Peters v. Gunnell, Inc.

• Decision Date: 26 December 2002
• Docket Number: Docket No. 230721,Docket No. 231661.
• Parties: Nicholas R. PETERS, Plaintiff/Counter-Defendant-Appellee, v. GUNNELL, INC., Defendant/Counter-Plaintiff-Appellant.
• Court: Court of Appeal of Michigan — District of US

655 N.W.2d 582

253 Mich. App. 211

Nicholas R. PETERS, Plaintiff/Counter-Defendant-Appellee, v. GUNNELL, INC., Defendant/Counter-Plaintiff-Appellant.

Docket Nos. 230721, 231661.

Court of Appeals of Michigan.

Submitted June 12, 2002, at Detroit.

Decided September 27, 2002, at 9:10 a.m.

Released for Publication December 26, 2002.

John Bishop, Vassar, for Gunnell, Inc.

Before: ZAHRA, P.J., and MARK J. CAVANAGH and WHITE, JJ.

ZAHRA, P.J.

Defendant/counterplaintiff Gunnell, Inc.,¹ brought two appeals as of right from judgments for plaintiff and an order awarding plaintiff attorney fees and costs. The appeals were consolidated. Defendant challenges the trial court's award of damages to plaintiff under the sales representatives' commissions act (SRCA), M.C.L. § 600.2961, the award on defendant's countercomplaint, and the award of fees and costs to plaintiff. We affirm.

I. Facts and Procedure

Defendant manufactures custom wheelchairs and related goods. In July 1996, the parties entered into an Independent Sales Contractor Application and Agreement, whereby plaintiff agreed to serve as a regional sales representative for defendant. The contract provided the following with respect to commissions to be paid to plaintiff:

A. Base Commission:

8% of all total Gunnell units, parts, etc. less shipping rebates, discounts, returns, show equipment, etc. Plus special quarterly bonus commission incentives based on meeting and exceeding quarterly and annual sales quota's [sic].

* * *

C.

The independent sales contractor will be paid base commission on a monthly basis, with bonus commissions paid quarterly.

Plaintiff claimed that defendant stopped providing monthly payments to him in late 1996. According to plaintiff, defendant eventually paid past-due commissions in April 1997, but did not pay him for commissions that came due after that date. Records prepared by defendant and introduced below indicate that plaintiff was owed $8,102.26 in commissions in February 1998. Plaintiff claimed he was owed at least that amount in commissions.

Defendant's president, Dwight Gay, admitted that defendant did not pay commissions earned by plaintiff because of cash flow problems. Gay further testified that defendant withheld the $8,102.26 amount due plaintiff because plaintiff failed to sell or return all "show equipment" that was in his possession.² Defendant's national sales manager, Cathy Castle, had sent a memo to all sales representatives in December 1996, instructing them to sell or return all old show equipment. Castle specified that fifty percent of the value of all show equipment one year old or older that had not been sold or returned by February 28, 1997, would be deducted from commissions. Castle's memo further stated that she would send representatives monthly statements to help track the equipment. Plaintiff asserted at trial that, notwithstanding this December 1996 memo, it was not the general practice to require the return of equipment at the one-year mark or automatically deduct the value of the equipment from commissions at that time. Plaintiff testified that, notwithstanding the memo, he was not sent monthly statements regarding his inventory of show equipment; that by the time his show equipment was one year old, Castle had left the company;³ that in his numerous conversations with Gay regarding unpaid commissions, Gay continually identified cash flow problems as the reason the commissions had not been paid and never mentioned the show equipment; and that the show equipment did not become an issue until this litigation was initiated. Plaintiff offered contemporaneous notations from conversations with Gay to support the contention that Gay at all times cited cash flow problems as the reason for nonpayment. Gay offered no support for his assertion that he asked plaintiff to return show equipment in the summer and fall of 1997.

Gay drafted a letter to plaintiff in January 1998, stating that plaintiff's services were to be terminated effective February 28, 1998. That letter stated, in part: "When your show equipment account is settled, the balance of commissions due will be paid at that time." Plaintiff denied receiving this letter and testified that the first time he saw it was during a deposition. Plaintiff testified that he continued representing defendant through May or June of 1998.

In August 1998, plaintiff filed the instant suit, alleging that defendant breached its sales commission agreement. Defendant filed a countercomplaint, seeking $16,037.60, the alleged value of unaccounted-for show equipment that was loaned to plaintiff.

