Opinion
Case No. 1:98-CV-126.
January 19, 2000.
JUDGMENT
In accordance with the Court's Findings of Fact and Conclusions of Law;
IT IS HEREBY ORDERED that judgment is entered in favor of Plaintiff John McElwee and against Defendant Omco, Inc. as to Plaintiff's claims for breach of contract and for unpaid commissions in the amount of $9,565.47, plus prejudgment interest. Costs may be billed in accordance with 28 U.S.C. § 1920 and Local Civil Rule 54.1. Said Judgment shall bear interest from this date forward in accordance with 28 U.S.C. § 1920.
IT IS FURTHER ORDERED that a judgment of no cause is entered as to all other claims and counter-claims asserted in this suit. Attorney fees are disallowed.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
After extensive discovery and several rounds of dispositive motions, this matter was tried before the bench on August 17, 18, 19 and 23, 1999. The parties were permitted post-trial briefing, which was concluded on December 13, 1999 — the delay being occasioned by a confluence of events which included a need for supplemental briefing and the illness of one of Defendants' attorneys. Accordingly, pursuant to Federal Rule of Civil Procedure 52(a), the Court reaches the findings stated below based on its review of the exhibits, testimony and arguments of the parties.
A . Findings of Fact:
1. Plaintiff John McElwee was employed by World Publishing Company, a New York publishing company, which published Bibles, secular books and dictionaries from 1970 until 1974.
2. In 1974, World Publishing Company was acquired by Wm. Collins Publishers, Inc. ("Wm. Collins"). Plaintiff was, thereafter, employed as a sales representative for Wm. Collins until 1980 when Wm. Collins discontinued its business. John McElwee was a successful sales employee for Wm. Collins.
3. In April 1980, Riverside Book Bible, Inc. (also known as "Riverside Distributors" or "Riverside") acquired the Bible publishing business of World Publishing Company, Inc. ("World") from Wm. Collins and continued to operate World as a subsidiary or sister company. The companies, when acting jointly, are referred to as "Riverside/World."
4. In connection with the operations of World, Riverside/World determined not to retain the Wm. Collins in-house sales staff and instead determined to hire independent sales representatives.
5. In 1980, Gary Wharton operated Omni Communications as a Michigan sole proprietorship in the business of independently distributing religious products including Bibles.
6. As of June 24, 1980, after a process of earlier negotiations, Gary Wharton and Michael Anderson of Riverside/World agreed to a written contract for Omni Communications ("Omni") to distribute the World line of products on behalf of Riverside/World. The contract contained Omni's standard typed language requiring Riverside/World not to hire Omni trade representatives for a period of 12 months from the expiration or termination of the agreement. (Plaintiff's Exhibit 7.)
7. In June 1980, Gary Wharton and John McElwee agreed that John McElwee would work as a trade sales representative for Omni. (Plaintiff's Exhibit 3.)
8. Gary Wharton proposed to John McElwee a written trade representation contract containing Omni's standard typed non-completion clause which promised that McElwee "Not accept a position with or assignment from any Omni represented companies for at least one year after termination of service with Omni unless the publisher-supplier has a year prior terminated any agreement with Omni and contracts for the services of John McElwee." (Plaintiff's Exhibit 6 at ¶ 5 ("Paragraph 5 amendment").) McElwee then insisted on an amendment to the language which excepted World Bible Publishers (Riverside Book Bible) from the non-compete requirement as well as other amendments. ( Id.) Wharton agreed to this amendment and other amendments as of June 26, 1980. (Plaintiff's Exhibit 4.)
9. Wharton and McElwee reached agreement on the amended contract, which was approved by Wharton on June 26, 1980 and by McElwee on June 30, 1980 and was effective as of June 1980. (Plaintiff's Exhibit 8.)
10. The purpose of the Paragraph 5 amendment was to permit McElwee's employment by Riverside/World. The parties by the negotiated agreement should have understood from the language of the Paragraph 5 amendment that Omni would not interfere with McElwee's future post-termination solicitation of business from Riverside/World.
