Opinion
Case No.: 98-75639.
August 28, 2000.
OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT/COUNTER-PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
Before the Court is Defendant/Counter-Plaintiffs motion for summary judgment (Docket Entry #32). The Court heard oral argument on this motion on August 16, 2000. Upon consideration of the motion, the submissions of the parties, and the applicable law, the Court grants in part and denies in part Defendant/Counter-Plaintiffs motion.
I. BACKGROUND
A. Factual Development
Plaintiff, Ron Schlesinger, filed this breach of employment action against his former employer, Defendant Customized Transportation, Inc. ("CTI"), a wholly-owned subsidiary of CSX. As CTI filed the instant motion for summary judgment, the facts are presented in the light most favoring Plaintiff.
Plaintiff began working for CTI on November 10, 1995. (Def Ex. 3.) Plaintiffs initial assignment was as Operation Supervisor at Defendant's Brownstown, Michigan facility. Plaintiff worked for the Eurostar operation, a joint venture with Chrysler Corporation which involved shipping seat containers to Chrysler operations in Austria. (P1. Dep. at 14-15.) In the spring of 1996, Chrysler was not satisfied with its contract with CTI, and CTI began laying off employees at Brownstown. (McHugh Aff ¶ 2, Def. Ex. 4; P1. Dep. at 18.) Pat McHugh, a CTI Manager, recruited Plaintiff to go to Cologne, Germany to work for Defendant's overseas operations. (P1. Dep. at 17.)
In June of 1996, Plaintiff accepted a position as a logistics engineer for CTI in Cologne. The terms of his employment were expressed in correspondence from Defendant. The benefits included, inter alia, a ten percent salary increase, payment of living expenses, a car allowance, and a tax equalization payment to ensure that the overseas assignment did not negatively affect his tax obligations. (July 9, 1996 letter from Pamela Van Auker, Director CTI Resource Development to Plaintiff; P1. Ex. B.) The offer of employment also expressly stated that the length of Plaintiff's assignment was to be two years, beginning on July 1, 1998, with Defendant having the option to extend for an additional year. ( Id.) As a logistics engineer, Plaintiff was responsible to improve the flow of goods and materials in an efficient manner, to make sure that they were being touched as few times as possible, and to ensure that they were sitting for the shortest amount of time as possible. (P1. Dep. at 26.)
Despite the written agreement indicating that Plaintiff's assignment was for two years, Plaintiff's logistical engineer position ended about ten months after he began, in April 1997. Thereafter, Plaintiff returned to the United States for another position with Defendant. The parties dispute the reason why Plaintiff left Germany. Defendant asserts that shortly before his annual paid return trip to the United States on March 27, 1997, Plaintiff requested from Jack Gross, CTI's Vice President of International Operations, a reassignment to the United States to be closer to his ailing father. (Gross Aff., ¶¶ 3-4, Def. Ex. 8; Van Auker Aff. ¶¶ 3-4, Def. Ex. 5.) Plaintiff maintains that about ten months after he began the German position, he unexpectedly received a telephone call telling him to be on the next available flight to Chicago, Illinois and that when he got there, he would learn where to go. Plaintiff asserts that he heard various reasons for this decision, such as that CTI was downsizing the company, and that he had a sick relative back home, however Plaintiff claims that he never received a straight answer. (P1. Dep. at 3 1-32.) Both Plaintiff and his father deny that his father was ill at this time. (P1. Dep. at 32; Frederick Schlesinger Aff., P1. Ex. C.)
Upon his return to the United States, Defendant offered Plaintiff a position working as a process engineer on CTI's contract with Montgomery Wards in Romeoville, Illinois. (P1. Dep. at 34; May 8, 1997 Letter from Heather Shirley, CTI Resource Development Specialist to Plaintiff; P1. Ex. D.) Unlike his German assignment, the length of time for this position was not specified. ( Id.) Plaintiff accepted the Romeoville position after negotiating an increase in wages. (P1. Dep. at 34.) Plaintiff received a 12.5% increase in wages compared to his German assignment. (Doc. No. 109; Def. Ex. 12.) Plaintiff began his new position in May 1997. His job duties were to develop a process for the shipping of merchandise to the Wards' distribution center and to facilitate the flow of materials. (P1. Dep. at 34.)
