Bailey v. Fast Model Technologies LLC
ORDER granting in part and denying in part 27 Motion to Amend/Correct; granting 12 Motion for Partial Summary Judgment; granting in part and denying in part 24 Motion for Summary Judgment. Signed by District Judge Avern Cohn. (Chubb, A)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
CHRISTOPHER JAMES BAILEY,
Case No. 10-15118
HON. AVERN COHN
FAST MODEL TECHNOLOGIES, LLC,
MEMORANDUM AND ORDER
GRANTING PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT (DOC.12)
DENYING IN PART AND GRANTING IN PART
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT (DOC.24)
GRANTING IN PART AND DENYING IN PART PLAINTIFF’S MOTION TO AMEND
THE COMPLAINT AND TO EXTEND DISCOVERY (DOC. 27)
This is a breach of employment contract case. Plaintiff, Christopher James Bailey
(Bailey), worked for the defendant, Fast Model Technologies, LLC (Fast Model) as a
software sales representative. Fast Model terminated Bailey’s employment for what it
says was cause. Baily claims that Fast Model failed to pay him commissions he earned
under the terms of his employment contract and did not compensate him for additional
work developing Fast Model’s football software.
The complaint is in five (5) Counts: I) Violation of Michigan Sales Representative
Commission Act (MSRCA), M.C.L. §600.2961; II) Violation of Michigan’s Procuring
Cause Doctrine for Post-Termination Commissions; III) Promissory Estoppel; IV) Breach
of Contract; and V) Unjust Enrichment and Quantum Meruit. Bailey asks the Court to
award him unpaid commissions earned prior to and after his termination from Fast
Model, penalties under M.C.L. §600.2961, and an ownership interest in Fast Model’s
Now before the Court are three (3) motions, Bailey’s motion for partial summary
judgment (Doc. 12) (pre-termination commissions), Fast Model’s motion for summary
judgment (Doc. 24) (pre and post-termination commissions and an ownership interest in
the football software), and Bailey’s motion to amend the complaint and to extend
discovery (Doc. 27).
For the reasons that follow, Bailey’s motion for partial summary judgment (Doc.
12) Count (1) and Count (IV) is GRANTED. Fast Model’s motion for summary judgment
(Doc. 24) is GRANTED as to Counts (II), (III), and (V) and DENIED as to Counts (I) and
(IV). Finally, Bailey’s motion to amend the complaint and to extend discovery (Doc. 27)
is GRANTED as to proposed count (VI) Tortious Interference with Contract and
DENIED as to proposed Count (VII) Intentional Infliction of Emotional Distress.
A. Employment Contract
The facts, as gleaned from the parties’ papers follow. Fast Model is a New
Jersey company specializing in software for athletic teams and coaches. Fast Model
hired Bailey in January of 2010 to sell coaching software to high school and college
athletic teams. The parties entered into an employment contract in January of 2010,
which provided for an annual base salary of $24,000, plus commissions of twenty-five
percent (25%) of gross sales for new accounts, and seventeen and one-half percent
(17.5%) of gross sales on renewals of existing clients. Bailey’s duties required him to:
lead, run and manage the Fast Model Football division as well as selling to
division 1 baseball and softball teams. Developing new client relationships
and expanding our market share by selling the products offered by Fast
The contract also stated that Bailey was an “at-will” employee and could be terminated
at any time for any reason, with or without notice. Further, Bailey’s commissions were to
be paid “at the end of each month once our account receivable department has
When Bailey joined Fast Model, it was in the process of developing footballcoaching software. Bailey says he helped develop the software and performed market
research. Bailey says that his advice and input were critical to the project. The
software was not ready to bring to market in time for the 2010 season. As a result, the
parties agreed to modify Bailey’s employment contract in April 2010. Instead of selling
football software, Bailey was to sell basketball software to NCAA Division I college
teams in the Eastern portion of the United States. During the negotiations for contract
modification, Bailey agreed that his commission on renewal contracts would decrease
from seventeen and one-half percent (17.5%) to seventeen percent (17%). The
remaining contract terms stayed the same. Bailey sold basketball software from May to
August 2010 to NCAA Division I teams.