11. At the time of the agreement with McElwee, Gary Wharton had signed the Riverside/World agreement and more than a score of other vendor agreements which all contained Omni's standard language that the vendors would not hire Omni representatives within a year of the termination of the given contract. As such, it was Gary Wharton's intent as of June 1980 to contractually prevent Riverside/World from hiring Plaintiff upon his termination as a trade sales representative for Omni. Wharton did not disclose the contents of the Riverside/World agreement to McElwee as of the time that they reached their agreement. It was Wharton's usual practice to keep vendor contracts confidential.
12. On July 22, 1980, Gary Wharton, as sole incorporator of Omco, Inc. ("Omco"), filed articles of incorporation with the Michigan Department of Commerce to incorporate Omco, Inc. as a Michigan corporation to do the business of Omni Communications. (Defendants' Exhibit J.)
13. Gary Wharton, on behalf of Omco, entered into a written trade sales representation agreement with John McElwee on December 4, 1980, which superseded the June 1980 agreement. The terms of the December 1980 agreement were substantially similar to the earlier agreement and the terms of Paragraph 5 (the non-complete clause) were essentially identical. Said agreement became effective January 1, 1981. (Plaintiff's Exhibit 9.) At the time of the agreement, it was the intention of Gary Wharton and of Omco to contractually prevent Riverside/World from hiring Plaintiff upon his termination from Omco.
14. Omco, Inc. conducted its first meeting of the sole incorporator and first meeting of the board of directors on January 3, 1981 and thereby approved by-laws for the operation of the corporation, established its principal office and registered agent, approved the issuance of stock to Gary Wharton in exchange for the assets of his sole proprietorship, appointed a board of directors and officers, and made other arrangements for the operation of Omco, Inc.
15. Since its formation, Omco, Inc. has conducted business under the names of Omco, Omni and Dove Communications.
16. Hazel Wharton did not operate or participate in Omni Communications as a de jure or de facto partner nor as a sole proprietor. She did not induce John McElwee to believe that she was a partner or sole proprietor. She did not consent to any other person's representation that she was a partner or sole proprietor of Omni Communications. Once Omco was incorporated, Hazel Wharton served as an officer and director of Omco and communicated with her husband about the business of Omco. However, business decisions regarding contracts of sales representatives were made exclusively by Gary Wharton as the president of Omco, Inc.
17. Omco, Inc. subsequently entered into new contracts with Riverside/World, which superceded the 1980 contract and which contained like terms establishing that Omco, Inc.'s representation was "exclusive" and that Riverside/World would not hire Omco representatives within one year of the expiration or termination of the contract. (Plaintiff's Exhibits 27, 28 and 35.) The agreement between Riverside/World and Omco, Inc. of July 1995 by its terms was set to expire on June 30, 1998. (Plaintiff's Exhibit 35 at 6.) At the time that Omco, Inc. entered into said contracts, it was the intent of Omco, Inc. and Gary Wharton to contractually prevent Riverside/World from hiring McElwee upon his termination from Omco.
18. As an Omco, Inc. representative, John McElwee was very successful in selling religious products, won numerous sales awards and was the top Omco sales representative for many years. During these years, McElwee was aggressive in pursuing sales opportunities and helped Omco expand its business in both domestic and international markets.
19. Beginning in 1995, Nick Conner was hired as the Vice-President of sales and marketing for World Bible Publishing with the provision that World would be operated separately from Riverside. Skip Knapp was the President of Riverside and had final authority concerning decisions over sales representation for both World and Riverside.
20. In 1997, Gary Wharton approached his sales representatives including John McElwee and requested that they sign new contracts with Omco, Inc. McElwee had many concerns about the new contract, which were expressed to Wharton in a memorandum dated June 17, 1997. (Plaintiff's Exhibit 50.) Wharton responded to McElwee's memorandum by his memorandum of June 26, 1997. (Plaintiff's Exhibit 51.) McElwee then inquired by facsimile memorandum on July 2, 1997 whether he would be terminated if he refused to approve the new contract. The same day Wharton answered him by facsimile of a written note on the July 2, 1997 memorandum that he would be terminated if he refused to approve the new contract. (Plaintiff's Exhibit 52.)
21. On July 13, 1997, Gary Wharton met with John McElwee at the Christian Bookseller Association Convention in Atlanta, Georgia and told McElwee that they had to go their separate ways. This conversation was understood or should have been understood by the parties as a clarification that the July 2, 1997 notice to McElwee was written notice of his termination as a sales representative for Omco, Inc. effective 30 days from the written notice of termination of July 2, 1997 (written notice being required under the December 1980 agreement).
