Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca6-06-02380/USCOURTS-ca6-06-02380-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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*

 The Honorable Louis F. Oberdorfer, Senior United States District Judge for the District of Columbia, sitting

by designation.

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit Rule 206

File Name: 08a0093p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT _________________

SCOTT L. EUNGARD,

 Plaintiff-Appellant,

v.

OPEN SOLUTIONS, INC.,

 Defendant-Appellee.

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No. 06-2380

Appeal from the United States District Court

for the Eastern District of Michigan at Ann Arbor.

No. 05-60272—John Corbett O’Meara, District Judge.

Argued: February 6, 2008

Decided and Filed: February 26, 2008 

Before: MARTIN and SUTTON, Circuit Judges; OBERDORFER, District Judge.*

_________________

COUNSEL

ARGUED: Melinda A. Balian, FRANK, HARON, WEINER & NAVARRO, Troy, Michigan, for

Appellant. Charles C. Dewitt, Jr., DeWITT, BALKE & VINCENT, Detroit, Michigan, for Appellee.

ON BRIEF: Melinda A. Balian, Monica P. Navarro, FRANK, HARON, WEINER & NAVARRO,

Troy, Michigan, for Appellant. Charles C. Dewitt, Jr., DeWITT, BALKE & VINCENT, Detroit,

Michigan, for Appellee.

_________________

OPINION _________________

SUTTON, Circuit Judge. Scott Eungard, a salesman, seeks commissions on products and

services ordered by a client on the same day he was fired. Because ambiguity in Eungard’s

compensation agreement precludes summary judgment for Open Solutions, we reverse and remand.

I.

In June 2003, Open Solutions acquired Eungard’s previous employer, Liberty FiTech. After

the acquisition closed, Open Solutions gave Eungard the title of Area Vice President, but his job

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description remained the same: He sold computer software, systems and hardware to banks and

credit unions in the Great Lakes region. 

During Eungard’s first year of employment with Open Solutions, he began pitching a sale

to AurGroup Financial Credit Union. Later that year, in March or April 2004, AurGroup

collaborated with another credit union to form the Shared Resources Technology Group. Eungard

maintained responsibility for landing a contract with AurGroup and shared responsibility with Kelly

Bannevans for landing a contract with Shared Resources. Eungard performed initial groundwork

on both prospects. Yet when AurGroup sought concessions Eungard lacked authority to make, Mark

Roberson (Vice President of National Sales at Open Solutions) became involved. 

In June 2004, Eungard traveled to Ohio with Bannevans and Roberson to finalize the

AurGroup and Shared Resources sales contracts. By the end of the day on June 30, negotiations

“had gotten pretty heated.” According to Eungard, Roberson was placing “tremendous pressure

[upon the clients] to get the contract signed on June 30th” because Open Solutions wanted to make

its end-of-quarter targets. Roberson, Eungard claims, employed “used car tactics,” and the

negotiations basically ended when Roberson “tossed the contract across the table . . . and told

[AurGroup’s CIO] to execute the agreement and . . . see what happens from there.” The meeting

ended without a signed contract. That evening, Eungard dropped Roberson off at the Dayton airport

before he drove home to Detroit. Before leaving, Roberson told Eungard to “stay engaged” with the

contracts. 

Eungard never had the opportunity. As it turns out, his supervisor, George McGourty, was

not pleased with Eungard, who had not completed any sales during his first year of employment and

who had no promising prospects aside from AurGroup. On the morning of July 2, less than 36 hours

after Eungard left Dayton, McGourty terminated him for poor performance and allegedly promised

that his commissions would be paid. 

Over the same two days that McGourty planned and implemented Eungard’s discharge,

Roberson exchanged several emails with AurGroup’s management to resolve their disputes. The

parties soon came to terms, and AurGroup and Shared Resources signed the contracts on the evening

of July 2—several hours after Eungard was fired. For reasons that remain unclear, the clients

backdated their signatures to June 30. AurGroup and Shared Resources mailed the contracts and

a check to Open Solutions and faxed a copy of that preliminary check, dated July 2, on the same day.

Open Solutions received the contracts in the mail and signed them on July 6. 

In the following weeks, Eungard and Open Solutions exchanged emails and voice messages

regarding Eungard’s request for commissions and McGourty’s alleged promise that the commissions

would be paid. Open Solutions eventually paid Eungard the first half of the commission for the

AurGroup contract ($11,343), initially saying it was being paid “per the comp plan,” but later saying

it was being paid as part of a “business decision” designed “to avoid litigation.” Eungard demanded

the other half of the AurGroup commission and his share of the Shared Resources commission, but

the company refused. 

