Cynthia Barton-Spencer v. Farm Bureau Life Insurance Company of Mi

STATE OF MICHIGAN

COURT OF APPEALS

CYNTHIA BARTON-SPENCER, UNPUBLISHED

March 22, 2016

Plaintiff/Counter-Defendant-

Appellant,

v No. 324661

Washtenaw Circuit Court

FARM BUREAU LIFE INSURANCE LC No. 13-000290-NZ

COMPANY OF MICHIGAN, FARM BUREAU

MUTUAL INSURANCE COMPANY OF

MICHIGAN, FARM BUREAU GENERAL

INSURANCE COMPANY OF MICHIGAN,

FARM BUREAU ANNUITY COMPANY OF

MICHIGAN, and COMMUNITY SERVICE

ACCEPTANCE COMPANY,

Defendants/Counter-Plaintiffs-

Appellees.

CYNTHIA BARTON-SPENCER,

Plaintiff/Counter-Defendant-

Appellant,

v No. 325153

Washtenaw Circuit Court

FARM BUREAU LIFE INSURANCE LC No. 13-000290-NZ

COMPANY OF MICHIGAN, FARM BUREAU

MUTUAL INSURANCE COMPANY OF

MICHIGAN, FARM BUREAU GENERAL

INSURANCE COMPANY OF MICHIGAN,

FARM BUREAU ANNUITY COMPANY OF

MICHIGAN, and COMMUNITY SERVICE

ACCEPTANCE COMPANY,

Defendants/Counter-Plaintiffs-

Appellees.

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Before: TALBOT, C.J., and WILDER and BECKERING, JJ.

PER CURIAM.

In these consolidated appeals arising out of a contract dispute between plaintiff/counter-

defendant, Cynthia Barton-Spencer, and Farm Bureau,1 Barton-Spencer appeals as of right

several rulings that the trial court made at various stages of the lower court proceedings. We

affirm in part, reverse in part, and remand for further proceedings in the trial court.

I. FACTUAL BACKGROUND

Farm Bureau hired Barton-Spencer as a salaried “employee agent” in the spring of 1998.

Slightly over a year later, she became an independent agent for Farm Bureau, opening an agency

in Whitmore Lake. As an independent agent, Barton-Spencer sold various Farm Bureau

insurance products on a commission basis, including life insurance. Her agency relationship

with Farm Bureau was governed by a written “agent agreement,” which conspicuously noted, in

several places, that Barton-Spencer would serve as an independent contractor:

Independent Contractor Relationship

The [Farm Bureau] Companies believe that insurance agents who operate as

independent contractors are best able to provide the creative selling, professional

counseling, and prompt, skillful service essential to the creation and maintenance

of successful multiple line insurance companies and agencies. The Companies do

not seek, and will not assert, control over the Agent’s daily activities, provided

that the Agent does not violate applicable laws or any terms of this Agreement or

any agreement or guidelines ancillary to this Agreement. The Companies expect

the Agent to exercise his/her own judgment as to the time, place, and manner of

soliciting insurance, servicing Michigan Farm Bureau Members and Farm Bureau

Insurance policyholders and otherwise carrying out the provisions of this

Agreement.

* * *

A. Agent’s Authority.

* * *

4. Principal Occupation. The fulfillment of this Agreement shall be

the Agent’s principal occupation.

* * *

1

For the sake of clarity, we refer to the defendants/counter-plaintiffs collectively as Farm

Bureau.

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C. Independent Contractor.

1. The Agent acknowledges that he/she is an independent contractor

for all purposes and situations governed by this Agreement. The relationship

between the Agent and the Companies created by this Agreement shall be

governed by those rules and laws governing the status of and relationships with

independent contractors and not those rules and laws governing employer-

employee relationships. Accordingly, the Agent has full control of his/her daily

activities, with the right to exercise independent judgment as to the time, place,

and manner of soliciting insurance, servicing policyholders, and otherwise

carrying out the provisions of this Agreement.

* * *

D. Agent’s Responsibilities. The Agent agrees to comply with the

Companies’ rules and regulations pertaining to the policies and products covered

by this Agreement; provided, however, that such rules and regulations shall not

interfere with the Agent’s status as an independent contractor.

The agent agreement also set forth the manner of Barton-Spencer’s compensation and specified

how the parties could terminate the agreement:

G. Compensation. The Companies shall pay the Agent commissions and

bonuses only as set forth in the applicable Agent Compensation Schedule. . . .

Farm Bureau [] has the right, in its sole discretion, to modify the Agent

Compensation Schedules. Notice of any such modification shall be provided to

the Agent.

* * *

2. Commissionable Premiums. Commissionable premiums shall

consist of only those premiums which are collected and retained by Farm Bureau

[] on business personally produced by or assigned to the Agent. If, after a

contract of insurance is issued and the commission is paid, the contract is changed

to include a different plan of insurance or the premium paid on the contract of

insurance is refunded for any reason, the Companies shall have the right to

determine what, if any, change in commission is required and the Agent shall

have such amount deducted from commissions.

3. First Lien. The Companies shall have first lien on all commissions or

other compensation due, or to become due, to the Agent in discharge of any

indebtedness owing to the Companies by the Agent.

4. Commission Deduction Authorization. The Agent agrees that the

Companies may deduct from the Agent’s commissions; bonuses, and other

compensation, all indebtedness or obligations which the Agent owes to the

Companies and/or which the Agent has obligated the Companies to pay. Such

indebtedness or obligations shall include, but shall not be limited to, any debts

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incurred by the Agent as a result of a New Agent Finance Plan Agreement and

any fees charged to the Agent as a result of the Companies’ rules or regulations.

* * *

I. Termination of Agreement.

1. Notice of Termination. The Companies or the Agent may

terminate this Agreement at any time, with or without cause, by giving notice of

termination, in writing, to the other party. Notice of termination need not include

the reason or reasons, if any, for such termination. The date of termination shall

be the date specified in the notice or, if no date is specified, the date of

termination shall be the date of delivery if the notice is delivered or the date of the

postmark if the notice is mailed.