22. Following the July 13, 1997 conversation, McElwee and Wharton continued to deal with one another in August 1997 on the subject of termination and to finalize their dealings. During August and September 1997, they both actively pursued the representation of vendors in competition to one another.
23. Subsequent correspondence and discussion between the parties themselves and between the parties and vendors disclose inconsistent termination dates for John McElwee. Commission payments paid to McElwee by Defendant Omco, Inc. after August 1, 1997 (the termination date based on the July 2, 1997 facsimile correspondence) were not paid mistakenly because of a mistake as to the actual termination date of McElwee since the parties understood that the "official" termination date was unsettled. These payments were made with full knowledge of the arbitrariness of the "official termination date" and were paid to obtain McElwee's continued services after August 1, 1997 in order to provide interim service to vendors.
24. In addition to the commission payments made by Defendant Omco, Inc. for periods after August 1, 1997, Plaintiff at the behest of Defendant continued to make sales of Omco, Inc.'s contracted products without payment of ordinary commissions. As a result, Plaintiff lost expected commissions for these services (as well as earlier commissions that went unpaid) in the amount of $9,564.47. (Plaintiff's Exhibit 98; Defendant's Exhibit Y-1.)
25. McElwee communicated his termination to Skip Knapp (the President of Riverside) by letter of August 22, 1997. (Plaintiff's Exhibit 65.) He also communicated his termination to other vendors about this same time.
26. On September 9, 1997, Wharton sent a memorandum to McElwee stating that McElwee had no right to solicit work from any Omco vendor within one year of his termination (including Riverside/World). (Plaintiff's Exhibit 70.)
27. Between September 10, 1997 and September 12, 1997, Wharton sent out memoranda to Riverside/World and to many other vendors informing them that McElwee was voluntarily terminated in that he had declined to sign a new independent representative agreement. The memoranda also told vendors including Riverside/World that "His [John McElwee's] claim of "involuntary termination" as he puts it, incorrectly excuses him (and you, he thinks) from our (and his) agreement not to represent any of Omco's contracted publishers for the subsequent 12 months after his termination with Omco." The memoranda also referenced that Omco had reached an agreement in principle with World Bible Publishers to represent them through June 1999. (Plaintiff's Exhibits 71, 74, 75, 76, 77.)
28. During September 1997, Wharton apparently discussed McElwee's termination with these and other vendors consistent with the remarks in his memoranda. ( See, e.g., Plaintiff's Exhibit 87.)
29. On September 11, 1997, Wharton announced to his sales representatives that Omco would represent World through June 1999 and Riverside through June 2000. (Plaintiff's Exhibit 72.)
30. On September 12, 1997, Wharton communicated to Riverside/World that they had the right to solicit John McElwee for international sales (but not for domestic sales). (Plaintiff's Exhibit 78.) At the time, Omco and Riverside/World were finalizing a contract which did not include permanent plans for international sales representation.
31. On September 15, 1997, McElwee wrote to Wharton to inform him that their June 1980 contract included an exception for World Bible Publishers (Riverside Book Bible), which permitted him to solicit work from World. (Plaintiff's Exhibit 79.) Wharton responded by memorandum of the same day stating that he was delaying issuance of McElwee's commission check and that "breaches of our agreement relative to representing existing Omco vendors must be resolved to our mutual satisfaction." (Plaintiff's Exhibit 80.) This correspondence refers in part to an oral agreement that the parties reached around September 9, 1997, which allegedly provided that McElwee agreed to abide by the non-compete clause in his contract with Omco provided that Omco would permit him and former vendors to contract for sales. ( See also Plaintiff's Exhibit 70.)
32. At the time of the September 9, 1997 agreement, John McElwee had requested information from Gary Wharton relating to restrictive clauses in vendor contracts prohibiting the hiring of Omco representatives (including Omco's contract with World/Riverside). As of September 9, 1997, John McElwee and his counsel Kenneth McElwee were not provided such information and were not aware of such information independently.