Sometime in the beginning of 2010, Bailey encouraged Fast Model to hire his
former girlfriend, Heidi England (England). Fast Model hired England to work in
accounts receivable; she did not report to Bailey. Soon thereafter, the relationship
between Bailey and England soured. Fast Model says that Bailey engaged in a
campaign of sexual harassment toward England. Specifically, that Bailey threatened to
use his influence in the company to have England fired unless she agreed to his
demands for sexual favors. England says that Bailey harassed her with unwanted
telephone calls, including calling her ninety-three (93) times in one day from his work
phone, sending profane emails, and coming to her home uninvited.
England brought the situation to the attention of her supervisor at Fast Model on
August 17, 2010, who relayed her complaint to Comerford. Comerford spoke to Bailey
and instructed him not to have further contact with England. Fast Model retained a law
firm to investigate England’s allegations. Despite Fast Model’s instructions to the
contrary, Bailey attempted to contact England by phone under the guise of discussing a
client issue. England reported the attempt to Fast Model management. Bailey
subsequently e-mailed England. The email, according to Fast Model, contained veiled
threats that scared England into reporting Bailey to the police.
Fast Model suspended Bailey on August 26, 2012 pending the completion its
investigation. The attorney retained by Fast Model to investigate England’s complaint
concluded that Bailey’s conduct amounted to quid pro quo sexual harassment and
hostile work environment sexual harassment. Accordingly, Fast Model’s attorney
recommended Bailey’s termination. Fast Model terminated Bailey effective September
10, 2010. Bailey says that he was not paid all of the commissions he earned.
III. Bailey’s Motion for Partial Summary Judgment
Bailey moves the Court to enter partial summary judgment in his favor on Counts
(I) Violation of Michigan Sales Representative Commission Act (MSRCA) M.C.L.
§600.2961 and (IV) Breach of Contract. Bailey calculates that his unpaid commission
total $29,463.43. Bailey requests treble damages, $88,390.29, attorney’s fees, and
costs. As will be discussed, Fast Model argues that Bailey cannot recover based on the
faithless servant doctrine and the absence of a contractual right to post-termination
IV. Fast Model’s Motion for Summary Judgment
Fast Model moves the Court to enter for summary judgment in its favor. Fast
Model says that as to Counts (I) and (IV), Bailey forfeited compensation through
misconduct. As to Count (II), Bailey is not entitled to recover under a procuring cause
claim because he did not procure any accounts. Further, Fast Model argues that the
procuring cause doctrine does not apply to terminations for cause. Finally, Fast Model
says that Bailey cannot prevail on Counts (III) and (V) because he was compensated in
accordance with the terms of his written contract.
V. Legal Standard for Summary Judgment
Summary judgment will be granted when the moving party demonstrates 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). There is no genuine issue of
material fact when “the record taken as a whole could not lead a rational trier of fact to
find for the non-moving party.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475
U.S. 574, 587 (1986).
The nonmoving party may not rest upon his pleadings; rather, the nonmoving
party’s response “must set forth specific facts showing that there is a genuine issue for
trial.” FED. R. CIV. P. 56(e). Showing that there is some metaphysical doubt as to the
material facts is not enough; “the mere existence of a scintilla of evidence” in support of
the nonmoving party is not sufficient to show a genuine issue of material fact. Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). Rather, the nonmoving party must
present “significant probative evidence” in support of its opposition to the motion for
summary judgment in order to defeat the motion. Moore v. Philip Morris Co., 8 F.3d
335, 340 (6th Cir. 1993); see also Anderson, 477 U.S. at 249–50. “[C]ourts are required
to view the facts and draw reasonable inferences in the light most favorable to the party
opposing the summary judgment motion.” Scott v. Harris, 550 U.S. 372, 378 (2007)
(quoting United States v. Diebold, Inc., 369 U.S. 654, 655 (1962) (internal mark
VI. Discussion: Bailey’s Motion for Partial Summary Judgment
A. Michigan Sales Representative Commission Act
1. M.C.L. §600.2961
The inquiry considering what commissions, if any, Fast Model owes Bailey must
begin with the MSRCA, M.C.L. §600.2961.1 The MSRCA provides that its terms are
mandatory and cannot be waived by contract. Section 600.2961(4) requires a principal
to pay all commissions due to a sales representative at the time of termination within
forty-five (45) days. Commissions that become due after the date of termination shall be
Section 600.2961 applies to sales made out of state by a Michigan sales
representative. See Stonemen Group, Inc. v. Metalforming Technologies, Inc., 362
F.Supp.2d 896 (E.D. MI 2005).
