TAURUS MOLD INC V TRW AUTOMOTIVE US LLC
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STATE OF MICHIGAN
COURT OF APPEALS
TAURUS MOLD, INC, a Michigan Corporation,
UNPUBLISHED
January 13, 2009
Plaintiff-Appellant,
v
No. 282269
Macomb Circuit Court
LC No. 2007-001748-CK
TRW AUTOMOTIVE US, LLC, a Foreign
Limited Liability Company,
Defendants-Appellees.
Before: Murphy, P.J., and K.F. Kelly and Donofrio, JJ.
PER CURIAM.
In this breach of contract action, plaintiff, Taurus Mold, Inc., appeals as of right from the
trial court’s order granting summary disposition pursuant to MCR 2.116(C)(10), in favor of
defendant, TRW Automotive US, LLC. Because the trial court properly granted summary
disposition in favor of defendant due to the existence of a valid integration clause in the parties’
contracts, namely purchase orders, as well as by operation of the parol evidence rule, we affirm.
Plaintiff was in the business of providing molding and mold-building services, as well as
servicing molds and molding machines operated by other entities. Plaintiff’s molds were used to
produce parts, typically made of plastic, for various industries including the automotive industry.
Defendant was in the business of supplying automotive parts and systems to the automobile
industry. In years 2003 through 2006, defendant ordered various mold products and services
from plaintiff. In its complaint, plaintiff acknowledges that during this time period, it provided
defendant with goods and services, and defendant would provide checks for payment of the
services in accordance with purchase orders issued by defendant for those goods and services.
The purchase orders all contain the following language,
THIS PURCHASE ORDER IS SUBJECT TO THE TRW AUTOMOTIVE
TERMS AND CONDITIONS OF PURCHASE, AS REVISED OR AMENDED
FROM TIME TO TIME (THE “TERMS AND CONDITIONS”). The Terms and
Conditions, which are incorporated into this Purchase Order by reference, are
located at https://vin.livmi.trw.com (the VIN website), and Supplier
acknowledges receipt, review and acceptance of the Terms and Conditions.
Commencement of any work, services, or delivery of goods under the Purchase
Order shall constitute Supplier’s acceptance of the Terms and Conditions.
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Defendant’s Terms and Conditions of Purchase provided in relevant part:
1. ACCEPTANCE: (A) SELLER WILL BE DEEMED TO HAVE
ACCEPTED THIS ORDER WHEN SELLER ACKNOWLEDGES THIS
ORDER OR BEGINS PERFORMANCE UNDER THIS ORDER.
SELLER’S ACCEPTANCE IS LIMITED TO ACCEPTANCE OF BUYER’S
TERMS.
BUYER HEREBY OBJECTS TO AND REJECTS ANY
PROPOSAL BY SELLER FOR ADDITIONAL OR DIFFERENT TERMS.
IF SELLER PROPOSES ADDITIONAL OR DIFFERENT TERMS WHICH
RELATE TO THE DESCRIPTION, QUANTITY, PRICE OR DELIVERY
SCHEDULE OF THE GOODS, SELLER’S PROPOSAL WILL OPERATE
AS A REJECTION OF BUYER’S OFFER; IN ALL OTHER CASES,
SELLER’S PROPOSAL WILL BE DEEMED A MATERIAL
ALTERATION OF BUYER’S TERMS, AND BUYER’S TERMS WILL BE
DEEMED ACCEPTED BY SELLER WITHOUT SELLER’S ADDITIONAL
OR DIFFERENT TERMS.
IF THIS ORDER IS DEEMED AN
ACCEPTANCE OF SELLER’S PRIOR OFFER, BUYER’S ACCEPTANCE
IS EXPRESSLY CONDITIONAL ON SELLER’S ASSENT TO BUYER’S
TERMS.