33. In the Spring of 1997, Nick Conner formulated a plan to renegotiate the 1995 Omco/Riverside agreement (which did not expire until 1998) in order to conduct more World/Riverside sales through in-house employees and thereby decrease the cost of sales. Nick Conner began discussions with Gary Wharton in April 1997 and serious negotiations were later conducted in August and September, 1997, culminating in a final written agreement (which superseded the 1995 agreement) on October 24, 1997 with an effective date of September 1, 1997. (Plaintiff's Exhibit 94.) The negotiations themselves were contentious and, according to Nick Conner, involved Riverside/World making blusterous threats that it would simply renege on the 1995 contract if it was not renegotiated.
34. Under the new agreement, approximately 80 percent of Riverside/World sales were retained in-house by Riverside/World (which eventually hired five sales representatives for this purpose) and the remaining 20 percent of the sales accounts were non-exclusively placed with Omco. International sales were not placed as part of the agreement except on an interim basis. As part of the agreement, the parties also agreed in Paragraph 8 that Riverside/World could hire McElwee for both international and domestic sales should it desire to do so. The parties also provide releases to one another discharging liability for violations of the 1995 agreement. ( Id.)
35. Riverside/World decided to pursue the above strategy concerning its sales representation primarily to obtain a release from Omco as to the 1985 agreement and to achieve cost savings. Riverside/World considered hiring McElwee for domestic and international sales but chose not to pursue the option because Nick Conner disliked and could not work effectively with McElwee and because awarding domestic sales to McElwee would have been contrary to their strategy and would have thwarted their plan to obtain a release from Omco.
36. In the fall of 1997 and thereafter, other vendors that Omco had contacted regarding the termination of McElwee failed to contract with McElwee for trade representation services.
However, their reasons for not contracting with McElwee are unexplained with the exception of Oxford University Press. Oxford University Press ("Oxford") was prepared to contract with McElwee in mid-September 1997 until Gary Wharton traveled to New York to meet with Hargis Thomas and Jonathan Weiss of Oxford. Gary Wharton then explained to them that hiring McElwee would be a breach of Oxford's contract with Omco and, more specifically, their covenant preventing the hiring of former Omco representatives. Based upon that visit, Oxford determined not to contract with McElwee and to instead continue to contract with Omco, Inc.
37. On September 8, 1998, Riverside and McElwee agreed that McElwee would serve as the exclusive international representative (excluding Canada) for Riverside products and a non-exclusive representative of Riverside products in the United States in exchange for commissions. They stated such in their written agreement of that date. (Plaintiff's Exhibit 86.)
38. Nick Conner left the employment of World Bible Publishers in December of 1998.
39. On February 5, 1999, McElwee and World agreed to a trade sales agreement which provided that McElwee agreed to serve as an exclusive trade sales representative for international territories (excluding Canada) in exchange for commissions. (Defendant's Exhibit Z-1.)
B. Conclusions of Law :
1. This action is subject to this Court's diversity jurisdiction under 28 U.S.C. § 1332 since it involves citizens of different states and matters in controversy exceeding $75,000.
2. The various claims asserted in the Plaintiff's Second Amended Complaint and the Defendants' Counter-Claims have been resolved by this Court's previous decisions (or abandoned by the parties) with the exception of: (a) Plaintiff's claim for violation of former Michigan Compiled Laws Section 445.761; (b) Plaintiff's claim for breach of contract, breach of the duty of good faith, and unpaid commissions; (c) Plaintiff's claim for fraud, misrepresentation and non-disclosure; (d) Plaintiff's claim for tortious interference with economic relationships; and (e) Defendant's counterclaim for restitution of mistakenly paid commissions.
3. It is the burden of the parties to prove their various claims by a preponderance of the evidence — with the exception of the fraud claims, which must be proven by clear and convincing evidence. See Michigan Standard Jury Instructions § 8.01 and § 128.01 et seq. "A preponderance of the evidence" means evidence which is greater than the evidence in opposition and which is sufficient to warrant a belief in the proposition asserted. Id.; see also Black's Law Dictionary at 1201 (7th Edition). "Clear and convincing evidence" is evidence sufficient to establish the proposition with a high degree of probability. Id.
4. These parties' claims and counter-claims are governed by Michigan law. McElwee v. Wharton, 19 F. Supp.2d 766, 773 (W.D.Mich. 1998).