On July 1, 1997, Montgomery Wards declared bankruptcy. (Johnson Aff. ¶ 5; Def. Ex. 9.) Due to a failure to renegotiate the CTII Wards contract successfully, it was terminated in August 1997, and Wards decided to assume responsibility for the warehouse services at its Romeoville, Illinois facility. ( Id. ¶¶ 6-7.) Montgomery Wards requested, and Defendant agreed, to employ directly a number of CTI employees who worked at the Romeoville facility. ( Id. at ¶ 8.) However Montgomery Wards declined to hire Plaintiff and four other CTI employees who were supervisors or managers. ( Id. at ¶ 10.) Defendant did not retain Plaintiff or the other four employees passed over by Wards. ( Id.)
Upon termination, Plaintiff received from Defendant his accrued, but unused, vacation time and two weeks of severance pay, in accordance with the CTI severance policy. (Doc. No. 102, Def. Ex. 13; Severance Pay Policy. Def. Ex. 14.) Following his termination from Defendant, Plaintiff was unemployed until January 1999 when he began working for EDS. (P1.Dep. at 46.)
B. Procedural Posture
On July 16, 1998, Plaintiff filed the instant action in the Wayne County Circuit Court. In Count I of his complaint, Plaintiff alleged that he entered into express and implied contracts in July 1996 and May 1997 with CTI, and that CTI unilaterally breached these contracts. In Count II of his complaint, Plaintiff claimed that CTI agreed to pay him commissions on certain production sales and services, and that CTI breached those contracts. Plaintiff also alleged under this count that he was entitled to an additional award of double the amount of unpaid commissions plus reasonable attorney fees and costs pursuant to the Michigan Sales Representative Act ("MSRA"), MICH. COMP. LAWS ANN. § 600.2961. In Count III of his complaint, Plaintiff asserted a claim of fraudulent misrepresentation. Finally, in Count IV of his complaint, Plaintiff asserted a claim of innocent misrepresentation. As discussed infra, n. 2, the Court dismissed Counts III and IV of the complaint.
Based on diversity of citizenship jurisdiction, CTI removed the action to this couri on September 22, 1998. Upon removal, this case was randomly assigned to United States District Court Judge Barbara K. Hackett.
"In addition to CTI, Plaintiffs complaint named Bill Sheeran, CTI's Director of Business Development, as a defendant. In its removal notice, CTI asserted that Plaintiff fraudulently joined Sheeran, a citizen of Michigan, in order to divest this court of diversity jurisdiction. Upon removal, Sheeran moved to dismiss the action. The parties then stipulated to Sheeran's dismissal. However, Plaintiff maintained that the case should still be remanded because the amount in controversy was less than the jurisdictional amount of $75,000. Judge Hackett denied Plaintiff's request for remand, holding that Defendant met its burden of establishing that the amount in controversy exceeded $75,000 based upon an aggregate of all the claims and the fact that Plaintiff requested $135,000 from CTI in order to settle the case. ( See Order Denying Plaintiff's Request for Remand, dated Jan. 13, 1999, Docket Entry No. 10.)
