IN RE CERTIFIED QUESTION - KENNETH HENES SPECIAL PROJECTS
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Michigan Supreme Court
Lansing, Michigan 48909
_____________________________________________________________________________________________
Chie f Justice
Justices
Maura D. Corrigan
Michael F. Cavanagh
Elizabeth A. Weaver
Marilyn Kelly
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
Opinion
____________________________________________________________________________________________________________________________
FILED APRIL 23, 2003
In re CERTIFIED QUESTION FROM
THE UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
________________________________________
KENNETH HENES SPECIAL PROJECTS
PROCUREMENT, MARKETING AND
CONSULTING CORPORATION,
Plaintiff,
v
No. 120110
CONTINENTAL BIOMASS INDUSTRIES, INC.
Defendant.
________________________________________
BEFORE THE ENTIRE BENCH
YOUNG, J.
Plaintiff
filed
suit
against
Continental
Biomass
Industries, Inc., to recover unpaid sales commissions and
penalty damages pursuant to the Michigan sales representative
commission
act
(SRCA ),
MCL
600.2961.
Pursuant
to
MCR
7.305(B),1 the United States Court of Appeals for the Sixth
1
MCR 7.305(B)(1) provides: ”When a federal court . . .
considers a question that Michigan law may resolve and that is
(continued...)
Circuit has certified the following question to this Court:
What standard is appropriate in evaluating the
mental state required for double damages under the
Michigan Sales Representative Commission Act?
We have accepted the certification and hold that the plain
language of the statute requires only that the principal
purposefully fail to pay a commission when due. The statute
does not require evidence of bad faith before double damages,
as provided in the statute, may be imposed.
I. FACTS
AND
PROCEEDINGS
Continental Biomass Industries (CBI ) is a New Hampshire
corporation that manufactures equipment used in wood waste
processing.
For several years, Kenneth Henes served as
CBI ’s
sales representative, with an exclusive sales territory that
encompassed Michigan, Ohio, Indiana, Illinois, and Wisconsin.
After plaintiff’s services were terminated in May 1998,
he sought unpaid commissions on four sales.
CBI refused to
pay because it did not believe that plaintiff was entitled to
the commissions under the terms of the contract.
The case was tried before a jury in federal court.
The
defendant requested a jury instruction regarding the level of
intent required for the double-damages provision contained in
the act.
Specifically, defendant wanted the jury to be
instructed that “[i]ntentional failure to pay means that
defendant knew a commission was due the plaintiff and chose
not to pay it.”
1
(...continued)
not controlled by Michigan Supreme Court precedent, the court
may on its own initiative or that of an interested party
certify the question to the Michigan Supreme Court.”
2
The trial court refused to give the requested jury
instruction.
Instead, the trial court followed the language
of the statute, instructing the jury that if it found that a
commission
was
owed,
it
must
then
decide
if
defendant
intentionally failed to pay the commission when due.
On a special verdict form, the jury found that defendant
owed all four commissions and that it intentionally failed to
pay three of the four commissions when due.
Defendant filed a postjudgment motion for a new trial and
amendment of the judgment.
Defendant claimed that the jury
instruction given by the trial court was insufficient because
it did not define the term “intentionally” for the jury.
The
trial court denied the motion, stating that the
was
SRCA
intended to be compensatory and not punitive.2
While defendant’s appeal was pending in the United States
Court of Appeals for the Sixth Circuit, this Court released
Frank W Lynch & Co v Flex Technologies, Inc, 463 Mich 578; 624
NW2d 180 (2001).
of the
SRCA ,
In Lynch, which addressed the retroactivity
the opinion stated that “the
SRCA
clearly serves
a punitive and deterrent purpose,” id. at 586, and that the
act was “indisputably punitive, not compensatory.”
Id. at n
4. These statements arguably conflict with the trial court’s
conclusion regarding the nature of the statute.
The Sixth Circuit heard oral argument in the present case
in August 2001.
observed
that
In the certified question request, the panel
the
Lynch
opinion
2
did
not
indicate
“what
In making this ruling, the trial court relied on M & C
Corp v Erwin Behr GmbH & Co, KG, 87 F3d 844 (CA 6, 1996).