5. Under Michigan law, a person may be liable as a "partner by estoppel" for not only reliance upon a false representation of partnership that the person has induced, but also reliance that others have induced with the consent of the person. Mich. Comp. Laws § 449.16(1); McElwee, 19 F. Supp.2d at 772. In this case, Plaintiff after trial abandoned its claims against Hazel Wharton as a partner by estoppel (which were not supported by the evidence presented) and asserted that Hazel Wharton was liable as a "de facto" partner (a partner whose partnership was not formalized in a written agreement).
6. Under Michigan law, a formal partnership agreement is not required to prove a partnership. McCormick v. McCormick, 70 N.W.2d 706 (Mich. 1955); 19 Callaghan's Michigan Civil Jurisprudence, Partnership § 10 (West 1990 ed. 1999 Supp.). However, in the absence of a formal partnership agreement and in cases where the putative partners do not call themselves such, there must be sufficient evidence of an intention to form a partnership including evidence of a community of property, a community of interest and a community of profits. Id.
7. In this matter, the evidence presented was insufficient to warrant a conclusion that Omni was operated as a partnership of Hazel Wharton and Gary Wharton, There was also insufficient evidence to warrant a conclusion that the acts of Hazel Wharton (before or after the incorporation of Omco, Inc.) caused any legal injury of the kinds claimed in the Second Amended Complaint. Accordingly, judgment shall enter in favor of Hazel Wharton as to all claims made against her by Plaintiff.
8. Under Michigan law, a corporation comes into existence upon the filing of the articles of incorporation. Mich. Comp. Laws § 450.1221. Accordingly, Omco, Inc. came into legal existence on July 22, 1980.
9. Under Michigan law, a corporation cannot act except through duly appointed agents and employees. 6 Callaghan's Michigan Civil Jurisprudence, Corporations § 75 (West 1997 ed. 1999 Supp.) In this matter, while Gary Wharton contracted on behalf of Omco, Inc. in December 1980 with John McElwee before he had authority to do so (because at the time the corporation had not yet appointed directors and officers), this defect in the contract was cured by the subsequent appointment of Gary Wharton as president of Omco, Inc. and the corporation's implied and express assumption of the December 1980 contract and the other contracts of Gary Wharton's sole proprietorship.
10. Under Michigan law, a pre-incorporation contract with a sole proprietorship may be assumed by a corporation if the parties to the contract so consent. See Haworth, Inc. v. Wickes Mfg. Co., 532 N.W.2d 903, 904-05 (Mich.Ct.App. 1995). In this case, the June 1980 contract between Omni Communications, Gary Wharton and John McElwee was assumed by Omco, Inc. in that Omco, Inc., Gary Wharton, and John McElwee each consented to the transfer of Gary Wharton's legal responsibilities to Omco, Inc. as evidenced by their approval of the December 1980 contract and their subsequent conduct.
11. A promoter is not liable on a contract of a to-be-formed corporation in the absence of an express undertaking to bind him personally. 6 Callaghan's Michigan Civil Jurisprudence, Corporations § 28. As a matter of law, Plaintiff's contract with Omco, Inc. in December 1980 (which superseded the June 1980 contract) is the legal responsibility of Omco, Inc. and not that of Gary Wharton. However, the tortious acts of Omco, Inc. carried out by Gary Wharton are the legal responsibility of both Gary Wharton and Omco, Inc. Joy Management Co. v. City of Detroit, 455 N.W.2d 55, 58 (Mich.Ct.App. 1990).
12. Paragraph 5 of the December 1980 contract (with the exception of the clause excepting Riverside Book Bible) violated former Michigan Compiled Laws § 445.761 since it was an illegal agreement under the statute as a partial restraint on Plaintiff from engaging in the sales profession and since the state legislature has retained operation of the statute as to all agreements entered into on or prior to March 29, 1985 (unless the agreement was thereafter ratified). See McElwee, 19 F. Supp.2d at 775, as well as the other previous decisions of this Court as to this statutory claim.
