Opinion
Case No. 08-11077.
July 6, 2010
OPINION ORDER GRANTING DEFENDANT'S RULE 50 MOTION FOR JUDGMENT AS A MATTER OF LAW
In this action, Plaintiff asserts that it is owed sales commissions from Defendant Petra'Lex USA, Inc. A jury trial in this matter began on June 21, 2010. At the close of Plaintiff's proofs on June 28, 2010, Defendant moved for judgment as a matter of law as to all claims, pursuant to FED. R. CIV. P. 50(a). The parties have briefed the issues and the Court heard oral argument on the motion on June 28, 2010. For the reasons set forth below, Defendant's Motion shall be GRANTED and Plaintiff's claims shall be DISMISSED WITH PREJUDICE.
BACKGROUND
Plaintiff Innotext, Inc. ("Plaintiff" or "Innotext") is a Michigan corporation. (Stipulation of Facts in Joint Final Pretrial Order, Docket Entry No. 53, at 11). Collin Stafford ("Stafford") is the Vice President of Innotext. ( Id.).
Defendant Petra'Lex USA, Inc. is a North Carolina corporation incorporated in 1999 and owned by Charles Sadosky ("Sadosky") and his wife, Karen Sadosky. (Stipulation of Facts in Joint Final Pretrial Order, Docket Entry No. 53, at 11).
It is undisputed that Sadosky and his wife also have an ownership interest in: 1) a company in Honduras called Petra'Lex S. de R.L.; 2) a company in China called PTX Textiles, Inc.; and 3) another U.S. company called PTX Commercial, Inc.
Plaintiff's Amended Complaint asserts the following four counts: "Breach of Contract" (Count I); Violation of MCLA § 600.2961" (Count II); "Breach of Implied Contract" (Count III); and "Unjust Enrichment/Procuring Cause" (Count IV).
Although Plaintiff originally sued two Defendants in this action (Petra'Lex USA, Inc. and PTX Commercial, Inc.), Plaintiff agreed to voluntarily dismiss all claims against PTX Commercial, Inc. at the summary judgment stage. ( See Docket Entry No. 41 at 10 n. 1; Docket Entry No. 51 at 2 24).
As to its claims against Defendant Petra'Lex USA, Inc., Plaintiff seeks to recover commissions that it claims to have earned relating to three products, lines or programs that it claims were developed for, and sold to, Johnson Controls, Inc. ("JCI"): 1) a seat cushion assembly called "Under Covers;" 2) a fabric called "Grid Mesh;" and 3) an alleged "Duon replacement" fabric called "Trem."
It is undisputed that the only sales Plaintiff made of Grid Mesh were sample orders. "Should Plaintiff show liability for commissions on Grid Mesh, Plaintiff is limited to $120.00 in damages." (Stipulation of Facts in Joint Final Pretrial Order, Docket Entry No. 53, at 11).
With respect to Under Covers, "[i]n November 2006, Johnson Controls awarded the Under Cover Program to Petralex S. de R.L. Production began in February, 2007 and sales began in April, 2007." (Stipulation of Facts in Joint Final Pretrial Order, Docket Entry No. 53, at 11).
Trial in this matter began on June 21, 2010. At close of Plaintiff's proofs on June 28, 2010, Defense Counsel made an oral motion pursuant to FED. R. CIV. P. 50(a), seeking judgment as a matter of law on all claims. The Court heard oral argument on the motion on June 28, 2010.
In addition, on June 29, 2010, Defendant filed a brief in support of its motion. (Docket Entry No. 70).
On June 30, 2010, Plaintiff filed a brief in opposition to the motion. (Docket Entry No. 71). Plaintiff's response references very little trial testimony. Moreover, Plaintiff's response relies on materials previously submitted to the Court during the summary judgment stage of this case, such as Stafford's Affidavit. Plaintiff's reliance on such materials to oppose Defendant's Rule 50 Motion is misplaced. In ruling on the motion, this Court considers the evidence presented at trial.
STANDARD OF REVIEW
Defendant brings the instant motion under Rule 50(a) of the Federal Rules of Civil Procedure. Rule 50(a) provides that "[i]f a party has been fully heard on an issue during a jury trial and the court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue," the court may: (A) resolve that issue against the party; and (B) grant a motion for judgment as a matter of law against the party on a claim or defense that, under the controlling law, can be maintained or defeated only with a favorable finding on that issue.In diversity cases, when a Rule 50 motion for judgment as a matter of law is based on a challenge to the sufficiency of the evidence, the Court applies the standard of review used by the courts of the state whose substantive law governs the action. Betts v. Costco Wholesale Corporation, 558 F.3d 461, 466 (6th Cir. 2009). It is undisputed that Michigan law governs the claims in this action. "Michigan courts use the terms `directed verdict' and `judgment notwithstanding the verdict' rather than judgment as a matter of law." Brocklehurst v. PPG Indus., Inc., 123 F.3d 890, 894 n. 3 (6th Cir. 1997). A directed verdict may be granted only if, after viewing the evidence in the light most favorable to the party opposing the directed verdict, reasonable minds could not differ on any question of material fact. Betts, 558 F.3d at 467.
ANALYSIS
I. Based Upon The Evidence Presented At Trial, The Jury Would Not Have A Legally Sufficient Evidentiary Basis To Find A Contract Between Plaintiff And Defendant.
In its Rule 50 Motion, Defendant challenges Plaintiff's contract claims on numerous grounds. As set forth below, the Court shall grant Defendant's Rule 50 Motion as to Plaintiff's contract claims because, even when the evidence presented at trial is viewed in the light most favorable to Plaintiff, the jury would not have a legally sufficient evidentiary basis to find a contract between Plaintiff and Defendant under Michigan law.
As the parties agree, under Michigan law, in order to form a contract there must be a "meeting of the minds" between the parties on all essential terms of the contract. Whether there has been a meeting of the minds is "judged by an objective standard, looking to the express words of the parties and their visible acts, not their subjective states of mind." Kamalnath v. Mercy Memorial Hospital, Corp., 194 Mich.App. 543, 548 (1992).
As explained below, the Court agrees with Defendant that there was insufficient evidence presented at trial to establish that the parties had a meeting of the minds as to the essential terms of the alleged contract.
A. Plaintiff Has Presented Insufficient Evidence To Establish That There Was A Meeting Of The Minds As To The Parties To The Alleged Contract.
Defendant asserts that there was insufficient evidence presented at trial to establish that the parties had a meeting of minds as to the parties to the alleged contract.
Plaintiff alleges that its contract was with Defendant Petra'Lex USA, Inc., and Stafford testified at trial that it is his understanding that the contract was with Defendant Petra'Lex USA, Inc. Defendant contends, however, that "Stafford's testimony does not establish that understanding from the June, 2002 meeting when the contract was allegedly formed. There is no objective evidence, whether express words or acts by Sadosky, that Sadosky was representing Defendant, rather than PTX Textiles, Inc. or Petra'Lex S. de R.L." (Def.'s Br. at 2).
In response to Defendant's Rule 50 Motion, Plaintiff contends that "[t]here was an agreement on the parties as Mr. Stafford was representing Plaintiff at the meeting and Mr. Sadosky's business card indicated he was representing PetraLex USA, Inc." (Pl.'s Resp. Br. at 9-10).
Again, whether there has been a meeting of the minds is "judged by an objective standard, looking to the express words of the parties and their visible acts, not their subjective states of mind." Kamalnath v. Mercy Memorial Hospital, Corp., 194 Mich.App. at 548 (emphasis added). The Court agrees with Defendant that, the evidence presented at trial regarding the parties' express words and visible acts is insufficient to establish that there was a meeting of the minds as to the parties to the alleged contract.
