Linsell v. Applied Handling, Inc.

• Decision Date: 08 February 2005
• Docket Number: Docket No. 249647.
• Citation: Linsell v. Applied Handling, Inc., 266 Mich.App. 1, 697 N.W.2d 913 (Mich. App. 2005)
• Parties: Mary Anne LINSELL, Plaintiff-Appellee/Cross-Appellant, v. APPLIED HANDLING, INC., Defendant-Appellant/Cross-Appellee.
• Court: Court of Appeal of Michigan

697 N.W.2d 913

266 Mich. App. 1

Mary Anne LINSELL, Plaintiff-Appellee/Cross-Appellant, v.APPLIED HANDLING, INC., Defendant-Appellant/Cross-Appellee.

Docket No. 249647.

Court of Appeals of Michigan.

Submitted January 18, 2005, at Detroit.

Decided February 8, 2005.

Approved for Publication April 19, 2005, at 9:00 a.m.

Released for Publication June 7, 2005.

Timmis & Inman PLLC(by John C. Louisell and Michael F. Wais), Detroit, for the plaintiff.

Kienbaum Opperwall Hardy & Pelton, P.L.C.(by Elizabeth Hardy and William B. Forrest III), and Day & Butler, P.L.L.C.(by Mark T. Butler), Birmingham, Detroit, for the defendant.

Before: MARKEY, P.J., and FITZGERALD and OWENS, JJ.

PER CURIAM.

DefendantApplied 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 plaintiffMary 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.

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 post termination 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 post termination 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.¹Her 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 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.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...