13. Under the circumstances of this case, ratification is an affirmative defense. Under Michigan law, defendants bear the burden of proving affirmative defenses by a preponderance of the evidence. Booth Newspapers, Inc. v. Regents of Univ. of Michigan, 286 N.W.2d 55, 60 (Mich.Ct.App. 1979). Ratification requires proof that the ratifying party knew all material facts pertinent to the thing ratified. Old Mortgage Financial Co. v. Pasadena Land Co., 216 N.W. 922, 926 (Mich. 1928); Apfelblat v. National Batik Wyandotte-Taylor, 404 N.W.2d 725, 727 (Mich.Ct.App. 1987); Hill v. General Motors Acceptance Corp., 525 N.W.2d 905, 911 n. 4 (Mich.Ct.App. 1994).
14. In this case, Defendants have failed to demonstrate that the December 1980 contract was ratified in September 1997 (so as to make non-competition clause legal and enforceable). This is because the evidence fails to show that Plaintiff knew those facts material to ratification — especially including the existence of the anti-employment covenants with Riverside/World and other vendors.
15. Omco, Inc.'s contracts with vendors which were entered into after March 29, 1985 (including the restrictions on hiring Omco, Inc.'s agents) are not subject to former Michigan Laws § 445.761 and were otherwise lawful. Even if they had been entered into prior to March 29, 1985, the covenants to not hire Omco representatives contained in said contracts would not have violated former Michigan Comp. Laws § 445.761 because that statute did not prohibit agreements between businesses to not hire away one another's employees. Dickinson County Memorial Hospital v. Northern Professional Emergency Physicians, 367 N.W.2d 833, 834-36 (Mich.Ct.App. 1984).
16. Under former Michigan Compiled Laws § 445.711 (1976), a Plaintiff is entitled to recover actual damages caused by a state anti-trust violation plus reasonable attorney fees. Damages are deemed "proximately caused" when they are foreseeable results of the violation and the violation is a substantial factor in producing the damages. See Brisboy v. Fibreboard Corp., 418 N.W.2d 650, 653-54 (Mich. 1988); Derbeck v. Ward, 443 N.W.2d 812 (Mich.Ct.App. 1989). In this case, the statutory violation did not proximately cause Plaintiff damages because Plaintiff did not alter his conduct in soliciting business because of either the illegal contract or the Defendants' threats to enforce the illegal contract. This is especially true as to the business Plaintiff solicited from Riverside/World since the illegal agreement did not prohibit or prevent his solicitation of said business. Accordingly, since no damages resulted from the anti-trust violation, a judgment of no cause shall be returned in favor of the Defendants on this claim.
17. Since no damages resulted, an award of attorney fees under the anti-trust statute would be unjust and contrary to the intent of the Michigan legislature in drafting the statute. See M. Derfner A. Wolf, Court Awarded Attorney Fees § 8.03 (Matthew Bender 1999 ed.) (stating that attorney fees statutes are uniformly interpreted as not permitting awards of attorney fees where no damages or other relief is obtained); see also Ruckelshaus v. Sierra Club, 463 U.S. 680 (1983); Sheppard v. Riverview Nursing Center, 88 F.3d 1332 (4th Cir. 1996).
18. In order to prevail on a breach of contract claim, a plaintiff must prove that a legally binding contract existed between the parties, must prove the terms of the contract and must prove that the defendant breached the contract. Platsis v. E.F. Hutton Co., 642 F. Supp. 1277 (W.D.Mich. 1986), aff'd, 829 F.2d 13 (6th Cir. 1987).
19. The contract between Omco, Inc. and John McElwee was a valid and enforceable agreement between the parties, supported by their mutual assent and consideration, apart from Paragraph 5. Said Paragraph was void as a violation of former Mich. Comp. Laws § 445.761 with the exception of the clause excepting Riverside/World.
20. Under Michigan law, terms may be implied in a contract, not because they are reasonable, but because they are necessarily involved in the contractual relationship so that the parties must have intended them but failed to state them due to obviousness. Baldwin Rubber Co, v. Paine Williams Co., 107 F.2d 350, 353 (6th Cir. 1939); Redinger v. Standard Oil Co., 148 N.W.2d 225 (Mich.App. 1967). One such implied term in the 1980 contract was that Defendant Omco and its agents would not contract with World/Riverside to not hire Plaintiff upon his termination from Omco and would not enforce or otherwise use such a contract term against Plaintiff.
