Reicher v. Set Enterprises, Inc.

• Decision Date: 12 May 2009
• Docket Number: Docket No. 278907.
• Citation: 283 Mich. App. 657,770 N.W.2d 902
• Parties: REICHER v. SET ENTERPRISES, INC.
• Court: Court of Appeal of Michigan — District of US

770 N.W.2d 902

283 Mich. App. 657

REICHER v. SET ENTERPRISES, INC.

Docket No. 278907.

Court of Appeals of Michigan.

Submitted Aug. 6, 2008, at Detroit.

Decided May 12, 2009, at 9:10 a.m.

Randall J. Gillary, P.C. (by Randall J. Gillary and Kevin P. Albus), Troy, for the plaintiff.

Law Offices of Richard M. Shulman (by Richard M. Shulman), Bloomfield Hills, for the defendant.

Before: DAVIS, P.J., and BORRELLO and WILDER, JJ.

WILDER, J.

Plaintiff appeals as of right the circuit court's order denying his motion for summary disposition, and granting summary disposition to defendant, in this action seeking penalty damages and attorney fees under the Michigan sales representatives' commissions act (SRCA), MCL 600.2961. We affirm.

In or around 1972, according to plaintiff, plaintiff and Jebco Manufacturing, Inc. (Jebco), entered into an oral sales representation agreement. Under this agreement, plaintiff solicited orders for automotive parts manufactured by Jebco. For the orders, Jebco promised to pay sales commissions to plaintiff for the life of the parts. From 1972 through about August 1999, according to plaintiff, plaintiff procured orders for Jebco parts, and Jebco paid plaintiff sales commissions. Throughout that period, according to plaintiff, Jebco would pay the commissions to plaintiff on the 10th or 12th day of each month for the shipments made during the preceding month.

By letter dated August 27, 1999, Jebco informed plaintiff that the sales representation agreement would be terminated, except for the commission obligations assumed by Noble Metal Forming, Inc. (Noble) (an earlier name of defendant), to which Jebco was selling substantially all of its assets and business. The letter states: "As we have discussed, effective as of the close of business August 31, 1999, Jebco will complete the sale of substantially all of its assets and business to Noble Metal Forming, Inc., a Michigan corporation based in Detroit, Michigan." The letter further states that Jebco was terminating its sales representation agreement with plaintiff: "Inasmuch as Jebco will no longer be in the automotive supply business after August 31, 1999, please accept this letter as Jebco's notice that, effective as of the close of business on August 31, 1999, the Sales Representation Agreement shall be terminated, except for the obligations assumed by Noble as described" in the letter.

According to the August 27, 1999, letter, Noble agreed to assume Jebco's obligations under the sales representation agreement for products sold before August 31, 1999, for which payment had not been received by Jebco by the closing date. The letter states:

As part of the sale, Noble has agree[d] to the following:

• [To] Assume the obligations of Jebco arising under the Sales Representation Agreement with respect to commissions due for products sold prior to August 31, 1999 for which payment has not been received by the Company from the ultimate customer as of the Closing Date.

Noble also agreed, according to Jebco's letter, to assume certain other obligations of Jebco arising under the sales representation agreement:

As part of the sale, Noble has agree[d] to the following:

* * *

• [To] Assume the obligations of Jebco arising under the Sales Representation Agreement with respect to commissions relative to (i) products sold after August 31, 1999 on contracts that existed on August 31, 1999 as required by the "life of part" or other commission continuation provisions under the Sales Representation Agreement, and (ii) business generated for the benefit of Noble after August 31, 1999 as a result of the efforts of you prior to August 31, 1999 which can be reasonably evidenced by you (e.g., the DaimlerChrysler RS 2001 Program).

Effective August 31, 1999, Jebco sold substantially all its assets and its business to Noble.