Finally, the agent agreement provided that, in the event of litigation arising out of the parties’

agreement, Farm Bureau could, under certain circumstances, seek to recover its attorney fees and

costs from Barton-Spencer:

L. Miscellaneous.

* * *

5. Attorneys Fees and Costs. If the Companies are successful in any

suit or proceeding against the Agent brought to enforce any provision of this

Agreement, or brought to establish damages sustained by the Companies as a

result of the Agent’s violation of any provision of this Agreement, the Agent

agrees to reimburse the Companies’ attorney fees and costs as may be fixed by the

court in which such suit or proceeding is brought.

Barton-Spencer continued to work at the Whitmore Lake agency for roughly 13 years.

Her initial “book” of yearly premiums from established clients was between $200,000 and

$300,000, but over time she increased that figure to more than $800,000.

In 2010, representatives of Farm Bureau contacted Barton-Spencer to see if she was

interested in leaving her Whitmore Lake agency to take over another established agency in

Manchester, Michigan. To sweeten the deal, Farm Bureau promised that, if she changed

agencies, Barton-Spencer would continue to receive commissions on $200,000 of the Whitmore

Lake “book,” plus the commissions she would earn on the Manchester agency’s established book

of $1.1 million, for a total book of $1.3 million. Thus, on November 1, 2010, Barton-Spencer

left her former location and took charge of the Manchester agency. But for the first four months

after she changed agencies, Barton-Spencer did not receive the promised commission payments

on the $200,000 of the Whitmore Lake book, which amounted to unpaid commissions of

approximately $6,666.

Among the Farm Bureau products Barton-Spencer sold at the Manchester agency were

“[s]ingle premium whole life [(SPWL)] policies”—a type of “modified endowment contract”—

which generate dividends and interest during the policyholder’s life, and ultimately yield a “tax-

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free death benefit.” Unlike a traditional life insurance policy, which has continuing premium

payments over time, an SPWL policy is funded at the outset with the payment of a single, lump-

sum premium. When she sold an SPWL policy, Barton-Spencer received a one-time

commission of 5% of the premium that was generated. She actively marketed the policies to her

clients, characterizing them as “a great product.”

Relevant to this appeal and with regard to SPWL policies, Barton-Spencer perceived a

continuing “debate” about the tax consequences of funding an SPWL policy with money

transferred from a “qualified plan” account, i.e., an account receiving tax-deferred treatment

under the Internal Revenue Code (IRC), such as a 401(k) or an Individual Retirement Account

(IRA). In 2011 and 2012 Barton-Spencer sold several policies to clients who funded their

policies with qualified plan money despite knowing that using “qualified plan” money to fund an

SPWL policy might result in a taxable transfer under the IRC. Instead, Barton-Spencer informed

such clients that the transfers would be “honored” as nontaxable by the Internal Revenue Service

so long as the clients’ tax returns were handled “properly.”

Eventually, an outside professional who shared a common client with Barton-Spencer

contacted Farm Bureau and voiced concerns about the tax consequences of such transactions.

After auditing several of Barton-Spencer’s files, Farm Bureau began an investigation into the

transactions. At the conclusion of its investigation, Farm Bureau gave Barton-Spencer written

notice that it was terminating her agent agreement for cause:

[Y]our Agent Agreement is hereby terminated effective today, February 4,

2013[.]

* * *

[T]here are reasons for this termination, which relate to sales of [SPWL] policies.

The [Farm Bureau] Companies investigated policies sold by you and found a

pattern of tax advice to purchasers that the purchases funded by transfers of funds

from IRAs or other qualified plans could be used to purchase the policies with no

taxable event whereas the policyholders were subject to taxation. The resulting

business practices violate Michigan Insurance laws and rules and regulations of

the Companies in ways that include statements misrepresenting non-taxable

advantages of policies that actually resulted in policyholders being subject to

taxation, with accompanying misrepresentations that rollovers or transfers from

other financial institutions were to IRAs of Farm Bureau Life Insurance Company

of Michigan, when the funds were to be used to purchase policies that were not

qualified plans.

The Companies have concluded that the business practices of your agency

are not acceptable, and the net effect is to not have the level of service required by

your Agent Agreement, rules and regulations, and Michigan Insurance Laws.

Under the “Agent Commission Schedule” that was in effect at the time of termination, upon

termination of the agent agreement, Barton-Spencer would ordinarily have been entitled to

“extended earnings”—the continued payment, over a certain period, of a portion of her pre-

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termination commissions. At Farm Bureau’s option, however, such extended earnings could be

terminated

if the Agent violates any rule or regulation of any of the [Farm Bureau]

Companies, fails to comply with any of his/her obligations under his/her Agent

Agreement or Agent Employment Agreement, as the case may be, commits

and/or is convicted of a criminal act against any of the Companies, violates any

regulation of the Michigan Insurance Bureau, and/or violates a Michigan

Insurance Law.

In its termination letter to Barton-Spencer, Farm Bureau informed her that, given its conclusion

that her sales practices constituted “violations of [Farm Bureau] rules and regulations . . . the

Agent Agreement, and Michigan Insurance Laws,” it deemed her ineligible to receive extended

earnings. At the time of termination, however, Barton-Spencer had already received her

commissions on the premiums for the sale of the SPWL policies over which Farm Bureau

terminated her agent agreement.

II. PROCEDURAL BACKGROUND

The month after she was terminated, Barton-Spencer filed a four-count complaint against

Farm Bureau alleging: (1) breach of contract based on Farm Bureau’s refusal to pay extended

earnings; (2) failure, for four months, to pay her the promised commissions on the Whitmore

Lake “book,” and requesting an accounting thereof; (3) age discrimination in violation of the

Elliott-Larsen Civil Rights Act (ELCRA), MCL 37.2101 et seq.; and (4) violation of Michigan’s

Consumer Protection Act (CPA), MCL 445.901 et seq. Barton-Spencer demanded a jury trial on

“all issues in this cause unless expressly waived.” In its answer, Farm Bureau relied on Barton-

Spencer’s jury demand.