(B)
BUYER AND SELLER AGREE THAT, NOTWITHSTANDING
THE PRIOR OR SUBSEQUENT USE BY SELLER OF ANY ORDER
FORM, INVOICE OR OTHER DOCUMENT CONTAINING PRINTED
TERMS OR CONDITIONS, THEY ARE CONTRACTING SOLELY ON
THE BASIS OF THIS ORDER, WHICH CONTAINS THE ENTIRE
UNDERSTANDING OF THE PARTIES AND IS INTENDED AS A FINAL
EXPRESSION OF THEIR AGREEMENT AND A COMPLETE
STATEMENT OF THE TERMS THEREOF, AND MAY NOT BE
AMENDED, MODIFIED OR OTHERWISE SUPPLEMENTED UNLESS
SUCH AMENDMENTS, MODIFICATIONS OR SUPPLEMENTS ARE IN
WRITING
AND
SIGNED
BY
BUYER’S
AUTHORIZED
REPRESENTATIVE. A PROVISION CONTAINED IN ANY ORDER
FORM, INVOICE OR OTHER DOCUMENT USED BY SELLER
(WHETHER PRIOR OR SUBSEQUENT TO THE DATE OF THIS ORDER)
WHICH IS INCONSISTENT WITH THIS SUBPARAGRAPH WILL HAVE
NO FORCE OR EFFECT AND WILL NOT BE BINDING ON THE BUYER
UNLESS SUCH PROVISION IS CONTAINED IN AN ORDER FORM,
INVOICE OR OTHER DOCUMENT DATED SUBSEQUENT TO THE
DATE HEREOF AND IS SPECIFICALLY INITIALED BY BUYER’S
AUTHORIZED REPRESENTATIVE.
***
21.
Payments: Buyer will pay the prices stipulated on this Order for Goods
delivered and accepted, less deduction, if any, as herein provided, but only
(i) upon submission by Seller of an invoice or (ii) pursuant to other
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mutually agreed-upon arrangements. The prices for Goods will not be
subject to any variation without the prior written consent of Buyer. Unless
otherwise specified, Buyer will pay for partial deliveries accepted by the
Buyer.
But plaintiff also alleges in its complaint that it invoiced defendant for only a portion of
the work hours, goods, or services plaintiff actually provided to defendant during the time period
at issue, because it expected payment for the balance of the unbilled work when defendant’s
budget allowed. Plaintiff alleges in its complaint that it engaged in this practice because
defendant’s agent, Sam Gill, “would limit the amount of (already rendered) services for which
[plaintiff] could invoice [defendant] under the representation that the Purchase Orders and
Checks that were issued in response to such invoices would be payment only for the hours,
goods or services invoices, and that the balance of services rendered (i.e., the un-invoiced
amounts) could and would be paid in subsequent periods, i.e., as [defendant’s] budgeting
allowed.”
Defendant publicly announced in August 2005 that it would be ceasing operations at its
Sterling Heights manufacturing facility by August 2006. Defendant thereafter implemented shut
down procedures and closed its Sterling Heights facility according to its plan. Plaintiff alleges
that in August 2006 and September 2006 it submitted invoices to defendant for the previously
uninvoiced amounts defendant incurred between the period March 2003 and August 2006.
Specifically, plaintiff submitted four separate invoices to defendant for payment: (1) an invoice
dated August 8, 2006 for 6041 work hours incurred between July 1, 2005 through June 30, 2006
in the amount of $362,460; (2) an invoice dated August 18, 2006 for 5894 work hours incurred
between June 1, 2004 and June 30, 2005 in the amount of $353,640; (3) a second invoice dated
August 18, 2006 for 7968.75 work hours incurred between March 2003 and June 1, 2004 in the
amount of $478,125; and (4) an invoice dated September 5, 2006 for storage and handling fees
associated with the provision of services between April 2003 and August 2006 in the amount of
$123,000.
After defendant did not pay the four invoices plaintiff submitted, plaintiff filed its
complaint in this action. Plaintiff alleged breach of contract, unjust enrichment/quantum meruit;
account stated; negligent and intentional misrepresentation; and lost future profits. Defendant
answered denying all of plaintiff’s allegations. Defendant also filed several general affirmative
defenses including the defense that plaintiff’s claims were barred by the express provisions of the
purchase orders issued by defendant, as well as the defense that plaintiff’s claims were barred by
operation of defendant’s payment of all amounts due under defendant’s purchase orders.