According to plaintiff, in February 2000, Noble terminated the sales representation relationship with him and indicated it did not intend to fulfill its obligation to pay life-of-the-part sales commissions to him. As a result, in March 2000, plaintiff commenced an action in the Macomb Circuit Court. In resolving that action, in February 2001, plaintiff and Noble entered into a written settlement agreement. Noble agreed to pay commissions to plaintiff for parts listed in an exhibit to the agreement, which payments would include not only the parts listed, but any modifications or changes to the parts. Noble agreed to pay commissions for parts shipped through June 1, 2000, at the rate of 3 percent, and 3 or 2 percent for parts shipped commencing on June 1, 2000, through May 31, 2005, as listed in the agreement. Plaintiff agreed to dismiss the action.

The settlement agreement also contained a mutual release:

3. Mutual Release of All Claims. For valuable consideration, receipt of which is hereby acknowledged, both NOBLE and REICHER mutually hereby agree to release, acquit, and forever discharge the other including all agents, representatives, employees, insurers, attorneys, and indemnitors of and from any and all claims which either may have against the other, except those arising out of this Settlement Agreement and Mutual Release, which arose out of and/or during the course of the employment relationship between PETER L. REICHER and JEBCO MANUFACTURING, INC. and the employment relationship, if any, between PETER L. REICHER and NOBLE METAL FORMING, INC. as well as any affiliated entity. This includes, without limitation, claims for commissions, attorney fees, costs, expenses, additional damages under the Michigan Sales Commission Act, and any other claims for commissions or compensation of any kind. [Emphasis added.]

About May 2001, Noble changed its corporate name to S.E.T. Metal Forming, Inc. In July 2001, S.E.T. Metal Forming, Inc. merged into S.E.T. Steel, Inc. In September 2001, S.E.T. Steel, Inc., changed its name to S.E.T. Enterprises, Inc.

According to plaintiff, during these changes in defendant's corporate entity and name, defendant continued to pay sales commissions in accordance with the settlement agreement. According to defendant's response to plaintiff's requests for admissions, sometime in February 2004, defendant began making its commission payments late, and from February 2004 through August 2005, defendant made approximately 11 payments to plaintiff that were more than 45 days late when they were paid. Defendant argues that by August of 2005, it satisfied all payments under the settlement agreement.

As a result of the late payments, plaintiff commenced this action, seeking penalty damages and attorney fees under the SRCA. Plaintiff made a list of the late payments and attached it to requests for admissions, and defendant admitted that the list was accurate.

Later, plaintiff filed a motion for summary disposition under MCR 2.116(C)(10), arguing that defendant admitted that it failed to make commission payments within the time limits prescribed by the SRCA and that defendant failed to produce any evidence that its failure to make timely payments was a result of mistake or inadvertence. In its response to the motion, defendant argued that plaintiff's claim was barred by the release in the settlement agreement. In his reply brief, plaintiff argued that the release only applied to claims arising before the execution of the settlement agreement and that the release excluded claims arising under the settlement agreement. Plaintiff also argued that, under the SRCA, any attempts to waive the provisions of the SRCA are void. The circuit court agreed with defendant, denied plaintiff's motion, and granted summary disposition to defendant.

We first examine whether the SRCA provision prohibiting waiver of any right under the SRCA voids the release involved herein. We hold that it does not.

Well-established principles guide this Court's statutory construction efforts; we begin by consulting the specific statutory language at issue. Provider Creditors Comm. v. United American Health Care Corp., 275 Mich.App. 90, 95, 738 N.W.2d 770 (2007). "This Court gives effect to the Legislature's intent as expressed in the statute's terms, giving the words of the statute their plain and ordinary meaning." McManamon v. Redford Charter Twp., 273 Mich.App. 131, 135, 730 N.W.2d 757 (2006). "When the language poses no ambiguity, this Court need not look outside the statute, nor construe the statute, but need only enforce the statute as written." Id. at 136, 730 N.W.2d 757.

The SRCA establishes due dates for the payment of commissions to terminated sales representatives and imposes penalties on principals who intentionally fail to pay commissions by the due dates. MCL 600.2961(4) ...