Miltimore Sales, Inc. v. International Rectifier, Inc. ( 2004 )

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 04a0057n.06
Filed: October 29, 2004
Nos. 03-1314, 03-1317
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
MILTIMORE SALES, INC., )
)
Plaintiff-Appellee/ )
Cross-Appellant, ) ON APPEAL FROM THE
) UNITED STATES DISTRICT
v. ) COURT FOR THE EASTERN
) DISTRICT OF MICHIGAN
INTERNATIONAL RECTIFIER, )
INC., )
) OPINION
Defendant-Appellant/ )
Cross-Appellee. )
_______________________________________)
Before: MOORE and CLAY, Circuit Judges; HAYNES,* District Judge.
KAREN NELSON MOORE, Circuit Judge. The defendant, International Rectifier, Inc.
(“IRI”), appeals an award of damages to the plaintiff, Miltimore Sales, Inc. (“MSI”), for breach of
contract and violation of the Michigan Sales Representative Commission Act (“MSRCA”), MICH.
COMP. LAWS § 600.2961. On appeal IRI raises various claims based on alleged trial errors and
insufficiency of the evidence. MSI cross-appeals asserting that the damages judgment was
inconsistent with the jury’s verdict. For the reasons stated below, we AFFIRM the judgment of the
district court.
*
The Honorable William J. Haynes, Jr., United States District Judge for the Middle District
of Tennessee, sitting by designation.
I. BACKGROUND
IRI is a corporation that supplies electrical components to the automotive industry. MSI
provides sales representation within the automotive industry. On January 3, 1994, the two parties
entered into a written contract under which MSI agreed to act as IRI’s exclusive sales agent in lower
Michigan in exchange for an agreed upon sales commission. The written agreement specified that
California law would govern its interpretation and that the agreement would last for two years unless
renewed by IRI in writing thirty days prior to its expiration. IRI renewed the contract once, and thus
it was set to expire on January 3, 1998.
Prior to January 3, 1998, the parties met to discuss terms for their continued contractual
relations. Following negotiations, representatives of the two parties agreed that the sales
commission paid to MSI would be reduced by forty percent and that in exchange IRI would pay MSI
$2.5 million in compensation for past investment expenses. The parties also agreed to increase the
length of time over which commissions could be paid. Instead of MSI’s right to commissions
expiring 180 days after the termination of the relationship between IRI and MSI, as agreed upon in
the original written contract, MSI would now be entitled to “life of the part” commissions. This
meant that even after IRI terminated its relationship with MSI it would be obligated to pay
commissions to MSI on the sales of parts to customers whose business as to those parts MSI had
originally procured.
On January 22, 1999, IRI informed MSI that IRI was terminating their relationship and that
IRI would pay commissions to MSI only under the terms of the now-expired written contract. In
June 1999, MSI filed a complaint against IRI in district court alleging, inter alia, breach of contract
and violation of the MSRCA. Following the trial, the jury returned a verdict in favor of MSI,
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finding that an oral contract between the parties had been formed which IRI breached by failing to
pay MSI for investment expenses and “life of the part” commissions. The jury also found that IRI
violated the MSRCA by intentionally failing to pay these commissions. IRI then filed a timely
appeal, and MSI filed a timely cross-appeal.
II. ANALYSIS
A. IRI’s Claims on Appeal
IRI presents numerous arguments on appeal but asserts two general claims: first, that it is
entitled to a new trial as a result of trial error committed by the district court; and second, that there
was insufficient evidence for the jury to find that IRI breached its contract with MSI or violated the
MSRCA.
1. Claim That District Court Made Legal and Evidentiary Errors
IRI contends that the district court made various legal and evidentiary errors for which it is
entitled to relief, including that the district court erred: (1) in applying Michigan law to the case
instead of California law; (2) in ruling that the contract claim was not barred by the statute of frauds;
(3) in its instructions to the jury on contract law; and (4) in precluding IRI from using MSI’s First
Amended Complaint to impeach MSI witnesses, along with various other evidentiary rulings. None
of these claims, however, warrant reversal of the district court’s decision.
First, the district court was correct in ruling that Michigan law governs the present suit. A
federal court sitting in diversity applies the choice of law rules of the forum state. Cole v. Mileti,
133 F.3d 433, 437 (6th Cir.), cert. denied, 525 U.S. 810 (1998). While Michigan permits contractual
choice of law provisions, the written contract specifying California law as governing expired on
January 3, 1998. Therefore, the district court properly determined that Michigan law applied in this
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case.
Second, MSI’s contract claim is not barred by the statute of frauds. The statute of frauds
only requires that all contract modifications which lack consideration be in writing and bars oral
agreements that cannot be performed within one year. MICH. COMP. LAWS § 566.1; § 566.132(1)(a).
The parties’ oral agreement was not a modification of the written contract. It was a separate
agreement that took effect after the written contract expired. The oral contract also lacked a
completion date and thus does not implicate the statute of frauds’ bar against oral agreements longer
than one year. See Rowe v. Montgomery Ward & Co., 473 N.W.2d 268, 271 (Mich. 1991) (“oral
contracts for an indefinite term . . . fall outside the statute of frauds”).