paid within forty-five (45) days of the date the commission became due. The MSRCA
states that the terms of the contract between the parties determine when a commission
becomes due. The contract between Fast Model and Bailey states that a commission
becomes due at the end of the month that Fast Model receives payment from the
Fast Model admits that $1,415 in commissions became due to Bailey from
August 27, 2010 to September 10, 2010. Fast Model also acknowledges that if Bailey
“had not been suspended…he would have earned $10,024.50” during the period from
August 27, 2010 through September 7, 2010.
2. The Three Groups
Bailey calculates that Fast Model owes him a total of $29,409.50 in unpaid
commissions. The total, according to Bailey, can be broken down into three different
categories. The first group represents sales invoiced and paid by the customer prior to
September 10, 2010, which Bailey calculates at $12,409.50. The second group consists
of sales invoiced before September 10, 2010 but paid by the customer after September
10, 2010, which total $11,226.93. Finally, the third group consists of sales originally
invoiced before September 10, 2010 but later re-invoiced and paid after September 10,
2010. Bailey says the third group totals $5,827. Bailey also seeks penalties under
M.C.L. §600.2961, which allows for the recovery of a sum twice the amount of unpaid
commissions, the unpaid commissions, attorney’s fees, and court costs.
3. Accrue v. Due
The MSRCA requires Fast Model to pay Bailey the commissions from all three
groups. The unifying characteristic of the three is that the commissions accrued prior to
termination. Bailey’s right to the commission accrued when he made a sale; the date the
customer paid dictated when the commission became due. Whether the commission
became due before or after termination is irrelevant.
The Michigan Court of Appeals decided a similar case, which is instructive here.
In Walters v. Bloomfield Hills Furniture, 228 Mich. App. 160 (Mich. Ct. App. 1998)2, the
plaintiff Walters, a furniture sales representative, voluntarily terminated his employment
with the furniture store. The store subsequently refused to pay commissions on furniture
sold by Walters but delivered after he terminated his employment. The store argued that
its contract with Walters disclaimed payment of commissions on sales delivered after
his employment ended.
The court of appeals held that the MSRCA rendered contradictory contractual
terms void. The court explained “[t]he text of the statute indicates that the Legislature
intended to ensure that sales representatives are paid the commissions to which they
are entitled, especially where those commissions come due after the termination of the
employment relationship. This conclusion is supported by the legislative analysis.” Like
Walters, Bailey’s commissions became due upon a subsequent triggering event; for
Walters the triggering event was the customer taking delivery. For Bailey, the date the
customer paid the invoice determined when his commission became due. The MSRCA
recognizes that commissions accrue before they become due. It requires payment of all
commissions that accrued before the date of termination.
Federal courts considering claims under the MSRCA have questioned the court’s
reasoning and the subsequent adherence by the court of appeals as to whether the
parties may waive post-termination commissions through an employment contract. See
e.g. Eungard v. Open Solutions, Inc., 517 F.3d 891, 898 (6th Cir. 2008). Because
Bailey’s employment contract contained no such limitation, this concern does not apply.
B. The Faithless Servant Doctrine
Nevertheless, Fast Model says that it is excused from paying commissions owed
to Bailey based on the faithless servant doctrine. The faithless servant doctrine prohibits
an agent from profiting from misfeasance or malfeasance. An agent who engages in
misconduct will forfeit the compensation related to the service that was improperly
performed. See e.g. Harris v. Specialties Distributing Co., 305 Mich. 373, 379 (1943).