Along with its notice of removal, Defendant CTI filed a motion requesting from Plaintiff a more definite statement regarding Counts III and IV, fraudulent misrepresentation and innocent misrepresentation respectively. On January 21, 1999, Judge Hackett granted the motion and ordered Plaintiff to state his misrepresentation claims with greater specificity. However, Plaintiff failed to amend his complaint in a timely fashion. Plaintiff's counsel asserted that the failure to amend the complaint on or before the deadline was due to his failure to docket the demand on his calendar. On February 16, 1999, Defendant CTI filed a motion to dismiss Counts III and IV of Plaintiff's complaint. While Plaintiff submitted a proposed amended complaint, Judge Hackett found that its filing would cause Defendant substantial prejudice since "Defendant ha[d] been forced to spend the [prior] five months addressing plaintiff's woefully insufficient complaint (and other inappropriate conduct) with several otherwise unnecessarily motions." (Order Granting Defendant's Motion to Dismiss Counts III and IV of Plaintiff's Complaint, April 8, 1999, Docket Entry # 16, at p. 2.) Judge Hackett also concluded that the proposed amended complaint was futile as, like the original complaint, it too lacked the specificity required by FED. R. Civ. P. 9(b). ( Id. at 3.) Accordingly, the court dismissed Counts III and IV of Plaintiffs complaint. ( Id.)
On April 23, 1999, CTI filed an answer to Plaintiff's complaint, and also filed a counterclaim against Plaintiff for unjust enrichment. According to Defendant, Plaintiff received tax equalization payments, totaling $13,852, covering the entire year of 1997. CTI asserted that these payments were additional compensation to offset incremental taxes on Plaintiff while he worked in Germany. CTI contended that since Plaintiffs foreign position ended early, he was only entitled to receive $3,641 of the 1997 payment. Therefore, CTI claimed that Plaintiff was unjustly enriched by $10,211. CTI later revised this figure to $11,416.
Upon Judge Hackett's retirement, this action was reassigned to the undersigned Judge on January 31,2000. Currently before the Court is CTI's motion for summary judgment on the remaining counts of Plaintiffs complaint.
II. STANDARD OF REVIEW
The Court may properly grant a motion for summary judgment if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Blankenship v. Parke Care Centers, 123 F.3d 868, 87 1-72 (6th Cir. 1997), cert. denied, 522 U.S. 1110, (1998). The Court is directed to view the evidence in the light most favorable to the non-moving party and determine "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986). The moving party initially has the burden to advise the Court of the basis for the summary judgment motion and of demonstrating that the record shows no material issue of fact exists. See Celoi'ex Corp. v. Catrett 477 U.S. 317, 323 (1982). However, "the mere existence of a scintilla of evidence" in support of the non-moving party is not sufficient; a genuine issue for trial is presented when there is sufficient "evidence on which the jury could reasonably find for the [non-moving party]." Anderson, 477 U.S. at 252.
III. BREACH OF CONTRACT
In Michigan, employment for an indefinite period of time is presumed to be at-will. See Toussaint v. Blue Cross and Blue Shield, 408 Mich. 579, 600 (1980); see also, Lytle v. Malady, 0458 Mich. 153, 164 (1998) (on reh'g); Valentime v. General American Credit, Inc., 420 Mich. 256, 258 (1982). The employment at will doctrine permits an employer to terminate employment with or without cause and with or without notice. See Valentime, 420 Mich. at 25859. However, "an employer's express agreement to terminate only for cause, or statements of company policy and procedure to that effect, can give rise to rights enforceable in contract." Toussaint, 408 Mich. at 610.
"The presumption of employment at will is overcome with proof of either a contract provision for a definite term of employment, or one that forbids discharge absent just cause." Lytle, 458 Mich. at 164 ( citing Rood v. General Dynamics Corp., 444 Mich. 107, 117, (1993)). Michigan courts have recognized three ways by which an employee can prove such contractual terms: (1) proof of"a contractual provision for a definite term of employment or a provision forbidding discharge absent just cause;" (2) an express agreement, either written or oral, regarding job security that is clear and unequivocal; or (3) a contractual provision, implied at law, where an employer's policies and procedures instill a "legitimate expectation" ofjob security in the employee. Lytle, id. (quoting Rood, id.) (other citations omitted).
In the case at bar, Plaintiffs employment contract with Defendant for the position in Germany specified that the length of the assignment was "[t]wo years with CTI having the option to extend for an additional year." (July 9, 1996 letter from Pamela Van Auker, Director CTI Resource Development to Plaintiff; P1. Ex. B.) Plaintiff began this job on July 1, 1996. However, this position ended ten months later in April 1997 when Plaintiff was ordered td report to Chicago, Illinois. The reason why Plaintiff returned to the United States is a disputed issue of fact. Because Plaintiffs agreement had a definite length of employment, and Plaintiffs job ended fourteen months early, summary judgment is not appropriate on whether Defendant breached Plaintiffs employment contract for the German position.
