GYRO DESIGN GROUP LLC V LAWRENCE R O'GRADY
Annotate this Case
Download PDF
STATE OF MICHIGAN
COURT OF APPEALS
GYRO DESIGN GROUP, L.L.C.,
UNPUBLISHED
December 13, 2002
Plaintiff/CounterdefendantAppellee,
V
No. 234192
Wayne Circuit Court
LC No. 00-032543-CK
LAWRENCE R. O’GRADY,
Defendant/Counterplaintiff-
Appellant.
Before: Griffin, P.J., and White and Murray, JJ.
PER CURIAM.
Defendant Lawrence R. O’Grady appeals as of right from a trial court order granting
summary disposition pursuant to MCR 2.116(C)(7) in favor of plaintiff Gyro Design Group,
LLC (Gyro Design), on defendant’s counterclaim alleging breach of contract, violation of the
Michigan sales representatives’ commissions act (SRCA), MCL 600.2961, and unjust
enrichment. We affirm in part and reverse in part.
I
Defendant O’Grady, a consultant in the field of interactive product development, was
employed as a commissioned sales representative/consultant for a company called AKA Detroit
from July 1998 until February 1999. In November 1999, AKA Detroit and another company,
Davis Design Group, merged to form plaintiff Gyro Design. Gyro Design took over defendant’s
AKA Detroit accounts and continued his employment. During the next several months, Gyro
Design and O’Grady had a series of disagreements, culminating in the termination of O’Grady’s
employment on March 30, 2000. Defendant filed an administrative complaint with the Michigan
Department of Consumer and Industry Services,1 Wage and Hour Division, alleging violations of
the wages and fringe benefits act (WFBA), MCL 408. 471 et seq. He sought compensation for
unpaid commissions and vacation and sick pay.
1
Formerly known as the Department of Labor.
-1-
On July 27, 2000, the Wage and Hour Division issued its determination order finding that
Gyro Design owed defendant $53,502.34 as of March 31, 2000. In rendering this determination,
the Wage and Hour Division only considered commissions that were “earned,” meaning Gyro
Design had actually received payment from the customer, during the period of November 1999
to March 31, 2000. The determination order noted that there were several outstanding projects,
not included in the final award, that were not completed and for which revenues and
commissions attributable to defendant had not yet been collected. Thus, immediately after the
first determination order was issued, defendant filed a second complaint with the Wage and Hour
Division to collect his commissions for any additional post-March 31, 2000, customer payments
received by Gyro Design.
After the first Wage and Hour Division determination was made and before the second,
Gyro Design filed the instant lawsuit against defendant, alleging violation of the uniform trade
secrets act, MCL 445.1901 et seq., common law conversion, statutory conversion, and unjust
enrichment. Defendant counterclaimed alleging breach of contract, violation of the SRCA, and
unjust enrichment. Gyro Design thereafter filed a motion for summary disposition under MCR
2.116(C)(7), arguing that defendant’s counterclaim should be dismissed in its entirety for the
reason that the claims alleged therein were barred by the doctrine of collateral estoppel. Citing
Minicuci v Scientific Management, Inc, 243 Mich App 28; 620 NW2d 657 (2000), Gyro Design
maintained that defendant was collaterally estopped from relitigating his counterclaim because
the same issues were raised in the administrative hearing before the Wage and Hour Division. In
addition, plaintiff argued that the pursuit of an administrative remedy precluded the initiation of
any other claim based on the same facts. Following a hearing, the trial court agreed with
plaintiff and, relying on Minicuci and also the principle that “once plaintiff chose to seek the
administrative remedy [under the WFBA], plaintiff had to pursue the remedy exclusively,” it
granted Gyro Design’s motion for summary disposition. Defendant now appeals.