Roughly six months later, Farm Bureau filed a motion for summary disposition under

MCR 2.116(C)(10). In pertinent part, Farm Bureau argued that Barton-Spencer’s ELCRA and

CPA claims were fatally flawed because she was an independent contractor, not a Farm Bureau

employee, and as such she lacked the ability to assert such claims against Farm Bureau. The trial

court agreed, granting Farm Bureau summary disposition of the ELCRA and CPA claims.

The next day, Barton-Spencer filed an amended complaint, which added a claim of

defamation per se. She relied on her previously filed jury demand. Farm Bureau subsequently

sought and was granted summary disposition regarding the defamation claim.

Along with its answer to Barton-Spencer’s amended complaint, Farm Bureau included a

four-count counterclaim, only two of which are relevant to our instant analysis. Among its

general allegations, Farm Bureau alleged that (1) Barton-Spencer’s “actions”—i.e., her sales

practices regarding SPWL policies—“failed to comply with [her] obligations under the Agent

Agreement,” (2) she “gave tax advice in violation of [Farm Bureau’s] rules and regulations, and

moreover, the tax advice [she] provided . . . to customers was false and was [given] with the

purpose of inducing customers to use their tax-deferred retirement funds to purchase Farm

Bureau SPWL policies so that plaintiff could receive commissions on those sales,” and (3) that

Barton-Spencer persisted in such practices even after she was aware of the tax implications. The

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first counterclaim sought the return of $42,592.07 in commissions that were paid to Barton-

Spencer on SPWL policies that Farm Bureau subsequently refunded to customers. Farm Bureau

alleged that, because the premiums supporting such commissions had been refunded, Barton-

Spencer was unentitled to the commissions, was “liable to return [them] to Farm Bureau,” and

“would be unjustly enriched if . . . not required to return the commissions[.]” In the second

counterclaim, Farm Bureau sought to recover from Barton-Spencer, under the terms of the agent

agreement, its “attorney fees and costs in connection with this action.”

In response to Farm Bureau’s counterclaims, Barton-Spencer filed, among other motions,

a motion to strike Farm Bureau’s counterclaims. She argued that, with just slightly more than a

month before the scheduled end of discovery, she would have insufficient time to conduct

discovery regarding the counterclaims. In the alternative, Barton-Spencer argued that Farm

Bureau should be required to present a more definite statement regarding the nature of its

counterclaims. At the subsequent motion hearing, Barton-Spencer made another alternative

argument, orally requesting additional time for discovery. Reasoning that trial was scheduled to

begin in less than two months, and that it had already granted several adjournments, the trial

court held that no extension of the discovery dates would be permitted, and that the parties would

simply have to “accommodate each other with regard to [] discovery[.]” After taking the matter

under advisement, the trial court ultimately denied Barton-Spencer’s motion to strike the

counterclaims.

Three days before the jury trial began, Barton-Spencer filed a motion seeking a “directed

verdict” regarding Farm Bureau’s counterclaims. In support, she argued that the counterclaim

was an improper claim for unjust enrichment based on the agent agreement, not a claim for

breach of that agreement. Additionally, Barton-Spencer contended that, under the plain language

of the agent agreement, she had no obligation to return the commissions on which Farm Bureau’s

first counterclaim was premised. Farm Bureau filed a response, arguing that its counterclaim to

recover such commissions was for breach of contract, not unjust enrichment. Farm Bureau also

argued that Barton-Spencer’s motion was not a proper motion for a directed verdict but was,

instead, a “disguised motion” for summary disposition under MCR 2.116(C)(8), which was filed

long after the deadline set for such motions by the scheduling order. Because the jury trial had

already commenced at the time Farm Bureau filed its response, the trial court did not initially

entertain argument on the matter. Rather, Barton-Spencer’s motion for a directed verdict was

argued on the final day of the trial. At that time, the trial court denied the motion, reasoning that

Farm Bureau’s counterclaim was “clearly” for breach of the agent agreement and that sufficient

evidence had been presented for a rational trier of fact to find in Farm Bureau’s favor.

At the conclusion of the five-day trial, the jury returned a verdict indicating that (1)

Barton-Spencer’s “actions in connection with the sale of [SPWL] policies” contravened a “rule

or regulation of Farm Bureau,” the terms of the agent agreement, or “Michigan insurance law,”

(2) accordingly, Barton-Spencer was not entitled to extended earnings, (3) with regard to its

counterclaim, Farm Bureau was entitled to recover $49,027.64 from Barton-Spencer in

commissions she had been paid for SPWL policies that had subsequently been refunded, and (4)

conversely, Barton-Spencer was entitled to recover $6,666.66 for the commissions Farm Bureau

failed to pay her in the first four months after she moved to the Manchester agency. Farm

Bureau’s counterclaim seeking costs and attorney fees under the agent agreement was not

submitted to the jury.

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Instead, Farm Bureau filed a postjudgment motion seeking such costs and attorney fees.

In her response, Barton-Spencer objected, arguing that she was entitled to a jury trial regarding

the reasonableness of the attorney fees sought. Without expressly deciding whether Barton-

Spencer was entitled to a jury trial, the court granted Farm Bureau’s motion, concluding that the

attorney fees sought by Farm Bureau were reasonable when reduced by 30%. Thus, the trial

court awarded Farm Bureau attorney fees of $40,157.25, plus costs of $9,341.81, for a total

award of $49,499.06.

After it was granted those contractual costs and fees, Farm Bureau filed a motion seeking

its actual costs in the action—including attorney fees incurred since the trial court’s previous

order—as case evaluation sanctions under MCR 2.403(O). Reasoning that Barton-Spencer

“failed to obtain a verdict more favorable to her than case evaluation,” whereas Farm Bureau

“did obtain a more favorable verdict,” the trial court decided that Farm Bureau was entitled to its

actual costs under MCR 2.403(O). Noting its previous order regarding contractual attorney fees,

and deducting any “overlap” of such fees already awarded, the trial court granted Farm Bureau

an additional $32,242.50 in attorney fees.