A bench trial was held, after which the trial court ruled that plaintiff is entitled to $8,102 in commissions, plus $16,204 in statutory damages under the SRCA. The trial court further ruled that defendant is entitled to $1,000 in connection with its claim for missing show equipment. Plaintiff filed a motion for costs and attorney fees. The trial court granted that motion, ordering defendant to pay $7,387.50 in fees and costs. These appeals ensued.

II. Analysis

A. Actual damages under M.C.L. § 600.2961(5)(a)

Defendant argues that the trial court erred in awarding $8,102 in commissions under the SRCA. Issues of statutory interpretation are questions of law that we review de novo. Frank W Lynch & Co. v. Flex Technologies, Inc., 463 Mich. 578, 583, 624 N.W.2d 180 (2001); Oakland Co. Bd. of Co. Rd. Comm'rs v. Michigan Property & Casualty Guaranty Ass'n, 456 Mich. 590, 610, 575 N.W.2d 751 (1998). Likewise, the interpretation of a contract is reviewed de novo. Archambo v. Lawyers Title Ins. Corp., 466 Mich. 402, 408, 646 N.W.2d 170 (2002).

The primary goal of judicial interpretation of statutes is to ascertain and give effect to the Legislature's intent. Frankenmuth Mut. Ins. Co. v. Marlette Homes, Inc., 456 Mich. 511, 515, 573 N.W.2d 611 (1998). If the plain and ordinary meaning of a statute is clear, judicial construction is neither necessary nor permitted. Walters v. Bloomfield Hills Furniture, 228 Mich. App. 160, 163, 577 N.W.2d 206 (1998). We may not speculate regarding the probable intent of the Legislature beyond the words expressed in the statute. In re Schnell, 214 Mich.App. 304, 310, 543 N.W.2d 11 (1995).

The SRCA provides, in pertinent part:

(4) All commissions that are due at the time of termination of a contract between a sales representative and principal shall be paid within 45 days after the date of termination. Commissions that become due after the termination date shall be paid within 45 days after the date on which the commission became due.

(5) 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 commissions 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 $100,000.00, whichever is less.

(6) If a sales representative brings a cause of action pursuant to this section, the court shall award to the prevailing party reasonable attorney fees and court costs. [MCL 600.2961.]

Plaintiff claimed that he was owed at least $8,102.26 in commissions from his sales in 1997. Defendant's records of plaintiff's commissions state that the amount owed to plaintiff through February 1998 was $8,102.26. According to defendant, plaintiff's employment was terminated as of February 28, 1998. There is no evidence that plaintiff received any of the commissions that defendant's own records establish were due him. In fact, Gay admitted that defendant withheld payment of the amount due plaintiff in an attempt to ensure return of defendant's show equipment. Under these circumstances, the evidence establishes that defendant failed to comply with M.C.L. § 600.2961(4), which requires payment of commissions that are due within forty-five days after the date of termination of a sales representative contract. Therefore, defendant is liable for actual damages caused by the failure to pay commissions when due. MCL 600.2961(5)(a). The evidence introduced below establishes that plaintiff suffered actual damages in the amount of $8,102.26.⁴

We reject defendant's argument that the value of unaccounted-for show equipment must be deducted from commissions that were due and owing plaintiff. "Commission" is defined by the SRCA as "compensation accruing to a sales representative for payment by a principal, the rate of which is expressed as a percentage of the amount of orders or sales or as a percentage of the dollar amount of profits." MCL 600.2961(1)(a). As discussed, the SRCA provides that the principal must pay all commissions that are due within forty-five days of termination of a sales representative contract. MCL 600.2961(4). The principal's failure results in liability for actual damages. MCL 600.2961(5)(a). Nothing in the SRCA suggests that it is necessary or proper for a principal to reduce commissions that are due by the amount of expenses that might later be deemed owed by a sales representative. "Nothing may be read into the statute that is not within the manifest intent of the Legislature as gathered from the act itself." In re Juvenile Commitment Costs, 240 Mich.App. 420, 427, 613 N.W.2d 348 (2000), citing In re S R, 229 Mich.App. 310, 314, 581 N.W.2d 291 (1998). The "Base Commission" provision of the parties' contract allows show equipment to be deducted when calculating commissions. However, the evidence establishes that defendant did not offset the amount of commissions plaintiff earned by the value of the unaccounted-for show equipment. To the contrary, at different points when plaintiff inquired with defendant regarding commissions owed in 1997, defendant's agent informed plaintiff that defendant was unable to pay commissions because of cash flow problems. Defendant's records indicate that plaintiff was owed commissions...