3
specific intent standard applies,” and that the “appeal turns
on what level of intent is needed to invoke the double-damages
provision . . . .”
II. THE STATUTE
The
relevant
statutory
language
at
issue,
MCL
600.2961(5), states:
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 commission 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.
A fundamental principle of statutory construction is that
"a clear and unambiguous statute leaves no room for judicial
construction or interpretation."
59, 65; 503 NW2d 435 (1993).
Coleman v Gurwin, 443 Mich
The statutory language must be
read and understood in its grammatical context, unless it is
clear that something different was intended. Sun Valley Foods
Co v Ward, 460 Mich 230; 596 NW2d 119 (1999).
legislature
has
unambiguously
conveyed
its
intent
When a
in
a
statute, the statute speaks for itself and there is no need
for judicial construction; the proper role of a court is
simply to apply the terms of the statute to the circumstances
in a particular case.
Turner v Auto Club Ins Ass’n, 448 Mich
22, 27; 528 NW2d 621 (1995).
The clear language of the statute evinces no textual
intent to create a good faith defense to the double-damages
4
provision. Grammatically, the word “intentionally” modifies
the phrase “failed to pay.”
defined
in
the
statute.
The word “intentionally” is not
Where
the
Legislature
has
not
expressly defined the common terms used in a statute, this
Court may turn to dictionary definitions "to aid our goal of
construing those terms in accordance with their ordinary and
generally accepted meanings."
People v Morey, 461 Mich 325,
330; 603 NW2d 250 (1999).
Random House Webster's College Dictionary (1991) defines
"intentional" as "done with intention or on purpose; intended
. . . ."
Nothing in the generally accepted meaning of the
word leads to the inference that a good faith belief on the
part
of
the
principal
600.2961(5)(b).3
sales
precludes
recovery
under
MCL
See, generally, Gillary & Albus, Michigan's
representative
act
revisited—again—or,
does
"intentionally" mean "in bad faith"?, 2001 L R MSU-DCL 965.
Therefore, under the clear language of the statute, if a
principal deliberately fails to pay a commission when due, it
is liable for double damages under the statute, even if the
principal did not believe, reasonably or otherwise, that the
commission was owed.
There is no textual indication that a
principal’s good faith belief
determination
that
double
is
damages
3
relevant in making the
are
payable
under
the
Defendant claims that the word “intentional” is a legal
term of art, and not susceptible to the use of a lay
dictionary. As used in the statute under consideration, we
disagree. However, we note that the legal definition of
“intentionally” provides defendant no relief. Black's Law
Dictionary (6th ed) defines "intentionally" as “[t]o do
something purposefully, and not accidentally."
5
statute.4
III. May the Legislative History of the srca
trump the statutory language?
Notwithstanding that the language of the statute does not
require “bad faith” as a precondition to recovering double
damages, defendant asserts that such a construction must be
imposed by the courts.
Defendant relies upon the legislative
history of the statute in support of its position.5
4
Some states that have passed similar acts have required
a higher level of intentionality before additional damages are
assessed. See Cal Civil Code 1738.15 (“willfully fails to
pay commissions”); Ind Code 24-4-7-5(b) (“in bad faith fails
to comply”); Mass Gen Laws Ann ch 104, § 9 (“wilfully or
knowingly fails to comply”); Pa Consol Stat tit 43, § 1475(a)
(“willfully fails to comply”); Tenn Code Ann 47-50-114(d)
(“acting in bad faith, fails to comply”).
5
This Court has recognized the benefit of using
legislative history when a statute is ambiguous and
construction of an ambiguous provision becomes necessary.
Stajos v City of Lansing, 221 Mich App 223; 561 NW2d 116
(1997); People v Hall, 391 Mich 175; 215 NW2d 166 (1974);
Liquor Control Comm v Fraternal Order of Eagles, Aerie No 629,
286 Mich 32; 281 NW 427 (1938).
However, we take this
opportunity to emphasize that not all legislative history is
of equal value, a fact that results in varying degrees of
quality and utility of legislative history.