III. ANALYSIS

A. STANDARDS OF REVIEW

Barton-Spencer raises numerous claims of error on appeal, thereby implicating numerous

standards of review. We review de novo a trial court’s ruling on a motion for summary

disposition, Johnson v Pastoriza, 491 Mich 417, 428; 818 NW2d 279 (2012), its decision

regarding a motion for a directed verdict, Aroma Wines & Equip, Inc v Columbian Distrib Servs,

Inc, 497 Mich 337, 345; 871 NW2d 136 (2015), any issues of statutory interpretation, including

the proper interpretation of the ELCRA, Elezovic v Ford Motor Co, 472 Mich 408, 418; 697

NW2d 851 (2005), issues of constitutional law, Brooks Williamson & Assoc, Inc v Mayflower

Const Co, 308 Mich App 18, 32; 863 NW2d 333 (2014) (citation omitted), “[t]he existence and

interpretation of a contract,” Kloian v Domino’s Pizza LLC, 273 Mich App 449, 452; 733 NW2d

766 (2006), and “the proper interpretation and application of a court rule,” Hanton v Hantz Fin

Servs, Inc, 306 Mich App 654, 661; 858 NW2d 481 (2014).

In reviewing a trial court’s decision on a motion for summary disposition pursuant

to MCR 2.116(C)(10), this Court considers the affidavits, pleadings, depositions,

admissions, and documentary evidence submitted by the parties in the light most

favorable to the nonmoving party. A motion for summary disposition under MCR

2.116(C)(10) should be granted if, there being no genuine issue of material fact,

the moving party is entitled to judgment as a matter of law. [Radina v Wieland

Sales, Inc, 297 Mich App 369, 372-373; 824 NW2d 587 (2012) (citations

omitted).]

With regard to summary disposition, our review of the record is limited “to the evidence

presented to the trial court at the time [the] motion was decided.” Peña v Ingham Co Rd Comm,

255 Mich App 299, 313; 660 NW2d 351 (2003).

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On the other hand, we review the trial court’s decisions regarding discovery for an abuse

of discretion. Shinkle v Shinkle (On Rehearing), 255 Mich App 221, 224; 663 NW2d 481

(2003). “A trial court abuses its discretion when its decision falls outside the range of principled

outcomes.” King v Mich State Police Dep’t, 303 Mich App 162, 175; 841 NW2d 914 (2013).

B. AGE DISCRIMINATION UNDER THE ELCRA

On appeal, Barton-Spencer does not argue, as she did in the trial court, that she was an

“employee” of Farm Bureau under the “economic reality test,” rather than an independent

contractor. See generally Ashker ex rel Estate of Ashker v Ford Motor Co, 245 Mich App 9, 12-

16; 627 NW2d 1 (2001) (noting that the economic reality test is used to determine whether an

employer-employee relationship exists under the ELCRA). Instead, she contends that the trial

court erred when it decided that the viability of her ELCRA claim was entirely dependent on her

status as a Farm Bureau employee.2 We agree that the trial court erred but, because it

nevertheless reached the right result, reversal is unwarranted.

In considering Farm Bureau’s motion for summary disposition regarding the ELCRA

claim, the trial court determined that Barton-Spencer was an independent contractor, not a Farm

Bureau employee. On that basis, the trial court granted Farm Bureau summary disposition. It

reasoned that, absent a direct employer-employee relationship, Barton-Spencer could not pursue

an ELCRA claim against Farm Bureau.

By so ruling, the trial court erred. Oftentimes, liability under the ELCRA is premised on

the existence of an employer-employee relationship. See id. Indeed, in pertinent part, MCL

37.2202(1) provides, “An employer shall not. . . . Fail or refuse to hire or recruit, discharge, or

otherwise discriminate against an individual with respect to employment, compensation, or a

term, condition, or privilege of employment, because of . . . age[.]” (Emphasis added.) But as

our Supreme Court explained in McClements v Ford Motor Co, 473 Mich 373, 386-387; 702

NW2d 166 (2005), amended 474 Mich 1201 (2005),3 the existence of an employer-employee

relationship is not a prerequisite to recovery under the ELCRA:

[A]n employer is liable under the [EL]CRA when it utilizes a prohibited

characteristic in order to adversely affect or control an individual’s employment

or potential employment. Thus, the key to liability under the [EL]CRA is not

simply the status of an individual as an “employee”; rather, liability is contingent

upon the employer’s affecting or controlling that individual’s work status.

2

Because Barton-Spencer did not raise this precise issue in the trial court, it is unpreserved. See

Hines v Volkswagen of Am, Inc, 265 Mich App 432, 443; 695 NW2d 84 (2005). We

nevertheless exercise our discretion to review it “because it is an issue of law regarding which all

the relevant facts have been presented.” See Breighner v Mich High Sch Athletic Ass’n, Inc, 255

Mich App 567, 578; 662 NW2d 413 (2003).

3

Since McClements was decided, MCL 37.2202 was amended in ways that are not germane to

the instant analysis. See 2009 PA 190.

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Accordingly, an employer can be held liable under the [EL]CRA for

discriminatory acts against a nonemployee if the nonemployee can demonstrate

that the employer affected or controlled a term, condition, or privilege of the

nonemployee’s employment.10

10

For example, a secretary who works for a temporary employment agency might

not be an “employee” at the office where she is sent to fill in. However, there is

little question that the employer at that office would dictate a term, condition, or

privilege of her employment with the temporary employment agency, at least

during the pendency of her temporary employment.

Here, the terms of the agent agreement and the agent commission schedule clearly establish that

Farm Bureau “affected or controlled a term, condition, or privilege of [Barton-Spencer’s]

employment[.]”4 See id. at 385. Therefore, contrary to the trial court’s ruling, Barton-Spencer

was not precluded as a matter of law, from pursuing a claim, if viable, under the ELCRA.

