MARY ANNE LINSELL V APPLIED HANDLING INC
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STATE OF MICHIGAN
COURT OF APPEALS
MARY ANNE LINSELL,
Plaintiff-Appellee/Cross-Appellant,
v
UNPUBLISHED
February 8, 2005
APPROVED FOR
PUBLICATION
April 19, 2005
9:00 a.m.
No. 249647
Wayne Circuit Court
LC No. 01-101515-CZ
APPLIED HANDLING, INC,
Defendant-Appellant/CrossAppellee.
Official Reported Version
Before: Markey, P.J., and Fitzgerald and Owens, JJ.
PER CURIAM.
Defendant Applied Handling, Inc. (Applied), a Michigan corporation that sells material
handling equipment to the automotive industry, appeals as of right a judgment entered on a jury
verdict in favor of plaintiff Mary Anne Linsell, a former sales representative for Applied, in this
breach of contract action. The jury awarded plaintiff damages in the amount of $498,500, as
well as $576,000 pursuant to the penalty provision of the Michigan sales representative
commissions act (SRCA), MCL 600.2961(5)(b). The court also awarded plaintiff attorney fees
and costs pursuant to MCL 600.2961(6) in the amount of $292,845.15, for a total judgment of
$1,367,345.15. The judgment also provided for judgment interest until the judgment is paid,
with interest of $179,961.96 owing when the judgment was entered. The trial court denied
Applied's motion for judgment notwithstanding the verdict. Plaintiff cross-appeals, challenging
the amount of damages awarded pursuant to the penalty provision of the SRCA.
Applied is owned by brothers Bruce and Drew Bacon. Applied hired plaintiff as a
salaried marketing employee in 1987. In 1989, plaintiff moved into a salaried sales
representative position. At that time, she executed a written employment contract governing the
conditions under which she would receive sales commissions during and after her employment.
The contract provided that "[c]ommissions will be paid on all booked business which is paid in
full within the thirty (30) day notice period." Plaintiff resigned her employment in 1991, but was
paid commissions on all orders received by Applied before her resignation that were paid in full
by the customer within thirty days of her resignation.
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At Applied's 1991 Christmas party, co-owner Drew Bacon asked plaintiff to consider
returning to work at Applied. In January 1992, plaintiff and her husband met with Drew at his
apartment to discuss the possibility of plaintiff returning to work at Applied. Plaintiff was
reluctant to return because of what she perceived as unfairness in Applied's written policy on
posttermination commissions. Plaintiff testified that
Drew said, we will treat you—we will do things differently. I will be there for
you, MAL. I will be your guardian angel and I will take care of you. I mean,
we're not going to do it like we did the last time. He said, I will pay you for your
sales effort.
Plaintiff further testified that Drew said that "[h]e would pay me for my sales effort that
generated sales for the company. . . . [I]f I created the relationships . . . I would be compensated,"
whether or not the sale came in before or after she left. Drew Bacon confirmed that his
conversation with plaintiff was "not a very detailed" one and that he agreed to "take care of her .
. . ." He testified that he told plaintiff that he would do things differently by modifying the
thirty-day policy so customers would not be required to pay within thirty days of termination in
order for her to be entitled to posttermination commissions. Accordingly, unlike the other sales
representatives, plaintiff would be paid commissions on all orders received by Applied before
her termination at the point the customer paid. The discussion between plaintiff and Drew was
not reduced to writing.
Plaintiff returned to work at Applied in March 1992, earning a sales commission of
thirty-five percent.1 Her job duties as a sales representative required her to secure orders for
equipment from Ford Motor Company and Chrysler Corporation. After receiving an order,
plaintiff oversaw the purchasing of the equipment and its delivery and installation at the
customer's facility. Plaintiff explained that while she was the national account salesperson for
Chrysler accounts, Applied became a "strategic source supplier" for Chrysler, meaning that
competition was essentially eliminated and Applied became the supplier of choice for Chrysler.
Plaintiff also obtained "blanket orders" for approximately 1,271 items, which meant that prices
and funding were preset, and when Chrysler wanted to order an item, it merely provided a
"release" for the item. Plaintiff worked two years obtaining the Chrysler blanket orders.
Plaintiff also obtained a blanket order from Ford that included 130 items. Blanket orders did not
become "true" orders until Ford or Chrysler provided releases for the items. Plaintiff explained
that items on the blanket orders as well as sales that she expected, constituted her "pipeline." It
sometimes took a year or two of work to build the pipeline before the orders started coming in.
