Terry Barr Sales Agency, Inc. v. All-Lock Company, Inc.
96 F.3d 174 (1996)
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Rule of Law:
Under Michigan law, where an express oral contract is silent on a material term, such as post-termination commissions, and there is conflicting extrinsic evidence as to the parties' intent, the question of what the parties intended the contract to include is a genuine issue of material fact for a jury to decide, making summary judgment inappropriate.
Facts:
- In 1973, Terry Barr Sales Agency, a sales representative company led by Terry Barr, and All-Lock Company, a parts manufacturer led by Ron Hermann, entered into an oral agency agreement.
- Under the agreement, Terry Barr Sales was to solicit sales of All-Lock's automotive parts to original equipment manufacturers in exchange for a commission.
- The commission rate was set at 3.5% for new business and a lower 2% rate for pre-existing "inherited" business that Terry Barr Sales agreed to service.
- The oral agreement did not explicitly address whether commissions would continue to be paid to Terry Barr Sales for sales it procured after the termination of the agency relationship.
- By 1992, Terry Barr Sales had successfully secured purchase orders for All-Lock to supply locks and latches for the entire General Motors "Saturn" automobile line.
- In March 1994, Ron Hermann informed Terry Barr that All-Lock was terminating the agency relationship for the "latch" product line.
- During the termination meeting, Barr asserted that his company was due commissions for the "life of the part" on business it had secured, while Hermann stated All-Lock would only pay commissions for 90 days post-termination.
Procedural Posture:
- Terry Barr Sales Agency sued All-Lock Company in the U.S. District Court for the Eastern District of Michigan for breach of contract and other claims.
- All-Lock Company filed a separate suit against Terry Barr Sales in New Jersey, which was then consolidated with the Michigan case.
- After limited discovery, both parties filed cross-motions for summary judgment.
- The district court granted summary judgment in favor of All-Lock from the bench, dismissing all of Terry Barr Sales' claims.
- Terry Barr Sales Agency, as the appellant, appealed the district court's grant of summary judgment to the U.S. Court of Appeals for the Sixth Circuit.
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Issue:
Is summary judgment appropriate in a breach of contract action where an oral agency agreement is silent on the term of post-termination commissions, but both parties present conflicting evidence regarding their intent and the course of performance under the agreement?
Opinions:
Majority - Judge Boyce F. Martin, Jr.
No, summary judgment is not appropriate. Where genuine issues of material fact exist as to the parties' intent in an oral contract, the case must be decided by a jury. Michigan law, particularly in Reed v. Kurdziel, establishes that an agent's right to post-termination commissions depends on the parties' intent, which is determined by considering all circumstances under a basic principle of fair dealing. In this case, the parties vigorously dispute whether their oral agreement included a term for post-termination commissions. All-Lock points to the parties' course of dealing and deposition testimony as evidence that such commissions were not intended. Conversely, Terry Barr Sales presents its own deposition testimony, correspondence invoking industry standards, and explanations for the course of dealing that support its claim. Because the evidence is conflicting and requires credibility assessments and the weighing of evidence, the district court erred by resolving these factual disputes at the summary judgment stage. Such issues of contractual intent in an oral agreement are factual questions for a jury, not legal questions for a judge.
Analysis:
This decision reaffirms the fundamental procedural rule that summary judgment is improper when there are genuine disputes over material facts, particularly regarding contractual intent in an oral agreement. It underscores that a judge's role at the summary judgment stage is not to weigh evidence or determine credibility, but merely to identify whether a triable issue exists. The ruling strengthens the position of sales agents under Michigan's "procuring cause" doctrine, ensuring that claims for post-termination commissions based on oral contracts cannot be easily dismissed before trial if the agent can produce some evidence of intent or industry custom, thereby forcing principals to litigate the terms of unwritten agreements before a jury.