Even so, reversal is unwarranted because the trial court reached the right result, albeit it

for the wrong reason. See Hoffenblum v Hoffenblum, 308 Mich App 102, 114; 863 NW2d 352

(2014). To establish an ELCRA claim using indirect or circumstantial evidence of

discriminatory animus, a plaintiff must establish a prima facie case by “present[ing] evidence

that (1) she belongs to a protected class, (2) she suffered an adverse employment action, (3) she

was qualified for the position, and (4) her failure to obtain the position occurred under

circumstances giving rise to an inference of unlawful discrimination.” Sniecinski v Blue Cross &

Blue Shield of Mich, 469 Mich 124, 134; 666 NW2d 186 (2003). A prima facie case “creates a

presumption of unlawful discrimination,” i.e., a presumption that there is “a causal link between

the discriminatory animus and the adverse employment decision.” Id. at 134-135. Once the

plaintiff establishes a prima facie case, “the burden [] shifts to the defendant to articulate a

legitimate, nondiscriminatory reason for the adverse employment action.” Id. at 134. If the

“defendant produces such evidence, the presumption is rebutted, and the burden shifts back to

the plaintiff to show that the defendant’s reasons were not the true reasons, but a mere pretext for

discrimination.” Id.

A plaintiff can establish that a defendant’s articulated legitimate,

nondiscriminatory reasons are pretexts (1) by showing the reasons had no basis in

fact, (2) if they have a basis in fact, by showing that they were not the actual

4

Aside from the fact that the agent agreement gave Farm Bureau authority to terminate the

agency relationship “at any time, with or without cause,” it also (1) obligated Barton-Spencer “to

comply with [Farm Bureau’s] rules and regulations pertaining to the policies and products

covered” by the agreement, (2) permitted Farm Bureau to fine Barton-Spencer for violations of

such rules and regulations and to deduct such fines from her commissions, bonuses, and other

compensation, and (3) afforded Farm Bureau “the right, in its sole discretion, to modify the

Agent Compensation Schedules.” Indeed, under the agent commission schedule, Farm Bureau

also had the power to unilaterally terminate Barton-Spencer’s extended earnings, as it eventually

did.

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factors motivating the decision, or (3) if they were factors, by showing that they

were jointly insufficient to justify the decision. [Feick v Monroe Co, 229 Mich

App 335, 343; 582 NW2d 207 (1998).]

“Mere speculation or conjecture is insufficient to establish reasonable inferences of causation.”

Sniecinski, 469 Mich at 140.

There is insufficient evidence on this record for plaintiff to have sustained a claim of

discrimination against Farm Bureau, and therefore, summary disposition of Barton-Spencer’s

ELCRA claim was proper. First, she did not establish the fourth element for a prima facie case.

Although Barton-Spencer presented evidence that the Farm Bureau agent who replaced her was

16 years younger than Barton-Spencer, she failed to produce any evidence that age was a factor

in Farm Bureau’s termination decision. “While a plaintiff is not required to show circumstances

giving rise to an inference of discrimination in any one specific manner, the plaintiff's burden of

production remains to present evidence that the employer’s actions, if otherwise unexplained, are

more likely than not based on the consideration of impermissible factors.” Hazle v Ford Motor

Co, 464 Mich 456, 470-471; 628 NW2d 515 (2001) (quotation marks and citation omitted).

Because Barton-Spencer failed to produce such evidence, she failed to establish a prima facie

case of age discrimination under the ELCRA.

Second, even if Barton-Spencer had established a prima facie case, she failed to produce

evidence to rebut the legitimate, nondiscriminatory reason that Farm Bureau articulated for

terminating the agent agreement. Farm Bureau’s justification for terminating Barton-Spencer

was that Barton-Spencer persisted in falsely advising clients that they could fund SPWL policies

using “qualified plan” funds without incurring tax liability. It is immaterial whether such

funding actually creates tax liability. The germane inquiry is whether Farm Bureau was

motivated by discriminatory animus, “not whether [its decision was] wise, shrewd, prudent, or

competent.” See id. at 476 (citation omitted). Nevertheless, Barton-Spencer failed to produce

sufficient evidence to create a genuine issue of material fact on the question whether Farm

Bureau’s stated reason was a pretext. She provided no evidence (1) that Farm Bureau’s given

reason for terminating the agreement lacked any factual basis, (2) that such stated basis was not

an actual factor motivating Farm Bureau’s ultimate decision, or (3) that the stated reason was a

factor in the decision, but was insufficient to justify Farm Bureau’s decision.

C. FARM BUREAU’S COUNTERCLAIMS

Barton-Spencer presents four distinct claims of error regarding Farm Bureau’s

counterclaims. We address each in turn.

1. SUFFICIENCY OF PLEADING

Barton-Spencer argues that the trial court erred by denying her motion for a “directed

verdict” regarding Farm Bureau’s first counterclaim. Specifically, Barton-Spencer argues that

the trial court erred by failing to recognize that, on the face of the pleadings, the counterclaim

was an improper claim for unjust enrichment based on the agent agreement, not a claim for

breach of that agreement. We disagree.

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Although it was argued on the final day of the jury trial, Barton-Spencer’s motion for a

“directed verdict” was filed three days before the trial commenced. Thus, it was actually a

motion for summary disposition, not for a directed verdict. Compare MCR 2.116(B)(1) (“A

party may move for dismissal of or judgment on all or part of a claim in accordance with this

rule.”) and MCR 2.516 (“A party may move for a directed verdict at the close of the evidence

offered by an opponent.”).