Plaintiff obtained orders from three Ford plants—Edison; Oakville, Ontario; and Kentucky—that
1
Plaintiff was generally Applied's top sales person and earned commissions of $236,953.93 in
1995, $415,237.23 in 1996, $381,733.78 in 1997, $281,249.50 in 1998, $385,860.51 in 1999,
and $415,753.00 for the first six months that she worked in 2000. Applied continued to pay
plaintiff commissions on all orders received before her resignation, without regard to when the
orders were paid by the customer. Plaintiff was paid $237,043.59 in postresignation
commissions.
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were either shipped and delivered or in the process of being shipped at the time plaintiff resigned
the second time.
Plaintiff testified that the Edison, Oakville, and Kentucky plant sales "vanished" off her
sales and commission reports after she resigned and that expenses were posted to her accounts
after her resignation. Bruce Bacon testified that the Edison, Oakville, and Kentucky orders were
cancelled by Ford and reordered by Ford's financing company, Connell Financing. Bruce
admitted, however, that none of the equipment was returned to Applied; rather, the "sold to"
party was changed. In addition, some items were added to the orders.
In the late 1990s, plaintiff began experiencing health problems and was diagnosed with
irritable bowel syndrome. Plaintiff was overwhelmed at work and offered to give sales
representative Bob Williams fifty percent of her commission for his assistance with a project
known as "GAP [Global Automotive Program] III." Plaintiff did not want to use the labor
provided by Applied's operations department because she felt that this department, whose labor
cost her twenty percent of her commission, did not adequately perform its job.
On July 20, 2000, after the close of business, plaintiff placed a resignation letter drafted
by her attorney on Bruce Bacon's chair. She also left a note on Drew Bacon's chair informing
him that she had been advised by her attorney not to speak with him or Bruce. In her resignation
letter, she requested that Applied provide her with monthly accounting information so that she
could track all sales for which she was the "procuring cause." The letter stated:
Assuming Applied maintains sales and servicing of the
customers/accounts procured by me, commission payments paid to me will
continue indefinitely. Naturally, it is in our mutual best interest to reach an
accommodation to allow a transition of my sales activity to best ensure maximum
sales retention for Applied. I am prepared to discuss terms of such an
accommodation with Applied or consider a negotiated buyout of Applied's future
commission obligations to me if such an offer is forthcoming and fair. Please
advise.
The Bacons called plaintiff 's attorney, Jack Louisell, on Monday, July 24, 2000, to
discuss plaintiff 's offer to formulate a transition plan. On August 3, 2000, Louisell sent Bruce a
proposed "Separation Agreement." The proposed agreement claimed that plaintiff was entitled
to commissions indefinitely. Applied rejected the proposed agreement because it exceeded the
company's perception of any entitlement, and the parties continued to negotiate.
Before plaintiff 's resignation, Applied used the sales code "MAL 352" for plaintiff. The
sales codes identified which sales representative had responsibility for orders received and paid
for by the customer. After plaintiff resigned, Bruce created a separate sales code, "MAL 353", to
account for those orders Applied received after plaintiff 's resignation. According to Bruce, the
separate sales code allowed Applied to segregate the orders received before plaintiff 's
resignation from those orders received after her resignation. Applied admittedly paid $10,000 to
plaintiff from the MAL 353 account for sales made after her resignation, but according to Bruce
the money was paid in error. Bruce denied that he told Applied's controller, Hildegard
Neumann, that plaintiff was entitled to postresignation commissions for sales generated from
activity entered into the computer or business quoted by plaintiff before her resignation.
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Neumann testified in her deposition that according to instructions she initially received from
Bruce and Drew, the money in the MAL 353 account was supposed to go "into Mary Anne's
pocket." Neumann also testified that she had a discussion with Bruce after plaintiff left
regarding what to pay plaintiff after she left. She testified that she understood Bruce's comments
to mean that plaintiff would be paid commissions for business she generated before leaving, as
well as for orders quoted before she left but entered on the computer after she left.
Bob Williams testified that he assumed responsibility for completing and servicing those
sales jobs that were in process when plaintiff resigned. Drew told Williams to continue to input
new sales from plaintiff 's customers fifty percent to plaintiff and fifty percent to Williams. New
sales were recorded by Applied on this fifty-fifty basis through September 2000. In October
2000, Applied hired sales representative Ryan Dillingham to assist Williams in finishing the
work on these jobs. Applied paid Dillingham fifteen percent of the total commissions on these
jobs, paid Williams sixty percent of the commissions, and put the remaining twenty-five percent
into an account that was earmarked for plaintiff in the event she agreed to return and assist in the
transition, as proposed in her resignation letter. This account was named the "XYZ transition
account." In total, approximately $144,0002 was deposited into the transition account.