21. Defendant Omco also owed Plaintiff a duty of good faith to not frustrate Plaintiff's negotiated exception by reaching inconsistent contract terms with World/Riverside and using those terms against Plaintiff. 2 Restatement (Second) of Contracts, § 205; Fortune v. National Cash Register Co., 364 N.E.2d 1251 (Mass. 1977); Maljack Productions, Inc. v. Motion Picture Ass'n of America, Inc., 52 F.3d 373 (D.C. Cir. 1995); see also ParaData Computer Networks, Inc. v. Telebit Corp., 830 F. Supp. 1001 (E.D.Mich. 1993).
22. By agreeing to the 1995 contract with Riverside/World which contained a clause prohibiting the hiring of Omco representatives during and after the term of the contract (including John McElwee) and by asserting to Riverside/World the 1995 clause in September 1997 as a reason to not hire Plaintiff as a Riverside/World representative, Defendant Omco violated the above implied term of the contract and the duty of good faith.
23. Defendant's breach of contract did not proximately cause Plaintiff damages because Riverside/World chose not to hire Plaintiff in September 1995 for reasons independent of the terms of the 1995 contract. However, since Plaintiff has proven a breach of contract, he is entitled to at least nominal damages under Michigan law. Kolton v. Nassar, 99 N.W.2d 362, 364 (Mich. 1959); Holloway Construction Co. v. State of Michigan, 205 N.W.2d 575, 588 (Mich.Ct.App. 1973); Derosia v. Austin, 321 N.W.2d 760, 762 (Mich.Ct.App. 1982). As such, judgment shall entered in favor of Plaintiff and against Defendant Omco, Inc. in the amount of $1, plus prejudgment interest, for breach of the December 1980 trade sales representation contract.
24. According to the terms of the December 1980 trade sales representation contract, the contract was terminable upon 30 days written notice. Gary Wharton's July 2, 1997 facsimile note to John McElwee constituted notice of termination as clarified by their conversation of July 13, 1997. Accordingly, the contract was terminated as of August 1, 1997.
25. Under Michigan law, the law implies a duty on the recipient of funds paid due to mistake of fact or ignorance of fact to return overpayments. General Motors Corp. v. Enterprise Heat Power Co., 86 N.W.2d 257 (Mich. 1957); General Equipment Manufacturers v. Bible Press, Inc., 160 N.W.2d 370, 373 (Mich.Ct.App. 1968). Payments made because of a mistake of law (as to one's legal rights) do not trigger a duty of restitution. Montgomery Ward Co. v. Williams, 47 N.W.2d 607, 612 (Mich. 1951). In this case, payments made to John McElwee after August 1, 1997 for commissions were not paid because of factual mistake and under the circumstances imposing a duty of repayment would be unjust. Accordingly, a judgment of no cause shall enter on Defendants' claims for restitution and for an accounting.
26. Upon Michigan law, an implied-in-fact contract arises between parties when those parties show a mutual intention to contract and act consistent with that intent. Kingsley Associates v. Moll PlastiCrafters, Inc., 65 F.3d 498 (6th Cir. 1995); Erickson v. Goodell Oil Co., 180 N.W.2d 798 (Mich. 1970). The terms of their agreement will be determined by their conduct or other pertinent circumstances surrounding the transaction. Id.
27. The evidence presented justifies a conclusion that after the termination of the parties' trade representative contract on August 1, 1997, Omco and John McElwee agreed that John McElwee would continue to transact orders for Omco while Omco worked to obtain other representation for vendors. The parties also agreed by their conduct that Omco would compensate McElwee for said orders at his previous contract commission rates. Based on this understanding, McElwee placed orders warranting commissions in the amount of $9,564.47 for which he was not compensated. Accordingly, a judgment for unpaid commissions shall enter in favor of John McElwee and against Omco, Inc. in the amount $9,564.47 plus pre-judgment interest.
28. Plaintiff's fraud claims against Omco and Gary Wharton in connection with the June 1980 and December 1980 contracts with Omni and Omco, Inc. are premised on bad faith promises by Gary Wharton, Omni Communications and Omco, Inc. To recover on a fraud claim premised on a bad faith promise, a plaintiff must prove the following elements by clear and convincing evidence: (1) that the defendant made a material promise; (2) that at the time of the promise the defendant did not intend to keep the promise; (3) that the defendant made the promise with the intent that the plaintiff would rely upon it; (4) that the plaintiff relied upon it; and (5) that the plaintiff was damaged as a result of the reliance. Mich. S.J.I.2d § 128.03; Hi-Way Motor Co. v. International Harvester Co., 247 N.W.2d 813 (Mich. 1976).
