears was no longer employed by Nationwide; and third, the contest was a joke. In the end, Nationwide used the theme submitted by Mears for the July convention. After the convention, Mears spoke with Handy. Handy informed Mears that Nationwide never intended to award the two automobiles, and offered Mears a restaurant gift certificate instead. On October 12, 1994, Mears sued Nationwide in federal court for breach of contract. Nationwide admitted that the contest was legitimate, but argued that Mears was not entitled to the two Mercedes-Benz automobiles as a prize. The jury found in favor of Mears and awarded him $ 60,000 in damages.

Issue:

Can the announcement made by the subject committee be considered as a binding contract?

Answer:

Yes.

Conclusion:

Nationwide's contest notice offered several prizes--an all-expense paid trip around the world for two and prizes to be determined later, as well as the his and her Mercedes--and gave no indication of which prize the winning theme submitter would receive.  However, a contract that is facially ambiguous can be made certain by the subsequent actions or declarations of the parties. At trial, both Peterson and Mears testified that she told him that he had won two Mercedes while at a dinner attended by many Nationwide employees. Peterson claimed that she spoke with a facetious tone and, in reality, had no intention of awarding the automobiles. Mears, on the other hand, took Peterson at her word and believed that of the prizes listed on the contest announcement, he had won the Mercedes. It appears that others around Mears also believed that he had won the automobiles.. Faced with this factual dispute, the jury had to decide which version of events was more credible. They believed Mears and the court found no reasoning for undoing this jury determination.

Because the contest contract could be reasonably construed to entitle Mears to two Mercedes-Benz automobiles, the only remaining uncertainty lies in the type of Mercedes to be awarded. There is, as the district court notes, a wide range of values for Mercedes, depending largely on the model and year. This uncertainty, however, is not fatal. First, contract terms are interpreted with strong consideration for what is reasonable. Under a reasonable interpretation of the contest contract, the jury could expect the automobiles to be new.Second, when a minor ambiguity exists in a contract, Arkansas law allows the complaining party to insist on the reasonable interpretation that is least favorable to him. Indeed, in Dolly Parker Motors, Inc. v. Stinson, the Arkansas Supreme Court held that a contract that specified only the make of the automobile had enough certainty to be enforceable. These two factors, taken together, are sufficient to support the jury's conclusion that Nationwide owed Mears two of Mercedes-Benz's least expensive new automobiles as his contest prize.