Fast Model argues that because Bailey was involved in sexual harassment while at
work, he is not entitled to his unpaid commissions.
The faithless servant doctrine does not apply to Bailey because his misconduct
was not related to the underlying service for which he seeks compensation. The
faithless servant doctrine applies in cases where an employee seeks compensation for
an improperly performed service.3 For example, in Burnam v. Kelly, 299 Mich. 452
(1941), the executor of an estate forfeited his right to compensation through misconduct
and mismanagement of the estate’s property. The executor, Kelley, sold timber on the
estate’s land without permission of the court or an appraisal. Further, Kelley failed to
collect rents and pay taxes, destroyed documents, and filed false papers with the court.
The estate’s beneficiaries sued for damages. Kelley attempted to offset his liability to
the estate by the amount of his management fee. The court held Kelley could not collect
a fee for work on behalf of the estate because his work amounted to gross
mismanagement of the estate.
Similarly, the court held an attorney who breaches his fiduciary duty to his client
could not collect payment for the underlying services. Rippey v. Wilson, 280 Mich. 233,
Additionally, the faithless servant doctrine usually involves a breach of fiduciary duty
although the Court knows of no Michigan authority that specifically so holds.
245, 273 N.W. 552 (1937). The plaintiffs in Rippey were patent attorneys who
represented an inventor competently for several years. A dispute arose over unpaid
fees and the attorneys’ representation thereafter was improper. The court allowed the
attorneys to recover their fees for services performed faithfully but not for services that
included misconduct. Rippy instructs misconduct is not a complete bar to compensation
so long as the services are severable.
The doctrine remains unchanged in more recent decisions of the court of
appeals. See Tooling Mfg. & Technologies Ass'n v. Tyler, 2010 WL 5383529 (Mich. Ct.
App. December 28, 2010). For example, in Tooling Mfg. & Technologies Ass’n, Tyler
was an insurance agent who worked for a trade association. Tyler was tasked with
selling insurance policies to member companies. Tyler diverted commissions belonging
to the association to a company he owned. After his deceit became known, the
association sued to recover its losses. Tyler argued that the association owed him
bonus payments on the same sales. The Tooling court refused to award Tyler bonuses
derived from business he was simultaneously misappropriating for personal gain. Tyler
could not collect payment for work that included misconduct.
Nevertheless, Fast Model argues that the faithless servant doctrine is a complete
bar to compensation. Fast Models cites to Toy ex rel. Ketcham v. Lapeer Farmers Mut.
Fire Ins. Ass'n, 297 Mich. 188, 193 (1941), to support the proposition that an employee
who engages in misconduct forfeits all of his compensation. Toy involved an insurance
company that was in receivership after being badly mismanaged. The treasurer of the
company sued to collect back salary. The court denied recovery because the treasurer’s
performance of his duties was grossly negligent. In Toy, denial of the treasurer’s entire
salary was proportional to his complete failure to perform his duties. Toy is
distinguishable because the treasurer in Toy sought compensation for services
improperly performed. Such is not the case with Bailey.
Next, in support of its argument, Fast Model points to the language of Harris v.
Specialties Distributing Co., 305 Mich. 373, 379 (1943).
An agent is entitled to no compensation for conduct which is disobedient
or which is a breach of his duty of loyalty; if such conduct constitutes a
[willful] and deliberate breach of his contract of service, he is not entitled to
compensation even for properly performed services for which no
compensation is apportioned. Id. at *8 (citing 2 Restatement Agency, 2d, §
469, p. 399).
However, the phrase “he is not entitled to compensation even for properly performed
services” should not be plucked out of context and severed from its modifying clause to
fashion a new rule of law heretofore unknown to Michigan courts.
In all of the cases discussed above, the disputed compensation relates to the
improperly performed service. Bailey did not commit misconduct with respect to his
duties as a salesperson; therefore, he is not profiting from his misdeeds. The faithless
servant doctrine does not apply to Bailey.
