Opinion
Case No.: 99-70112
February 13, 2002
MEMORANDUM OPINION AND ORDER
I. FACTS
On or about September 22, 1999, the parties to this action entered into a Settlement Agreement ("Agreement") whereby Defendant, Certified Tool Manufacturing Corporation ("Defendant" or "Certified") agreed to continue to pay Plaintiff MLW Associates Incorporated ("Plaintiff" or "MLW") a "commission fee equal to three and one-quarter percent (3.25%) of `net sales by Certified' as the term `net sales' has been defined and adopted by the parties by their past actions, of the parts identified on Exhibit A hereto (the `Parts'), any successor part to a Part (also a `Part'), and/or any other part number identifying a Part (also a `Part'), the sale of which was procured by MLW, payable as hereinafter set forth." See Pl.'s Mot. for an Order to Enforce Settlement Agreement, Ex. A, at 2, ¶ 1 (hereinafter referred to as "Pl.'s Mot.").
Plaintiff alleges that, "[i]n violation of its commission payment obligations under the Agreement, Certified has failed to pay MLW commissions on all three categories of parts described above." Pl.'s Brief in Support of its Motion for an Order to Enforce Settlement Agreement, at 1 (hereinafter referred to as "Pl.'s Br."). Specifically, Plaintiff claims that Defendant has underpaid commissions on the Parts listed in Exhibit A and has filed the present motion to recover $45, 299.00. Plaintiff also requests that this Court order Certified to provide MLW with additional documentation to allow MLW to make an accurate determination as to whether it was the procuring cause of Certified's sale(s) of those parts and determine the amount of unpaid commissions due MLW.
Plaintiff has attached Exhibits B, C and D to its Brief in Support of its Motion for an Order to Enforce Settlement Agreement. Exhibit B is a list of part numbers identifying parts listed on Exhibit A to the Agreement and/or their successor parts presently in production. See Pl.'s Mot. at 2, ¶ 5. Exhibit C purports to be a list of part numbers identifying parts, the sale of which were procured by MLW on behalf of Certified presently in production. Id. at ¶ 6. Exhibit D is a list of part numbers, the sale of which MLW believes to have been procured by MLW on behalf of Certified and which are presently in production. Id. at ¶ 7. Plaintiff states that it "has been unable to accurately determine whether it was the procuring cause of the sale of the parts listed on Exhibit D because Certified has failed to provide, and/or make available to MLW the necessary documentation as set forth in the Agreement." Id.
MLW alternatively requests that this Court grant it an evidentiary hearing to allow it to provide additional proofs relating to the sale of the parts identified and listed in Exhibits B and C, and to determine whether the parts identified and listed on Exhibit D are parts, the sale of which were procured by MLW on behalf of Certified. Pl.'s Br. at 2. For the following reasons, this Court DENIES Plaintiffs motion in its entirety.
II. STANDARD OF REVIEW
A federal court possesses the inherent power to enforce an agreement in settlement of litigation pending before it. Therma-Scan, Inc. v. Thermoscan, Inc., 217 F.3d 414, 419 (6th Cir. 2000). This power exists whether or not the agreement has been reduced to writing. Id. Here, the Agreement is in writing, and both parties agree that this Court has jurisdiction to entertain the instant motion.
III. ANALYSIS
The Agreement in this case states that Michigan law governs its interpretation. See Agreement at ¶ 10. Under Michigan law, an agreement to settle a pending lawsuit is a contract and is to be governed by the legal principles applicable to the construction and interpretation of contracts. See Michigan Mut Ins. Co. v. Indiana Ins. Co., 637 N.W.2d 232, 235, 247 Mich. App. 480, 484 (2001). Both parties argue that the language of Paragraph 1 is plain and unambiguous. See Pl.'s Reply Br. at 1 ("The Settlement Agreement unambiguously provides, . . ."); see also Def's Resp. Br. at 9 ("[U]nder the plain language of the Settlement Agreement . . ."). This Court agrees.
Paragraph 1 states, in pertinent part, that "Certified shall continue to pay MLW a commission fee equal to three and one-quarter percent (3.25%) of "net sales by Certified' as the term `net sales' has been defined and adopted by the parties by their past actions, of the parts identified on Exhibit A hereto (the `Parts'), any successor part to a Part (also a `Part'), and/or any other part number identifying a Part (also a `Part'), the sale of which was procured by MLW, payable as hereinafter set forth." Agreement at ¶ 1. "Part" is initially defined in the Agreement as all parts identified on Exhibit A. The Agreement further states that any successor part to a Part is also a Part. Finally, the Agreement provides that any other part number identifying a Part, the sale of which was procured by MLW, is a Part. Id.
MLW characterizes the third type of commission-eligible part as "any other part number identifying a part, the sale of which was procured by MLW on behalf of Certified." See Pl.'s Mot. at 1, ¶ 3 (emphasis added). However, this characterization rewrites the definition of Part by including therein all parts for which a sale was procured by MLW on Certified's behalf As Defendant notes, such an interpretation renders the first two prongs of the definition superfluous "because the parts encompassed by the first and second prongs would be subsets of those encompassed by the third prong and subsumed thereby." See Def's Resp. Br. at 11. If Parts is defined as any part number identifying a part the sale of which was procured by MLW on behalf of Certified, then all parts for which a sale was procured by MLW on Certified's behalf, including those listed on Exhibit A, would be Parts under prong three of the definition of Parts under Paragraph 1 of the Agreement. The plain language of the Agreement does not support that interpretation.
