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Barton-Spencer v. Farm Bureau Life Insurance Co. of Michigan

Supreme Court of Michigan

April 14, 2017

CYNTHIA BARTON-SPENCER, Plaintiff/Counterdefendant-Appellant, Cross-Appellee,
v.
FARM BUREAU LIFE INSURANCE 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/Counterplaintiffs-Appellees, Cross-Appellants.

          Chief Justice: Stephen J. Markman Justices: Robert P. Young, Jr. Brian K. Zahra Bridget M. McCormack David F. Viviano Richard H. Bernstein Joan L. Larsen.

         Syllabus

         Cynthia Barton-Spencer brought an action in the Washtenaw Circuit Court against Farm Bureau Life Insurance Company of Michigan and others, arguing that defendants had breached her contract with them by withholding extended earnings owed to her under the Farm Bureau Insurance Agent Agreement (Agent Agreement); failed to pay her commissions that she alleged were owed to her; violated the Michigan Consumer Protection Act (CPA), MCL 445.901 et seq.; and terminated her on the basis of unlawful age discrimination in violation of the Civil Rights Act (CRA), MCL 37.2101 et seq. Plaintiff demanded a jury trial on all issues unless expressly waived. Defendants moved for summary disposition, and the court, Archie C. Brown, J., granted summary disposition to defendants on the CPA and CRA claims. Plaintiff then filed an amended complaint. Defendants filed an answer and a counterclaim, seeking to recover commissions they had paid to plaintiff as well as attorney fees and costs pursuant to the Agent Agreement, which provided that plaintiff agreed "to reimburse [defendants'] attorney fees and costs as may be fixed by the court." Following a trial, the jury returned a verdict finding for defendants on plaintiff's breach-of-contract claim, finding that plaintiff was entitled to recover commissions that defendants had failed to pay her, and finding that defendants were entitled to recover from plaintiff the commissions they had paid her on 11 policies that defendants had refunded to the purchasers because of plaintiff's misrepresentations to the purchasers. Defendants filed a postjudgment motion seeking contractual attorney fees and costs, and the court granted defendants attorney fees and costs as well as actual costs pursuant to MCR 2.403(O), deducting from the sanctions award some overlapping fees that had previously been paid as contractual attorney fees and costs. Both parties appealed, and the Court of Appeals, Talbot, C.J., and Wilder and Beckering, JJ., largely affirmed the resolution of the claims, but it reversed the trial court's decision to grant defendants contractual attorney fees. Barton-Spencer v Farm Bureau Life Ins Co of Mich, unpublished per curiam opinion of the Court of Appeals, issued March 22, 2016 (Docket No. 324661). The Court of Appeals held that contractual attorney fees are damages, and as such, plaintiff had a constitutional right under Article 1, § 14 of Michigan's 1963 Constitution to have a jury determine the reasonableness of the contractual fees. The panel also concluded that the provision in the Agent Agreement providing that attorney fees and costs will be "fixed by the court" was not an express waiver of plaintiff's constitutional right to a jury trial on the question of attorney fees because that phrase was ambiguous, and therefore plaintiff had not agreed to have the amount of reasonable attorney fees and costs determined by a judge rather than a jury. The Court of Appeals reversed the trial court's award of contractual attorney fees, reversed the trial court's award of case evaluation sanctions, and directed the trial court to recalculate the case evaluation sanctions on remand because the sanctions award was impermissibly dependent on the judge's improper determination of reasonable contractual attorney fees and costs. Both parties sought leave to appeal.

         In a unanimous per curiam opinion, the Supreme Court, in lieu of granting leave to appeal and without hearing oral argument, held:

         Courts should construe contracts so as to give effect to every word or phrase as far as practicable. A contractual term is ambiguous on its face only if it is equally susceptible to more than a single meaning. The Court of Appeals erred when it held that the parties' agreement was ambiguous because the phrase "fixed by the court" in the Agent Agreement was not ambiguous. In ordinary parlance, the word "court" refers to judges, and legal opinions often use the terms "court" and "judge" synonymously, even when referring to amounts of money fixed by judgments of "the court." Therefore, the parties decided in the Agent Agreement that the amount of attorney fees and costs would be fixed by a judge, and plaintiff waived any right she had to a jury trial by agreeing to this contractual provision. To avoid the contract, plaintiff held the burden of proving that the contract was invalid, but plaintiff did not raise a contractual defense to argue that the Agent Agreement was invalid.

