Terry Barr Sales Agency, Inc. v. All-Lock Co., Inc.

• Decision Date: 16 September 1996
• Docket Number: ALL-LOCK,No. 95-1952,95-1952
• Citation: 96 F.3d 174
• Parties: TERRY BARR SALES AGENCY, INC., Plaintiff-Appellant, v.COMPANY, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 174

96 F.3d 174

TERRY BARR SALES AGENCY, INC., Plaintiff-Appellant, v. ALL-LOCK COMPANY, INC., Defendant-Appellee.

No. 95-1952.

United States Court of Appeals, Sixth Circuit.

Argued Aug. 15, 1996.

Decided Sept. 16, 1996.

Daniel R. Rustmann, Buzel Long, Detroit, MI, Edward M. Kalinka (argued and briefed), Butzel Long, Birmingham, MI, for Plaintiff-Appellant.

Carl H. von Ende (argued and briefed), Frederick A. Acomb, Miller, Canfield, Paddock & Stone, Detroit, MI, Morrill J. Cole, Cole, Schotz, Meisel, Forman & Leonard, Hackensack, NJ, for Defendant-Appellee.

Before: BOYCE F. MARTIN, Jr., KRUPANSKY, and DAUGHTREY, Circuit Judges.

BOYCE F. MARTIN, Jr., Circuit Judge.

Terry Barr Sales Agency appeals the district court's award of summary judgment in favor of All-Lock Company on its breach of contract claim. Believing that the oral agreement between the parties did not include a commitment by All-Lock to pay commissions to Terry Barr Sales after the termination of the parties' agency agreement, the district court awarded summary judgment in favor of All-Lock from the bench after a hearing. Because genuine issues of material fact exist as to whether All-Lock is bound to pay commissions to Terry Barr Sales after termination of the parties' relationship, we REVERSE.

Terry Barr Sales is a sales representative company based in Detroit. All-Lock is a corporation engaged in the manufacture of locks and latches for automobiles with its corporate headquarters in New Jersey and its main manufacturing plant in Alabama. Terry Barr, the president of Terry Barr Sales, and Ron Hermann, the president of All-Lock, entered into an oral agency agreement in 1973. Under the agreement, Terry Barr Sales made sales to, and/or obtained orders from, automobile manufacturers for the purchase of All-Lock's locks and latches for use in new automobiles. In exchange for this service, Terry Barr Sales, which in effect is a manufacturer's representative, received a commission on sales to these "original equipment" customers, which included Ford, General Motors, and Chrysler.

The commission rate for new business was three and one-half percent of total sales. In addition, at the time the parties entered into the agreement, All-Lock had some pre-existing sales that it previously had serviced in-house. Terry Barr Sales agreed to service this "inherited" business at a two percent commission rate. Over the years, the parties' relationship proved mutually financially beneficial. Terry Barr Sales received significant commissions for sales made to "original equipment" customers, and All-Lock's sales to those customers increased dramatically. By 1992, Terry Barr Sales had obtained purchase orders for All-Lock to supply locks and latches for the entire General Motors "Saturn" automobile line.

Sometime after this, and for no explained reason in the record, All-Lock decided to terminate Terry Barr Sales as its manufacturer's sales representative. In March of 1994, Ron Hermann met with Terry Barr at an airport hotel in Detroit and informed him that All-Lock was terminating Terry Barr Sales on the "latch" product line. All-Lock was, however, retaining Terry Barr Sales on its lock and switch accounts. Terry Barr's deposition testimony reveals that the parties' dispute concerning commissions began at that meeting in Detroit. When Hermann informed Barr that All-Lock was terminating Terry Barr Sales on the latch product line, Barr indicated his belief that Terry Barr Sales was due commissions on continuing orders for the "life of the part." ¹ Hermann, however, responded that All-Lock was willing to pay commissions only for ninety days after termination of the agency relationship. Soon thereafter, Mike Smith, the vice-president at Terry Barr Sales, sent a letter to All-Lock which stated that:

At this time we must request that All-Lock abide by the standards of our industry regarding the relationship between manufacturers and their representatives and pay us life of the part commissions on current business, as well as life of the part commissions on all programs we started that are sourced to All-Lock within 12 months of termination.