Eungard sued Open Solutions in Michigan state court, claiming its refusal to pay the full

commissions (1) breached their contract, (2) violated the Michigan Sales Representatives

Commission Act, (3) violated the procuring-cause doctrine under Michigan law and (4) breached

an implied contract. Open Solutions, a Delaware corporation whose principal place of business is

in Connecticut, removed the suit to federal court based on diversity jurisdiction (Eungard is from

Michigan), after which both parties moved for summary judgment. The court ruled for the company,

holding that, “[a]s of the time of Plaintiff’s termination, . . . the agreements were not yet finalized

or signed,” that the second halves of the commissions were not “‘due’ to be paid to him until after

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his termination” and that Eungard’s statutory, procuring-cause and implied-contract claims lacked

merit. 

II.

Two provisions of the company’s sales commission plan govern these claims. The first

establishes a schedule for commission payments: 

Commissions will be calculated on the commissionable Agreement value, then paid

over the following schedule: 

" 50% in the month following Agreement signing 

" the remaining 50%, the month following conversion. 

The second describes the commission payment process for employees who leave the company:

If an Area Vice President’s employment with Open Solutions is terminated, either

voluntarily or involuntarily, all of the employee’s closed orders as of their

termination date will be reviewed for calculation of commission payments based on

their status as of that date. . . . Only the amount due to be paid at termination will be

paid. No additional amounts will be paid after termination. 

This case raises several questions about the meaning of these two provisions: Did the orders

close by Eungard’s termination date? Were the first-half commission payments on those contracts,

which were “schedule[d]” to be paid in the month after signing, “due to be paid at [Eungard’s]

termination”? Were the second-half commissions, which were “schedule[d]” to be paid following

conversion, due? Did Eungard earn any of the Shared Resources commissions? And does Michigan

law expand Eungard’s rights to commissions beyond the contractual terms? We look at each

question in turn.

A.

Were the orders closed? Under the sales commission plan, Open Solutions had a duty to

“review[]” only “closed orders as of [Eungard’s] termination date.” So if the orders were not closed

as of July 2, the company had no duty. Reasoning that the orders were not fully executed when the

company discharged Eungard, the district court granted summary judgment to the company.

We disagree. Under Michigan contract law, the sales contracts that the company prepared

for AurGroup and Shared Resources constituted offers, which the clients accepted when they signed

the contracts. See, e.g., McKain v. Moore, 431 N.W.2d 470, 475 (Mich. Ct. App. 1988) (holding

an agreement was binding even in the absence of the offeror’s signature). So far as Open Solutions

was concerned, once the clients signed the contracts and mailed their checks on the evening of July

2, it had enforceable contracts. No doubt, parties may say that a contract will not go into effect until

all parties have signed it, see Palman v. Reynolds, 16 N.W.2d 657, 658–59 (Mich. 1944), but that

is not what these parties said: They said the contract would be binding “upon execution and

delivery . . . by Client.” Even if the clients’ promises to pay did not suffice as consideration to

create binding contracts, which does not appear to be the case under Michigan law, see Garlock v.

Motz Tire & Rubber Co., 159 N.W. 344, 346 (Mich. 1916) (“[P]romises may be a good

consideration for promises . . . .”), the fact that AurGroup mailed a check to Open Solutions and

faxed a copy of that check on July 2 made those orders binding as of July 2. 

Nor did Open Solutions’ failure to sign the agreements until July 6 prevent them from being

“closed orders.” The term “order” connotes action on the part of the buyer, requesting goods or

services on the seller’s proposed terms, see Webster’s Third New International Dictionary 1588

(2002) (defining “order” as “a formal written authorization to deliver materials, to perform work,

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or to do both”), and does not turn on the seller’s formalization of an already submitted request or

for that matter on whether the buyer could enforce the contract against the seller. Otherwise, the

contract would give the company the immediate benefit of a binding contract without the

simultaneous burden of commission payments until it chose to “close[]” the order—a reading of the

contract that not only is rife with the potential for abuse but also does not respect the contract’s

terms. 

B.

Were the commissions due at termination? The more difficult question is which, if any, of

Eungard’s claimed commission payments were “due to be paid at termination.” (emphasis added).