“Michigan is a notice-pleading state.” Johnson v QFD, Inc, 292 Mich App 359, 368;

807 NW2d 719 (2011). A counterclaim is a pleading, MCR 2.110(A), and must be supported by

“[a] statement of the facts, without repetition, on which the pleader relies in stating the cause of

action, with the specific allegations necessary reasonably to inform the adverse party of the

nature of the claims the adverse party is called on to defend,” MCR 2.111(B)(1). “[I]t is well

settled that we will look beyond mere procedural labels and read the complaint as a whole when

ascertaining the exact nature” of a claim. Johnson, 292 Mich App at 368.

Viewed as a whole, within the context of the entire pleading, Farm Bureau’s

counterclaim was stated with sufficient specificity to reasonably inform Barton-Spencer of its

nature as a claim for breach of contract. Indeed, in its general allegations section, the

counterclaim specifically alleges that Barton-Spencer’s “actions”—i.e., her sales practices

regarding SPWL policies—“failed to comply with [her] obligations under the Agent

Agreement[.]” Hence, the trial court did not err by concluding that Farm Bureau’s counterclaim

was supported by sufficient allegations to reasonably inform Barton-Spencer of its nature.

2. INTERPRETATION OF THE AGENT AGREEMENT

Barton-Spencer also argues that, even assuming, arguendo, that Farm Bureau’s

counterclaim was stated sufficiently to satisfy MCR 2.111(B)(1), the trial court should have

granted her a directed verdict regarding that counterclaim. In support, Barton-Spencer argues

that the trial court should have decided as a matter of law that, under the plain language of the

agent agreement, Barton-Spencer’s retention of the contested premiums (for the sale of SPWL

policies) did not constitute a breach of the agent agreement. We disagree.

“The primary goal in the construction or interpretation of any contract is to honor the

intent of the parties.” Rasheed v Chrysler Corp, 445 Mich 109, 127 n 28; 517 NW2d 19 (1994).

To discern that intent, this Court “examin[es] the language of the contract according to its plain

and ordinary meaning.” Miller-Davis Co v Ahrens Const, Inc (After Remand), 495 Mich 161,

174; 848 NW2d 95 (2014). If the parties have “several agreements relating to the same subject

matter,” their intention “must be gleaned from all the agreements.” Omnicom of Mich v

Giannetti Inv Co, 221 Mich App 341, 346; 561 NW2d 138 (1997). “[E]very word, phrase, and

clause” must be given effect, and constructions “that would render any part of the contract

surplusage or nugatory” must be avoided. Klapp v United Ins Group Agency, Inc, 468 Mich 459,

468; 663 NW2d 447 (2003). “A contract is patently ambiguous only if, after the court has

engaged in its judicial duties of giving effect to the contract’s language, the court concludes that

a term is equally susceptible to more than a single meaning, or that two provisions of the same

contract irreconcilably conflict with each other[.]” Shay v Aldrich, 487 Mich 648, 678; 790

NW2d 629, 646-47 (2010) (quotation marks and citations omitted). “[T]he meaning of an

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ambiguous contract is a question of fact” that must be resolved by the fact-finder. Klapp, 468

Mich at 469.

At the time Farm Bureau terminated her agent agreement, Barton-Spencer had already

received her commissions on the sale of the SPWL policies for which she was terminated. Farm

Bureau’s counterclaim sought to recover such commissions from Barton-Spencer based on the

language of the agent agreement, particularly the following provisions:

G. Compensation.

* * *

2. Commissionable Premiums. Commissionable premiums shall

consist of only those premiums which are collected and retained by Farm Bureau

[] on business personally produced by or assigned to the Agent. If, after a

contract of insurance is issued and the commission is paid, the contract is changed

to include a different plan of insurance or the premium paid on the contract of

insurance is refunded for any reason, the Companies shall have the right to

determine what, if any, change in commission is required and the Agent shall

have such amount deducted from commissions.

3. First Lien. The Companies shall have first lien on all commissions or

other compensation due, or to become due, to the Agent in discharge of any

indebtedness owing to the Companies by the Agent.

4. Commission Deduction Authorization. The Agent agrees that the

Companies may deduct from the Agent’s commissions; bonuses, and other

compensation, all indebtedness or obligations which the Agent owes to the

Companies and/or which the Agent has obligated the Companies to pay. Such

indebtedness or obligations shall include, but shall not be limited to, any debts

incurred by the Agent as a result of a New Agent Finance Plan Agreement and

any fees charged to the Agent as a result of the Companies’ rules or regulations.

[Emphasis added.]

Barton-Spencer argues that the language above permitted Farm Bureau to deduct refunded

commissions from any future commission payments it owed Barton-Spencer, but it did not

obligate Barton-Spencer to return any commissions already paid to her, even if the premiums

supporting such commissions were later refunded.

In analyzing this point, the trial court concluded that the parties’ intent was a question of

fact for the jury to decide, thereby implicitly deciding that the language of the contract was

patently ambiguous. We agree.

Barton-Spencer is correct that the plain language of the agent agreement is silent about

whether she was entitled to retain paid commissions that were refunded after she was terminated.

But the contract’s silence in that regard does not render it unambiguous. Under the agreement,

“commissionable premiums” are “only” those that are both “collected and retained” by Farm

Bureau. It is undisputed that the premiums at issue here were refunded; hence, Farm Bureau did

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not retain them. Because Farm Bureau did not retain such premiums, they do not qualify as

“commissionable” premiums. In other words, Barton-Spencer had no right to receive a

commission on those premiums under the parties’ agreement, but it is silent about whether she

was obligated to return those commissions to Farm Bureau under the circumstances at bar.

Given the dichotomy between, on the one hand, the contract’s silence about the return of

previously paid commissions that are later refunded, and, on the other hand, its qualification that

premiums are only commissionable if they are retained by Farm Bureau, the contract is patently

ambiguous; it is equally subject to more than one reasonable interpretation. Consequently, it was

appropriate for the trial court to submit this issue to the jury for resolution at trial, and Barton-

Spencer’s instant claim of error merits no relief. See Klapp, 468 Mich at 469.