Defendant then filed a motion for summary disposition arguing that plaintiff’s claims
were barred by the parol evidence rule relying on the integration clause found in Section 1.(B) of
defendant’s Terms and Conditions of Purchase. Defendant summarized its argument in its brief
supporting its motion for summary disposition as follows:
Plaintiff alleges that it entered into oral agreements with [defendant] under which
Plaintiff agreed to sell goods and perform services specified in written purchase
orders, but at a higher price than specified in the purchase orders. Each of the
purchase orders, however, is a fully integrated agreement, specifically stating that
the “parties are contracting solely on the basis of this order, which contains the
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entire understanding of the parties and is intended as a final expression of their
agreement and a complete statement of the terms thereof[.]” Plaintiff’s
allegations of separate oral agreements by [defendant] employees for additional
payments should therefore not be heard by this Court. And because Plaintiff’s
claims cannot possibly succeed as a matter of law, the Court should grant
defendant’s motion for summary disposition and dismiss Plaintiff’s complaint
with prejudice.
Plaintiff responded that defendant’s reliance on the parol evidence rule fails arguing specifically
that “[n]either the purchase orders nor the never-before-revealed ‘terms and conditions’ were
ever part of the contracts between [defendant] and [plaintiff].” Instead plaintiff asserted that the
purchase orders did not constitute the agreements between the parties and that the agreements
were already formed before defendant ever submitted its purchase orders for the work performed
via written or oral work orders issued by Sam Gill on behalf of defendant.
After entertaining oral argument on the motion, the trial court granted summary
disposition in defendant’s favor pursuant to MCR 2.116(C)(10). The trial court held as follows
in its opinion and order:
The Court is satisfied that each Purchase Order clearly and unambiguously
incorporated defendant’s Terms and Conditions, which, in turn, clearly and
unambiguously stated that the parties were contracting solely on the basis of each
respective order, which included the parties’ complete understanding. In this
regard, Paragraph 1(B) plainly prohibited any amendments, modifications, or
supplements unless they were in writing and signed by defendant. Pursuant to
Paragraph 21, defendant was to pay the prices stipulated on each Purchase Order,
which would not be subject to change without defendant’s written consent.
The Court finds that parol evidence of any alleged prior agreements is not
admissible inasmuch as the parties included an integration clause in their
agreements and inasmuch as there is no evidence of fraud.
***
The Court is not convinced by plaintiff’s argument that the Terms and Conditions
were “secret” and “hidden” since they were on defendant’s website, as plainly
stated under each Purchase Order. Neither is the Court persuaded that defendant
failed to pay the amounts due on the written Purchase Orders that were separate
and distinct from the alleged work performed pursuant to the purported oral
agreements. Finally, the Court finds no merit to plaintiff’s argument that the
Terms and Conditions altered the parties’ agreements. To the contrary, plaintiff is
the party attempting to alter the parties’ agreements by raising the alleged oral
contracts.
It is from this order that plaintiff now appeals.
We review a trial court’s grant of summary disposition de novo. Nesbitt v American
Community Mut Ins Co, 236 Mich App 215, 219; 600 NW2d 427 (1999). A motion for summary
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disposition pursuant to MCR 2.116(C)(10) “tests the factual support of a claim and requires this
Court to consider the pleadings, admissions, affidavits, and other relevant documentary evidence
of record in the light most favorable to the nonmoving party to determine whether a genuine
issue of material fact warranting a trial exists.” Elezovic v Ford Motor Co, 274 Mich App 1, 5;
731 NW2d 452 (2007). As the Court in Nesbitt, supra, explained:
Where the moving party has produced evidence in support of the motion, the
opposing party bears the burden of producing evidence to establish that a genuine
question of material fact exists. Skinner v Square D Co, 445 Mich 153, 160; 516
NW2d 475 (1994), citing MCR 2.116(G)(4). ‘Summary judgment should only be
granted when the plaintiff's claim is so clearly unenforceable as a matter of law
that no factual development can possibly justify a right to recovery.’ Young v
Michigan Mut Ins Co, 139 Mich App 600, 603; 362 NW2d 844 (1984). [Nesbitt,
supra at 219-220.]