II
Whether collateral estoppel bars a particular claim is a question of law that this Court
reviews de novo. Minicuci, supra at 34. If collateral estoppel applies, then summary disposition
is appropriate pursuant to MCR 2.116(C)(7). Id. at 36, n 5. We review a trial court’s decision on
a motion for summary disposition de novo to determine if the moving party was entitled to
judgment as a matter of law. Alcona Co v Wolverine Environmental Production, Inc, 233 Mich
App 238, 245; 590 NW2d 586 (1998). A court reviewing a motion pursuant to MCR
2.116(C)(7) may consider all affidavits, pleadings, and other documentary evidence, construing
them in the light most favorable to the nonmoving party. Id. at 246; Barrow v Pritchard, 235
Mich App 478, 480; 597 NW2d 853 (1999).
On appeal, defendant claims that the trial court erred by finding the doctrine of collateral
estoppel barred his counterclaim. Generally,
“Collateral estoppel precludes relitigation of an issue in a subsequent,
different cause of action between the same parties when the prior proceeding
culminated in a valid final judgment and the issue was actually and necessarily
determined in the prior proceeding.” Porter v Royal Oak, 214 Mich App 478,
485; 542 NW2d 905 (1995). Generally, mutuality of estoppel is a necessary
element of collateral estoppel. Nummer v Dept of Treasury, 448 Mich 534, 542;
-2-
533 NW2d 250 (1995). Collateral estoppel is mutual if the one taking advantage
of the earlier adjudication would have been bound by it, had it gone against him.
Howell v Vito’s Trucking & Excavating Co, 386 Mich 37, 43; 191 NW2d 313
(1971). [Barrow, supra at 480-481.]
When a party is seeking to preclude relitigation on the basis of an administrative
decision, three additional requirements must be satisfied: the administrative determination must
have been adjudicatory in nature and provide a right to appeal, and the Legislature must have
intended to make the decision final absent an appeal. Minicuci, supra at 33-34, quoting
Nummer, supra at 541-542.
In Minicuci, supra, the plaintiff brought an action against his former employer alleging
breach of contract and violation of the SRCA with respect to sales commissions the defendant
allegedly owed to the plaintiff. Before bringing his action in circuit court, the plaintiff had filed
a claim under the WFBA with the Michigan Department of Labor, seeking the same unpaid sales
commissions. The department issued a determination order against the plaintiff, concluding that
no further wages were due to him for the period in question. The plaintiff timely appealed the
determination, but then moved that his appeal be withdrawn or dismissed without prejudice. A
subsequent department order granted the plaintiff’s motion to dismiss, but ordered the dismissal
with prejudice. The plaintiff did not seek the allowed judicial review of the order of dismissal,
but instead filed an action in circuit court alleging, among other claims, breach of contract and
violation of the SRCA. The circuit court granted summary disposition for the defendant, ruling
that the plaintiff had the option to elect either the wage act’s administrative remedy or other
relief available at common law, but that once the plaintiff chose to seek the administrative
remedy, he had to pursue that remedy exclusively.
On appeal, this Court held that collateral estoppel precluded the claims raised in the
plaintiff’s action; thus, the trial court correctly granted summary disposition for the defendant,
albeit for the wrong reason. The Minicuci Court explained in pertinent part:
Plaintiff contends that the trial court erred in granting defendant summary
disposition because the court relied on the Murphy [v Sears, Roebuck & Co, 190
Mich App 384, 388; 476 NW2d 639 (1991)] Court’s nonbinding statement in
dicta that “once an employee chooses to pursue the administrative remedy, that
remedy must be utilized exclusively.” Id.; see Faulkner v Flowers, 206 Mich
App 562, 566; 522 NW2d 700 (1994) (recognizing the quoted statement as dicta).
We note that although defendant’s brief on appeal urges that we decline
consideration of claim preclusion issues, defendant invokes the cited Murphy
dicta as the proper basis for our affirmation of the trial court’s grant of summary
disposition. While neither the trial court nor the Murphy opinion dicta expressly
considered the doctrines of claim preclusion, we find that collateral estoppel
represents the doctrine correctly applied in and controlling of the outcome of the
instant case, and the basis for the Murphy Court’s suggestion that “once an
employee chooses to pursue the administrative remedy, that remedy must be
utilized exclusively, including an appeal to the circuit court.” Murphy, supra at
388.