C. Actively Servicing Accounts
In the alternative, Fast Model argues that for Bailey to earn a commission he had
to be actively servicing an account. This would preclude recovery on commissions that
accrued during Bailey’s suspension. This period of suspension covers the vast majority
of the commissions in dispute. Fast Model offers the affidavit of one of its employees
who avers to the fact that Fast Model did not intend that a suspended employee to
collect commissions. First, to the extent that this policy is inconsistent with the MSRCA
it is void. Second, there was no policy in place regarding payment of commissions
during a suspension when Bailey was suspended. There is nothing in the record to
show that any policy on compensation during suspension was communicated to Fast
Model employees. As such, Fast Model cannot create a post-hoc condition of
employment to avoid paying accrued commissions. Fast Model drafted the contract;
accordingly, ambiguities are resolved against Fast Model.
Because Fast Model failed to timely pay commissions of $29,463.43, the MSRCA
entitles Bailey to treble damages totaling $88,390.29, plus reasonable attorney’s fees,
and court costs.
VII. Discussion: Fast Model’s Motion for Summary Judgment
A. Procuring Cause Doctrine: Post-Termination Sales
Next, Bailey says the procuring cause doctrine entitles him to post-commission
sales; it does not. The procuring cause doctrine is an equitable remedy designed to
ensure salespeople are compensated for their work. The purpose of the principle is to
ensure fair dealing and to “prevent a principal from unfairly taking the benefit of the
agent’s or broker’s services without compensation.” Steinke & Associates, Inc. v.
Loudon Steel, Inc., No. 263362, 2006 WL 664346 (Mich. Ct. App. March 16, 2006)
(citing Reade v. Haak, 147 Mich. 42 (1907)). The doctrine was first applied in Michigan
with respect to the sale of real estate. The doctrine prevented a seller from dismissing
his agent to avoid paying commission after the agent found a buyer but before the sale
was complete.4 See e.g. Heaton v. Edwards, 90 Mich. 500 (1892); Ranson v. Weston,
110 Mich. 240 (1896).
For a discussion of the historical development of the procuring cause doctrine in
Michigan, see Randall Gillary, The History of the Procuring Clause Doctrine in Michigan,
74 MICH. B.J. 1264 (December 1995).
The Michigan Supreme Court decided the seminal case on the procuring cause
doctrine, Reed v. Kurdziel, in 1958. 352 Mich. 287 (1958). In Reed, the parties had an
oral contract for commission on sales to customers secured by Reed. Reed was the
exclusive sales agent for the company’s products. Kurdziel paid Reed the agreed upon
rate for the initial sales but refused to remit a commission on renewals from the same
customers. Reed sued to recover commissions on the renewals. The trial court made
findings of fact that the parties intended that Reed would receive commission on the
“account” as opposed to the first sale. Moreover, the court found the contract was
intended to be of an unlimited duration. Affirming an award to Reed, the court noted that
Reed did not have to personally close every sale, it was sufficient that he was the
procuring cause. Reed and its progeny make clear that an express agreement between
the parties determines the salesperson’s right to post-termination commissions. See
e.g. Titchenal v. Jackson & Church Co., 375 Mich. 281 (1965).5 The present case
contains no such agreement.
This Court considered an argument similar to Bailey’s several years ago. The
[t]he question of whether an agent is entitled to continuing commissions
on accounts which he has introduced to the principal, but which the
principal subsequently appropriates for himself, has never been directly
addressed by Michigan appellate courts. However, a brief analysis of the
relevant authority suggests that no such right exists.
Despite plaintiff's vigorous assertions that he is entitled to continuing
commissions for all sales to customers he originally procured, the law is
clear that, absent any agreement to the contrary, a salesman is entitled
Subsequent decisions also make clear that whether or not an agent is the procuring
cause is a question of fact for the jury.
only to commissions for sales he actually makes. Plaintiff has not cited a
single case to the contrary. Roberts Associates, Inc. v. Blazer Int’l Corp.,
741 F. Supp 650, 652 (ED MI 1990)(Cohn, J).
The facts in this case do not lend support to the notion that Fast Model and Bailey
intended to establish a right to indefinite and perpetual commissions.6 In contrast, the
parties defined the life of their relationship as terminable at-will by either party. The
procuring cause doctrine cannot be used to fashion a better deal than the one for which
Bailey bargained. Aerotronics, Inc. v. Pneumo Abex Corp., 62 F.3d 1053, 1065 (8th Cir.
