Kelly-Stehney & Associates, Inc. v. MACDONALD'S INDUSTRIAL PRODUCTS, INC …

• Court: Court of Appeal of Michigan
• Writing for the Court: ZAHRA, J.
• Citation: Kelly-Stehney & Associates, Inc. v. MACDONALD'S INDUSTRIAL PRODUCTS, INC …, 693 N.W.2d 394, 265 Mich. App. 105 (Mich. App. 2005)
• Decision Date: 17 March 2005
• Docket Number: Docket No. 238079.
• Parties: KELLY-STEHNEY & ASSOCIATES, INC., Plaintiff-Appellant, v. MACDONALD'S INDUSTRIAL PRODUCTS, INC., Defendant-Appellee.

693 N.W.2d 394

265 Mich. App. 105

KELLY-STEHNEY & ASSOCIATES, INC., Plaintiff-Appellant, v. MACDONALD'S INDUSTRIAL PRODUCTS, INC., Defendant-Appellee.

Docket No. 238079.

Court of Appeals of Michigan.

Submitted May 21, 2004, at Lansing.

Decided February 3, 2005, at 9:05 a.m.

Released for Publication March 17, 2005.

Colombo and Colombo, P.C. (by Michael J. O'Shaughnessy and Eric R. Bowden), for the plaintiff. Bloomfield Hills.

Miller, Johnson, Snell & Cummiskey, P.L.C. (by David J. Gass and S. Grace Davis), for the defendant. Grand Rapids.

Before: BANDSTRA, P.J., and ZAHRA and METER, JJ.

ON REMAND

ZAHRA, J.

In February 1994, the parties entered into a written manufacturer's representative agreement (MRA) by which plaintiff would receive three percent commissions on its sales of products manufactured by defendant for three years, thereafter extending in one-year increments, unless otherwise agreed in writing. In early 1997, defendant orally proposed to extend the contract for another three years on the condition that plaintiff's commissions on certain products would decrease on a sliding scale. Pursuant to this oral agreement (the DLO agreement), defendant paid plaintiff decreased commissions over the next three years. After defendant terminated the contract in 2000, plaintiff sued defendant, arguing that it should have received three percent commissions under the MRA.

This is the second time the parties have appeared in this Court. Initially, we reluctantly affirmed an order granting summary disposition for defendant premised upon an equitable estoppel theory. We were reluctant in our affirmance because the concept of equitable estoppel is inconsistent with the purpose of the statute of frauds, which would bar an oral agreement under these circumstances. Still, we were constrained by existing Supreme Court precedents. This matter was subsequently remanded to this Court by the Supreme Court, 469 Mich. 1046, 677 N.W.2d 838 (2004), with directions that we remand the case to the trial court for consideration of the following issues:

(1) whether there is a writing here sufficient to satisfy the statute of frauds, MCL 566.132(1); Goslin v. Goslin, 369 Mich. 372, 376 [120 N.W.2d 242] (1963); (2) whether Quality Products & Concepts Co. v. Nagel Precision, Inc., 469 Mich. 362, 364 [666 N.W.2d 251] (2003), is pertinent to this case; and (3) whether the language of MCL 566.136 affects the disposition of this case or the resolution of whether there is a sufficient writing.

The trial court determined that the commission checks, commission reports, and correspondence between the parties were writings sufficient to satisfy the statute of frauds, MCL 566.132(1). The trial court observed that MCL 566.136 buttresses the conclusion that the writings satisfy the statute of frauds. Further, the trial court concluded that there is clear and convincing evidence that plaintiff, through writings, oral representations, and conduct, waived the written modification clause of the MRA and agreed to modify the MRA by entering into the DLO agreement.

We agree with the trial court and affirm the order granting summary disposition in favor of defendant.

I. Facts and Procedure

The pertinent facts were previously set forth by this Court in Kelly-Stehney & Assoc., Inc. v. MacDonald's Industrial Products, Inc., 254 Mich.App. 608, 609-611, 658 N.W.2d 494 (2003), vacated and remanded 469 Mich. 1046, 677 N.W.2d 838 (2004):

On February 23, 1994, the parties entered into a Manufacturer's Representative Agreement (MRA), which provided that plaintiff would work for defendant as an independent contractor selling products manufactured by defendant to other manufacturers in the automotive industry. The MRA provided that plaintiff would receive three percent commissions on new product sales of defendant's products unless otherwise agreed in writing. The MRA bound both parties for three years and automatically extended in one-year increments after the initial three years. The MRA further provided that all modifications had to be in writing.