Most of the commissions allocated to the XYZ transition account were based on a series
of orders received by Applied after plaintiff 's resignation as part of the program known as GAP
III. Ford instituted the GAP program in 1999 in response to a number of employee injuries on its
loading docks. After conducting surveys and collecting data from Ford plants across the country,
Applied concluded that new loading dock equipment was necessary to prevent future accidents.
Ford funded the GAP program in three phases. GAP I and GAP II occurred in 1999 and
consisted of replacing "dock levelers" and installing hooking devices that locked onto trailers
while loading or unloading at the dock. GAP III occurred in 2000 and involved the installation
of expensive "combination control panels" at the docks. At the time plaintiff resigned in July
2000, Applied had received only a few GAP III orders. Most of the GAP III orders were
received after plaintiff resigned. Williams was required to complete the servicing and
installation work on those orders and to resurvey a number of the plants. Applied paid plaintiff
commissions on each GAP III order received before she resigned as long as the order was not
subsequently cancelled. For GAP III orders received after plaintiff 's resignation, Applied
allocated commissions on those orders to the XYZ transition account.
Applied never reached an agreement with plaintiff on a transition plan, and plaintiff filed
the present lawsuit on January 16, 2001. In her complaint, plaintiff alleged that Applied had an
obligation to pay her commissions on sales she procured. At her deposition, plaintiff testified
that she could not determine the amount of commissions to which she was entitled. At trial, she
testified that she was leaving it up to her legal and accounting experts to look at and compile the
data.
2
$144,000 represented twenty-five percent of the commissions.
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Over Applied's objection, plaintiff 's damages expert, Anthony Antoun, testified that
plaintiff was owed thousands of dollars in preresignation commissions dating back to 1997 as a
result of misstatements of gross profits on the sales commission reports. Antoun opined that
Applied had two sets of books: one for computing the commissions paid to salespeople and one
for reporting gross profits on financial statements. In response to Antoun's testimony, Applied
presented evidence that the "understatement" of gross profits on the sales commission reports
resulted from the twenty percent routine charge that Applied uniformly imposed on projects
requiring work by its operations department. Applied denied any accounting improprieties.
Antoun utilized three different approaches in calculating damages. In the first approach,
he calculated that plaintiff was underpaid $872,346 for the years 1997 through 2002. Using a
monthly average for sales, he applied the statutory penalty on a monthly basis and calculated
damages for the years 1997 through 2002 in the amount of $2,617,037. He also calculated future
damages in the amount of $136,000 for the years of 2003 through 2005. In the second approach,
Antoun calculated that plaintiff was entitled to the commissions in the XYZ transition account in
the amount of $288,000. He calculated commissions on "vanishing" orders from 1997 through
2000 in the amount of $346,000, and calculated underpayments for 2001 and 2002, for a total
underpayment of $923,044. Using this, he then calculated a monthly average underpayment of
$12,800, applied a statutory penalty of $25,600 each month, and calculated damages of
$2,764,800. He also calculated future damages of $136,000 for the years 2003 through 2005, for
total damages of $2,900,800. In the third approach, he calculated underpayments of $860,348
for 1997 through 2002, and damages of $2,581,043 with the statutory penalty included. He also
calculated future damages of $140,000 for 2003 through 2005, for total damages of $2,721,043.
The jury found that Applied had an oral contract with plaintiff requiring Applied to pay
plaintiff sales commissions for both pre- and postresignation sales, and that Applied breached its
contract with plaintiff by failing to pay plaintiff sales commissions. The verdict form asked in
question number five, "What damages, if any, did Plaintiff suffer to date as a result of the
breach[?]" The jury answered, "$498,500." The jury also found that plaintiff was entitled to
statutory penalties under MCL 600.2961 in the amount of $576,000. After the jury was polled,
the trial court granted plaintiff 's counsel's request that the jury be asked, "What damages, if any,
will Plaintiff suffer from today through 2005 that have not already been included in the answer to
Question #5[?]" The jury was sent to deliberate further. The jury returned the same verdict,
finding that plaintiff was not entitled to future damages.
The trial court denied Applied's motions for new trial, judgment notwithstanding the
verdict, and remittitur.
I
Applied argues that the trial court erred by denying its motion for judgment
notwithstanding the verdict with regard to postresignation sales commissions because the
evidence presented by plaintiff at trial was insufficient as a matter of law to establish mutual
assent on the terms of the oral contract. Applied also contends that the alleged terms of the
contract were so vague and indefinite as to be incapable of ascertainment. A trial court's
decision on either a motion for judgment notwithstanding the verdict or a motion for a directed
verdict is reviewed de novo, considering the evidence and all reasonable inferences in a light
most favorable to the nonmoving party. Sniecinski v Blue Cross & Blue Shield of Michigan, 469
-5-
Mich 124, 131; 666 NW2d 186 (2003). If reasonable jurors could have reached different
conclusions, the jury verdict must stand. Central Cartage Co v Fewless, 232 Mich App 517,
524; 591 NW2d 422 (1998).