1995) (applying Michigan law and explaining the procuring cause doctrine “cannot be
used to supplant or contradict terms of contract entered into between parties.”) The
ability of his employer to discharge him at any time for any reason is fundamentally
incompatible with the argument Bailey advances.
Fast Model argues that the procuring cause doctrine does not apply in
terminations for cause. This argument finds support in a recent Michigan Court of
Appeals decision. KBD & Associates, Inc. v. Great Lakes Foam Technologies, Inc., No.
303044, 2012 WL 800650 (Mich. Ct. App. March 15, 2012). The sales representative in
KBD was fired after a large client of his principal refused to work with him. The court of
appeals stated that the procuring cause doctrine did not apply because the salesperson
was not fired to avoid paying commissions.
Finally, Bailey’s claim must be viewed against the backdrop of the purpose of the
procuring cause doctrine. The procuring cause doctrine is an equitable remedy
designed to protect a salesperson from unscrupulous principals who would use his
Fast Models does not cite a case, nor is the Court aware of a case, where a
salesperson succeeded under the procuring cause doctrine to secure “commissions for
life” absent the express agreement of the parties.
services but not compensate him. Fast Model terminated Bailey for sexual harassment.
The procuring cause doctrine does not apply.
B. Contractual Right to Post-Termination Commissions
Next, Bailey says that his contract entitles him to renewal commissions on the
accounts he serviced. The basis of this assertion is the language of the contract that
says Bailey will receive a seventeen percent (17%) commission on “all existing
renewal.” Bailey interprets “existing” to mean, “as long as the account exists.” Bailey’s
interpretation is unconvincing. Bailey is an “at-will” employee and as such has no
expectation of commissions beyond the life of his employment with Fast Model. It is a
principle of contract law that the contract must be read as a whole to give effect to all of
its terms. 11 WILLISTON
CONTRACTS § 32:9 (4th ed.). A perpetual right to
commissions is incompatible with an at-will employment relationship.
C. Promissory Estoppel
Next, Bailey says the Court should award him a twenty percent (20%) ownership
interest in Fast Model’s football software under the doctrine of promissory estoppel.
“[W]ho, by his language or conduct, leads another to do what he would not otherwise
have done, shall not subject such person to loss or injury by disappointing the
expectations upon which he acted.” Dickerson v. Colgrove, 100 U.S. 578 (1879). As the
preceeding quote explains, equity can render a gratuitous promise enforceable when
detrimentally relied upon by the promissee. Thus, an action in promissory estoppel first
requires a promise. There is nothing in the record to indicate that Fast Model made any
promise to Bailey concerning an ownership interest in its football software or
compensation beyond his base salary and future sales commissions. Accordingly,
Bailey cannot maintain a promissory estoppel claim.
D. Quantum Meruit
In the alternative, Bailey says he should be awarded an ownership interest in
Fast Model’s football software based on a theory of unjust enrichment or quantum
The elements of a claim for unjust enrichment are: (1) receipt of a benefit
by the defendant from the plaintiff and (2) an inequity resulting to plaintiff
because of the retention of the benefit by defendant. Dumas v. Auto Club
Ins. Ass'n, 437 Mich. 521, 546 (1991). In such instances, the law operates
to imply a contract in order to prevent unjust enrichment. Martin v. East
Lansing School Dist., 193 Mich. App. 166, 177 (1992). However, a
contract will be implied only if there is no express contract covering the
same subject matter. Id.; Campbell v. City of Troy, 42 Mich.App. 534, 537
(1972) (citations altered).