Stafford testified that the first time he met Sadosky was on June 4, 2002. (6/22/10 Trial Tr. at 4-5). Stafford picked Sadosky up at the airport and they went to a meeting at Intier's headquarters in Farmington Hills, Michigan. ( Id. at 5). They met with Mr. Wolcox at Intier and had an hour or so meeting. During that meeting, Sadosky told Wolcox and Stafford that he had "this sewing plant in Honduras" that "employed like a thousand people. It was — I believe — 50,000 square feet." ( Id.) Stafford testified that Sadosky also talked about "his US company." ( Id.).
Neither party submitted any portions of the trial transcript to the Court. Attached as Ex. A to this Opinion Order is a rough copy of relevant portions of Mr. Stafford's testimony.
Intier was a prospective client.
Stafford testified that Sadosky also said something about having "an affiliate" in Shanghai. ( Id. at 7). Sadosky told Stafford that the affiliate in Shanghai "was essentially a company that bought and sold and marketed and developed textiles." ( Id.). Stafford testified that textiles are different than "cut and sew," which is a process where parts are put together. ( Id.).
Stafford testified that Sadosky provided a business card at the meeting at Intier that had "Petra Lex USA" on it along with his name and phone number. ( Id. at 8).
After leaving Intier, Stafford and Sadosky went to a restaurant in Farmington Hills to have lunch. It is at this lunch meeting that Plaintiff claims that Plaintiff and Defendant Petra'Lex USA, Inc. entered into the oral contract that is the subject of this litigation. Stafford testified that he "explained to him, you know, my interest in this company." ( Id. at 9) (emphasis added). Stafford testified:
any of his affiliates
Q. Okay. And at this point in time — this was in 2002? A. Yes. Q. Was Mr. Sadosky or doing business in the automotive industry? A. No, I asked him that question and he told me that, no, he had not done any business in the automotive industry at all. ( Id. at 9). They discussed selling in the automotive industry in general. Stafford told Sadosky that it was a very tough business and that, "if you come into this business, you're a non-entity, you have very low credibility, nobody knows who you are, you're a brand new person." ( Id.).Stafford testified that they had discussions about sales representatives in general and how they operate. ( Id. at 11). Stafford testified that he told Sadosky that "sales representatives usually work on the basis of representing a company" and that they are "paid on commission on sales that they bring into the company or on projects they develop." ( Id.).
Stafford further testified: a new company. his company I represent him. a new company this company. him I told him that I would be extremely interested in representing his company. his company had an advantage in its low-cost sewing. And what was your offer you made him? I his companies
During the meeting at Intier, Sadosky mentioned that he had a "sewing plant in Honduras," an apparent reference to Petra'Lex S. de R.L.
Thus, viewing Stafford's testimony in the light most favorable to Plaintiff, Sadosky presented a Petra'Lex business card at the meeting at Intier — not at the lunch meeting later that day. Stafford also testified that during that meeting at Intier on June 4, 2002, which occurred prior the lunch meeting, Sadosky discussed several companies that he had an interest in, including: 1) an unidentified "US company;" 2) a "sewing plant in Honduras;" 3) an "affiliate in Shanghai;" and 4) "Petra Lex USA." Thus, prior to the lunch meeting on June 4, 2002, all of these various companies had been discussed.
Notably, the express language that Stafford used to communicate his offer to Sadosky at the lunch meeting on June 4, 2002, did not include the name of a single company. That is, in making the alleged offer to Sadosky, Stafford did not indicate he was making the offer on behalf of Innotext or on his own behalf. More importantly, in making the alleged offer to Sadosky, Stafford never identified which of Sadosky's several companies he was offering to represent. In addition, Plaintiff has not identified any evidence to indicate that Sadosky accepted the offer on behalf of Petra'Lex USA, Inc., as opposed to Petra'Lex S. de R.L. or PTX Textiles, Inc.
Accordingly, the Court concludes that the evidence presented at trial, even when construed in the light most favorable to Plaintiff, is insufficient to establish that there was a meeting of the minds as to the parties to the alleged contract.
B. Plaintiff Has Presented Insufficient Evidence To Establish That There Was A Meeting Of The Minds As To The Subject Of The Contract.
In its Rule 50 Motion, Defendant also asserts that there is no evidence to establish that there was a meeting of the minds as to the alleged "relating to any sales opportunity brought to defendant" term.
During oral argument on Defendant's Rule 50 Motion, the Court asked Defense Counsel to articulate the contract that is alleged in this case. Plaintiff identified the alleged contract as follows:
The contract is that the plaintiff and defendant Petra Lex USA agreed that plaintiff would act as sales representative for Petralex USA. Petra Lex USA would pay 3 percent commission on all sales made by defendant or their affiliated companies to customers in the automotive industry relating to any sales opportunity brought to defendant by plaintiff for the life of the program. That's the agreement here. And that's the handshake agreement that was reached on June 4, 2002.
(6/28/10 Tr. at 16) (emphasis added). Plaintiff's assertion that Defendant agreed to pay him commissions on any "sales opportunity brought to defendant by plaintiff" is central to Plaintiff's case because in this action Plaintiff is seeking to recover commissions on sales orders that Plaintiff did not obtain.
Attached as Exhibit B to this Opinion Order is a rough copy of the transcript of the oral argument on June 28, 2010.
The Court asked Plaintiff's Counsel to identify the evidence presented at trial to establish that Sadosky agreed to the above alleged terms:
THE COURT: Hold on a second. Where is the evidence that Mr. Sadosky agreed to these terms?
MR. TOMLINSON: The evidence that Mr. Sadosky agreed to these terms was he stood up and shook hand with Mr. Stafford at the meeting at Cosi . . .
. . . .
THE COURT: What did Mr. Sadosky say or what evidence do you have that he agreed to that quote, unquote concept of opportunity such that your client would be owed a commission?
MR. TOMLINSON: He received the proposal that my client made at that meeting and extended his hand and said "we've got a deal" or "that's a good deal" or "that sounds like a good deal" and shook hands with my client.
(6/28/10 Tr. at 16-17 23).
Plaintiff has not directed this Court to any portion of Stafford's trial testimony wherein he testified that his offer to Sadosky on June 4, 2002, included that Plaintiff would be paid commissions on all sales made by Defendant to automotive customers "relating to any sales opportunity brought to defendant by plaintiff."
While Stafford did testify, during his direct examination, as to the offer he made to Sadosky on June 4, 2002, that testimony did not include discussion of this alleged term. ( See 6/22/10 Trial Tr. at 11). relating to any sales opportunity brought to defendant by plaintiff
Alleged Agreement Plaintiff Is Attempting Stafford's Testimony at Trial: To Establish: Petra Lex USA would pay 3 percent Q. And what was your offer you made commission on all sales made by defendant or him? their affiliated companies to customers in the A. I said to him that I would represent his automotive industry companies for three percent sales commission for the life of the parts or for the life of the program. (6/28/10 the life of the programs. And he Tr. at 16) (emphasis added). listened and said, — I think he kind of nodded and accepted what I told him. (6/22/10 Trial Tr. at 11). Moreover, even if Stafford had testified that he included the "relating to any sales opportunity brought to defendant by plaintiff" term in his alleged offer to Sadosky on June 4, 2002, there is no evidence to establish that the parties had a "meeting of the minds" as to the meaning of the amorphous concept of "bringing a sales opportunity" to Defendant without actually making a direct sale. Plaintiff did not present any evidence at trial to establish that Stafford and Sadosky had any discussion as to what a "sales opportunity" was, what it would mean to "bring" an opportunity to Defendant, or when such commissions would be due. Thus, there was no evidence presented to the jury that could establish that the parties had a meeting of the minds as to this key alleged term.Accordingly, Defendant is entitled to judgment as a matter of law on Plaintiff's contract claims.