Relying on the “due . . . at termination” language as well as the fact that the company fired Eungard

before the clients signed the contracts, the company contends it need not pay commissions that

become due after the time of termination, even if the orders “closed” on the same date. While this

is one plausible reading of the contract, it creates tension with the rest of the paragraph, which says

that commissions will be calculated “based on their status as of that date.” (emphasis added). Open

Solutions offers no explanation why a contract would use one measure of time (days) to determine

an order’s status and another measure of time (hours, minutes, even seconds) to determine whether

a commission is due. 

Making the company’s interpretation more implausible is our strong suspicion that the

company paid Eungard for a full day of work on July 2 (rather than pro-rating his salary for that day)

and that it did not make any termination of benefits effective until the next day. We say “suspicion”

because, while the record does not confirm one way or another how or when the company ended

Eungard’s other employment benefits, we are not aware of any (ruthless) custom by which

discharged salaried employees do not receive the benefit of a full day’s pay on the day of

termination, and indeed the company has not even explained at what hour (or minute) Eungard was

fired, making it quite unlikely that the company pro-rated his pay for that day. Because the

“due . . . at termination” clause in the final analysis plausibly allows for commission payments on

accounts that close on the date of termination but happen to have been signed hours after an

employee is fired, we find the provision materially ambiguous and therefore leave its meaning to

be resolved by a jury. See Klapp v. United Ins. Group Agency, Inc., 663 N.W.2d 447, 453–54

(Mich. 2003) (holding that, if a term is ambiguous, the parties’ intent becomes a question of fact,

which must be decided by a jury). 

Both parties lean heavily upon extrinsic evidence to resolve the ambiguity. The company

relies on Eungard’s words: In a deposition he said that the compensation plan precludes

commissions for contracts signed after the time of termination. Eungard relies on the company’s

words and actions: It paid him the first half of his AurGroup commission and said that it did so “per

the comp plan.” Pertinent though these words and actions may be to the parties’ understanding of

the contract, they do not provide a basis for granting summary judgment to one party over the other.

This evidence, as an initial matter, points in opposite directions, making the resolution of the

question one for the jury.

Context, moreover, weakens the value of each piece of evidence. As to Eungard’s alleged

admission: the company’s counsel, true enough, asked Eungard if he agreed that “under the terms

of the compensation plan . . . if there is no contract in place at the time that you are terminated[,] you

don’t earn any commission.” And after his counsel objected that the question called for a legal

conclusion, Eungard responded that he “would agree.” The question, however, downplayed, rather

than underscored, the date/time dichotomy, and Eungard’s “agree[ment]” with the suggestion may

simply reflect the contract’s limitation on commissions to those “due . . . at termination” rather than

any belief as to the meaning of “at termination.” So far as the record shows, the date/time debate

also had not been joined by the parties at the time of the deposition, as documents revealed only the

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clients’ signatures on the sales contracts (dated June 30), making Eungard’s response in context an

admission that any orders closed by a salesman on June 30 would require commissions to be paid

to that salesman if he were fired on July 2. 

Similar uncertainties cloud Eungard’s reliance on the company’s act of paying him the firsthalf commission on the AurGroup contract and its statement that it was doing so “per the comp

plan.” The statement might indicate that the company believed that the comp plan required it to pay

the first-half commission on this contract, but it also might refer to the calculation of a given

commission rather than to Eungard’s right to it. And while the company says its act of paying

Eungard the commission was a “business decision” designed “to avoid litigation,” a jury might well

discredit this claim given that a settlement request did not accompany the payment. 

C.

Were the “Conversion” Commissions Due at Termination? Even if the first halves of the

commissions might have been “due” on both contracts as of July 2, the company argues that

summary judgment is still warranted on the second halves of the commissions because a

salesperson’s right to those payments accrues only upon conversion of the accounts—namely when

the purchased computer system has been installed and is up and running. Because both accounts

converted over six months after the company discharged Eungard, the company argues, the

commissions could not have been “due to be paid at termination.” Supporting this interpretation is

the agreement’s two-tiered commission-calculation inquiry, stating first that “closed orders . . . will

be reviewed” and second that the “calculation of commission payments [will be] based on their

status as of that date.” The agreement, for these reasons, seems to contemplate further review of an

order’s “status” beyond the point it “close[s].” As far as we can tell, the only status change relevant

to commission calculation beyond a client’s signing (which determines whether an order is “closed”)

is an account’s “conversion” point. Reading the conversion commissions to become “due” at

signing thus arguably renders the agreement’s reference to account “status” superfluous, running

counter to the judicial preference for giving “meaning to all the terms” of a contract. Century Sur.

Co. v. Charron, 583 N.W.2d 486, 488 (Mich. Ct. App. 1998).