***
-3-
While plaintiff denies that his wage act administrative claim is related to
his instant breach of contract count and his claim under MCL 600.2961(4) and
(5); MSA 27A.2961(4) and (5), plaintiff ignores that all three claims allege and
seek reimbursement for defendant’s wrongful retention of commissions owed
plaintiff. Plaintiff’s wage act claim asserted defendant’s nonpayment of
approximately $11,000 in commissions, bonuses, and illegal deductions.
Plaintiff’s instant complaint likewise alleges that when he left defendant’s
employ, defendant intentionally and unreasonably failed to provide plaintiff more
than $10,000 in unpaid commissions and unauthorized deductions. The
department’s initial “Determination Order” expressly “determined that no wages
are due” for the period plaintiff alleged defendant’s nonpayment. Accordingly,
the department clearly determined the fact essential to the instant action whether
defendant unlawfully failed to provide plaintiff any outstanding commissions. . . .
Every indication exists that plaintiff’s alleged entitlement to unpaid
commissions was “‘actually litigated and determined by a valid and final
judgment.’” Nummer, supra at 542, quoting Storey v Meijer, Inc, 431 Mich 368,
373, n 3; 429 NW2d 169 (1988). . . .
. . . Neither plaintiff’s wish for a dismissal without prejudice nor the extent of
plaintiff’s knowledge concerning the referee’s conclusion to enter an order of
dismissal with prejudice alters the fact that both the administrative claim and the
instant claims sought plaintiff’s entitlement to commissions and that the referee’s
order dismissing plaintiff’s administrative claim constitutes a final adjudication
on the merits. . . . Furthermore, we observe that “an unappealed [administrative
agency’s] determination . . . that plaintiff is not entitled to ‘back pay’ . . . operates
as collateral estoppel to the subsequent maintenance of a suit in circuit court to
recover the same reimbursement as ‘damages’ for breach of contract” when the
“questions of fact necessary for determination of ‘damages’ by the circuit court . .
. would be identical to questions of fact already determined by the [administrative
agency] in concluding ‘back pay’ was improper.” Senior Accountants, Analysts
& Appraisers Ass’n v Detroit, 399 Mich 449, 453, 457-459; 249 NW2d 121
(1976) . . . [Id. at 33-37 (emphasis in original and added).]
The Minicuci Court determined that the remaining requirements of collateral estoppel had
been met, id. at 37-41, and thus concluded that
Once the issue of defendant’s liability for these commissions proceeded to
an adverse administrative adjudication on the merits, . . .collateral estoppel
precluded plaintiff’s subsequent resort to the circuit court except through the
wage act’s direct appeal provision. MCL 408.481(9); MSA 17.277(11)(9). Our
failure under the instant circumstances to apply collateral estoppel would sanction
multiplicity of litigation and the absolutely unnecessary waste of precious judicial
resources. [Id. at 41.]
On the basis of Minicuci, the trial court in the instant case concluded that defendant was
precluded from pursuing his counterclaim in circuit court. However, on appeal, defendant
contends that the trial court misconstrued Minicuci and erred when it dismissed his counterclaim.
-4-
We agree with defendant and thus reverse in part the trial court’s grant of summary disposition to
plaintiff.
As defendant points out, this Court has held that where the Legislature has provided an
aggrieved employee with two statutory avenues of redress for the same conduct and each avenue
provides for different, though overlapping remedies, the employee is not precluded from
concurrently pursuing both. In Faulkner v Flowers, 206 Mich App 562; 522 NW2d 700 (1994),
this Court held that two employees who were terminated for reporting wage and fringe benefit
violations could pursue a cause of action under the Whistleblowers’ Protection Act (WPA), MCL
15.361 et seq., even though the plaintiffs had already initiated a pending WFBA administrative
proceeding. The Faulkner Court explained:
[H]ere, the wage and fringe benefits act and the WPA provide differing
remedies and encompass differing, but not conflicting, goals.