After the parties entered into the MRA, defendant made an agreement with DaimlerChrysler Corporation in which defendant was scheduled, commencing in the summer of 1997, to produce a line of automobile window frames called the Daylight Opening (DLO). In early 1997, defendant's president, Robert MacDonald, orally proposed a three-year special arrangement regarding the DLO program to Edward Stehney, one of plaintiff's main shareholders (the oral DLO agreement). MacDonald proposed that defendant would extend the MRA, but would pay plaintiff DLO commissions on a reduced sliding scale as follows: three percent for model year (MY) 1998,1 two percent for MY 1999, and 1.5 percent for MY 2000. Under this agreement, defendant would pay plaintiff commissions based on a fixed rate of $21.86 for each piece.2 MacDonald testified that Stehney orally agreed to this arrangement. MacDonald attested that the only reason he agreed to extend the term of the MRA was because plaintiff agreed to continue working for reduced commissions under the oral DLO agreement.

In MYs 1998 through 2000, defendant paid plaintiff commissions based on $21.86 for each piece. Defendant paid plaintiff three percent commissions in MY 1998, two percent in MY 1999, and 1.5 percent in MY 2000. Defendant terminated the MRA on January 7, 2000. After this termination, plaintiff demanded that defendant pay plaintiff its commissions for MYs 1999 and 2000 at a rate of three percent. When defendant refused, plaintiff sued, requesting damages based on the commissions to which it was originally entitled under the MRA. The trial court granted defendant's motion for summary disposition, concluding that the oral DLO agreement was not barred by the statute of frauds and the parties were bound by this agreement. The trial court further concluded that plaintiff's claims were barred by equitable estoppel.

1. A "model year" spanned from July through June of the next year.

2. Apparently, instead of paying plaintiff commissions based on the varying prices of the products, defendant proposed paying the commissions at a fixed rate of $21.86 for each piece. Defendant apparently determined this amount by factoring in the material costs for each piece, labor costs, burden costs, and scrap costs of each operation used in making the pieces.

II. Analysis

Standard of Review

This Court reviews de novo a trial court's decision whether to grant a motion for summary disposition. Corley v. Detroit Bd. of Ed., 470 Mich. 274, 277, 681 N.W.2d 342 (2004). Similarly, "[t]his Court reviews de novo questions of law such as whether the statute of frauds bars enforcement of a purported contract." Zander v. Ogihara Corp., 213 Mich.App. 438, 441, 540 N.W.2d 702 (1995).

"A motion under MCR 2.116(C)(10) tests the factual sufficiency of the complaint." [Maiden v. Rozwood, 461 Mich. 109, 119, 597 N.W.2d 817 (1999).] In evaluating such a motion, a court considers the entire record in the light most favorable to the party opposing the motion, including affidavits, pleadings, depositions, admissions, and other evidence submitted by the parties. Where the proffered evidence fails to establish a genuine issue regarding any material fact, the moving party is entitled to judgment as a matter of law. [Corley, supra at 278, 681 N.W.2d 342.]

B. Discussion

1. Statute of Frauds

Plaintiff first argues that the DLO agreement is barred by the statute of frauds because there was not a writing sufficient to satisfy the statute. The applicable statute of frauds provides, in pertinent part:

In the following cases an agreement, contract, or promise is void unless that agreement, contract, or promise, or a note or memorandum of the agreement, contract, or promise is in writing and signed with an authorized signature by the party to be charged with the agreement, contract, or promise:

(a) An agreement that, by its terms, is not to be performed within 1 year from the making of the agreement. [MCL 566.132(1).]

Here, there is no dispute that the DLO agreement was for a term of three years, so it could not be performed in full within one year from the making of the agreement. Therefore, the DLO agreement is void under the statute of frauds unless it was in writing and signed by plaintiff.

Our Supreme Court has declined to adopt narrow and rigid rules for compliance with the statute of frauds. Opdyke Investment Co. v. Norris Grain Co., 413 Mich. 354, 367, 320 N.W.2d 836 (1982) Instead, the Court has adopted a case-by-case approach. Forge v. Smith, 458 Mich. 198, 206, 580 N.W.2d 876 (1998). The statute of frauds does not require that the entire agreement be in writing, but only requires that "a note or memorandum of the agreement" is in writing and signed. MCL 566.132(1); Opdyke, supra at 367, 320 N.W.2d 836. Our Supreme Court, in Goslin v. Goslin, 369 Mich. 372, 376, 120 N.W.2d 242 (1963), adopted Professor Corbin's standard for what constitutes a sufficient note or memorandum under the statute of frauds. Our Supreme Court reaffirmed this standard in Opdyke, supra at 368, 320 N.W.2d 836, quoting Goslin, supra at 376, 120 N.W.2d 242, quoting an earlier edition of 2 Corbin, Contracts, § 498, p. 683:

"`Let us proceed, therefore, with a general consideration of what constitutes a sufficient note or memorandum. We may well start with this one general doctrine: There are few, if any, specific and uniform requirements. The statute itself prescribes none; and a study of the existing thousands of cases does not justify us in asserting their existence. Some note or memorandum having substantial probative value in establishing the contract must exist; but its sufficiency in attaining the purpose of the statute depends in each case upon the setting in which it is found. * * * That is the rule of law to be applied with intelligence and discrimination and not like a pedant playing a game of logomachy.'" [¹]

A note or memorandum...