29. The evidence in this case supports the following conclusions by clear and convincing evidence: (1) Defendants Gary Wharton, Omni Communications and Omco, Inc. made material promises (in the June and December 1980 contracts) to permit and not interfere with Plaintiff's solicitation of business from Riverside/World upon his termination; (2) that Defendants at the time of the promises did not intend to keep the promises; (3) that the promises were made to induce Plaintiff's reliance and obtain his signature to the contracts; and (4) that Plaintiff relied upon the promises in entering into contracts with Defendants. However, the Court also determines that there is not clear and convincing evidence on the fifth element because the breach of the promises (the contracts with Riverside/World prohibiting their hiring of all Omco representatives) did not cause Riverside/World to not hire or contract with Plaintiff in the fall of 1997 and thereafter. Rather, Riverside/World had separate motivations to so act aside from those provisions of the Riverside/World agreements. As such, Defendants are entitled to a judgment of no cause as to Plaintiff's fraud claims. (Plaintiff's other constructions of its fraud claim as "misrepresentation, innocent misrepresentation, constructive fraud, and non-disclosure" fail for the same reason.)
30. Plaintiff further claims that Defendants Wharton and Omco, Inc. tortiously interfered with Plaintiffs' business expectancies with Riverside/World, Oxford University Press and with other vendors which Plaintiff was soliciting in the fall of 1997. To prevail as to such claims, a plaintiff must prove by a preponderance of the evidence that: (1) plaintiff had a business relationship or expectancy at the time of alleged interference; (2) the relationship or expectancy had a reasonable likelihood of future economy benefit to the plaintiff; (3) defendants knew of the relationship or expectancy at the time of claimed interference; (4) defendants intentionally interfered with the business relationship or expectancy; (5) defendants wrongly interfered with the relationship or expectancy; (6) defendants' conduct caused plaintiff to lose a business relationship or expectancy; and (7) plaintiff was damaged as a result. Mich. S.J.I.2d § 126.01; Jim Bob, Inc. v. Mehling, 443 N.W.2d 451 (Mich.Ct.App. 1989).
31. Plaintiff's claim that Defendants tortiously interfered with Plaintiff's business expectancies in soliciting a contract with Riverside/World succeeds on each of these elements with the exception of causation and damages. Plaintiff cannot prove that he was damaged as a result of the tortious interference in that Riverside/World had determined not to contract with him for independent reasons.
32. Plaintiff's claim that Defendants tortiously interfered with his business expectancies with Oxford University Press cannot succeed because Defendants' conduct in seeking to enforce its contract with Oxford University Press was not improper and, therefore, Oxford University Press determination to not contract with Plaintiff was not caused by wrongful interference. See Dickinson County Memorial Hospital, 367 N.W.2d at 834-36.
33. Plaintiff's claim of tortious interference with other vendors cannot succeed because the proofs submitted do not demonstrate that Defendants improperly interfered, see id., and because the proofs do not demonstrate that any kind of interference caused Plaintiff to lose business expectancies with said vendors.
34. Accordingly, the evidence requires that a judgment of no cause be returned as to Plaintiff's claims for wrongful interference with a business expectancy.
CONCLUSION
Regardless of what may be true for the publishers and sellers of religious writings in general, it is true of the contestants in this controversy that to them the business of selling religious materials is first and foremost a for-profit business and not a calling ministered by the better angels of human nature. It is fair to say that the perils of business dealings with such persons would cause even Jesus of Nazareth to cling tightly to his purse.
For the reasons determined herein, judgment shall enter in favor of John McElwee and against Defendant Omco, Inc. in the amount of $9,565.47, plus prejudgment interest, on Plaintiff's claims for breach of contract and unpaid commissions. Otherwise, a judgment of no cause shall enter on all other claims and counterclaims prosecuted in this suit. The Judgment entered shall bear interest hereafter in accordance with 28 U.S.C. § 1961. Costs shall be permitted Plaintiff in accordance with Local Civil Rule 54.1 and 28 U.S.C. § 1920. Attorney fees will not awarded consistent with the Court's Conclusions of Law.