This case also involves the interpretation of a contract that this Court similarly reviews de
novo. In re Smith Trust, 480 Mich 19, 24; 745 NW2d 754 (2008). Our Supreme Court recently
reiterated:
In interpreting a contract, it is a court’s obligation to determine the intent of the
parties by examining the language of the contract according to its plain and
ordinary meaning. If the contractual language is unambiguous, courts must
interpret and enforce the contract as written, because an unambiguous contract
reflects the parties’ intent as a matter of law. However, if the contractual
language is ambiguous, extrinsic evidence can be presented to determine the
intent of the parties. [Smith, supra at 24 (internal footnotes and citations
omitted.)]
Plaintiff first argues on appeal that the trial court erred as a matter of law when it failed to
recognize that defendant’s attempt to use an adoptive reference in a post-performance document
that played no role in contract formation to import the “Terms and Conditions” from its website
was barred by the preexisting duty rule. In explaining this contention in its brief on appeal,
plaintiff alleges that the contracts between the parties regarding the services plaintiff performed
existed prior to defendant’s issuance of its purchase orders, and therefore, any additional terms
set forth in the later-issued purchase orders would be void for lack of consideration under the
preexisting duty rule. Defendant counters that the trial court properly found that as a matter of
law, plaintiff’s claim of alleged prior agreements is barred by the parol evidence rule because the
purchase orders were clear on their faces and were fully integrated.
Generally, the parol evidence rule stands for the proposition that “‘a written instrument is
open to explanation by parol or extrinsic evidence when it is expressed in short and incomplete
terms, or is fairly susceptible of two constructions, or where the language employed is vague,
uncertain, obscure, or ambiguous, and where the words of the contract must be applied to facts
ascertainable only by extrinsic evidence, a resort to such evidence is necessarily permitted.’”
Klapp v United Ins Group Agency, Inc, 468 Mich 459, 470; 663 NW2d 447 (2003), quoting
Edoff v Hecht, 270 Mich 689, 695-696; 260 NW 93 (1935). A contract is ambiguous when its
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terms are susceptible to more than one meaning. Coates v Bastian Brothers, Inc, 276 Mich App
498, 503; 741 NW2d 539 (2007).
An integration clause, also called a merger clause, determines the applicability of the
parol evidence rule to a contract.
Recitations to the effect that a written contract is integrated, that all conditions,
promises, or representations are contained in the writing and that the parties are
not to be bound except by the writing, are commonly known as merger or
integration clauses. By stipulating the fact of integration, such clauses purport to
contractually require application of the parol evidence rule to the parties'
agreement. [11 Williston on Contracts § 33:21 (4th ed 2006) (internal footnotes
omitted.)]
This Court has held that “when the parties include an integration clause in their written contract,
it is conclusive and parol evidence is not admissible to show that the agreement is not integrated
except in cases of fraud that invalidate the integration clause or where an agreement is obviously
incomplete ‘on its face’ and, therefore, parol evidence is necessary for the ‘filling of gaps.’”
UAW-GM Human Resource Ctr v KSL Recreation Corp, 228 Mich App 486, 502; 503 NW2d
411 (1998), quoting in part 3 Corbin, Contracts, § 578, p 411. The Court continued, “the merger
clause made it unreasonable for [the plaintiff] to rely on any representations not included in the .
. . agreement.” Id. at 504.
In order to support its argument, plaintiff only attempts to set a factual backdrop for the
business practices it claims plaintiff and defendant followed throughout their relationship
regarding the multiple purchase orders at issue in this case. Plaintiff states in the “Background”
section of its brief on appeal the following:
On numerous occasions, after the work was completed, [defendant] (through one
of its vice presidents, Sam Gill), would only authorize payment for part of the
hours provided claiming that [defendant]’s budget was tight and that [defendant]
would “make it up to” [plaintiff] later. As a result, [defendant] would issue an
after-the-fact “purchase order” for only a part of the hours of service provided,
and [plaintiff] would then provide and invoice for the amount of the authorized
partial payment (which, pursuant to Sam Gill’s instructions, would be backdated
almost two months so that [plaintiff] would not have to wait a full sixty days for
its partial payment.