3. ADEQUACY OF DISCOVERY

Barton-Spencer also argues that the trial court erred by failing to grant her pretrial motion

for additional discovery regarding the counterclaim, and by failing to grant her postjudgment

motion for a new trial, which was premised on the purported inadequacy of discovery. We

disagree.

Although “Michigan has a broad discovery policy that permits the discovery of any

matter that is not privileged and that is relevant to the pending case,” our “court rules

acknowledge the wisdom of placing reasonable limits on discovery.” Alberto v Toyota Motor

Corp, 289 Mich App 328, 336; 796 NW2d 490 (2010). A trial court’s discovery ruling is only a

basis for reversal where the trial court committed error that actually prejudiced the appellant. In

re Forfeiture of $1,159,420, 194 Mich App 134, 141; 486 NW2d 326 (1992), citing MCR

2.613(A).

Barton-Spencer argues that, because Farm Bureau’s counterclaim was asserted just over a

month before the end of discovery, and the trial court refused to grant her additional discovery

regarding the counterclaim, she “was compelled to proceed to trial without meaningful discovery

on the [] counterclaim,” which resulted in “potential prejudice.” But she fails to cite evidence of

any actual prejudice, to explain why one month of discovery was inadequate—despite the

extensive discovery conducted earlier in the case regarding claims based on the same contract—

or to specify what additional discovery she would have conducted had she been afforded

additional time. Thus, Barton-Spencer’s instant claim of error necessarily fails. See id.; see also

In re TK, 306 Mich App 698, 712; 859 NW2d 208 (2014) (“A party cannot simply assert an error

or announce a position and then leave it to this Court to discover and rationalize the basis for her

claims, or unravel and elaborate for her her argument, and then search for authority either to

sustain or reject her position.”) (quotation marks, brackets, and citation omitted).

4. CONTRACTUAL ATTORNEY FEES

Finally, Barton-Spencer argues that the trial court erred by granting Farm Bureau

contractual attorney fees after Farm Bureau failed to adduce evidence supporting the

reasonableness of such fees at trial. She contends that, because the trial court decided the issue

based on evidence presented after the jury trial, she “was denied her right to have this issue

decided by the jury.” We agree.

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“Michigan generally follows the ‘American rule’ regarding attorney fees, which provides

that fees are not generally recoverable unless a statute, court rule, or common-law exception

provides otherwise.” Silich v Rongers, 302 Mich App 137, 147-148; 840 NW2d 1 (2013).

Exceptions to that general rule must be narrowly construed. Fleet Bus Credit v Krapohl Ford

Lincoln Mercury Co (After Remand), 274 Mich App 584, 589; 735 NW2d 644 (2007) (Fleet).

However, “[t]he parties to a contract may include a provision that the breaching party will be

required to pay the other side’s attorney fees and such provisions are judicially enforceable.”

Zeeland Farm Servs, Inc v JBL Enterprises, Inc, 219 Mich App 190, 195; 555 NW2d 733 (1996)

(Zeeland). “Attorney fees awarded under contractual provisions are considered damages, not

costs.” Central Transp, Inc v Fruehauf Corp, 139 Mich App 536, 548; 362 NW2d 823 (1984);

see also Fleet, 274 Mich App at 590-592 (holding that such attorney fees are general damages,

not special damages).

“In order to obtain an award of attorney fees as damages under a contractual provision

requiring such a payment, the party seeking payment must sue to enforce the fee-shifting

provision, as it would for any other contractual term.” Pransky v Falcon Group, Inc, 311 Mich

App 164, 194; ___ NW2d ___ (2015). Farm Bureau did so in its counterclaim, specifically

stating a cause of action to recover attorney fees under the agent agreement. However, because

“recovery is limited to reasonable attorney fees,” “[a] party claiming the right to recover

attorney fees under a contract must introduce evidence of the reasonableness of the attorney fees

to establish a prima facie case[.]” Zeeland, 219 Mich App at 195-196 (emphasis added).

Although Farm Bureau adduced evidence to support the reasonableness of its claimed

attorney fees, it did so in postjudgment motion proceedings before the trial judge, not during the

jury trial. Barton-Spencer objected, arguing that she was entitled to a jury trial regarding the

reasonableness of the attorney fees sought. Without deciding whether Barton-Spencer was

entitled to a jury trial, the trial court nevertheless granted Farm Bureau’s motion.

By doing so, the trial court erred. Barton-Spencer demanded a jury trial on all issues so

triable. “A right to a jury trial can exist either statutorily or constitutionally.” Madugula v Taub,

496 Mich 685, 696; 853 NW2d 75 (2014). Article 1, § 14 of Michigan’s 1963 Constitution

provides, “The right of trial by jury shall remain, but shall be waived in all civil cases unless

demanded by one of the parties in the manner prescribed by law.” Under the above provision, a

party in a civil case has a constitutional right to a jury trial “[i]f the nature of the controversy

would have been considered legal at the time the 1963 Constitution was adopted,” but no such

right exists “if the nature of the controversy would have been considered equitable[.]”

Madugula, 496 Mich at 705-706. “[W]e must consider the relief sought as part of the nature of

the claim to determine whether the claim would have been denominated equitable or legal at the

time the 1963 Constitution was adopted.” Id. at 706.

The contractual attorney fees sought by Farm Bureau were damages, see Fleet, 274 Mich

App at 590-592, and “claims for money damages were generally considered legal in nature at the

time the 1963 Constitution was adopted,” Madugula, 496 Mich at 713. Moreover, our Courts

have long recognized, in cases decided both before 1963 and afterward, that “[a]n action for

damages for a breach of contract is historically an action at law, not in equity.” See, e.g., Stroud

v Glover, 120 Mich App 258, 261; 327 NW2d 462 (1982), citing Reith v Univ Housing Corp,

247 Mich 104, 108; 225 NW 528 (1929). Furthermore, settled precedent indicates that the

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reasonableness of the contractual fees sought is a question that may be properly decided by a

jury. Zeeland, 219 Mich App at 199. Thus, we conclude that Barton-Spencer was entitled to

have the issue decided by a jury rather than the trial court.

