Plaintiff appeals as of right from the trial court's order granting defendant's motion for summary disposition. We affirm.
I. Factual and Procedural History
On February 23, 1994, the parties entered into a Manufacturer's Representative Agreement (MRA), which provided that plaintiff would work for defendant as an independent contractor selling products manufactured by defendant to other manufacturers in the automotive industry. The MRA provided that plaintiff would receive three percent commissions on new product sales of defendant's products unless otherwise agreed in writing. The MRA bound both parties for three years and automatically extended in one-year increments after the initial three years. The MRA further provided that all modifications had to be in writing.
After the parties entered into the MRA, defendant made an agreement with DaimlerChrysler Corporation in which defendant was scheduled, commencing in the summer of 1997, to produce a line of automobile window frames called the Daylight Opening (DLO). In early 1997, defendant's president, Robert MacDonald, orally proposed a three-year special arrangement regarding the DLO program to Edward Stehney, one of plaintiff's main shareholders (the oral DLO agreement). MacDonald proposed that defendant would extend the MRA, but would pay plaintiff DLO commissions on a reduced sliding scale as follows: three percent for model year (MY) 1998,
In MYs 1998 through 2000, defendant paid plaintiff commissions based on $21.86 for each piece. Defendant paid plaintiff three percent commissions in MY 1998, two percent in MY 1999, and 1.5 percent in MY 2000. Defendant terminated the MRA on January 7, 2000. After this termination, plaintiff demanded that defendant pay plaintiff its commissions for MYs 1999 and 2000 at a rate of three percent. When defendant refused, plaintiff sued, requesting damages based on the commissions to which it was originally entitled under the MRA. The trial court granted defendant's motion for summary disposition, concluding that the oral DLO agreement was not barred by the statute of frauds and the parties were bound by this agreement. The trial court further concluded that plaintiff's claims were barred by equitable estoppel.
II. Analysis
A. Standard of Review
Defendant filed its motion for summary disposition pursuant to MCR 2.116(C)(10). A motion for summary disposition under MCR 2.116(C)(10) tests the factual sufficiency of the complaint. Veenstra v. Washtenaw Country Club, 466 Mich. 155, 163, 645 N.W.2d 643 (2002). A motion for summary disposition should be granted when, except in regard to the amount of damages, there is no genuine issue in regard to any material fact and the moving party is entitled to judgment or partial judgment as a matter of law. MCR 2.116(C)(10), (G)(4); Veenstra, supra at 164, 645 N.W.2d 643. In deciding a motion brought under this subsection, the trial court must consider affidavits, pleadings, depositions, admissions, and other evidence submitted by the parties, MCR 2.116(G)(5), in a light most favorable to the nonmoving party. Veenstra, supra at 164, 645 N.W.2d 643. The moving party has the initial burden of supporting its position with documentary evidence, but once the moving party meets its burden, the burden shifts to the nonmoving party to establish that a genuine issue of disputed fact exists. Quinto v. Cross & Peters Co., 451 Mich. 358, 362, 547 N.W.2d 314 (1996). "Where the burden of proof at trial on a dispositive issue rests on a nonmoving party, the nonmoving party may not rely on mere allegations or denials in pleadings, but must go beyond the pleadings to set forth specific facts showing that a genuine issue of material facts exists." Id. The moving party is entitled to a judgment as a matter of law when the proffered evidence fails to establish a genuine issue regarding any material fact. Veenstra, supra at 164, 645 N.W.2d 643. The decision whether to grant a motion for summary disposition is a question of law that is reviewed de novo. Id. at 159, 645 N.W.2d 643.
B. Judicially Created Exceptions to the Statute of Frauds
Plaintiff argues that the oral DLO agreement is barred by the statute of frauds. "It is well established that a written contract may be varied by a subsequent parol agreement unless forbidden by the statute of frauds; and that this rule obtains though the parties to the original contract stipulate therein that it is not to be changed except by agreement in writing." Reid v. Bradstreet Co., 256 Mich. 282, 286, 239 N.W. 509 (1931) (emphasis added). Generally, where an original contract was required to be made in writing under the statute of frauds, any modification of the agreement should also be in writing. Zurcher v. Herveat, 238 Mich.App. 267, 299-300, 605 N.W.2d 329 (1999). The statute of frauds provides, in pertinent part:
In the following cases an agreement, contract, or promise is void unless that
Defendant does not dispute that the oral DLO agreement could not be fully performed within one year of making the agreement. However, defendant argues that the statute of frauds does not apply to the oral DLO agreement because: (1) the oral DLO agreement satisfied the writing requirement of the statute of frauds;
We reluctantly agree with defendant that the statute of frauds does not apply because plaintiff was equitably estopped from denying the validity of the agreement. We apply the equitable estoppel doctrine only because our Supreme Court has recognized that estoppel was "developed to avoid the arbitrary and unjust results required by an overly mechanistic application of the [statute of frauds]." Opdyke Investment Co. v. Norris Grain Co., 413 Mich. 354, 365, 320 N.W.2d 836 (1982).