But while plaintiff relies on these allegations to support its claims regarding the
preexisting duty rule, plaintiff in no way establishes, or even alleges for that matter, that “fraud”
existed thus justifying the admission of the extrinsic evidence it seeks to introduce despite the
existence of the integration clause. UAW-GM Human Resource Ctr, supra at 502. After
reviewing the purchase orders both parties reference, we agree with the trial court’s conclusion
that parol evidence is not admissible here because the purchase orders are plain and contain an
integration clause. Thus, the existence of the integration clause in the purchase orders
conclusively bars plaintiff from seeking to explain its actions or intentions while contracting with
defendant via the introduction of any parol evidence. Therefore, because the purchase orders are
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fully integrated and no fraud is alleged, we conclude that plaintiff’s argument regarding the
existence of prior agreements and the application of the preexisting duty rule1 which is wholly
buttressed on the introduction of impermissible parol evidence, fails. Id.
Plaintiff’s next argument regarding the common law mirror image rule and MCR
440.22072 likewise fails due to the application of the parol evidence rule and the integration
clause in the purchase orders. Plaintiff’s argument centers on its contention that the purchase
orders constituted only “part of the contract formation process” and plaintiff seeks to offer
evidence regarding what it believes constituted the offers and acceptances on the part of the
parties in the matter. Plaintiff’s premise is flawed from its inception because as we mentioned
1
The “preexisting duty” rule stands for the proposition that doing what one is legally bound to
do is not consideration for a new promise. 46th Circuit Trial Court v Crawford Co, 476 Mich
131, 158; 719 NW2d 553 (2006).
2
MCL 440.2207 is identical to UCC § 2-207 and states as follows:
(1) A definite and seasonable expression of acceptance or a written confirmation
which is sent within a reasonable time operates as an acceptance even though it
states terms additional to or different from those offered or agreed upon, unless
acceptance is expressly made conditional on assent to the additional or different
terms.
(2) The additional terms are to be construed as proposals for addition to the
contract. Between merchants such terms become part of the contract unless:
(a) the offer expressly limits acceptance to the terms of the offer;
(b) they materially alter it; or
(c) notification of objection to them has already been given or is given within a
reasonable time after notice of them is received.
(3) Conduct by both parties which recognizes the existence of a contract is
sufficient to establish a contract for sale although the writings of the parties do not
otherwise establish a contract. In such case the terms of the particular contract
consist of those terms on which the writings of the parties agree, together with
any supplementary terms incorporated under any other provisions of this act.
In Challenge Machinery Co v Mattison Machine Works, 138 Mich App 15, 22; 359 NW2d 232
(1984), this Court explained that,
At common law, the failure of the responding document to mirror the terms of the
offer would have precluded the formation of a contract. The UCC, however,
altered this “mirror-image” rule by providing that the inclusion of additional or
different terms would not prevent the acceptance from being operative unless the
acceptance was made conditional on the assent of the other party to those
additional or different terms. MCL 440.2207(1).
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above, the integration clause in the written purchase orders is conclusive and parol evidence is
not admissible to show that the agreement is not integrated. UAW-GM Human Resource Ctr,
supra, at 502. Thus, plaintiff cannot use parol evidence to attempt to modify the agreements in
the face of the integration clauses.
Finally, the trial court did not err when it held that plaintiff’s remaining counts in its
complaint “arise from and are closely intertwined with the breach of contract claim” and
dismissed the remaining claims. Plaintiff’s unjust enrichment claim fails because where a
written agreement governs the parties’ transaction, a contract will not be implied under the
doctrine of unjust enrichment. King v Ford Motor Credit Co, 257 Mich App 303, 327-328; 668
NW2d 357 (2003). Plaintiff’s misrepresentation claim fails as well. To prevail on its
misrepresentation claim, plaintiff was required to show reliance on any misrepresentations, and a
valid integration clause renders reliance on representations that are not included in the contract
unreasonable. UAW-GM Human Resource Ctr, supra at 504; Hamade v Sunoco, Inc (R & M),
271 Mich App 145, 171; 721 NW2d 233 (2006). Any other claims including lost future profits,
account stated, or claims involving storage and handling fees are barred by operation of the parol
evidence rule.
Affirmed.
/s/ William B. Murphy
/s/ Kirsten Frank Kelly
/s/ Pat M. Donofrio
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