Breach of contract; Sales agent agreements; Contract interpretation; Unambiguous exclusivity provision; “Carry”; Commission reduction provision; Whether a liquidated damages clause constituted an unenforceable penalty; Commission-related damages; Statutory damages & attorney fees under the Michigan Sales Representative Commissions Act (SRCA); MCL 600.2961; In re Certified Question; “Prevailing party”; Peters v Gunnell, Inc

The court held that there was an unambiguous exclusivity provision in the parties’ 2021 sales agent agreement, and the trial court erred in not enforcing it as written. It further erred in denying plaintiff’s request to recover unearned commissions because the commission-reduction aspect of that provision was not an unenforceable penalty. The court rejected defendants’ argument as to the calculation of commission-related damages, but agreed with them that they should have been awarded “statutory damages and attorney fees under the SRCA.” Defendants had sold and promoted plaintiff’s medical products as independent commissioned sales agents. Plaintiff sued “for breach of contract, alleging that defendants impermissibly and covertly sold” nonparty-I’s medical products. Defendants filed a counterclaim alleging wrongful termination of the agreement and violation of the SRCA. On appeal, the court concluded defendants breached the agreement by selling I’s products through a separate company owned by defendant-Buck (who also owned defendant-Patriot Medicals). “The plain language of the sales agreement does not limit the exclusivity provision to Buck’s role as a sales agent of” Patriot Medicals. Rather, it also applied to him personally. Thus, he breached the provision “as it was written by selling” I’s products through another of his companies. The trial court further erred in “interpreting the commission-reduction provision as an unenforceable penalty.” Thus, plaintiff was “entitled to recoup the unearned commissions that it paid to defendants from the date of the first breach.” And because plaintiff was entitled to terminate the agreement in 8/21 based on “defendants’ breach of the exclusivity provision,” the court was not definitely and firmly convinced the trial court erred as to the calculation of commission-related damages as to defendants’ counterclaims. But plaintiff “was not entitled to withhold the remaining amount of the earned commissions owed directly to defendants” and the trial court abused its discretion in ruling that they “were not entitled to statutory damages under the SRCA.” And because the court found “plaintiff violated the SRCA requirement to pay defendants earned commissions within 45 days of terminating the” agreement, they were prevailing parties under the SCRA entitled to attorney fees. Vacated and remanded.