Upon returning to the United States, Defendant offered Plaintiff a position working as a process engineer on CTI's contract with Montgomery Wards in Romeoville, Illinois. Plaintiff accepted the Romeoville position after negotiating an increase in wages. The Illinois contract does not state that it supercedes or modifies the former two year contract, nor does it provide that either party waived any rights under the former contract. Taking the facts in the light most favorable to the non-moving party, the fact that Plaintiff accepted the Illinois job after negotiating for higher wages relates to Plaintiff's mitigation of his damages.
Unlike his German assignment, the length of time for the Romeoville position was not specified. Based on the evidence before the Court, Plaintiff became an employee at-will upon accepting this position. Therefore, Plaintiff cannot maintain a breach of contract claim against Defendant for his termination from this Illinois position. Moreover, Defendant had just cause to terminate Plaintiff from this position, as the account on which Plaintiff worked expired when Montgomery Wards declared bankruptcy. See Mc Cart v. J. Walter Thompson USA, Inc., 437 Mich. 109, 114 (1991) (bona fide economic reasons for discharge constitute "just cause" under Toussaint).
Accordingly, the Court DENIES summary judgment for Defendant on Plaintiffs breach of contract claim with respect to the German position, but GRANTS summary judgment for Defendant on Plaintiffs breach of contract claim with respect to the Romeoville position.
IV. THE MICHIGAN SALES REPRESENTATIVE ACT (MSRA)
The MSRA provides statutory relief for sales representatives whose sales commissions are wrongfully held by their principals. MICH. COMP. LAWS ANN. § 600.2961. In Count II of his complaint, Plaintiff asserts that Defendant terminated his employment contract in 1997 and intentionally failed to pay commissions owed Plaintiff. Accordingly, Plaintiff claims, inter alia, that he is entitled to his unpaid commissions, and an additional award of double the amount of unpaid commissions plus reasonable attorney fees and court costs as pursuant to the MSRA. In its motion for summary judgment, Defendant claims that Count II of Plaintiffs complaint is nothing more than a frivolous waste of resources, as Plaintiff has never, in any job before, during or after his employment with CTI, been a salesman.
The MSRA defines a sales representative as follows:
"Sales representative" means a person who contracts with or is employed by a principal for the solicitation of orders or sale of goods and is paid, in whole or in part, by commission. Sales representative does not include a person who places an order or sale for a product on his or her own account for resale by that sales representative.
MICH. COMP. LAWS ANN. § 600.2961(1)(e).
In his response to CTI's motion for summary judgment, Plaintiff agreed to dismiss his claim under the MSRA, MICH. COMP. LAWS ANN. § 600.2961(6). (P1. Resp. ¶ 5.) Despite this concession, CTI argues that it is entitled to an award of reasonable attorneys' fees and costs under the MSRA.
In its reply brief, CTI also requests that the Court sanction Plaintiffs counsel pursuant to FED. R. Civ. P. 11 for bringing a meritless MSRA claim. Upon reviewing the record, the Court declines to impose Rule 11 sanctions.
The MSRA provides:
If a sales representative brings a cause of action pursuant to this section, the court shall award to the prevailing party reasonable attorney fees and court costs.
MICH. COMP. LAWS ANN. § 600.2961(6). The statute also defines a "prevailing party" as "a party who wins on all the allegations of the complaint or on all of the responses to the complaint." MICH. COMP. LAWS ANN. § 2961(1)(c). One purpose of this provision is to encourage parties not to assert implausible legal theories or allege questionable facts. See, Larry J. Saylor, Frederick A. Acomb, Michigan Sales Representative Statue, 73 MICH. B.J. 208, 209 (Feb. 1994).