         Court of Appeals' reversal of the trial court's award of contractual costs and attorney fees reversed; Court of Appeals' reversal of the award of case evaluation sanctions under MCR 2.403(O) reversed; Part III(C)(4) of the Court of Appeals' opinion holding that plaintiff had a constitutional right to a jury trial and that she did not relinquish this right by signing the Agent Agreement vacated.

         BEFORE THE ENTIRE BENCH

          OPINION

          PER CURIAM.

         The issue presented in this case is whether, by signing a contract providing that plaintiff agreed "to reimburse [defendants'] attorney fees and costs as may be fixed by the court, " the parties agreed that the amount of reasonable attorney fees would be fixed by a court rather than a jury. We hold that the parties did so agree. Accordingly, we vacate Part III(C)(4) of the Court of Appeals' opinion[1] and reverse that portion of the judgment that reversed the award of contractual attorney fees and costs as well as that portion of the judgment that reversed the award of case evaluation sanctions. We otherwise deny the application and cross-application for leave to appeal and leave in place the remainder of the Court of Appeals' opinion.

         I. FACTS AND PROCEDURAL HISTORY

         Plaintiff entered into a Farm Bureau Insurance Agent Agreement (Agent Agreement) with defendants in November 2000 and began working for defendants as an independent insurance agent. As relevant to our review of this case, the Agent Agreement allowed defendants to seek postlitigation attorney fees from plaintiff under the terms of the following provision:

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.

         Plaintiff continued to work for defendants until February 2013 when defendants terminated the Agent Agreement for cause, alleging that plaintiff had made misrepresentations to insurance clients regarding the tax consequences of moving funds into a specific type of life insurance policy. Eleven clients testified that they had purchased these policies from plaintiff on the basis of this false advice. Defendants later reversed these policies and refunded the premiums to the clients.

         Plaintiff sued defendants in the Washtenaw Circuit Court, arguing that defendants had breached her contract by withholding extended earnings owed to her under the Agent Agreement, [2] failed to pay her commissions that she alleged were owed to her, violated the Michigan Consumer Protection Act (CPA), MCL 445.901 et seq., and terminated her on the basis of unlawful age discrimination in violation of the Civil Rights Act (CRA), MCL 37.2101 et seq. Plaintiff demanded a jury trial on "all issues in this cause unless expressly waived."

         Defendants moved for summary disposition, and the Washtenaw Circuit Court granted summary disposition to defendants on the CPA and CRA claims. Plaintiff filed an amended complaint, [3] and defendants filed an answer and a counterclaim. In the counterclaim, defendants sought to recover the commissions they had paid to plaintiff on the sale of the 11 policies that defendants had refunded because of plaintiff's misrepresentations. Defendants also sought attorney fees and costs pursuant to the Agent Agreement. Defendants relied on the jury demand filed by plaintiff "with respect to all issues as to which trial before a jury is applicable."

         The parties proceeded to trial on plaintiff's remaining claims and on defendants' counterclaim. The jury returned a verdict finding for defendants on plaintiff's breach-of-contract claim but finding that plaintiff was entitled to recover commissions that defendants had failed to pay her. The jury additionally found for defendants on their counterclaim, determining that defendants were entitled to recover from plaintiff the commissions they had paid her on the subsequently refunded policies.

         Defendants filed a postjudgment motion seeking contractual attorney fees and costs. In her response, plaintiff argued both that defendants were not entitled to such fees and that the request for attorney fees should have been submitted to the jury. Plaintiff claimed that she had a constitutional right to a jury trial regarding the reasonableness of the attorney fees. The Washtenaw Circuit Court granted defendants attorney fees and costs in an order entered on September 11, 2014, without explicitly addressing plaintiff's asserted right to a jury trial. The Washtenaw Circuit Court also granted defendants' subsequent motion ...


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