Plaintiff clearly relied on an express oral contract, and Applied admitted there was an oral
contract for employment. The dispute related to the terms of the oral contract. Indeed, defense
counsel acknowledged when opposing plaintiff 's motion for directed verdict that "[c]ertainly it is
a jury issue as far as what the agreement of the party's [sic] was." And, in closing argument,
counsel for Applied stated, "The issue in this case is what was the agreement between the parties
and did my client abide by that agreement. . . . And ladies and gentlemen of the jury the
evidence is clear what the agreement was and the fact that my clients did abide by it." When the
terms of a contract are contested, the actual terms of the contract are to be determined by the
jury. Guilmet v Campbell, 385 Mich 57, 69; 188 NW2d 601 (1971).
Applied also argues that the trial court erred by denying the motion for judgment
notwithstanding the verdict with regard to preresignation sales commissions because "Linsell did
not allege in her complaint that Applied Handling breached a contract to pay her commissions on
sales that occurred before her resignation." (Emphasis in Applied's brief). Applied contends that
plaintiff did not claim preresignation commissions until the eve of trial, when Antoun noticed the
differences in "gross profits" between documents produced during discovery and documents
Applied produced on the eve of trial.
Because the jury verdict form did not divide damages into pre- or postresignation
damages, it is impossible to determine what amount of damages, if any, the jury attributed to
preresignation commissions. Further, we are unable to determine how the jury calculated the
damages for unpaid commissions. Nonetheless, a review of the record supports a finding that
plaintiff 's claim included preresignation sales commissions. Plaintiff 's complaint sought
recovery of all unpaid commissions. In response to Applied's motion for summary disposition,
plaintiff identified preresignation sales. During discovery, plaintiff presented documentary
evidence supplied by Applied with respect to preresignation sales that state "order by Mary Anne
Linsell" and have job order dates before her resignation for which she was not paid. Plaintiff
also presented evidence of preresignation orders that she alleged "vanished" from her sales
reports. Thus, Applied's argument that plaintiff did not claim preresignation commissions is
without record support.3
II
Applied argues that the evidence failed to establish that plaintiff was entitled to additional
commissions under the "procuring cause doctrine" or the equitable theories of unjust enrichment
or equitable estoppel. It is undisputed that the jury did not determine that plaintiff was entitled to
3
It appears that Applied is actually challenging the trial court's decision to admit the testimony
of Antoun regarding the issue of gross profits. However, this argument is more thoroughly
addressed in part IV of this opinion.
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postresignation commissions under the procuring cause doctrine or these equitable theories in
light of the jury's finding of an oral agreement with respect to postresignation sales commissions.
Thus, this argument is misplaced and without merit.
III
Both plaintiff and Applied challenge the jury's verdict with regard to penalties under the
SRCA. Applied contends that the trial court misapplied MCL 600.2961(5)(b) when it instructed
the jury that the penalty is triggered and assessed against a principal each time a commission
becomes "due." It contends that the SRCA provides for a single penalty of double the amount of
commissions due but unpaid, up to $100,000. Plaintiff contends that the penalty damages
awarded by the jury must be amended because the jury did not double the damages awarded for
unpaid commissions.
The SRCA, MCL 600.2961, was enacted in 1992 to provide special protection to sales
representatives, with the Legislature's expressed public policy to provide significant protections
for a salesperson to collect his or her commissions. Howting-Robinson Assoc, Inc v Bryan
Custom Plastics, 65 F Supp 2d 610, 613 (ED Mich, 1999). The legislative history reveals that
this law is
an attempt by Michigan lawmakers to compensate sales agents for goodwill and
other assets lost that would be difficult to quantify in a dispute. Thus, rather than
requiring the harmed agents to resort to costly litigation to provide the detailed
accounting necessary to ascertain all relevant damages, the legislature simply
chose to assess those additional damages by requiring a principal who
intentionally fails to pay commissions due to remit two times that amount to the
agent. [M & C Corp v Erwin Behur GmbH & Co, KG, 87 F3d 844, 850 (CA 6,
1996).]
To achieve that end, the Legislature included heavy penalties against violating principals
to ensure that sales representatives in Michigan are paid the full commissions to which they are
entitled, especially when those commissions fall due after the termination of the employment
relationship. Walters v Bloomfield Hills Furniture, 228 Mich App 160, 164; 577 NW2d 206
(1998).
MCL 600.2961 provides in pertinent part:
(2) The terms of the contract between the principal and sales
representative shall determine when a commission becomes due.