Allowing judge-made doctrines such as estoppel to override and preclude the application of legislatively created laws such as the statute of frauds "is contrary to well-founded principles of statutory construction and is inconsistent with traditional notions of the separation of powers between the judicial and legislative branches of government." Id. at 548, n. 4, 619 N.W.2d 66, citing Scalia, A Matter of Interpretation: Federal Courts and the Law (New Jersey: Princeton University Press, 1997), pp. 14-29. Although we question the propriety of applying the equitable estoppel doctrine and other common-law exceptions to the statute of frauds, we will continue to do so until our Supreme Court states otherwise.
The general principles regarding the doctrine of equitable estoppel are as follows:
This Court should look at the totality of the factual circumstances, including the parties' representations, in determining whether the equitable estoppel doctrine bars a statute of frauds argument. Lakeside Oakland, supra at 529, 644 N.W.2d 765. "Estoppel questions should be presented to the jury where factual issues exist regarding whether a party is estopped from raising the statute of frauds defense against a party who reasonably and justifiably relied on an oral agreement." Id. at 527, 644 N.W.2d 765.
1. Plaintiff Negligently or Intentionally Induced Defendant to Believe that Plaintiff Had Accepted the Terms of the Oral DLO Agreement
Applying the equitable estoppel defense to the facts of this case, we first conclude that, through Stehney's words and actions, plaintiff intentionally or negligently induced defendant to believe that it had assented to the oral DLO agreement. MacDonald testified that Stehney agreed to the oral DLO agreement, but there is no testimony from Stehney regarding whether he agreed to or rejected the oral DLO agreement. Additionally, Stehney testified that he knew that defendant was paying plaintiff commissions based on reduced rates and a fixed price of $21.86, but Stehney accepted them because he did not want defendant to terminate the contract. Stehney knew that defendant was paying plaintiff two percent commissions in MY 1999 and 1.5 percent commissions in MY 2000. On September 24, 1999, defendant sent plaintiff a letter reminding it of the commission rates under the DLO program. Plaintiff did not object to this letter. In MY 2000, plaintiff accepted defendant's payments of 1.5 percent commissions on DLO products. Stehney once asked MacDonald why the commissions were 1.5 percent rather than 1.75 percent.
Plaintiff continued to accept the commission checks despite knowing that they were based on commission rates lower than that expressed in the MRA. Plaintiff did not firmly object orally or in writing to the commission rates or base price until May 31, 2000, which was after defendant terminated the contract and more
Plaintiff argues that its acceptance of the base price and commission checks was not enough to establish that it assented to the oral DLO agreement. Stehney testified that he accepted the reduced commission checks only because defendant was going through a difficult financial time and he wanted to accommodate defendant. However, "[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." Marlo Beauty Supply, Inc. v. Farmers Ins. Group of Cos., 227 Mich.App. 309, 317, 575 N.W.2d 324 (1998). Similarly, under an estoppel analysis, Stehney's subjective state of mind is not relevant in determining whether plaintiff induced defendant into believing that it had assented to the oral DLO agreement. On June 22, 1999, Stehney wrote a letter to defendant stating, "Kelly-Stehney has been most accommodating and flexible in yielding to your requests for adjusting our commissions over the past several years on the DLO program." This evidence demonstrates that plaintiff accepted the reduced commission rates; it does not demonstrate that plaintiff expected to be reimbursed in the future. Stehney's testimony shows that plaintiff accepted the reduced rates and base price out of a fear that defendant would terminate the contract if plaintiff did not accept these reduced rates.
Plaintiff argues there is evidence showing that it did not induce defendant into believing that it had assented to the oral DLO agreement. First, plaintiff points to a letter written by Stehney before defendant proposed the oral DLO agreement. On October 25, 1995, Stehney sent a letter to defendant proposing a five-year extension of the MRA. Stehney proposed the five-year extension so that the MRA would extend through the life of the DLO program and plaintiff would receive commissions on the DLO sales. Stehney testified that defendant did not respond to his letter and did not sign the proposed extension. Plaintiff argues that this letter indicates its unwillingness to agree to a commission or base price reduction. We disagree. The letter and proposed written MRA amendment, which were written more than one year before defendant proposed the terms of the oral DLO agreement, merely indicate that plaintiff wanted to extend the MRA—there is no indication that plaintiff would not agree to a reduction in commission rates or the base price in exchange for this extension.