***
We hold that the Legislature has provided overlapping remedies for an
employee whose employment is terminated for reporting wage and fringe benefits
violations. We find it within the legislative intent for a plaintiff to pursue a WPA
cause of action even though that plaintiff has already initiated a wage and fringe
benefits act administrative proceeding. The WPA provides remedies not available
in the wage and fringe benefits act, cf. MCL 408.483(2); MSA 17.277(13)(2) with
MCL 15.364; MSA 17.428(4); see also Tyrna [v Adamo, Inc, 159 Mich App 592;
407 NW2d 47 (1987)], supra at 600. There are no conflicts between the remedies
provided, and the goals of the two statutes are complementary. [Id. at 568-569.]
Notably, as acknowledged in Minicuci, supra at 32-33, the Faulkner Court dismissed as
nonbinding dicta precedent indicating that once an employee chooses to pursue the
administrative remedy provided by the WFBA, that remedy must be utilized exclusively,
including an appeal to the circuit court. Id. at 566-567. Thus, the Faulkner Court concluded that
the plaintiffs therein did not have to exhaust their administrative remedies under the WFBA
simply because they had filed that claim first. Rather, the employees could concurrently pursue
their administrative complaint for violation of the WFBA and a civil action for violation of the
WPA. Cf. Tyrna, supra (a plaintiff need not exhaust administrative remedies and can
concurrently pursue an administrative claim for violation of MIOSHA and a civil claim for
violation of the WPA).
Where a civil complaint is based not on a separate statutory scheme but on a commonlaw remedy, such as breach of contract, unjust enrichment or conversion, this Court has likewise
held that a claimant need not exhaust the administrative remedies outlined in the WFBA. See
Cork v Applebee’s Inc, 239 Mich App 311, 318-319; 608 NW2d 62 (2000).2 Further, where a
2
The Cork Court did hold, however, that the WFBA requires a plaintiff to seek redress for
violations of the WFBA through the Department of Labor before seeking a remedy in the circuit
court. Thus, a claim filed in circuit court, insofar as it alleges a violation of the WFBA, must be
dismissed if the plaintiff has not exhausted his administrative remedies.
-5-
plaintiff seeks enforcement of a common-law right, the statutory administrative remedy is
cumulative, rather than exclusive, and such common-law claims may properly be brought in the
circuit court. Id.
Defendant’s counterclaim filed in the instant case alleges both common-law and SRCA
claims. To the extent it pleads the latter statutory claim, we conclude, like Faulkner, that the
Legislature has, in implementing the WFBA and the SRCA, provided overlapping remedies to
sales representatives who suffer from identical employer misconduct (failure to timely pay
commissions). Although, as the trial court noted, the remedies under the WFBA are similar to
those provided in the SRCA in certain respects, i.e., payment of wages due, exemplary damages
of twice the amount due, and attorney fees and court costs,3 the SRCA provides additional and
different remedies as well, including the requirement that “commissions that become due after
the termination date shall be paid within 45 days after the date on which the commission became
due,” MCL 600.2961(4), resultant “[a]ctual damages caused by the failure to pay the
commissions when due,” MCL 600.2961(5)(a), and an amount due equaling “2 times the amount
of the commissions due but not paid . . .or $100,000.00, whichever is less” if the failure to pay
commissions is intentional. MCL 600.2961(5)(b). Significantly, neither the WFBA nor the
SRCA mandates that the aggrieved employee must only pursue one claim in one arena. In fact,
the subsequently adopted SRCA expressly provides that it “does not affect the rights of a
principal or sales representative that are otherwise provided by law.” MCL 600.2961(9).
The SRCA was enacted in 1992 to provide special protection to sales representatives with
the Legislature’s expressed public policy to provide significant protections for a sales person to
collect his or her commissions. Howting-Robinson Associates, Inc v Bryan Custom Plastics, 65
F Supp 2d 610 (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 Behr GmbH & Co, KG, 87 F3d 844, 850 (CA 6,
1996).]