* * *
(4) All commissions that are due at the time of termination of a contract
between a sales representative and principal shall be paid within 45 days after the
date of termination. Commissions that become due after the termination date
shall be paid within 45 days after the date on which the commission becomes due.
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(5) A principal who fails to comply with this section is liable to the sales
representative for both of the following:
(a) Actual damages caused by the failure to pay the commissions when
due.
(b) If the principal is found to have intentionally failed to pay the
commission when due, an amount equal to 2 times the amount of commissions
due but not paid as required by this section or $100,000, whichever is less.
The primary goal of statutory interpretation is to ascertain and give effect to the
Legislature's intent. The Legislature is presumed to have intended the meaning it plainly
expressed. If the plain and ordinary meaning of the statutory language is clear, then judicial
construction is neither necessary nor permitted. A court is required to enforce a clear and
unambiguous statute as written. Smith v Globe Life Ins Co, 223 Mich app 264, 276-277; 565
NW2d 877 (1997), rev'd in part on other grounds 460 Mich 446 (1999).
Applied argues that the trial court misapplied MCL 600.2961(5)(b) when it instructed the
jury that the penalty is triggered and assessed against a principal each time a commission
becomes "due." Applied contends that MCL 600.2961(5)(b) "plainly states that the penalty
consists of 'an amount' (singular) that is equal to double 'the amount of [unpaid] commissions'
(plural) or $100,000, whichever is less." It argues that the penalty applies once to all unpaid
commissions in the aggregate, not separately to each unpaid commission.
The only case to directly address the proper assessment of damages under the SRCA for
intentional failure to pay commissions is Kenneth Henes Special Projects Procurement,
Marketing & Consulting Corp v Continental Biomass Industries, Inc, 86 F Supp 2d 721 (ED
Mich, 2000). Although decisions of a federal district court interpreting Michigan law are not
binding precedent on Michigan courts, Ryder Truck Rental, Inc v Auto-Owners Ins Co, Inc, 235
Mich App 411, 416; 597 NW2d 560 (1999), courts may find the reasoning of the federal court
persuasive. In Kenneth Henes, the plaintiff brought suit under the SRCA to recover unpaid
commissions "due and owing" as a result of sales of equipment that it procured. The jury found
that the plaintiff was owed commissions on four sales: $12,493 on a December 1996 sale;
$35,000 on a June 1997 sale; $50,200 on a May 1998 sale; and $37,500 on a 1998 sale, for total
commissions owing of $135,193. The jury also found that the defendant intentionally failed to
pay the sales commissions. Kenneth Henes, supra at 723. The trial court doubled the damages
for intentional failure to pay three of the sales commissions, and entered a verdict of $257,493 in
favor of the plaintiff as follows:
Ct. 1: $12,493.00
Ct. 2: $70,000.00 ([June 1997] sale jury verdict of $35,000 x 2)
Ct. 3: $100,000.00 (applying the statutory double commissions cap to the
[May 1998] sale)
Ct. 4: $75,000.00 ([the other 1998] sale jury verdict of $37,500 x 2) [Id. at
723-724.]
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The defendant moved for a new trial and amendment of the judgment, arguing in relevant
part that the $100,000 cap on double commissions provided in MCL 600.2961(5)(b) is a cap on
doubling commissions as a penalty in the aggregate, and not a cap for the penalty on each
commission. Therefore, the defendant claimed that the correct calculation of damages should
begin with the total amount of commissions that the jury found to be owing to plaintiff on all
counts ($135,193) and, since doubling the intentionally withheld commissions in the aggregate
would exceed $100,000, the plaintiff would be entitled to only an additional $100,000 penalty,
not the additional $122,300 penalty reflected in the judgment entered by the court. Kenneth
Henes, supra at 724-725, 733-734.
The plaintiff also moved to amend the judgment, arguing that it was entitled to more than
the $257,493(5)(b) reflected in the judgment. The plaintiff contended that the cap in MCL
600.2961(5)(b) applies separately to each unpaid commission and, therefore, it was entitled to
recover on each of the three commissions the amount the jury awarded plus either an amount
equal to twice that commission or $100,000, whichever was less. The plaintiff argued that the
judgment should have been for $380,193.4 Kenneth Henes, supra at 725, 734.