Clearly of the highest quality is legislative history
that relates to an action of the Legislature from which a
court may draw reasonable inferences about the Legislature's
intent with respect to an ambiguous statutory provision.
Examples of legitimate legislative history include actions of
the
Legislature
intended
to
repudiate
the
judicial
construction of a statute, see, e.g., Detroit v Walker, 445
Mich 682, 697; 520 NW2d 135 (1994), or actions of the
Legislature in considering various alternatives in language in
statutory provisions before settling on the language actually
enacted. See, e.g., Miles ex rel Kamferbeek v Fortney, 223
Mich 552, 558; 194 NW 605 (1923). From the former, a court
may be able to draw reasonable inferences about the
Legislature's intent, even when the Legislature has failed to
unambiguously express that intent.
From the latter, by
(continued...)
6
In 1991, our Legislature passed Senate Bill 36, which was
based on model language drafted by the Bureau of Wholesale
Representatives. The language of the bill passed was the same
as MCL 600.2961, except that it did not include the word
“intentionally.”
July 15, 1991.
Governor John Engler vetoed the bill on
The veto message stated in part: “Second, I
oppose the use of exemplary damages in contract actions absent
broad public policy considerations and particularly in this
case
where
exemplary
damages
would
be
assessed
without
consideration of the underlying factors resulting in breach of
(...continued)
comparing alternative legislative drafts, a court may be able
to discern the intended meaning for the language actually
enacted.
Of considerably diminished quality as legislative history
are forms that do not involve an act of the Legislature.
“Legislative analyses” created within the legislative branch
have occasionally been utilized by Michigan courts. These
staff analyses are entitled to little judicial consideration
in resolving ambiguous statutory provisions because: (1) such
analyses are not an official form of legislative record in
Michigan, (2) such analyses do not purport to represent the
views of legislators, individually or collectively, but merely
to set forth the views of professional staff offices situated
within the legislative branch, and (3) such analyses are
produced outside the boundaries of the legislative process as
defined in the Michigan Constitution, and which is a
prerequisite for the enactment of a law. Const 1963, art 4,
§§ 26 & 33. In no way can a “legislative analysis” be said to
officially summarize the intentions of those who have been
designated by the Constitution to be participants in this
legislative process, the members of the House and the Senate
and the Governor. For that reason, legislative analyses should
be accorded very little significance by courts when construing
a statute.
Finally, it bears repeating that resort to legislative
history of any form is proper only where a genuine ambiguity
exists in the statute. Legislative history cannot be used to
create an ambiguity where one does not otherwise exist.
7
contract.”
In response to the Governor’s veto, the Legislature added
the word “intentionally.”
With that addition, the Governor
signed the bill into law. 1992 PA 125.
It does appear that
the Governor vetoed the original bill in part out of a concern
for the inappropriateness of awarding extracontractual damages
on the basis of a mere breach of contract.
The fact remains
that the final bill enacted and signed into law did not cure
the problem the Governor raised in his veto message.
Defendant’s argument that the statute should be construed
to include a good faith defense must fail because it violates
a prime tenet of statutory construction: Michigan courts are
bound to apply the unambiguous language actually used in a
statute.
Danse Corp v Madison Hts, 466 Mich 175, 182; 644
NW2d 721 (2002).
Because the statute is clear, there is no
ambiguity that would permit or justify looking outside the
plain
words
of
the
statute.
“‘[W]e
do
not
resort
to
legislative history to cloud a statutory text that is clear.’”
Chmielewski v Xermac, Inc, 457 Mich 593, 608; 580 NW2d 817
(1998), quoting Gilday v Mecosta Co, 124 F3d 760, 767 (CA 6,
1997), quoting Ratzlaf v United States, 510 US 135, 147-148;
114 S Ct 655; 126 L Ed 2d 615 (1994).
See also Luttrell v
Dep't of Corrections, 421 Mich 93, 101; 365 NW2d 74 (1984).