Plaintiff also argues that its refusal to sign the written version of the oral DLO agreement proposed by defendant in MY 1998 shows its intent not to be bound by the terms of the oral DLO agreement. Plaintiff argues that, because the terms of the proposed written DLO agreement
Next, plaintiff argues that there exists a question of fact regarding whether it induced defendant into believing that it had assented to the oral DLO agreement because Stehney objected to the $21.86 base price in MY 1998 after reviewing the monthly commission statements. Stehney testified that he objected to the $21.86 base price, but MacDonald responded, "That's all you're going to get." Although Stehney may have initially objected to the price, he accepted it and cashed the commission checks. Through his actions, Stehney showed that plaintiff was willing to accept the reduced commission amounts reflected in the commission checks. There is no evidence that plaintiff did not agree to the terms of the oral DLO agreement in the first place and the evidence of plaintiff's later actions is not sufficient to show that it never manifested an intent to be bound by the oral DLO agreement.
We conclude that plaintiff's acceptance of the reduced commission checks, plaintiff's silence and failure to firmly object, and plaintiff's act of continuing to work for defendant while accepting the commission checks show that plaintiff intentionally or negligently induced defendant to believe that it had accepted the terms of the oral DLO agreement. Plaintiff did not object because it did not want to jeopardize its business relationship with defendant or risk defendant's termination of the contract. Instead, plaintiff waited until after the contract was terminated to object. In this way, plaintiff misled defendant into believing that it had accepted the terms of the oral DLO agreement.
2. As a Matter of Law, Defendant Justifiably Relied Upon Its Belief that Plaintiff Accepted the Terms of the Oral DLO Agreement8
Plaintiff also argues that defendant's reliance on its belief that plaintiff agreed to the oral DLO agreement was not reasonable because the MRA provided that all modifications had to be in writing. In support of its argument, plaintiff points to the fact that defendant demonstrated its knowledge of the clause in the MRA regarding no oral modifications by attempting to get plaintiff to sign a written form of the oral DLO agreement. Additionally, plaintiff argues that this clause in the MRA renders the oral DLO agreement invalid. We disagree and conclude as a matter of law that the clause in the MRA regarding no oral modifications does not render the oral DLO agreement invalid and defendant justifiably relied and acted on its belief that plaintiff agreed to the
Plaintiff also points to several cases that stand for the proposition that, absent a showing of fraud or mutual mistake, one who signs a contract cannot seek to invalidate it on the basis that he did not read it or thought its terms were different. Witt v. Seabrook, 210 Mich.App. 299, 303, 533 N.W.2d 22 (1995); Sherman v. DeMaria Bldg. Co., Inc., 203 Mich.App. 593, 599, 513 N.W.2d 187 (1994); Stopczynski v. Ford Motor Co., 200 Mich.App. 190, 193, 503 N.W.2d 912 (1993); Paterek v. 6600 Ltd., 186 Mich.App. 445, 450, 465 N.W.2d 342 (1990). Plaintiff argues that defendant is presumed to have read the clause in the MRA regarding no oral modifications and may not now say that it reasonably relied on plaintiff's oral representations regarding the oral DLO agreement. However, defendant does not seek to invalidate the contract because it was unaware of the clause. Rather, the clause is void by operation of law. Zurich Ins Co, supra at 601, 576 N.W.2d 392. Therefore, Witt; Sherman; Stopczynski, and Paterek are not applicable to the present case.
In sum, because the clause regarding no oral modifications is a nullity as a matter of law, there is no evidence to place in doubt the reasonableness of defendant's reliance on plaintiff's acceptance of the oral DLO agreement. Plaintiff did nothing to convey to defendant that it ought not rely on its belief that the oral DLO agreement constituted an extension of the MRA under which plaintiff was paid lower commissions than those payable under the original terms of the MRA.
3. Defendant Would be Prejudiced if Plaintiff were Permitted to Deny the Validity of the Oral DLO Agreement
Finally, we determine that there is no question of fact that defendant would be prejudiced if plaintiff were allowed to deny the validity of the oral DLO agreement. Plaintiff argues that defendant would not be prejudiced by paying the higher commission rates under the MRA because plaintiff was paid its commissions through a fixed fund already paid to defendant by DaimlerChrysler. Plaintiff's logic is flawed. Regardless of whether the higher commissions are paid directly by defendant or indirectly by DaimlerChrysler, defendant would still be forced to pay higher commissions if plaintiff were allowed to deny the validity of the oral DLO agreement.
Looking at the totality of the factual circumstances, we conclude that under the current state of the law, there is no question that the equitable estoppel doctrine applies to this case and that the statute of frauds does not bar enforcement of the oral DLO agreement.
Affirmed.
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