Barber v. SMH (US), Inc., 202 Mich. App. 366 (Mich. Ct. App. 1993). Bailey says that
his work in developing Fast Model football coaching software was beyond the scope of
his contractual duties. Further, Bailey says his contributions to the software were
significant and Fast Model stands to benefit from his work without compensating him.
Bailey’s argument fails for several reasons; most importantly, it fails because there is an
express contract covering the same subject matter.
Bailey’s employment contract requires him to “lead, run and manage the Fast
Model Football division as well as selling…” First, the language “as well as” belies
Bailey’s assertion that his role was limited exclusively to sales. The verbs “lead” “run”
and “manage” contemplate services beyond sales. Second, when Bailey was hired he
knew the football software was not yet operational and that Fast Model hoped it was be
ready by spring. Bailey knew he would not be able to sell football software for several
months after his employment started and his base salary would be his only
compensation. Moreover, Bailey’s contract gives Fast Model the right to alter his
responsibilities at its sole discretion. Bailey received his bargained for compensation in
the form of his base salary.
The Michigan Court of Appeals rejected a similar argument made by a sales
representative. In Barber supra, a manufacturer’s representative who sold watches
argued that his untimely termination unjustly enriched his former employer. Barber
asserted that his employer used his knowledge and expertise to develop its sales
accounts and then terminated him without compensation for the value of his service.
The court of appeals rejected his argument, finding that an express contract governing
the salesperson’s compensation precluded a claim for unjust enrichment.
Bailey’s claim is barred because the law will not imply a contract where there is
an express contract covering the same subject matter. Belle Isle Grill Corp. v. City of
Detroit, 256 Mich. App. 463 (Mich. Ct. App. 2003). There cannot be an express and
implied contract covering the same subject matter at the same time. Superior
Ambulance Service v. Lincoln Park, 19 Mich. App. 655 (Mich. Ct. App. 1969).
VIII. Bailey’s Motion to Amend
Finally, Bailey moves to amend his complaint to add counts of tortious
interference with contract and intentional infliction of emotional distress (IIED) and to
add Comerford as a defendant.7 Bailey claims that Comerford convinced his
Fast Model argues that the Court lacks personal jurisdiction over Comerford. However,
Michigan’s long arm statute, M.C.L. §600.705 provides personal jurisdiction over a
tortfeasor when the consequence of the tort occurs in Michigan. Assuming Comerford
has no other contacts with Michigan if Bailey pled an actionable tort claim, then the
subsequent employer, Scoutware, LLC (Scoutware), to fire him in retaliation for filing the
present suit. The events that form the basis for Bailey’s motion to amend occurred
during the pendency of this case. Additionally, Bailey conducted discovery on his
termination through discovery in this case. The facts as gleaned from Bailey’s proposed
first amended complaint (Doc. 27 ex. 1) and exhibits (Doc. 27 ex. 2-4) follow.
A. Termination from Scoutware
After Bailey’s termination from Fast Model, he secured employment with a
company called Scoutware. During discovery, Fast Model requested any subsequent
employment contracts entered into by Bailey. With some hesitancy, Bailey disclosed his
agreement with Scoutware on October 17, 2011. Scoutware terminated Bailey on
November 4, 2011. Before Bailey’s termination Scoutware’s chief executive officer
asked him why he did not disclose his lawsuit against Fast Model.
Bailey’s counsel deposed Comerford on December 13, 2011. During questioning,
Comerford acknowledged he spoke with Kate Cronin, an employee of Scoutware.
Comerford says that Cronin is a business acquaintance with whom he maintains contact
and occasionally sees socially.
Bailey subpoenaed Cronin’s telephone records. The records show six (6)
telephone calls between Comerford and Cronin on October 19, 2011, two days after
Bailey disclosed his employment contract with Scoutware. The phone records show
Comerford and Cronin had not spoken previously for seven (7) months. After speaking
with Comerford, Cronin telephoned the executive vice president of Scoutware Andy
Clark, then telephoned Jeff Murphy the chief executive officer of Scoutware. On October
Court has personal jurisdiction over Comerford. If Bailey’s claim does not survive then
the issue is moot.