IV. THE NATURE
OF THE SRCA
In Lynch, the opinion stated that “the
SRCA
clearly serves
a punitive and deterrent purpose,” 463 Mich 586, and that the
act was “indisputably punitive, not compensatory,” id. at n 4.
These statements
were made in response to the plaintiff’s
8
argument that the statute was remedial and should be applied
retroactively under the “exception” to the general rule of
prospective application.
Defendant
punitive
maintains
damages
are
that
not
under
available
Michigan
absent
a
case
law,
showing
of
malicious or willful misconduct. In support of this argument,
defendant cites Peisner v Detroit Free Press, 421 Mich 125;
364 NW2d 600 (1984).
In Peisner, the Court considered whether exemplary and
punitive
damages
under
the
Michigan
libel
statute,
MCL
600.2911(2)(b), resulted in plaintiff being compensated twice
for the same injury.6
In resolving this question, the Court
stated that “exemplary and punitive damages for libel cannot
be awarded in the absence of a finding that the defendant
acted with common-law malice—in the sense of ill will or bad
faith—in publishing the libel.” Id. at 136.
There are distinct differences between the language of
6
The statutory language at the time provided:
(b) Exemplary and punitive damages shall not
be recovered in actions for libel unless the
plaintiff, before instituting his action, gives
notice to the defendant to publish a retraction and
allows a reasonable time to do so, and proof of the
publication or correction shall be admissible in
evidence under a denial on the question of the good
faith of the defendant, and in mitigation and
reduction of exemplary or punitive damages.
The
retraction shall be published in the same size
type, in the same editions and as far as
practicable, in substantially the same position as
the original libel.
9
the libel statute and that of the
SRCA .
The libel statute does
not identify any particular mental state surrounding the libel
before liability for exemplary or punitive damages attaches,
whereas
the
expressly
SRCA
intentional failure to pay.
predicates
liability
on
an
In addition, the libel statute
explicitly permits the consideration of the “good faith of the
defendant,”
MCL
600.2911(2)(b),
whereas
conspicuously silent on the subject.7
the
is
SRCA
The textual difference
between the statutes militates against the application of the
Peisner holding to the facts of this case.
The double-damages provision of the
punitive
rather
than
provides
for
award
necessary
to
an
make
compensatory
of
damages
plaintiff
whole
in
SRCA
the
above
is irrefutably
sense
and
under
that
beyond
the
it
that
contract.
However, that conclusion is not controlling or even relevant
to the proper construction of this unambiguous statute.
clear
and
unambiguous
language
of
the
statute
The
penalizes
intentional failure to pay, without regard to the motivation
of the principal. Under the language of the statute, it
appears that the only cognizable defense to a double-damages
claim is if the failure to pay the commission were based on
7
The Peisner Court also relied on the now disfavored
doctrine of legislative acquiescence in holding that
“exemplary and punitive” damages are compensatory in nature
for purposes of the libel statute. 421 Mich 133. See Hanson
v Mecosta Co Rd Comm'rs, 465 Mich 492; 638 NW2d 396 (2002);
Donajkowski v Alpena Power Co, 460 Mich 243; 596 NW2d 574
(1999); People v Borchard-Ruhland, 460 Mich 278; 597 NW2d 1
(1999).
10
inadvertence or oversight.
The Legislature is certainly
within its power to award “punitive-type” damages for such
actions if it chooses to do so.
The imposition of a contrary
judicial gloss is inappropriate where the Legislature has
clearly expressed its intentions in the words of the statute.
Nawrocki v Macomb Co Road Comm, 463 Mich 143, 150; 615 NW2d
702 (2000); Chmielewski, supra at 606; People v Gilbert
414
Mich 191; 324 NW2d 834 (1982).
V. CONCLUSION
For the foregoing reasons, we conclude that the plain
language
of
the
double-damages
provision
of
the
statute
requires only that the principal purposefully fail to pay a
commission when the commission becomes due.
Having answered
the certified question, we return the matter to the United
States Court of Appeals for the Sixth Circuit for further
proceedings as deemed appropriate.
Robert P. Young, Jr.