The federal district court concluded that the judgment should reflect an award of all
actual damages assessed by the jury, plus a single statutorily capped penalty award under MCL
600.2961(5)(b) of $100,000. Noting that no court had squarely addressed the issue of the proper
application of the double commission penalty provision in MCL 600.2961(5)(b) or its attendant
$100,000 cap, the court observed that "the Sixth Circuit [in Kingsley Assoc, Inc v Moll
PlastiCrafters, Inc, 65 F3d 498 (CA 6, 1995)] has at least implicitly ruled on this issue and has
concluded that the proper assessment of damages for intentional failure to pay commissions is an
4
The plaintiff calculated the damages award as follows:
Jury verdict on the December 1996 sale: $12,493
Jury verdict on the June 1997 sale: $35,000
Penalty: $70,000
Jury verdict on the May 1998 sale: $50,200
Penalty: $100,000
Jury verdict on the other 1998 sale: $37,500
Penalty: $75,000
Total: $380,193
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award of the actual damages sustained by the plaintiff plus a single double commissions penalty
capped at $100,000." Kenneth Henes, supra at 734.
Kingsley involved a sales representative's claims of breach of contract and violation of
the SRCA arising out of the defendant's failure to pay commissions. Kenneth Henes quoted the
following from the Kingsley decision:
"As the jury has already made a finding that Moll Plasti Crafters
intentionally failed to pay Kinglsey its commissions due, Kingsley is hereby
awarded in addition to its actual damages an amount [singular] equal to twice
the amount of commissions [plural] due but not paid, not to exceed $100,000 . . .
." [Kenneth Henes, supra at 735, quoting Kingsley, supra at 508 (emphasis added
by Kenneth Henes.]
The Kenneth Henes court then stated:
As indicated, the Sixth Circuit assessed one single penalty of double the
amount of commissions due up to $100,000 in addition to the actual damages
sustained by the plaintiff. See also, H.J. Tucker & Associates, Inc. v. Allied
Chucker and Engineering Company, 234 Mich.App. 550, 595 N.W.2d 176
(1999), in which the Michigan Court of Appeals stated that Section 2961 provides
for an award of actual damages plus "an additional award of two times the amount
of commissions due, not to exceed $100,000." [234 Mich App at 555.] 595 N.W.
2d at 180. [Kenneth Henes, supra at 735 (emphasis in original).]
The Kenneth Henes court also noted:
This construction further appears to be consistent with the Michigan
Legislature's apparent desire to enact a sales representative commissions statute
that would "bring Michigan into line with most of its surrounding states, which
reportedly have a similar law." Kentucky, Wisconsin, Pennsylvania, Ohio and
South Carolina all have statutes which, are perhaps a bit more artfully drafted that
[sic] the Michigan statute, and these states' statutes make it clear that for
"intentional failure to pay," a single maximum penalty in addition to actual
commissions due is assessed. [Id. (emphasis in original; citation omitted).]
The court then granted the defendant's motion for amendment of judgment to reflect the
jury verdict of $135,193, plus an additional $100,000 pursuant to MCL 600.2961(b)(5) for
intentional failure to pay commissions, for a total damage award of $235,193. Kenneth Henes,
supra at 735-736.
Plaintiff relies on H J Tucker & Assoc, Inc v Allied Chucker & Engineering Co, 234 Mich
App 550; 595 NW2d 176 (1999), in support of her position that the double-damages provision
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applies to each commission as it becomes due.5 In Tucker, this Court concluded that claims for
payments due under contracts for commissions are analogous to claims for payments under an
installment contract. Thus, for purposes of determining whether a claim under the SRCA is
viable or barred by the statute of limitations, this Court concluded that it is appropriate to
compare monthly commission obligations to installment contracts. Id. at 562-563. Plaintiff
argues that the same construction must be applied to the statutory penalty provision and that "the
statutory penalty provision must apply each and every time periodic unpaid commissions become
due and are intentionally not paid." Under this construction, plaintiff contends that the penalty
award must be amended because the jury did not "double" the damages awarded for unpaid
commissions. She contends that the penalty award should have been $997,000 ($498,500
doubled).6
The holding in Tucker did not involve the interpretation of the double-damages provision
of MCL 600.2961(5)(b). Rather, the language in Tucker cited by plaintiff dealt solely with
whether the plaintiff 's breach of contract claim was barred by the statute of limitations.
Interestingly, the verdict of $1.2 million in Tucker was based on the failure to pay monthly
commissions over a six-year period, yet the trial court awarded the plaintiff a single SRCA
penalty capped at $100,000.7 No issue regarding the propriety of the SRCA penalty was
presented in Tucker. Thus, the decision in Tucker is not controlling with regard to the issue
presented in this case.
The language in MCL 600.2961 is ambiguous; therefore, judicial interpretation is
permissible. We agree with the reasoning in Kenneth Henes, however, and adopt it as our own:
damages pursuant to the penalty provision in MCL 600.2961(5)(b) are limited to a single award
of double the amount of commissions due but unpaid or $100,000, whichever is less.