That conclusion, however, does not end our analysis. Farm Bureau argues that, under the

plain language of the agent agreement, the amount of recoverable attorney fees and costs was to

“be fixed by the court in which [the] suit or proceeding [wa]s brought,” i.e., by the trial court.

Thus, Farm Bureau argues that Barton-Spencer agreed to have the amount of attorney fees and

costs judicially determined, thereby effectively waiving any right to a jury trial on the issue.

The right to a jury trial “cannot be forfeited by any means short of waiver[.]” Walters v

Nadell, 481 Mich 377, 384 n 14; 751 NW2d 431 (2008) (citation omitted). Such a waiver can be

effectuated by contract. Morris v Metriyakool, 418 Mich 423, 441; 344 NW2d 736 (1984); see

also In re Nestorovski Estate, 283 Mich App 177, 193; 769 NW2d 720 (2009) (citation omitted).

However, “[a]bsent an express waiver, a trial court, after a jury demand, must honor the right to

a jury trial with respect to damages.” Prentis Family Foundation v Barbara Ann Karmanos

Cancer Institute, 266 Mich App 39, 54; 698 NW2d 900 (2005) (emphasis added), see also Mink

v Masters, 204 Mich App 242, 247; 514 NW2d 235 (1994) (“[A]bsent an express waiver by

defendants of the right to a jury trial, the trial court was obligated to honor defendants’ right to a

jury trial on the issue of damages. The trial court, therefore, erred in conducting a hearing

instead of a jury trial on the issue of damages.”).

We conclude that the provision indicating that Farm Bureau’s contractual costs and

attorney fees would be “fixed by the court” was not an express waiver of Barton-Spencer’s right

to a jury trial on such damages. Because juries have the power to decide issues but lack

authority to enter orders or judgments, all judgments of a trial court are eventually “fixed” by the

court, even those following a jury trial. Thus, the “fixed by the court” language renders the

contract ambiguous on the question whether the parties intended to have the reasonableness of

contractual attorney fees decided by the trial court rather than a jury. By its very nature, such

ambiguous language cannot constitute an “express” waiver. Given the constitutional right at

issue, and the fact that the agent agreement fails to expressly mention that right—indeed, the

agreement contains neither the word “jury,” the phrase “jury trial,” nor any form of the word

“waive”—we cannot conclude as a matter of law that the parties intended to waive their

constitutional right to a jury trial on the question of attorney fees. “We cannot read words into

the plain language of a contract.” Northline Excavating, Inc v Livingston Co, 302 Mich App

621, 628; 839 NW2d 693 (2013).

Our conclusion in that regard is bolstered by the fact that Farm Bureau not only failed to

argue before trial that Barton-Spencer had waived her right to a jury trial, but also did not move

to bifurcate the trial of its counterclaims to permit a bench trial regarding the contractual attorney

fees. Instead, Farm Bureau waited until after the jury trial to challenge Barton-Spencer’s

entitlement to such a trial. At that point in the proceeding, however, it was too late for Farm

Bureau to make such motion. Under MCR 2.509(A), after a jury demand is made:

The trial of all issues so demanded must be by jury unless

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(1) the parties agree otherwise by stipulation[5] in writing or on the record,

or

(2) the court on motion or on its own initiative finds that there is no right

to trial by jury of some or all of those issues.

Here, the parties did not make such stipulation, Farm Bureau did not file a motion challenging

Barton-Spencer’s right to a jury trial,6 and the trial court never expressly found that Barton-

Spencer had waived her right to a jury trial. Consequently, even assuming that the contractual

language did waive the parties’ right to a jury trial, because the parties’ entitlement to a jury trial

as to attorney fees was never disputed before trial took place, a jury trial was mandatory under

MCR 2.509(A) regarding “all issues so demanded,” including Farm Bureau’s counterclaim for

contractual costs and attorney fees.

Moreover, we cannot conclude that, because of the trial court’s award of case evaluation

sanctions, the trial court’s error was harmless or that the instant issue is moot. Farm Bureau

argues that, since it was entitled to its reasonable costs and attorney fees as case evaluation

sanctions under MCR 2.403(O), it would have ultimately received “essentially the same” award

of costs and attorney fees regardless of the trial court’s contested ruling.

The case evaluation sanctions awarded by the trial court were, however, based on its

conclusion about the total amount of reasonable fees incurred by Farm Bureau, less the

“reasonable” costs and fees that it had already granted Farm Bureau under the terms of the agent

agreement. Thus, had the reasonableness of the contractually based costs and attorney fees been

decided by the jury, the final award might have been much different. Given the imprecise nature

of the reasonableness inquiry, we cannot conclude that the jury would have reached the same

conclusion that the trial court did about the exact amount of costs and fees that were reasonable.

IV. CONCLUSION

Hence, we generally affirm the trial court’s rulings, but we reverse its award of

$49,499.06 in contractual costs and attorney fees to Farm Bureau. Because the trial court’s

subsequent calculation of case evaluation sanctions under MCR 2.403(O) was dependent on its

deduction of “overlap” from the award we now reverse, we remand this matter to the trial court

for recalculation of such sanctions. On remand, the trial court should recalculate Farm Bureau’s

5

Under the plain language of the court rule, the agent agreement cannot be deemed a “stipulation

in writing” regarding the right to a jury trial in this action. In context, the phrase “stipulation in

writing,” as used in MCR 2.509(A)(1), clearly refers to an agreement, i.e., a stipulation, filed by

the parties to an action on the specific issue of whether that action will be tried before a jury.

6

On the contrary, in its answer Farm Bureau actually relied upon Barton-Spencer’s jury demand

to support its own right to a jury trial regarding its counterclaims.

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case evaluation sanctions without considering such “overlap.” We do not retain jurisdiction.

Each having prevailed in part, the parties may not tax costs under MCR 7.219.

/s/ Michael J. Talbot

/s/ Kurtis T. Wilder

/s/ Jane M. Beckering

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