To effect 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 after the termination of the employment
relationship. Walters v Bloomfield Hills Furniture, 228 Mich App 160; 577 NW2d 206 (1998).
These remedies are different than those available to sales representatives under the WFBA, yet
are complimentary to the common goal of both statutes. Thus, as in Faulkner, supra,
defendant’s filing of an administrative complaint for violation of the WFBA in the instant case
did not divest the circuit court of jurisdiction to consider his counterclaim.
3
See MCL 408.488 and MCL 600.2961(4)-(6).
-6-
II
It remains to be determined exactly how and to what extent the doctrine of collateral
estoppel affects defendant’s counterclaim.
As previously noted, unlike res judicata, which entirely bars the relitigation of claims,
collateral estoppel precludes the relitigation of issues. Barrow, supra. Collateral estoppel
applies when the issues in question were actually and necessarily litigated in a prior proceeding,
between the same parties, and were judicially determined. Id.; Nummer, supra.
Defendant concedes that the WFBA administrative determination order concluding that
Gyro Design failed to pay defendant the commissions earned between November 1999 and
March 30, 2000, has a collateral estoppel effect on his current civil claims. The issue of liability
for these commissions was actually litigated and judicially determined by the Wage and Hour
Division.
However, defendant maintains that to the extent his counterclaim raises issues not
included and decided within the parameters of the earlier WFBA administrative determination
order, it is not barred by collateral estoppel. Defendant argues that there is a critical difference
between this case and Minicuci:
In Minicuci, the Wage & Hour’s Division concluded that the employer did
not owe Plaintiff any commissions. This finding was fatal to the plaintiff’s SRCA
claim because liability for commissions is a necessary predicate to success on a
SRCA claim. Collateral estoppel barred the plaintiff in Minicuci from relitigating whether he was entitled to commissions. Summary disposition was thus
appropriate. In the case at hand, the Wage & Hour Division concluded favorably
that Plaintiff’s employer owes him $53,502.34 in commissions between
November 1999 and March 30, 2000. Thus, O’Grady has established one of the
necessary elements to succeed on his SRCA claim, and he must be given his day
in court to litigate the remaining issues on his SRCA claim.
In the case at bar, the Wage and Hour Division’s determination order favored defendant.
The division found that Gyro Design owed defendant commissions earned during his
employment. This fact allows defendant to continue with his counterclaim alleging SRCA
violations and common-law causes of action in the circuit court. While the Wage and Hour
Division’s determination established that Gyro Design did not pay defendant $53,502.34 in
commissions from November 1999 through March 31, 2000, there has been no actually litigated,
judicial determination regarding (1) whether defendant is owed commissions after March 31,
2000; (2) whether forty-five days have elapsed since the commissions were owing; (3) whether
Gyro Design’s failure to pay the commissions was intentional under MCL 600.2961(4) and (5);
and (4) whether Gyro Design is liable under the common-law theories set forth in defendant’s
counterclaim. Collateral estoppel does not apply to any of these issues because they were never
considered in the WFBA administrative claim.
Consequently, we conclude that the trial court erred to the extent it granted summary
disposition pursuant to MCR 2.116(C)(7) in favor of Gyro Design with regard to defendant’s
counterclaims set forth above. Although, under the doctrine of collateral estoppel, the parties are
-7-
precluded from relitigating the issue whether Gyro Design is liable to defendant for $53,502.34
in commissions from November 1999 through March 31, 2000, this prior administrative
determination does not preclude consideration of defendant’s distinguishable counterclaim in
circuit court. Moreover, defendant may pursue his counterclaim concurrently with the WFBA
administrative proceeding. Faulkner, supra.
Affirmed in part, reversed in part, and remanded for proceedings consistent with this
opinion. We do not retain jurisdiction.
/s/ Richard Allen Griffin
/s/ Helene N. White
/s/ Christopher M. Murray
-8-
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