IV
Applied asserts that it is entitled to a new trial because the trial court abused its discretion
by failing to strike Antoun as an expert witness because plaintiff failed to seasonably supplement
interrogatory answers regarding her expert witness. This Court reviews for an abuse of
discretion a trial court's decision with regard to whether to impose discovery sanctions. Bass v
Combs, 238 Mich App 16, 26; 604 NW2d 727 (1999).
5
Plaintiff also cites Peters v Gunnell, 253 Mich App 211; 655 NW2d 582 (2002), and M & C
Corp, supra. However, neither case considered the issue of multiple penalties under the SRCA.
6
It is impossible to determine how the jury determined the amount of damages for unpaid
commissions and penalties. However, because the amount of commissions placed in the XYZ
account was $144,000, and because this amount represented only fifty percent of the amount of
commissions plaintiff claimed she was entitled to, it appears that the jury doubled the $288,000
in commissions due from the XYZ account to determine the amount of the penalty.
7
The facts concerning the Tucker award are taken from the lower court judgment in that case, a
copy of which was attached to Applied's brief on cross-appeal.
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A party who has responded to a discovery request with a response that was complete
when made has a duty to seasonably supplement the response when the subject matter of the
request is expert testimony. MCR 2.302(E)(1)(a)(ii). If the party fails to seasonably supplement
the response, the trial court may enter an order that is just, including sanctions. MCR
2.302(E)(2); MCR 2.313(B)(2)(b). However, because sanctions are discretionary, the trial court
must carefully consider the circumstances of the case before it. In denying Applied's motion to
strike Antoun's testimony, the trial court concluded that Applied was not prejudiced because the
documents that formed the basis of Antoun's testimony were supplied by Applied:
And to say on the eve of or on the day of trial we have been sandbagged
because somebody has placed on charts our information and it should have been
contained in supplemental responses to interrogatories is not, in my opinion,
the—does not compel this Court to strike Mr. Antoun as an expert witness.
I'm not going to adjourn trial. If you want to depose Mr. Antoun during
the course of this trial I have every expectation that this trial is going to take a
couple of weeks.
There is no indication that plaintiff willfully failed to provide information regarding
Antoun. Rather, Applied contributed to the delay by failing to provide plaintiff with the
documents necessary for Antoun to render an opinion. See, e.g., Middleton v Margulis, 162
Mich App 218, 223-224; 412 NW2d 268 (1987). Further, the information used to render
Antoun's opinion and to calculate damages was provided by Applied. And the record reveals
that plaintiff provided Applied with the expert's charts shortly after they were completed. The
trial court gave Applied the opportunity to depose Antoun. These circumstances do not warrant
the striking of plaintiffs' expert witness, and the trial court did not abuse its discretion in refusing
to impose this sanction.
V
Applied asserts that it is entitled to a new trial because the trial court erred by refusing to
allow Applied to call plaintiff as a witness during Applied's case-in-chief. The mode and order
of interrogation of witnesses is within the trial court's discretion. Phillips v Mazda Motor Mfg
(USA) Corp, 204 Mich App 401, 415; 516 NW2d 502 (1994).
Plaintiff 's witness list included witnesses also named on Applied's witness list. At the
beginning of trial, the court stated that Applied's counsel could question witnesses taking the
stand during plaintiff 's case-in-chief either during plaintiff 's case or during Applied's case, but
not both. Applied deferred cross-examination of several witnesses called by plaintiff during her
case-in-chief and instead called those witnesses during Applied's case-in-chief.
Plaintiff took the stand during her case-in-chief. At the conclusion of her direct
examination, Applied's counsel indicated that he would not cross-examine plaintiff, but would
wait and call her during Applied's case-in-chief. Plaintiff 's counsel objected, and the trial court
ruled:
I never allow the Plaintiff to be called again in the defense's case once that
Plaintiff has testified on the stand. Plaintiff was on the stand, direct and then
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cross examination, while that person is on the stand. I do not have the Plaintiff
step down and then recalled in the Defendant's case.
When asked by Applied's counsel why the trial court was changing its position from that
previously announced regarding the examination of witnesses, the court explained, "I meant with
respect to your people, your witnesses, your Defendants and any experts you might call. I never
intended that to be true with respect to the Plaintiff."
Applied cross-examined plaintiff after her direct testimony. Applied now argues on
appeal that it was prejudiced by the trial court's ruling because the ruling prevented Applied from
questioning plaintiff about the testimony of witnesses who followed her. Specifically, Applied
argues that it "could not directly confront Linsell about Antoun's fraud allegations."
Applied acknowledges that a trial judge has discretion to manage a trial, and that MRE
611(a) provides that a trial judge shall exercise reasonable control over the mode and order of
interrogating witnesses and presenting evidence at trial. MRE 611 provides:
(a) Control by court. The court shall exercise reasonable control over the
mode and order of interrogating witnesses and presenting evidence so as to (1)
make the interrogation and presentation effective for the ascertainment of the
truth, (2) avoid needless consumption of time, and (3) protect witnesses from
harassment or undue embarrassment.