II. Absent A Contract Between The Parties, Plaintiff Cannot Proceed On A Claim Under The SRCA.
As set forth above, the Court concludes that, based upon the evidence presented at trial, the jury would not have a legally sufficient evidentiary basis to find a contract between Plaintiff and Defendant and Defendant is entitled to judgment as a matter of law as Counts I III.
In light of that ruling, Plaintiff cannot proceed on a claim under Michigan's Sales Representatives Commission Act, § 600.2961 ("SRCA") under Count II. The SRCA does not create a new obligation or impose a duty to pay sales commission, and a principal who is not liable under the common law is not liable under the SRCA. Flynn v. Flint Coatings, Inc., 230 Mich.App. 633 (1998); see also Clark Brothers Sales Co. v. Dana Corp., 77 F.Supp.2d 837, 852 (E.D. Mich. 1999); Khurshat v. General Bearing Corp., 2007 WL 1018225 at * 11 (E.D. Mich. 2007). Rather, the statute merely changes the remedy for failure to pay sales commissions under an existing agreement. Thus, Defendant is entitled to judgment as a matter of law on Count II.
III. Absent A Contract Between The Parties, The "Procuring Cause Doctrine" Has No Application In This Case.
The Court notes that Count IV of Plaintiff's Amended Complaint is titled "Unjust Enrichment/Procuring Cause."
As Plaintiff recognizes, "[w]here a contract is silent regarding post-termination commissions, an agent may recover post-termination commissions by demonstrating that it is the procuring cause." (Pl.'s Resp. Br. at 17). In other words, the "procuring cause doctrine applies in cases where the parties have an existing contract governing the payment of sales commissions but the contract is silent regarding the payment of post-termination commissions." Warring v. Total Manufacturing Sys., Inc., 2007 WL 2257719 (Mich.App. 2007) (citing Reed v. Kurdziel, 352 Mich. 287, 294 (1958)); see also Leger v. Image Data Svs., 2002 WL 1463555 (Mich.App. 2002) ("[T]he procuring cause doctrine is but a subset of contract law, acting as a default rule for interpreting a contract that is silent regarding" post-termination commissions.). Thus, if there is no contract between Plaintiff and Defendant, the procuring cause doctrine has no application.
Accordingly, to the extent that Count IV seeks recovery of commissions under the procuring cause doctrine in the absence of a contract between the parties, the claim fails.
IV. Defendant Is Entitled To Judgment As A Matter Of Law On Plaintiff's Unjust Enrichment Claim.
The parties agree that the elements of a claim for unjust enrichment are: 1) the receipt of a benefit by the defendant from the plaintiff; and 2) an inequity resulting to the plaintiff because of the retention of the benefit by the defendant. Barber v. SMH (US), Inc., 202 Mich.App. 366, 375 (1993).
Defendant asserts that Plaintiff has provided no evidence that Defendant received or retained any benefit from Plaintiff. (Def.'s Br. at 8). Defendant asserts that the only alleged benefit received and retained by Defendant is sales commissions. It further asserts that "Plaintiff has proffered no evidence that Petra' Lex U.S.A., Inc., the only defendant in this case, ever received any revenues on sales." ( Id.). Defendant contends that it did not receive any revenues or commissions from sales on the programs at issue and "it could not have retained what it did not receive." ( Id.).
In response to Defendant's Rule 50 Motion, Plaintiff asserts that it was involved in soliciting the Under Cover Program "on behalf of Defendants [sic] right through the November, 2006 meeting when JCI announced that it had awarded the Under Cover Program to Defendant." (Pl.'s Resp. Br. at 19). Plaintiff further asserts that the "result of the successful solicitation is that Defendant has already sold more than $20 million worth of parts to JCI and has retained all of the benefit of those sales without compensating the Plaintiff for Plaintiff's solicitation efforts." ( Id.) (emphasis added). Thus, Plaintiff claims that Defendant was unjustly enriched with respect to sales made on the Under Cover Program.
Plaintiff's brief does not, however, respond to Defendant's argument that this claim fails because there is no evidence that Defendant Petra' Lex U.S.A., Inc. — the only Defendant in this action — received or retained any sales revenues or sales commissions on any of the programs at issue, including Under Covers. Thus, Plaintiff has not directed this Court to any evidence presented at trial that would establish that Defendant received or retained any sales revenue or sales commissions on Under Covers.
Although in its Response Brief Plaintiff asserts that the Under Cover Program was awarded to "Defendant" (i.e., Petralex USA, Inc.), in the Joint Final Pretrial Order, the parties stipulated that "[i]n November 2006, Johnson Controls awarded the Under Cover Program to Petralex S. de R.L." (Stipulation of Facts in Joint Final Pretrial Order, Docket Entry No. 53, at 11) (emphasis added).
Moreover, Sadosky testified at trial that Defendant has never received any money as a result of sales of Under Covers, Trem, or Grid Mesh.
Accordingly, to the extent that Plaintiff's unjust enrichment claim seeks to recover sales revenue or sales commissions "retained by Defendant," there was insufficient evidence presented at trial to support that claim. See Hershey v. Capital Realty Svs. Inc., 2009 WL 1163409 (E.D. Mich. 2009) (dismissing unjust enrichment claim where plaintiff sued an individual based on services provided to companies owned by that individual, and therefore there was no evidence the individual received a benefit from plaintiffs, noting that under Michigan law, there is a presumption that the corporate form will be respected).
In addition, although Plaintiff's response to Defendant's Rule 50 Motion does not indicate that Plaintiff is seeking an award for the "fair market value" of any services that were actually provided to Defendant (as opposed to Petra'Lex S. de R.L. or PTX Textiles, Inc.) the Court concludes that such a claim would also lack a sufficient evidentiary basis. Plaintiff presented no evidence at trial as to "fair market value" of such services, such as the hourly rate for such services in the relevant market, or any other evidence that would enable to the jury to make such an award without resort to sheer speculation.
Accordingly, the Court concludes that Defendant is entitled to judgment as a matter of law on Plaintiff's unjust enrichment claim.
CONCLUSION ORDER
For the reasons set forth above, IT IS ORDERED that Defendant's Rule 50 Motion for judgment as a matter of law is GRANTED and Plaintiff's claims are DISMISSED WITH PREJUDICE.
IT IS SO ORDERED.