Maura D. Corrigan
Clifford W. Taylor
Stephen J. Markman
11
S T A T E
O F
M I C H I G A N
SUPREME COURT
In re CERTIFIED QUESTION FROM
THE UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT,
__________________________________
KENNETH HENES SPECIAL PROJECTS
PROCUREMENT, MARKETING AND
CONSULTING CORPORATION,
Plaintiff,
v
No. 120110
CONTINENTAL BIOMASS INDUSTRIES, INC,
Defendant.
___________________________________
CAVANAGH, J. (concurring).
The
Michigan
majority
sales
holds
that
the
representative
plain
language
commission
act
of
the
(SRCA),
MCL
600.2961, requires only that the principal purposefully fail
to
pay
the
commission
when
due
before
liability
for
an
intentional failure to pay would arise. Although I agree with
its result, I write separately to express my concern with the
majority’s
narrow
textualist
approach
to
statutory
interpretation.
LEGISLATIVE HISTORY
Though I agree that nothing need be gleaned from the
history in this case, I disagree with the majority’s assertion
that legislative history is wholly irrelevant when a statute
lacks “ambiguity.”
Of course, statutory interpretation must
always begin with the text.
However, statutes subject to
different reasonable interpretations are often held to be
clear and unambiguous on the basis of definitions selected by
this Court and provided by Webster’s Dictionary.
the
perspective
of
some
of
my
colleagues,
Contrary to
that
type
of
analysis can, at times, prove unhelpful. Instead, it is often
useful to consider legislative history because even those
statutes lacking clearly contradictory language are often
subject to different—yet reasonable—interpretations.1 In this
case, for example, the United States Court of Appeals for the
Sixth Circuit found the term sufficiently ambiguous to warrant
certification to this Court. Because a majority of this Court
rarely finds a statute ambiguous, legislative history is
seldom utilized, though many times it would be useful.
PURPOSE
In addition, I am troubled by the majority’s failure to
clarify that any other interpretation of the statute would
render the punitive measure almost meaningless and clearly
1
“Reading the legislative history puts the judge better
in touch with the values, vocabulary, and policy choices of
the authors of the statute—just as The Federalist does for the
framers of the Constitution.”
Eskridge, Textualism, The
unknown ideal? 96 Mich L R 1509 (1998).
2
contrary to the statute’s purpose.
“[T]he Court may depart
from strict construction principles when a literal reading of
the statute will produce absurd or illogical results, and this
Court should attempt to give effect to all relevant statutory
provisions.”
DiBenedetto v West Shore Hosp, 461 Mich 394,
408; 605 NW2d 300 (2000) (Cavanagh, J., dissenting); see also
1 Blackstone, Commentaries 61 (“[T]he most universal and
effectual way of discovering the true meaning of a law, when
the words are dubious, is by considering the reason and spirit
of it . . . for when this reason ceases, the law itself ought
likewise to cease with it.").
I understand that some members
of the majority disapprove of this doctrine, but it is most
applicable. If an insurance company were exempt from punitive
damages simply because it asserted a “reasonable” argument
concerning a disputed commission, the statute would create no
incentive to pay commissions owed to insurance sales agents.
For these reasons, I concur in the result only.
Michael F. Cavanagh
Marilyn Kelly
3
S T A T E
O F
M I C H I G A N
SUPREME COURT
In re CERTIFIED QUESTION FROM
THE UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
________________________________________
KENNETH HENES SPECIAL PROJECTS
PROCUREMENT, MARKETING AND
CONSULTING CORPORATION,
Plaintiff,
v
No. 120110
CONTINENTAL BIOMASS INDUSTRIES, INC.
Defendant.
________________________________________
WEAVER, J. (concurring).
I concur with the result reached by the majority.
I
write separately to state as I did in my dissent to the
proposed amendment of MCR 7.305 that this Court lacks the
constitutional authority to hear questions certified from
federal courts and that, therefore, MCR 7.305(B) represents an
unconstitutional expansion of judicial power. 462 Mich 1208
(2000), see also In re Certified Question (Wayne Co v Philip
Morris, Inc), 622 NW2d 518 (2001).
Elizabeth A. Weaver
2
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