Third, the district court properly instructed the jury as to the need for an expression of
consent and consideration for the formation of a contract. The district court’s jury instructions did
not misstate Michigan law and thus do not qualify as “confusing, misleading and prejudicial” in a
manner that would lead this court to reverse the judgment. United States v. Wells, 211 F.3d 988,
1002 (6th Cir. 2000).
Fourth, the district court did not abuse its discretion in declining to allow IRI to use MSI’s
First Amended Complaint to impeach MSI witnesses. See Hancock v. Dodson, 958 F.2d 1367, 1371
(6th Cir. 1992) (noting that this court reviews evidentiary determinations for abuse of discretion).
This is particularly true because the record indicates that the court allowed IRI to use the complaint
to bolster one of its witnesses’ testimony and impeach MSI’s financial expert. IRI’s argument that
the district court erred in permitting various MSI witnesses to testify and in permitting MSI to
impeach an IRI witness using prior inconsistent statements similarly must fail. None of the district
court’s evidentiary rulings raised by IRI on appeal represent an abuse of the court’s discretion.
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Therefore, IRI is not entitled to a new trial or remittitur.
2. Claims That Jury Verdict was Based on Insufficient Evidence or Against the
Weight of the Evidence
IRI’s appeal raises various claims relating to the sufficiency of the evidence, including: (1)
that there was insufficient evidence to support a breach of contract claim; (2) that there was
insufficient evidence upon which a jury could find that IRI violated the MSRCA; and (3) that the
jury’s award to MSI of damages for past investments and “life of the part” commissions was against
the great weight of the evidence. None of these claims, however, lead this court to disturb the jury
verdict.
Where a conflict exists in the parties’ evidence as to whether a new contract was formed or
a previous contract continued to govern, that issue is factual and properly resolved by a jury. See
Ferries v. Copco Steel & Eng’g Co., 73 N.W.2d 850, 852 (Mich. 1955). The evidence supported
the jury’s factual findings, and the law supported the legal conclusion that an oral contract had been
created in light of those facts. Despite IRI’s claims on appeal, there was sufficient evidence in the
record of both adequate consideration and a meeting of the minds. The parties’ agreement under
which IRI agreed to pay MSI a set commission rate in exchange for MSI’s continued sales
representation qualifies as consideration. Dolgy’s Estate v. Polate, 61 N.W.2d 649, 652 (Mich.
1953) (“An agreement to render services is a good consideration for a promise to pay for past
services as well as those about to be rendered”) (citation omitted). The jury was also presented with
sufficient objective evidence of meetings and telephone conversations between representatives of
both parties from which a meeting of the minds could be inferred. See generally Rood v. Gen.
Dynamics Corp., 507 N.W.2d 591, 598 (Mich. 1993) (noting that to determine mutual assent the
court asks “whether a reasonable person could have interpreted the [parties’] words or conduct in
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the manner that is alleged”). Thus, IRI’s claim that the jury’s finding of an oral agreement was not
supported by sufficient evidence must fail.
IRI’s claim that there was insufficient evidence of an MSRCA violation must also fail.
Under the MSRCA, a principal is liable if it “deliberately fails to pay a commission when due . . .
even if the principal did not believe, reasonably or otherwise, that the commission was owed.” In
re Certified Question, 659 N.W.2d 597, 600 (Mich. 2003). During trial, MSI presented evidence
showing that IRI deliberately failed to pay commissions owed under the parties’ oral agreement and
that this failure was not based on clerical error or IRI oversight. Therefore, there is sufficient
evidence upon which the jury could have determined that IRI violated the MSRCA.
Finally, IRI argues that the calculation of damages is against the great weight of the
evidence. The testimony of MSI’s financial expert, if believed by the jury, presented sufficient
evidence to sustain the jury award of $2,307,166 for past investment expenses. Additionally, IRI
offers no testimony or evidence in support of its allegation that the $455,573 awarded for “life of
the part” commissions is against the weight of the evidence. Thus, IRI’s arguments as to
miscalculation of damages must fail.
B. MSI’s Cross-Appeal
MSI contends on cross-appeal that district court erred by awarding a fixed sum for “life of
the part” commissions. MSI asserts that it is entitled not only to commissions from the date of
breach through the trial, but also to future commissions that have yet to accrue. Thus, MSI now
seeks to amend the judgment under FED.R.CIV.P. 60(a).
We agree with MSI that from the record it appears that the damages judgment did not fully
reflect the jury verdict. Rule 60(a), however, is meant to correct clerical errors in the judgment.
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Pruzinsky v. Gianetti (In re Walter), 282 F.3d 434, 440 (6th Cir.), cert. denied, 537 U.S. 885 (2002).
The rule does not allow courts to “correct an error of substantive judgment.” Id. (citation omitted).
Thus, we cannot make the substantive change to the district court judgment which MSI seeks. Our
holding, however, does not prevent MSI from pursuing damages for commissions earned after the
jury’s verdict through further litigation when such future commissions accrue.
III. CONCLUSION
For the foregoing reasons, we AFFIRM the judgment of the district court.
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