June 22, 2010
(EXCERPT)
INNOTEXT V. PETRA'LEX JURY TRIAL
COLIN STAFFORD, PLAINTIFF'S WITNESS, SWORN DIRECT EXAMINATION (CONTINUED)
BY MR. TOMLINSON: Q . . . in business. Did you stay in contact with Mr. Sadosky? A Yes, I did. Q Did you alert him to any other opportunities in the automotive business? A Yes, I did. Q What's the next opportunity or major opportunity you can remember alerting him to? A As I told you, I was a skier, and I had a good friend who I skied with one day who was a sales representative at one time and we were talking because we hadn't seen each other for a while and he said, "Geez, you know, I've left Velcro," he used to be a sales rep for Velcro, "And I'm now the buyer for all the seat components for a company by the name of Intier," Intier was part of the Magna Corporation. And this is another company that had gotten into the seating business after the OAM's had gotten out of it. And so he said, "What are you doing?" I said, "Well, you know, I've developed this ski pole business and I have some companies I still represent that make textiles. And I said, "Oh, you know, I found this company down in Honduras that has this very low cost cut and sew operation," and he said, "Geez, we ought to talk about that because one of my projects at Intier is to find and develop low-cost sewing overseas. So we met later and talked this over and he said, "Yeah, I think, let's get this guy here in town and let's have a meeting and talk." Q Okay. And what sort of programs was he looking at at that point in time? A Well, they were looking at building the entire seat cover, and that involves, you know, the fabric and the vinyl pieces that you see in the car that you actually sit on. Q And when you had this discussion, what company did you have in mind? A I had Petralex USA and its sewing operation in Honduras. Q All right. And did you arrange a meeting between your contact at Intier and Mr. Sadosky? A Yes, I did. Q I'm going to show you what's been marked as Exhibit B. And I think it's been pre-admitted. MS.BOGAS: No objection. MR. TOMLINSON: Move for the admission. THE COURT: B is received. MR. TOMLINSON: Thank you. THE WITNESS: Could I just have a glass of water? MR. TOMLINSON: I think — yeah, I think that's fine. THE WITNESS: A little dry. Thank you. MS.BOGAS: Mr. Tomlinson, is there a way to show the entire exhibit, because I know that last one was not showing entirely on the screen. Or at least at some point during the presentation if the jury could see the entire exhibit, rather than just parts of it. Is that possible? Or you can move it up and down. MR. TOMLINSON: Yeah, we'll move it up and down during the discussion. MS.BOGAS: Just so the jury can see the entire exhibit. Thank you. MR. TOMLINSON: I'll move it up and down. It's two pages, right. Okay. Okay. All right. Can you read it? Okay. Let's move it forward. BY MR. TOMLINSON: Q Okay. Mr. Stafford, I'm asking you to take a look at Exhibit B, are those a series of e-mails in May of 2002 with respect to the opportunity you've just been testifying about? A Yes, that's correct. Q And the individual that you knew that had this opportunity, what was his name? A His name was Keith Wilcox (ph). Q All right. And the company he was with was Intier company? A Was Intier, yes. Q All right. In this series of e-mails, did you arrange for Mr. Sadosky to come in to town? A Yes, I did. Q And did you set up a meeting at Intier? A Yes, we did. Q And did Mr. Sadosky end up coming into town? A Yes, he did. Q And do you know when that happened? A It would have been Tuesday, June the 4th. Q Okay. And did you — had you met Mr. Sadosky before he came to town? A No. Q So that was the first time you met him? A Yes. Q And where did you actually meet him? A I picked him up at the airport. Q At metro? A Yes. Q And when you picked him up where did you go? A We went to Farmington Hills to where the Intier headquarters were. Q All right. And did you meet with anybody? A Yes, we met with Mr. Wilcox. Q Okay. A And had approximately an hour or so, maybe a little more than an hour of meeting. Q And did you discuss that project that Mr. Wilcox had talked to you about? A Yes, we did. We discussed that with Mr. Sadosky. Q Okay. What did Mr. Sadosky say in the meeting about his company? A Well, he told Mr. Wilcox and myself, you know, that he had this sewing plant in Honduras and that he employed like a thousand people. It was — I believe — 50,000 square feet. And told him that, you know, what he was actually doing right now. Q What did you tell him he was doing right now? A That most of the sewing he was doing was in garment and undergarment and apparel business. Explained how many sewing machines he had and so forth. And Mr. Wilcox was very interested in one phase of Mr. Sadosky's business and that was the logistics of how to get fabrics for cars, which were mainly all made in the United States, how were we going to get the fabrics from the U.S. to Honduras sewn together and get the parts back and distributed to the car plants. That, you know, that could be a logistics nightmare because you have shipping involved and containers. Q Okay? A And Mr. Sadosky gave Mr. Wilcox a very good presentation about that and the timing and I think Keith was impressed. Q Okay. Did he — during the course of the meeting, did Mr. Sadosky talk at all about his U.S. company? A Yes. Q Okay. And how long did that meeting last? A Approximately I think it was about an hour — also, one other thing that came up in the meeting was Mr. Wilcox also bought body cloth, textile fabrics, and the — and the issue of Mr. Sadosky's affiliate in Hong Kong — Q Hand on a second. So Mr. Sadosky said something about having an affiliate in Hong Kong? A Yeah. And — Q Hong Kong or China? A Oh, excuse me, in Shanghai. Q Okay? A Sorry about that. Mistaken. And Mr. Wilcox was pretty interested in that. Q What did Mr. Sadosky say about the affiliate in Shanghai? A That it was essentially a company that bought and sold and marketed and developed textiles. Q Okay. And textiles are different than cut and sew? A Yeah, cut and sew is a process where parts are put together. Textiles, you know, come in big rolls and you go into textile — fabric shop and those are rolls of textiles. Q Okay. And so they talked about the body cloth at this meeting also? A Yes, they did. Q Okay. A And Mr. Wilcox said, you know, "We would be interested in exploring what possibilities there are for making body cloth textiles in China. Q Okay? A And he mentioned that I should get together with a gentleman by the name of Mike Roy. Mike Roy was an old Fisher Body GM guy had known for 20 years an said, "Hey, Colin, you know Mike. See what we're looking for. See what you can come up with." Q Did Mr. Sadosky, did he provide either of you with a business card at this meeting? A Yes, that was kind of common practice. You know, you get to a meeting. Nobody knows each other and we all pass out cards. Q And what was his card? A Petralex USA and it had his name, Clemens address, phone number and — Q Okay. Now, after you left Intier, at the end of the meeting? A Yes. Q What did you do? A I think it was around 1:00 and we were hungry so we went and had lunch. Q Where did you have lunch? A At a restaurant in Farmington Hills called Cosi. Q All right. And at the meeting, did you have discussion with Mr. Sadosky at all? A Yes. Q And did you tell him about yourself at all? A Yeah, I continued to tell him about myself and, you know, what — expanded on the things I told him previously on the phone. Q Okay? A And explained to him, you know, my interest in this company. Q Okay. And at that point in time — this was in 2002? A Yes. Q Was Mr. Sadosky or any of his affiliates doing business in the automotive industry? A No. I asked him that question and he told that, no, he had not done any business in the automobile industry at all. Q Okay. And did you have any discussion with him about the automotive industry? A Yes. Q And selling to the automotive industry? A Yes. Q What did you tell him? A I told him that it was a very, very tough business. Q Did you talk to him about the timelines he might expect? A Yeah, I said, "You know, you're coming — if you come into this business, you're a nonentity, you have very low credibility, nobody knows who you are, you're a brand new person." I said, "It could be three to five years before you get any business. Q Okay? A And, you know, most of the suppliers needed to be put on an improved source list. There were a lot of requirements for that. I told him there was considerable amount of upfront costs in developing things like quality systems and communications and computers and software to handle the — THE COURT: Let's keep it in question and answer format. MR. TOMLINSON: Okay. BY MR. TOMLINSON: Q Did you have discussions with Mr. Sadosky about sales representatives and how they operate? A Yes, I did. Yes. Q What did you tell him about sales representatives? A Well, I told him that sales representatives usually work on the basis of representing a company. Q Did you talk about how they were paid at all? A We did talk about how they were paid. Q And what did you tell them? A They were paid on commission on sales that they bring into the company or on programs they develop. Q Okay. Did you have — did you talk about anything else about sales? For example, did you have any discussions with regard to the timing of payments? A Yes, we did. I told him that this is a new company. There was a considerable amount of time and effort and commitment on my part to get his company up and running in the automotive industry. It was a time where no sales commission would probably be generated, and that was my commitment to him, what was what I had to commit to if I wanted him — to represent him. And he understood that. Q Okay. Did you discuss any further with the timing? A Yeah, I told him that because as a sales representative for a new company, you have a lot of upstream costs, where, you know for three years you're developing a sales operation for this company. And so the downstream side of that would be that commissions were paid for the life of programs that the sales representative would bring in. And even sometimes for the life of the part, because I had programs and parts that I had with General Motors that lasted ten and twelve years. Q Okay. At the meeting did you make him an offer? A Yes, I did. Q What did you tell him? A I said — I told him that I would be extremely interested in representing his company. I thought that he had — as I said before, I like little niche markets, people have an advantage. I thought that his company had an advantage in its low-cost sewing. I thought that could generate a lot of business, because I had customers, obviously, in the meeting of that day, we had a customer who was looking for somebody