20 and 22, 2011, Cronin exchanged text messages with both Comerford and Murphy.
The day preceding Bailey’s termination from Scoutware, November 4, 2011, Cronin had
a forty-five (45) minute telephone conversation with Murphy and the two exchanged
eight (8) text messages.
Bailey’s counsel expressed his concern on December 3, 2011 to Fast Model that
Bailey was terminated in such close proximity to the disclosure of his Scoutware
employment contract. Two days later, December 5, 2011 Comerford called Cronin and
spoke for twenty (20) minutes and the two exchanged four (4) text messages. During
his deposition, Comerford admitted to speaking with Cronin but denied discussing
Bailey beyond acknowledging that he previously worked for Fast Model. Two days after
his deposition, Comerford and Cronin exchanged ten (10) text messages and one
Bailey says that Comerford’s contacts with Cronin were designed to secure his
termination. Bailey says that the timing of the communications between Comerford and
Cronin raise the inference of intentional interference with Bailey’s contract with
B. Legal Standard
Under Fed. R. Civ. P. 15(a), a party may amend its pleadings after 20 days “only
by leave of court or by written consent of the adverse party” and leave to amend “shall
be freely given when justice so requires.” The decision whether or not to permit the
amendment is committed to the discretion of the trial court. See, e.g., Zenith Radio
Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 330-32 (1971); Estes v. Kentucky Util.
Co., 636 F.2d 1131, 1133 (6th Cir. 1980). This discretion, however, is “limited by Fed.
R. Civ. P. 15(a)’s liberal policy of permitting amendments to ensure the determination of
claims on their merits.” Marks v. Shell Oil Co., 830 F.2d 68, 69 (6th Cir. 1987) (citation
C. Tortious Interference with Contract
1. Prima Facie Case
A prima facie case of tortious interference with contract or expectancy requires
proof of the following: a business relationship, intentional interference, and damages.
CH Holding Co. v. Miller, No. 293686, 2011 WL 5008573 (Mich. Ct. App. Oct. 20, 2011)
(internal citation omitted). Improper interference can be shown either by proving “(1) the
intentional doing of an act wrongful per se, or (2) the intentional doing of a lawful act
with malice and unjustified in law for the purpose of invading plaintiffs' contractual rights
or business relationship.” Id.
Bailey had a contractual employment relationship with Scoutware of which Fast
Model and Comerford knew. The timing of Bailey’s termination following disclosure of
his Scoutware contract coupled with the timing of the telephone exchanges between
Comerford and Cronin raises a plausible claim that Comerford had something to do with
D. Intentional Infliction of Emotional Distress
Bailey’s final allegation is that James Goodwin, who is the chief operating officer
of Fast Model, sent a letter to the state unemployment agency saying that Bailey was
not entitled to unemployment benefits due to his misconduct. Bailey says that the sole
purpose of the letter was to retaliate against him for filing the present suit by interfering
in his ability to earn a living. The Sixth Circuit explained the tort of IIED as: “[o]ne who
by extreme and outrageous conduct intentionally or recklessly causes severe emotional
distress to another is subject to liability for such emotional distress.” Polk v. Yellow
Freight Sys., Inc., 801 F.2d 190, 195 (6th Cir.1986). Polk goes on to quote the Second
Restatement of Torts: “nor is the defendant liable ‘where he has done no more than to
insist upon his legal rights in a permissible way, even though he was well aware that
such insistence is certain to cause emotional distress.’” RESTATEMENT (2D)
46, comment g (1965).
M.C.L. §421.29(b) disqualifies an employee terminated for misconduct from
receiving unemployment benefits. Fast Model did nothing more than exercise its legal
right to challenge an award of unemployment benefits. Bailey has not stated a plausible
claim for IIED. As such, amendment would be futile.
Dated: May 2, 2012
UNITED STATES DISTRICT JUDGE
I hereby certify that a copy of the foregoing document was mailed to the attorneys of
record on this date, Wednesday, May 2, 2012, by electronic and/or ordinary mail.
Case Manager, (313) 234-5160
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