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America's Choice, Inc. v. Bienvenu

March 26, 2010

AMERICA'S CHOICE, INC., PLAINTIFF,
v.
SANDRA BUSH BIENVENU, DEFENDANT.



The opinion of the court was delivered by: Emmet G. Sullivan United States District Judge

MEMORANDUM OPINION

Plaintiff America's Choice, Inc. ("ACI" or "plaintiff") is a for profit corporation in the education consulting industry. Plaintiff seeks a declaratory judgment that it does not owe defendant Sandra Bush Bienvenu ("defendant" or "Bienvenu") a commission on a sales contract. Bienvenu counterclaims for the commission. Defendant filed a motion for partial summary judgment and plaintiff cross-moved for summary judgment. Upon careful consideration of the motions, responses and replies thereto, the applicable law, the entire record herein, and for the reasons stated below, the Court GRANTS IN PART AND DENIES IN PART defendant's motion for summary judgment, and DENIES plaintiff's motion for summary judgment.

I. BACKGROUND

A. The Parties and the Education Consulting Industry

ACI is a Delaware corporation headquartered in the District of Columbia. Defendant's Statement of Uncontested Material Facts ("Def.'s SOF") ¶ 2.*fn1 Its business involves providing curriculum materials and professional development training to struggling public schools nationwide. Def.'s SOF ¶ 2. ACI is a for-profit subsidiary of the National Center on Education and the Economy, a not-for-profit corporation. Def.'s SOF ¶ 3. ACI operates on a fiscal year ("FY") running from July 1 to June 30. Def.'s SOF ¶ 4.

In late 2004, ACI hired Nicholas Solinger as its Vice-President of Sales and Marketing. Def.'s SOF ¶ 13. Solinger developed the Compensation Policy for the commissions at the heart of this dispute. Def.'s SOF ¶ 13. Solinger hired several Business Development Managers responsible for regions around the country. Def.'s SOF ¶¶ 13-14. One of those Business Development Managers was Bienvenu, who had responsibility for the Southeast Region including Arkansas, Florida, Texas, Louisiana, Mississippi, Alabama, and Oklahoma. Def.'s SOF ¶ 24. Bienvenu in turn hired Cecil Harris, a salesman with connections to the Arkansas education establishment.*fn2 Def.'s SOF ¶ 25.

B. Contract With Arkansas Department of Education

Through prior contacts at the Arkansas Department of Education ("ADE"), Harris discovered that the state had certain Title I federal education funds that he believed needed to be committed by May 20, 2006 (i.e., in FY 2006) in order for Arkansas to receive the federal funds. Def.'s SOF ¶¶ 28-29. The prospect of a multi-million dollar contract led to marketing by Harris, Bienvenu, and other ACI representatives in early 2006. Def.'s SOF ¶ 30. On March 30, 2006, the ADE issued a Request for Proposals ("RFP") seeking bids to provide comprehensive school reform in low-performing Arkansas public schools. Def.'s SOF ¶ 32; see also Def.'s Ex. L, RFP. The RFP provided for a "Professional Services Contract"*fn3 between ADE and the successful offeror. Def.'s Ex. L, §1.01. The RFP also significantly provides that, under state law, the awarded contract was contingent upon review and approval by the Arkansas Department of Finance and Administrative Office of State Procurement and the Arkansas Legislative Council. Def.'s Ex. L, §1.01.

On April 12, 2006, ACI submitted its sixty-plus page proposal for a comprehensive school improvement model for low-performing public school districts in Arkansas, which outlined its proposed programs at a projected cost of $6,095,000. Def.'s Ex. R, Proposal to State of Arkansas Department of Education ("Proposal"). The Proposal breaks down the costs of each program for 46 schools in the state, specifies the programs for each grade level, notes the materials for each program, provides for a term to begin on May 30, 2006 and end on June 30, 2007 (over two fiscal years), and is signed by Jason Dougal, ACI's Vice-President of Legal and Business Affairs. See generally Proposal. In other words, there are clear and detailed price, service, and time terms.

On April 17, 2006, ADE accepted ACI's proposal and the ADE Commissioner and Dougal signed a "Professional/Consultant Services Contract," ("hereinafter "April Contract"). The April Contract set forth terms from the Proposal including that ACI would provide services for 46 Arkansas schools at a cost of $6,095,000 from May 30, 2006 through June 30, 2007. See Pl.'s Ex. 17 at §§ 2,3,6. The April Contract also contained the following statement regarding payment: "The method(s) of rendering compensation will be delivered in accordance with a schedule developed by the contractor and ADE." Pl.'s Ex. 17 at § 5. Pursuant to state law, the contract still had to go through the contingencies of review and approval by procurement officials. Davis Dep. at 20:1-21:15. The contract was reviewed and approved by: 1) internal ADE officials; 2) the State Director of Finance; 3) the state legislature; and 4) again by the State Director of Finance, who marked the contract as finally approved on June 2, 2006. Pl.'s Ex. G, Dep. of Estelle Mathis at 17:13-18:25; see also Def.'s Ex. M at 5.*fn4

On July 20, 2006, ADE and ACI executed a document entitled "America's Choice, Inc. Agreement with State of Arkansas, Department of Education," (hereinafter "July Agreement") which refined certain provisions in the April Contract. Def.'s SOF ¶ 56; Pl.'s SOF ¶ 37. Specifically, the July Agreement listed which schools would receive the different programs, developed more precise budgeting, and came up with a total contract amount -- still $6,095,000, though there was discussion of reducing that total to $5,848,000. Pl.'s SOF ¶¶ 37-38. The July Agreement also included an integration clause, which states that the July Agreement "supercedes" any prior agreements. Pl.'s SOF ¶ 39. The July Agreement, however, was not processed through the state contract ratification process. Def.'s Ex. I, Dep. of Dr. Diana Julian, ADE's Assistant Commissioner at 45:13-46:15. ACI began providing services to ADE in July 2006, with ACI invoicing ADE for the first time on July 20, 2006 for half the total, or $3,047,500. Pl.'s SOF ¶¶ 40-41. ADE paid this invoice on August 10, 2006. Pl.'s SOF ¶ 42.

C. ACI's Compensation Policy

On May 9, 2005, ACI and Bienvenu entered into an employment agreement. Def.'s SOF ¶ 18. The agreement provided that Bienvenu would work from her home in Florida, and would be responsible for developing sales in the Southeastern Region noted above. Def.'s SOF ¶¶ 18-19. Bienvenu's annual salary was $150,000 a year, but significant commissions were possible if she reached her sales quota. Def.'s SOF ¶ 19. Her sales quota for FY 2006 was $2.5 million. Def.'s SOF ¶ 23. Attached to her Employment Agreement was a commission grid specifying potential payouts, but this grid did not include any explanation of quota accrual rules. Def.'s SOF ¶ 19. Both parties agree that ACI could modify the Compensation Plan, even during the fiscal year, with approval from ...


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