Stating Plaintiffs interpretation of Part another way, MLW is entitled to commission payments for all part numbers identifying a part that was procured by MLW on behalf of Certified. It is undisputed that every part number on Exhibit A to the Agreement designates a part "procured by MLW on behalf of Certified." Assuming the validity of Plaintiffs definition, therefore, these part numbers would be Parts under both the first and third prongs of the definition. The parts would be Parts under the first prong because they are listed on Exhibit A and would be Parts under the third prong because they identify a part, the sale of which was procured by MLW on behalf of Certified. Because Michigan law requires that a contract be interpreted so that "effect and meaning [is] given to every word therein, if possible," this Court cannot accept Plaintiffs definition. See Associated Truck Lines, Inc. v. Baer, 77 N.W.2d 384, 386, 346 Mich. 106, 110 (1956). To do so would reduce the Agreement's language regarding the definition of Parts to unnecessary surplusage. See Clark Bros. Sales Co. v. Dana Corp., 77 F. Supp.2d 837, 844-45 (E.D. Mich. 1999).
Plaintiffs interpretation indirectly attempts to reform the Agreement. Plaintiff admits that some of the parts listed in Exhibits B, C and D were inadvertently omitted from Exhibit A to the Agreement. See Def's Resp. Br. at Ex. 11; see also Def's Resp. Br. at Ex. 12. As Defendant notes, "[a]ny omission or other mistake in the preparation of Exhibit A was made not by Certified, but by MLW, which created Exhibit A and attached it not only to its Complaint, but also to the Settlement Agreement." Def's Resp. Br. at 12. Because only the existence of fraud or mutual mistake, neither of which Plaintiff alleges, justifies reforming or reopening an otherwise valid settlement agreement. Brown v. County of Genesee, 872 F.2d 169, 174 (6th Cir. 1989); see also Hilley v. Hilley, 140 Mich. App. 581, 584, 364 N.W.2d 750, 752 (1985). Plaintiffs unilateral mistake is insufficient to reform the contract.
The Court concurs with Defendant's contention that the word "Part" is a defined term tied to the automotive parts listed on Exhibit A to the Agreement. Plaintiffs implied assertion that the term "Part" refers to all parts for which a sale was procured by MLW on behalf of Certified ignores the definition of "Part" set forth in the Settlement Agreement.
Defendant claims that it has paid commissions on the Parts under the Agreement. Def's Resp. Br. at 13 (citing Decl. of Patricia K. Terrault at ¶ 4-5). Defendant further claims that as to those parts listed on Exhibit B to Plaintiffs Motion that are not listed on Exhibit A to the Agreement, "none of them is a successor part to a part listed in Exhibit A to the Settlement Agreement, and only three parts . . . are renumbered versions listed in Exhibit A, and thus Parts." Id. at ¶ 5. According to Defendant, the parts listed on Exhibits C and D to Plaintiffs Motion are not alleged by Plaintiff to be Parts as defined under Paragraph 1 of the Agreement. See Def's Resp. Br. at 13-14. Commissions admittedly have not been paid on these parts. Id.
While MLW claims that Exhibit B to its Motion contains "a list of part numbers identifying parts listed on Exhibit A to the Agreement and/or successor parts presently in production," this Court finds that the parts listed on Exhibit B to Plaintiffs Motion are Parts under the Agreement only to the extent they are actually: (1) listed on Exhibit A of the Agreement; (2) successor parts to the parts listed on Exhibit A of the Agreement; or (3) a Part identified by any other part number pursuant to the Agreement. Similarly, the Court finds that only the parts listed on Exhibits C and D that fit into these categories are Parts under the Agreement. Because the Court is convinced that Defendant has properly paid all appropriate commissions under the Agreement, Plaintiffs Motion for an Order to Enforce Settlement is DENIED.
IV. CONCLUSION
This Court finds that MLW's contention that it is entitled to commissions and document production with respect to parts listed in Exhibits C through D of its Motion, but not listed on Exhibit A of the Agreement, is meritless. The Defendant shall provide sufficient documentation for the Parts listed on Exhibit B in order for Plaintiff to ascertain whether the parts listed thereon are Parts as defined in the Settlement Agreement. The Court further concludes that based on the parties' current submissions Defendant has paid all commissions due under the Agreement.
The Court notes Plaintiffs request that Defendant's Response to its Motion for an Order to Enforce Settlement Agreement be stricken for failure to comply with Local Rule 7.1(c)(2). While the Court denies Plaintiffs request in this regard, it does remind Defendant to adhere toall requirements set forth in the Local Rules of the Eastern District of Michigan.
Accordingly,
IT IS HEREBY ORDERED that Plaintiffs Motion for an Order to Enforce Settlement Agreement (Docket # 19, filed October 25, 2001) is DENIED.
IT IS FURTHER ORDERED that Defendant provide documentation with respect to Exhibit B so that Defendant may adequately review those parts Defendant claims are not covered by the Settlement Agreement.