It appears premature to determine whether Defendant is entitled to its attorneys' fees and costs under this statute. The Michigan Court of Appeals recently held that when a plaintiff pleads alternative claims for relief, the plaintiff need only prevail on one of them in order to be deemed a "prevailing party" under § 296 1(6). See H.J. Tucker Assoc., Inc. v. Allied Chucker and Engineering Co., 234 Mich. App. 550, 560-61 (1999); see also Kenneth Henes Special Projects Procurement v. Continental Biomass Industries, Inc., 86 F. Supp.2d 721, 736 (E.D. Mich. 2000) (Rosen, J.). In H.J. Tucker, the plaintiff asserted claims of breach of contract, fraudulent misrepresentation, innocent misrepresentation, detrimental reliance, quantum meruit, unjust enrichment, breach of fiduciary duty, and violation of the MSRA. The court of appeals determined that since each theory sought to recover for the same injury, it was only necessary that the plaintiff prevail on one claim to be considered a "prevailing party" for purposes of an award of statutory damages under § 2961. Similarly, in Kenneth Henes, the plaintiff asserted claims of breach of contract and violation of the MSRA to recover unpaid commissions. Relying on H.J. Tucker, the court considered the plaintiff a "prevailing party" when he prevailed on his breach of contract claim with respect to one transaction, and when he prevailed on his MSRA claim when he prevailed on his MSRA claim with respect to the remaining transactions.
In the case at bar, Plaintiff's breach of contract claim is unresolved, even upon his stipulation to dismiss his MSRA claim. Plaintiff may ultimately prevail on his breach of contract claim. However, the Court notes that while Plaintiff may have claimed the same injury by alternatively pleading his claims, unlike the plaintiffs in H.J. Tucker and Kenneth Henes, Plaintiff may never have had standing to bring a claim under the MSRA since he admitted in his deposition that he was not a "sales representative" as defined by the act. ( See P1. Dep. at 52-53.)
In consideration of the foregoing, the Court will dismiss Plaintiffs MSRA claim, and take under advisement CTI's motion for attorneys' fees and costs, pending the resolution of the merits of this case.
V. UNJUST ENRICHMENT
CTI argues that it is entitled to summary judgment on its counterclaim for unjust enrichment because Plaintiff expressly agreed to reimburse CTI for any overpayment of tax equalization benefits. CTI maintains that by letter dated July 14, 1998, its accountants, who prepared Plaintiffs tax returns, informed Plaintiff that, with respect tot he tax equalization payments made by CTI on Plaintiffs behalf, any tax refund may have to be repaid to the company. (Def. Ex. 16.) CTI maintains that Plaintiffs tax return establishes that $11,416 was refunded from the U.S. Internal Revenue Service to Plaintiff, based on payments CTI made under the tax equalization program, in addition to wages paid to Plaintiff. (Def. Ex. 17.)
Plaintiff maintains that while he received a refund of $11,416 from the U.S. government based on the return prepared by CTI's accountants, he has received notification from these accountants that he has an outstanding tax liability to the German government in excess of $15,000. (P1. Ex. E.) Plaintiff maintains that he has not been unjustly enriched.
Based on the evidence before the Court, there appears to be a genuine issue of material fact concerning whether Plaintiff was unjustly enriched by receiving a $11,416 tax refund related to tax equalization payments paid by Defendant. Accordingly, the Court DENIES summary judgment for Defendant on this issue.
VI. CONCLUSION
For the above stated reasons, the Court:
1. DENIES summary judgment for Defendant on Plaintiffs claim of breach of contract related to his position in Germany;
2. GRANTS summary judgment for Defendant on Plaintiffs breach of contract claim related to his position in Romeoville, Illinois;
3. DISMISSES Count II of Plaintiffs Complaint;
4. TAKES UNDER ADVISEMENT Defendant's claim for attorney's fees and costs under the MSRA; and
5. DENIES summary judgment for Defendant on its counter-claim for unjust enrichment.
SO ORDERED.