The parties dispute the import of this letter. Terry Barr Sales claims it was simply a reaffirmation of its position that it was due commissions on all sales procured by Terry Barr Sales for the "life of the part." All-Lock claims that Terry Barr Sales threatened to refuse to work on the lock and switch accounts it retained, and that this letter is evidence of Terry Barr Sales attempt to force All-Lock into a new agreement providing for "life of the part" commissions. In any event, the parties communicated back and forth over the next few months, with settlement negotiations eventually grinding to a halt. Terry Barr Sales then filed the instant lawsuit.

Terry Barr Sales filed suit against All-Lock on May 6, 1994 in the district court, asserting claims for its commissions based on breach of contract, unjust enrichment, and promissory estoppel theories. Terry Barr Sales also sought relief pursuant to Section 2961 of Michigan's Revised Judicature Act, Mich. Comp. Laws § 600.2961, which allows for the recovery of treble damages for the intentional failure to pay commissions. Perhaps as a defensive maneuver in reaction to Terry Barr Sales' complaint, All-Lock subsequently filed suit against Terry Barr Sales in New Jersey, alleging that Terry Barr Sales breached the parties' oral agreement by performing poorly. The cases were consolidated in the Eastern District of Michigan.

After the parties conducted limited discovery, they filed cross motions for summary judgment on Terry Barr Sales' complaint. After a hearing on the motions, the district court awarded summary judgment from the bench in favor of All-Lock. The court found that a contract existed between the parties. The court then orally dismissed Terry Barr Sales' claims based on unjust enrichment and promissory estoppel theories. The court went on to dismiss the claim seeking treble damages under Mich. Comp. Laws § 600.2961, holding, without opinion, that the statute violated the Title-Object Clause of the Michigan Constitution. ² The court then dismissed Terry Barr Sales' claim that the parties' oral agreement included an obligation to pay commissions after termination of the agency relationship, stating from the bench that:

The plaintiff claims that the contract between these parties, although silent on the term post-termination commissions, should be constructed by the court to award such commissions to the plaintiff, the representative, because of the Fernandez line of cases which suggest that representatives should not be taken advantage of by manufacturers who will make a silent contract.

I presume then [sic] when the rep is [sic] procured a great many sales, dismiss them and keep the commissions. And, well, simply because of the equities that are presumed by that line of cases.

But the court is unable to buy into the presumption as to the equities of all such situations that those cases are based upon. Each case is different as to which is the strongest party economically.

They did both have the opportunity to make an express contract. And the court stepping in to impose such a radical term on business parties does not seem appropriate to do.

I think the Andries line of cases is better, but even with the Fernandez analysis, the plaintiff cannot prevail here because the district court in that case said where the contract and other circumstances offer no guidance as to the party's [sic] intentions, the duty to pay post-termination commissions may be implied-in-law to enforce notions of fair dealing and prevent the principal from unfairly taking advantage of the agent's services, quoting Reed.

....

The practices under this contract, although they are minimized strenuously by the plaintiff were that Barr got commissions from the inception of this contract from parts that were sold by someone and says that the efforts necessary to continue those sales required some commission to be paid.

Now that's in opposition to the facts that the court should presume the agents' entitlement to future commissions, all future commissions, because the work is totally front-loaded. So there's an inconsistency here; that's another reason I can't buy into the Fernandez analysis.

The district court, based on this view of the hearing, awarded judgment in favor of All-Lock, stating its belief that the parties did not intend that Terry Barr Sales would receive commissions after termination of the agency relationship.

We review the district court's award of summary judgment de novo. Booker v. Brown & Williamson Tobacco Co., 879 F.2d 1304, 1310 (6th Cir.1989). Summary judgment is appropriate where there exists no genuine issue of material fact and the moving party is entitled to summary judgment as a matter of law. Fed.R.Civ.P. 56(c). The test requires this Court to determine "whether the evidence presents sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Booker, 879 F.2d at 1310 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 2509, 91 L.Ed.2d 202 (1986)). When reviewing a summary judgment motion, it is essential that we view the evidence in a light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88, 106 S.Ct. 1348, 1356-57, 89 L.Ed.2d 538 (1986). "[A]t the summary judgment stage the judge's function is not to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson, 477 U.S. at 247, 106 S.Ct. at 2509.

Before turning to the merits, we believe it appropriate to express our strong disapproval of the district court's decision to award summary judgment in favor of All-Lock without providing this Court with a written explanation of its reasoning. Ins...