to do that. Q And what was your offer you made to him? A I said to him that I would represent his companies for three percent sales commission for the life of the parts or the life of the programs. And he listened and said, — I think he kind of nodded and accepted what I told him. Q How did he accept? A And I said, you know — Q No. How did he accept? A Oh, he said to me, "That sounds like a good deal. Okay." And we had this handshake agreement. Q Did you shake his hand? A Yes. Q Okay. And based on the — based on your discussions, did you — THE COURT: Time out. I just need a break. Marie? (Brief pause in proceedings.) MR. TOMLINSON: Ready? THE COURT: Yes. BY MR. TOMLINSON: Q And based on your discussion, your handshake agreement, did you work to represent the Petralex then? A Yes, I did. Q Then you understood you'd be paid on commissions based on your meeting? A Yes, I did. Q And did you begin to try to find sales opportunities for Petralex? A Yes. I continued with my work with Intier. That was for cut and sew programs and also with automotive textiles. There were several other companies that I contacted and worked with to see if there was sewing jobs that they were interested in placing down there in Honduras. Q And based on your discussion at Cosi, if you brought an opportunity to Petralex or its affiliates, did you expect to get paid commissions? A I expected to be paid three percent commission, that's correct. Q Okay. Now, if you were not involved in bringing the opportunity to Petralex or the affiliates, would you get — you wouldn't get paid? A No. Q Okay. At the time you met at Cosi, where — was Innotext representing other companies? A Yes, they were — I mean, yes, I was. Q And who was Innotext representing at that time that you met with? A I was still representing the Neofiber, — Q Okay. A Fablock Mills, Ross Matthews Corporation, Jetty Q Jetty? A Jetty, Design Models. Q Okay. A A company by the name of Aberdeen Fabrics. They were in North Carolina. And a company by the name of Zepotta Corporation. Q All right. I'm going to show you what's been marked as Exhibit C. MS.BOGAS: No objection. THE COURT: All right. Exhibit C is received. BY MR. TOMLINSON: Q I think you said you kept working with Intier to find sales opportunities? A Yes. Q Okay. Was it just for the Honduren affiliate or was for anybody else that you sought opportunities? A Well, we were involved in the fabric end of it, which was really operated through the affiliate that was in Shanghai. Q Okay. The Chinese company? A The Chinese company, yes. Q Okay. A And that was run by a gentleman by the name of Simon Gin. Q Okay. And Exhibit C, is that — does this relate to one of the programs you were looking at for Intier? A Yes. Q What kind of program were you looking at there? A Well, you know, I believe I talked to Mr. Sadosky and told him that Intier had some seating operations in China — Q Okay. A — it was a joint venture and that I felt Simon should maybe try to contact these people because were going to build seats in China for I think it was — it might have been for the Buick. Q Okay. And so you were passing that information — A I was passing that information and I told him, you know, follow up on this and see what we can do with it. Q Okay. Okay. Were you — were there other sales opportunities other than Intier that you were bringing in to Petralex to take a look at? A Yeah, we did quote a job, a seat cover job to General Motors. Q Okay. And was that quote successful in getting that job? A No. Q Okay. Any other jobs that you were pursuing on behalf of Petralex or any of its affiliates? A I was involved in a company down in Hillsdale Michigan. Q What company was that? A Fairway Products. Sorry. Q That's okay. And were you — you brought in an opportunity to Petralex or its affiliates from Fairway? A Yes. Q What kind of program was that? A This was a relatively simple part. It was a set suspension that was sold to Ford Motor Company. Q When you say a simple part, what do you mean? A It involved die cutting out a rectangle of material and sewing these retainers on to the edges of it. Q Okay. And were you successful — when you brought that opportunity in, did the company get the business? A Yes, they did, yes. Q And were sales made to Fairway? A Yes, they were. Q All right. Did you receive some commissions on that? A Some. Q All right. When you got some commissions on Fairway, did you ever ask for any sort of backup documents to see — A Yes, I did, because there was a lot of confusion about what was shift and what wasn't. Q Okay. Now, at some point in time, did you become a aware that Petralex was hiring Jim Meek. A Yes. Q And I'm going to show you what's been marked as Exhibit B? MS.BOGAS: No objection. THE COURT: All right. Exhibit D is received. BY MR. TOMLINSON: many years. Before January 2, 2004, had you ever met Jim Meek? Q Exhibit B is an e-mail from Mr. Sadosky, a Simon Gin. It shows copy — I'm gonna ask you a question. It shows a copy of an e-mail copy sent to Colin Stafford and then there's an address of INTX at Prodigy.net; do you see that? A Yes. Q Do you see that in Exhibit B? A Yes. Q All right. What was that? A That was my e-mail address. Q Okay. At the time that was your e-mail address? A Yes. Q Okay. And Simon Gin, I think you said, was involved with the Chinese company, the Chinese affiliate? A Yes. Q And had you had discussions with Mr. Sadosky about the hiring of Jim Meek? A Yes. He called me and talked to me about, you know, that he was thinking of doing that. Q Okay. When did he call you? This is dated June 11 — A No, I think he actually called me before that on the telephone and talked to me about it. Q Okay. That's dated January 2, 2004, the e-mail? A Yes, that's correct. Q Okay. And it announces Meek as the manager of Textile Automotive Products? A Yes, it does. Q All right. When you talked with Mr. Sadosky did he tell you that what effect this would have on your role as a sales representative? A Other than he expected Jim and I to work together. Q Okay. A You know, any automotive project that we could come up with. Q Okay. And there's reference in you in the third paragraph down, third paragraph down, is that a reference to Colin? A Yes, that reference is me. Q All right. It says. "Colin will continue to open doors for Petralex in this market." Is that what your role is as sales representative, opening doors? A Opening doors. Q And did you keep opening doors even though Jim Meek had been hired? A Yes. Q All right. And it talks about Jim and Colin had already known each other during their A You know, actually, I may have, but I'm not positive. But I'm almost certain I had not personally met him. Q Okay? A But I did know his name. Q So you had heard the name? A Yeah, I had heard his name around the industry, yes. Q Okay. And when you came in, did you and Jim begin working together on automotive — A Yes, we did. Q Okay. And did you have any objection to that? A No. Q Okay. Did Mr. Stafford(sic) ever tell you, well, since he brought in Jim Meek you weren't going to be the sales representative for Petralex and its affiliates? A No, he did not. Q Pardon me? A No, he did not. Q Let's talk about at some point in time did you begin working with Johnson Control at all on behalf of Petralex? A Yes. Q And what's the first thing you can remember doing at Johnson Control for Petralex? A The first thing I did at Johnson Control for Petralex was have a meeting with a gentleman by the name of Todd Vergin. Q Okay. And how did you come to meet with Todd Vergin. A Jim Meek had been on a trip to China and had brought a series of automotive samples from various textile mills. Okay. And he gave me this box and said, you know, "See what you can find out with this. What you can do with it. Maybe we can sell some of these things." Q And did you take — did you take the sample to Johnson Controls? A Yes. Q How is it — how is it you knew to go to Todd Vergin at Johnson Controls? A Well, there was a gentleman there that I had worked with in the past and I knew that he — Q What was his name? A Carl Trosen (ph). Q And what was his job at Johnson Controls? A He was an engineer in the seating group. Q Okay? A And I had worked with him in the past on materials. Q Not involving Petralex? A No. Way before that. Q Okay? A And I called him, told him what I had and I said, you know, "Where do you think I ought to start?" And he said, "Well, I think you maybe should contact Todd Vergin." Q And did you contact Todd Vergin? A Yes, I did. Q And did you meet Mr. Vergin? A Yes. Q All right. And what did you talk about with Mr. Vergin during your meeting? A Generally the box of samples we had. Q All right. And I'm going to show you — after you talked to Vergin, what did you do next? A I called Jim Meek and told him that I had this meeting and that he had interest in some of the materials that were in this container. Q All right. And did you tell him what materials that Todd Vergin had expressed an interest in? A Not at that time, no. Q Did you have follow up meetings with anybody at Johnson Control, follow up contact from anyone at Johnson Control? A Yes. MR. TOMLINSON: I'm going to show you what's been marked as Exhibit E. MS.BOGAS: No objection. THE COURT: All right. Exhibit E is received. BY MR. TOMLINSON: Q Now, we're showing Exhibit E, which is an e-mail dated May 19th, 2005 from Teresa Stanek to INTX, that's your e-mail — A That was my e-mail address at that time, yes. Q Had you ever met Teresa Stanek before you got this e-mail? A No, I have not. Q Had you ever heard her name? A No. Q Okay. She said she got your business card from Todd Vergin? A That's correct. Q That's the fella you just testified you went and met with the samples? A Yes. Q All right. And she's talking about thank you for sending the mesh samples, what does that mean? What was that? A That was one of the pieces of material that was in this container and it looked like a woven mesh material. Q Okay. And you got Exhibit E, what did you do with it? A I called Mr. Meek and told him that, you know, we have received an inquiry on this material called the grid mesh. Q Okay. A Which was actually something they had been working on for quite some time and hadn't really solved any problem — solved the problem of what they were going to use it for. And so Teresa Stank said, "I'm going to send you a quote," which is a letter, quote letter and, you know, if you look and they're talking about 10 million pieces, that's a lot of parts. Q Okay. What — and what's a quote? A A quote is a request for quote, and that's something you would receive from a purchasing agent that asks you to price out what they request. Q Okay. A That's called generally a RFQ. (END OF EXCERPT)MS. CROSON: Thank you, Your Honor, and I'll try to go slow but if I get a little bit fast, please let me know.