(b) Scope of cross-examination. A witness may be cross-examined on any
matter relevant to any issue in the case, including credibility. The judge may limit
cross-examination with respect to matters not testified to on direct examination.
(c) Leading questions.
(1) Leading questions should not be used on the direct examination of a
witness except as may be necessary to develop the witness' testimony.
(2) Ordinarily leading questions should be permitted on crossexamination.
(3) When a party calls a hostile witness, an adverse party or a witness
identified with an adverse party, interrogation may be by leading questions. It is
not necessary to declare the intent to ask leading questions before the questioning
begins or before the questioning moves beyond preliminary inquiries.
Applied cites MCL 600.2161, the adverse witness statute, which provides:
In any suit or proceeding in any court in this state, either party, if he shall
call as a witness in his behalf, the opposite party, employee or agent of said
opposite party, or any person who at the time of the happening of the transaction
out of which such suit or proceeding grew, was an employee or agent of the
opposite party, shall have the right to cross-examine such witness the same as if
he were called by the opposite party; and the answers of such witness shall not
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interfere with the right of such party to introduce evidence upon any issue in such
suit or proceeding, and the party so calling and examining such witness shall not
be bound to accept such answers as true.
Then, without citing any Michigan authority, Applied argues that "[c]alling the plaintiff as an
adverse witness in the defendant's case is routine." Applied states that "[c]ourts in other states
that have addressed this issue under equivalent rules, have held that it is reversible error for the
trial court to refuse the defendant's request to recall the plaintiff during the defendant's case-inchief." Applied cites Loftin v Morgenstern, 60 So 2nd 732 (Fla, 1952), and Ohr v Ohr, 30 Colo
App 540; 495 P2d 1156 (1972) in support of this proposition. Both cases relied on former FR
Civ P 43(b) and like rules adopted in a number of states, to the extent that rule is concerned with
calling an adverse party as a witness. FR Civ P 43(b) provided:
A party may interrogate any unwilling or hostile witness by leading
questions. A party may call an adverse party or an officer, director, or managing
agent of a public or private corporation or of a partnership or association which is
an adverse party, and interrogate him by leading questions and contradict and
impeach him in all respects as if he had been called by the adverse party, and the
witness thus called may be contradicted and impeached by or on behalf of the
adverse party also, and may be cross-examined by the adverse party only upon the
subject matter of his examination in chief.
However, in § 3 of PL 93-595 (enacted January 2, 1975), Congress approved a Supreme Court
amendment abrogating FR Civ P 43(b). FRE 611 now governs the interrogation of witnesses
and provides:
(a) Control by court. The court shall exercise reasonable control over the
mode and order of interrogating witnesses and presenting evidence so as to (1)
make the interrogation and presentation effective for the ascertainment of the
truth, (2) avoid needless consumption of time, and (3) protect witnesses from
harassment or undue embarrassment.
(b) Scope of cross-examination. Cross-examination should be limited to
the subject matter of the direct examination and matters affecting the credibility of
the witness. The court may, in the exercise of discretion, permit inquiry into
additional matters as if on direct examination.
(c) Leading questions. Leading questions should not be used on the direct
examination of a witness except as may be necessary to develop the witness'
testimony. Ordinarily leading questions should be permitted on crossexamination. When a party calls a hostile witness, an adverse party, or a witness
identified with an adverse party, interrogation may be by leading questions.
MRE 611 is Michigan's counterpart to FRE 611.
The purpose of MCL 600.2161 is to permit calling the opposite party, or his agent or
employee, as a witness with the same privileges of cross-examination and contradiction as if the
opposite party had called that witness. See Kovich v Church & Church, Inc, 267 Mich 640, 644;
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255 NW 421 (1934). Neither MRE 611 nor MCL 600.2161 was violated when the trial court
exercised its discretion under MRE 611(a) and required Applied to cross-examine plaintiff
during plaintiff 's case-in-chief, rather than allowing Applied to forgo cross-examination while
plaintiff was on the stand during her case-in-chief and recall the plaintiff as an adverse witness
during Applied's case-in-chief.
The award of damages for unpaid commissions is affirmed. The award of statutory
penalties under the SRCA is vacated, and the case is remanded to the trial court. On remand, the
trial court shall reduce the award of statutory penalties to $100,000 and recalculate the interest
accordingly. Jurisdiction is not retained.
/s/ Jane E. Markey
/s/ E. Thomas Fitzgerald
/s/ Donald S. Owens
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