THE COURT: Sure.
MS. CROSON: Your Honor, we move for judgment as a matter of law pursuant to Rule 50(a) basically on all of plaintiff's claims. Regarding the Fairway transaction, Your Honor, there's absolutely no evidence in the record that 1 million sales were ever made. There's speculation that 1 million sales were made but there's simply no evidence proffered by plaintiff that 1 million sales were made and that any commission was owing on that program.
In terms of the NPNW, what plaintiff calls of the duon replacement, there's absolutely no evidence in the record that the fabric NPNW that Mr. Stafford was involved in — his last involvement being September of 2007 — is in fact the trem fabric that was starting to be sold over a year and a half later. There's a failure of evidence of both of those programs.
Now, looking at the contract itself, the allegation that there's a breach of contract between these parties, there's of course the plaintiff's burden to prove that there is a contract and prove all of the essential terms of that contract and show that there was a meeting of the minds on all those essential terms. There was no meeting of the minds on the essential terms of the alleged contract. Who did plaintiff contract with?
He said unequivocally in his testimony that he contracted with Petralex USA, but when he keeps account of meeting with Mr. Sadosky, who as we've heard time and time again has connections to other corporations, PTX Textiles Inc. and Petralex SDRL referring do jury trial as Petralex Honduras, there is no evidence that what they discussed was an agreement between Petralex USA, the only defendant in this case, and Innotext, the plaintiff in this case. There is simply a complete lack of discussion on that point.
Also, the course of conduct between the parties doesn't establish a contract because there was never any money paid by Petralex USA, the defendant in this case, for any sales that Innotext did bring, for example, on the Fairway program. There's no evidence that Petralex USA made payments under a contract.
As to the 3 percent commission, although Mr. Stafford testified that there was a 3 percent commission, there's no evidence of a meeting of the minds, because at every opportunity where that 3 percent commission should have been paid or could have been paid, it was not paid.
On the Fairway project there was supposedly a 3 percent commission due in 2005. It wasn't paid. Mr. Stafford didn't demand payment of that 3 percent commission. He didn't send a letter saying "I'm going to sue you if you don't pay me." He didn't do anything. So there is no meeting of the minds on the 3 percent commission.
The sample orders. Mr. Sanford says that he's due money on the simple orders. Now, the grid mesh program there is absolutely no evidence in the that any money was paid on the grid mesh. Mr. Stafford — Mr. Sadosky testified that he doesn't know if those payments were made. There's no evidence in the record that payments were made for the sample orders.
But there's also no meeting of the minds on payment on sample orders. There were samples given on undercovers. There were samples given on the NPNW. Mr. Stafford was never paid for those sample orders and he didn't demand payment. He doesn't demand payment today. Again, no meeting of the minds regarding payment on sample orders.
Further, there's no meeting of the minds that this was an exclusive contract as Mr. Stafford alleged in his complaint. It's very clear that this was — if there was a sales representative contract — and we don't admit there was — then it certainly was not an exclusive contract.
Mr. Stafford unequivocally testified during trial that Mr. Meeks was brought on to work on auto programs, that they were to work hand-in-hand, that they were to work in conjunction with each other, and that he was fine with that. He had no problem with that. They continued to work hand in hand.
On NPNW specifically, Mr. Stafford testified he worked with Jim Meeks. Jim Meeks attended meetings and production trails and he and Jim Meeks worked hand-in-hand. And that JCI asked Mr. Stafford, Jim Meeks and Petralex to look into the NPNW program together.
On the undercovers, there's a plethora of evidence that Mr. Meeks and Mr. Stafford worked on the program at least at the same time. Perhaps not doing the same things, but at least were working on the same program, so it not an exclusive arrangement. Where it's not an exclusive arrangement, the manufacturer — the manufacturer's rep in this case Jim Meeks — are perfectly free to compete with any other manufacturer's rep. In this case the alleged manufacture's rep, Innotext and Mr. Stafford.
It's a tenet of Michigan law that they can compete with each other and should someone, whoever ends up bringing the business ends up having made the sale and getting the commission.
Now on that point, what is supposedly in this alleged contract? Mr. Stafford testified unequivocally in trial that as a sales representative his job was to — he would be paid commissions on sales he brought to defendant for programs he developed for defendant. There is no evidence in this record that plaintiff ever brought sales to defendant on undercovers, NPNW or trem. We know for a fact the trem program didn't even start sales until a year and a half after Mr. Stafford was terminated.
There is no evidence other than his assertion that Mr. Sadosky identified a fabric in 2007 as it was going to be known as trem. There's no evidence that that fabric in 2007 is the same fabric that is being sold today. There is no purchase orders, there are no sales receipts on any of these programs for which he claims commissions. That's undercovers, NPNW, trem, grid mesh or Fairway. Any connection to actual sales of these parts and programs is completely missing.
As for bringing the programs, plaintiff admitted that if he was not involved in bringing an opportunity to defendant, he would not get paid. Opportunity can only mean sales opportunities, the opportunity to sell. Plaintiff did not bring an opportunity to sell to defendant.
Stafford also admitted that defendant needed purchase order or purchase order number in order to get paid. Again there's no evidence that he ever obtained any of that for defendant.
Stafford testified to get paid you have to discovery, you have to develop and you have to sell. He also admitted regarding Exhibit P proffered by defendant in this case, Jim Meeks told him we need you to make a sale, we need you to move a project across the finish line. And Mr. Stafford testified it meant that he needed to move undercovers or any other program to a purchase order, which he didn't do.
A lot of Mr. Stafford's case has to do with this June 2005 RFQ submitted to him by Tess Stanek, who of course, Mr. Stafford also testified it didn't matter to whom the purchase order went. Why? Because he and Jim Meek were working hand-in-hand on the undercover product. They were working together. It didn't matter who go it. So that's not the definitive bringing the opportunity to defendant.
But it's also undisputed that this June 2005 RFQ didn't bring a single sales to anybody. Didn't bring it to defendant. It didn't bring it to Petralex SDRL. It didn't bring it to PTX Textiles. Why, because it also undisputed that the undercover program was canceled in April 2006. No sales. Mr. Stafford testified that the purpose — and this was simply development process. All right. The quote that was developed in response to the June 2005 RFQ according to Mr. Stafford was not designed to obtain business and in fact did not obtain any business. And as of April 2006 as evidenced by Exhibit Five introduced by defendant, undercovers were dead.
Now JCI did reopen the undercover program with defendant USA about it, but it said it sent the reopening of it to Mr. Meeks and to Mr. Stafford, which is consistent with past behavior. That they both had been working on it.
But at this point this is where Mr. Stafford called the opportunity that he brought on undercovers. This is the opportunity, what Mr. Stafford defined as what JCI gives to a supplier to make sales. It was at this point he said that the sales opportunity — that's the sales opportunity obtained on undercovers.
But he didn't obtain it. It was sent to him, it was sent to Jim Meeks. There is no evidence that he actually closed — once this sales opportunity was here, there is no evidence that he actually closed it. He talked about Accumark files, he talked about Gerber, he talked about DXF files, but none of this, Your Honor, none of his activity he's testified to was any negotiations with JCI. Has context with JCI were limited to basically Scott Buck. This guy is an engineer. Scott Buck testified he had nothing to do with whether defendant or Petralex SDRL or PTX Textiles, were ever named as a supplier for JCI. What Mr. Stafford did was act as sometimes a conduit for information. He would take information from JCI and give it back to defendant USA. Sometimes at defendant USA's request, but most often not at defendant USA's request.
But nothing he did shows that he was negotiating with JCI at any time for the sale of any products or the securing of any program for defendant USA.
He testified all of the quotes were given by Jim Meek — in presentations by Jim Meek to JCI. It was Jim Meek who went to the meetings. It was Jim Meek who made the presentations. The plaintiff's evidence is simply insufficient to show that Innotext obtained the sales and opportunities on undercovers for defendant, as plaintiff himself admitted he needed to do to get commissions under his alleged conduct.
The same is true, NPNW, although initially sales of NPNW were made, we know that those rolls were all returned. It's uncontroverted that those sales were never finalized and never actually made because the fabric tore and all the fabric had to be returned. And Mr. Stafford admits he's not seeking commissions for those canceled sales.
The last involvement as I went through a little bit was plaintiff had with NPNW was September 2007 at a trem trial in Bridgewater. Mr. Stafford admits that he was terminated in September — in 2007, November 2007 and thereafter he had no more contact — he did no more selling of products, no more servicing of accounts, no more obtaining of business. He was done as of that point.
Which brings us Your Honor to Procuring Cause Doctrine. Under Michigan law, it's clear, that the Procuring Cause Doctrine, an alternative to the breach of contract claim, protects procurement of sales, not procurement of customer. Which Mr. Stafford admitted he had no agreement to procure customers, but he had an alleged agreement to procure a sales parts.
But it doesn't matter because a procuring cause doesn't protect customers. It protects actual sales. And as plaintiff says in his complaint, after defendant's terminated Innotext, they realized continuing revenues on the orders for which Innotext was a procuring cause. But there's no order here. There's no orders that plaintiff can point to and say, Yeah, I was a procuring cause on that order. He points to some sort of generalize, I was a procuring cause of the program. But again, the evidence as was clear in the breach of contract claim, he simply is not the but for approximate cause of those programs or those sales going to defendant or any of the other companies that we've talked about during his trial.
Mr. Stafford and admitted he did not negotiate prices, he did not negotiate quantity, he did not negotiate delivery, he did not negotiate blanket purchase orders, and he did not negotiate any further negotiations of sales. He testified that there's a blanket purchase order for parts and that those blanket purchase orders are then re-negotiated as time goes on. He admits he didn't do any of that.
So even if, for example, Your Honor, one were to find he was a procuring cause of the initial sales prior to his termination, his no cause of action for subsequent sales. It is well settled in Michigan law, Your Honor, that if there is a break in — let's say negotiations break off first of all. Once the negotiations, there's a break in negotiations and there's a second set of negotiations, that in order for it to be procuring cause, the sales rep has to negotiate both parts of those. He can't just negotiate the first part, sit back on his laurels and the second part goes to conclusion and he gets what he gets. In both NPNW, Your Honor, and in undercover, there was that a break. All right. The break in undercovers came in April 2006. From that point forward Mr. Stafford, Innotext's involvement in undercovers was marginal at best, and as Mr. Sadosky testified it wasn't helpful. It didn't move the program to completion in Mr. Stafford's own words.
The break in the NPNW came at the time when the NPNW contract was canceled. We're not going to use it. Which was right around the time or a little bit after Mr. Stafford was terminated. He admits he doesn't know what happened on NPNW. He doesn't know if NPNW was trem. He doesn't know if renegotiations took place. He assumed they did. He assumed that accounts needed to be serviced, but he doesn't know, because he wasn't there to do it.
He also admits that the only purchase order he ever obtained on NPNW was for prototypes. None of these programs, not a single program did he negotiate prices, quantity, delivery, purchase orders, any of that either prior to or after his termination.
Now, unjust enrichment, Your Honor, two elements to the claim of unjust enrichment. Receipt of a benefit by the defendant from the plaintiff and (2) an inequity resulting to plaintiff because of the retention of the benefit by defendant.
What's the benefits given, allegedly given to defendant Petralex USA here? That benefit is defined by plaintiff in his complaint and not contravented by anything given at trial is that defendant obtained revenues, revenues on orders, sales and orders for which plaintiff and Mr. Stafford was a procuring cause. All right. The benefit to them is the revenues.
The only other benefit could possibly be is the complaint concludes by stating defendants will be unjustly enriched if they are allowed the continuing benefit of Innotext services without paying commissions as reasonable compensation for said services. So it's either the retention of the profits of the sales or retention of the commissions that should've gone to Mr. Stafford.
The only evidence in this record of any money that went to defendant USA is a $40,000 sales and service fee that it received from his principals Petralex SDRL and PTX Textiles. There is absolutely no evidence on this record that any money at all from sales of any of these programs went to defendant or the defendant has retained any commissions due to Mr. Stafford. $40,000 a month, that is the only evidence of any money that went to them in this record.
THE COURT: Okay.
MS. CROSON: And one final thing I would point out, Your Honor, is Exhibit 64 submitted by defendant in this case, is Mr. Stafford's admission that there was no contract in this case. Exhibit 64, just to refresh your recollection, Your Honor, is Mr. Stafford's e-mail to Mr. Meek that says we need to get the prices, the quantities, the commissions moving forward on this case.
In sum, Your Honor, plaintiff has sued the wrong entity on every single count in his complaint. Petralex USA is uncontradicted testimony in this case that it is a sales and service representative for principals who are manufacturers and procurers of parts and fabrics. Those are the people — those are the people on which if Mr. Stafford did any work at all and we contend he did very little — if did any work at all, he did it on behalf of the actual manufacturers and procurers and not sales rep defendant Petralex USA Inc.
THE COURT: Thank you very much. Mr. Tomlinson.
What's the contract?
MR. TOMLINSON: The contract is that the plaintiff and defendant Petralex USA agreed that plaintiff would act as sales representative for Petralex USA. Petralex USA would pay 3 percent commissions on all sales made by defendant or their affiliated companies to customers in the automotive industry relating to any sales opportunity brought to defendant by plaintiff for the life of the program. That's the agreement here. And that's the handshake agreement that was reached on June 4th, 2002.
THE COURT: Hold on a second.
Where is the evidence that Mr. Sadosky agreed to these terms?
MR. TOMLINSON: The evidence that Mr. Sadosky agreed to these terms was he stood up and shook hands with Mr. Stafford at the meeting at Cosi and —
THE COURT: Where's the evidence that he stood up and shook hands?
MR. TOMLINSON: He shook hands with him and said that's the deal, or words to that effect. That was the evidence in the case. It's also in Exhibit —
THE COURT: What words did he use?
MR. TOMLINSON: I believe "that's the deal" or "sounds like a good deal to me" and shook hands. Those are the words that he used. Those are also — the agreement is also evidenced by Exhibit 4M in the case which is one of the exhibits. As well as — we read Ms. Bogus's question and Mr. Stafford's answer at page 68 of his deposition into the record in rehabilitating some of the attempted impeachment in the case. That's the agreement that was reached. That's the hand shake agreement was reached. And that's what these party proceeded under.
The evidence is clear that Mr. Stafford is the one who brought in the initial opportunity on the undercover program, he met with Teresa Stanek long before Jim Meek ever knew Teresa Stanek.
THE COURT: What are the damages?
MR. TOMLINSON: The damages are under the contract, it's the sales —
THE COURT: I mean, what are the damages.
MR. TOMLINSON: The damages are at the sales —
THE COURT: Specifically.
MR. TOMLINSON: Mr. Sadosky testified to them and his direct examination. There were $3 million of sales made in 2007 on the undercover program. There were $8 million made in 2007. $7.3 million in 2008. I forget what — I have the exact number written down in 2009. And 500 — or $3.8 million dollars —
THE COURT: So you're only claiming damages as to the undercover program?
MR. TOMLINSON: No. The undercover is one of the programs that we're claiming damages to. The other program is the duon replacement program.
THE COURT: So what were damages on that one?
MR. TOMLINSON: $50,000 a month beginningin December 2008 and continuing through the present date. And continuing for the life of the program. So those are the damages.
THE COURT: What exactly was your client supposed to do under this quote, unquote contract?
MR. TOMLINSON: My client was supposed to bring in sales opportunities.
THE COURT: What is that?
MR. TOMLINSON: A sales opportunity is anything that you bring in to make — that ends up resulting in sales for your customer.
THE COURT: What is that? Anything, what is that?
MR. TOMLINSON: Sometimes it's a request for quote like in the undercover —
THE COURT: Is that picking up and making a phone call.
MR. TOMLINSON: If you make a phone call at the request for quote comes in as a result of your effort, yes. Under this contract, that's what he was supposed to do. And then he was supposed to do whatever his principal wants him to do in following up the contract, which in this case was working from 2005 through November 2006 when the program was awarded to these folks.
THE COURT: How does the —
MR. TOMLINSON: He was there each and every step of the way. Mr. Sadosky testified the business was awarded in November of `06 and that's one place where my client and he agree.
THE COURT: What is an opportunity?
MR. TOMLINSON: There was testimony on the record. An opportunity as an opportunity to sell —
THE COURT: I've been here. What is an opportunity?
MR. TOMLINSON: An opportunity can include a request for quote in some cases. In some cases it's, hey, we've got a need for —
THE COURT: What is your client —
MR. TOMLINSON: Judge, you're asking me questions and now you're not going to let me answer them.
THE COURT: At what point and how is there an obligation to pay a commission to your client.
MR. TOMLINSON: If he brought the opportunity in and if subsequently sales were made by Petralex USA or any of its affiliates in such an auto program and for the life of the program.
THE COURT: Well, what is opportunity?
MR. TOMLINSON: I've tried to answer that, but you keep cutting me off in what my answer is —
THE COURT: Excuse me, sir, I'm not.
MR. TOMLINSON: An opportunity —
THE COURT: See again, you just cut me off.
MR. TOMLINSON: I apologize, Your Honor.
THE COURT: Just answer the question I posed to.
MR. TOMLINSON: An opportunity as any opportunity presented by a customer with respect to the potential purchase of goods. In this case —
THE COURT: Any opportunity. What is that?
MR. TOMLINSON: In this case as it relates to this case it is I find out as a sales rep that the customer Johnson Controls is looking to potentially transfer all of their business for the undercover program from Greenfield Ohio to a low-cost foreign producer. That's the opportunity that Colin Stafford brought in. He brought it in in terms of an initial meeting and request for quotation from Teresa Stanek.
THE COURT: Hold that thought. And where, when, how?
MR. TOMLINSON: May of `05.
THE COURT: Excuse me. You cut me off again.
MR. TOMLINSON: I thought you were done with your question.
THE COURT: I wasn't donw with my question. Where, when, how did the defendants agree to that concept of opportunity such that your client was owed a commission — or would be owed a commission?
MR. TOMLINSON: At the June 4, 2002 meeting.
THE COURT: How was that done again.
MR. TOMLINSON: That was done by Mr. —
THE COURT: What did Mr. Sadosky say or what evidence do you have that he agreed to that that quote, unquote concept of opportunity such that your client would be owed a commission?
MR. TOMLINSON: He received the proposal that my client made at that meeting and extended his hand and said "we've got a deal" or "that's a good deal" or "that sounds like a good deal" and shook hands with my client.
THE COURT: Listen to this question. How do you determine if he brought an opportunity to the defendant? How do you determine that?
MR. TOMLINSON: By looking at the facts that occurred and on the undercover recognizing that he's the one who learned of the opportunity through a series of meetings with Todd Vergin to Teresa Stanek, followed up on those, sold his principal and advised that the buyer —
THE COURT: So what event — and I think you may be dealing with this issue right now. What event marks when he, quote, brought and opportunity?
MR. TOMLINSON: When he sat down with Teresa Stanek in that very first meeting he had with her in May of 2005, and Teresa talked about the Greenfield undercover program, looking for replacement low cost supplier.
THE COURT: What event — if I'm defended how do I know that your client has brought an opportunity. What event, how to measure that?
MR. TOMLINSON: You can measure by the testimony in this case which is attached to it —
THE COURT: It's up to you to answer these questions. Go ahead.
MR. TOMLINSON: How you measure it is by the reaction —
THE COURT: How does the defendant measure it?
MR. TOMLINSON: The defendant measured it, because when Colin Stafford contacted Meek, told him of the meeting and the opportunity, Meek told him "great job bringing in the opportunity" and told him that on a couple of the occasions while they were pursuing the program. That's how. Jim Meek —
THE COURT: Where was that in the record that he said great job?
MR. TOMLINSON: During Mr. Stafford's testimony.
THE COURT: I'll have to look in my notes again.
MR. TOMLINSON: On a couple of occasions there was that interchange between Mr. Meeks and Mr. Stafford. And from that initial opportunity that was brought in — from that opportunity that led to test quote to determine viability. The next time the opportunity was brought by Mr. Stafford was in June of 2006 after a short hiatus in the program when Ken Hendrickson in Exhibit T wrote to Mr. Stanford saying "I want the details on PTX Corporation." That was the second time he brought in the opportunity on the undercover program.
Exhibite T to Mr. Stafford saying "give me the details on your principal." Mr. Stafford contacted him, contacted Meek, brought the two together, began the next series of quotes. Culminating between June and November 1st, the business is awarded, the undercover business was awarded to Petralex.
THE COURT: I'm not sure you answered my question.
Ms. Croson, you're going to be filing a brief?
MS. CROSON: Yes, sir.
THE COURT: And when do you anticipate doing that?
MS. CROSON: Your Honor, if I can file that tomorrow that would be the best for me, but I can do it today if the Court would like.
THE COURT: When do we think the trial is going to be done?
MS. BOGAS: I probably only have two witnesses, it could be done tomorrow or the next day. Certainly by Wednesday.
THE COURT: I'm just trying to gauge things.
MS. BOGAS: I would certainly think by Wednesday. I know Ms. Croson has a rough draft of the brief already done, so she'll do the best to get it to you.
THE COURT: Probably the best for you is to file it tomorrow?
MS. CROSON: Yes, Your Honor, I can do that.
THE COURT: I'm trying to work with everybody. Can you get it done by tomorrow?
BY MS. CROSON: Yes, Your Honor, I can have it done by tomorrow.