But there are problems with this interpretation, problems that preclude it from being right

as a matter of law. One problem is that it fails to explain why the same thinking should not govern

the first halves of the commissions. Remember that the first halves of the commissions are not

“schedule[d]” to be paid until one month after closing and thus would not have been “due” in this

sense on July 2. Yet the company does not argue that it had no obligation to pay the first halves of

the commissions on this basis, and we think there is a good reason why. That reading would reduce

all of the provisions to this: On the day of termination, the company must pay a salesman all

commissions it already had a duty to pay him and probably already would have paid him unless the

commission happened to be scheduled for payment that day. Not only does that reading border on

making the provisions pointless, but it also seems odd (and superfluous) to talk about “closed

orders,” commissions “to be paid” and so forth if that is what the provision does. 

Another problem is that this interpretation gives the word “schedule” more content than it

normally has. The company invokes the commission schedule not only to set the date when a

salesperson can expect to receive payment but also to establish whether a salesperson’s right to that

payment has accrued. When something is “scheduled,” that calendaring act generally affects only

when that thing will happen, not whether it will occur. See Webster’s Third New International

Dictionary 2028 (2002) (defining “schedule” as “to appoint, assign, or designate to do or receive

something at a fixed time in the future”).

Each party presents extrinsic evidence supporting its view, but neither manages to settle the

debate as a matter of law. Eungard points to evidence that at least one terminated employee received

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a post-termination, conversion commission, but a jury might well credit the company’s response that

this payment was a clerical error. Eungard and the company dispute whether Area Vice Presidents

have any significant role in marshaling an order from signing to conversion—an argument relevant

to whether the parties considered the full commission as earned at signing or as compensation to be

reaped through future effort. The company offers affidavits showing that there are “a number of

duties remaining to be performed on contracts” after signing. But a jury could fairly find that the

examples the affidavits give, such as “coordinating conference calls” and “resolving payment

issues,” are so insignificant that ordinary contracting parties would not hinge commission eligibility

on them. Eungard’s job description also fails to list post-signing duties and simply says that Area

Vice Presidents must manage “sales prospects from initial contact through contract execution” rather than through conversion. (emphasis added). As these disputes are factual ones, we leave

them for the jury to decide. When we construe these ambiguities against the drafter, Open Solutions,

as we must, see Cole v. Auto-Owners Ins. Co., 723 N.W.2d 922, 924 (Mich. Ct. App. 2006), we

cannot say that the company has the better reading as a matter of law.

D.

Were the Shared Resources Commissions Earned? The company seeks partial summary

judgment on the ground that Eungard did not perform sufficient work on the Shared Resources

contract to earn either of the commissions on that account. Although the company claims that Kelly

Bannevans “was the person who obtained the contract, not Mr. Eungard,” Eungard contests this

assertion with admissible evidence, claiming that he and Bannevans split the responsibilities on the

account and “were to share the commission equally.” The affidavit of Mark Wintzinger,

AurGroup’s CIO at the time, supports this theory because it says that the Shared Resources

responsibilities were “handled” by both Eungard and Bannevans. A jury must resolve this material

fact dispute. 

III.

Does Michigan Law Expand Eungard’s Entitlement to Commissions? Although we agree

with Eungard that the district court should not have granted summary judgment to the company, we

reject his arguments that he had a substantive right to commission payments not premised upon the

terms of the contract. First, the Michigan Sales Representative Commissions Act creates remedial

rights only to enforce “[t]he terms of the contract between the principal and sales representative,”

and the Act says that the contract “determine[s] when a commission becomes due.” Mich. Comp.

Laws § 600.2961(2); see also APJ Assocs., Inc. v. N. Am. Philips Co., 317 F.3d 610, 616 (6th Cir.

2003) (“[T]he Act itself states that the parties’ agreement will be held to define the scope of the

obligation to pay commissions . . . .”). It is true, as Eungard points out, that the Act prevents

employees from waiving their statutory rights. See Mich. Comp. Laws § 600.2961(8) (voiding any

“contract between a principal and a sales representative purporting to waive any right under [the

Act]”). But the Act does not grant every employee a right to post-termination commissions: It sets

forth only a deadline for the payment of commissions that “become due after the termination date,”

id. § 600.2961(4), and no commission can ever become “due” if the written contract between the

parties precludes it, see id. § 600.2961(2).

One Michigan Court of Appeals case, Walters v. Bloomfield Hills Furniture, 577 N.W.2d

206 (Mich. Ct. App. 1998), we recognize, held that a mid-employment contract improperly waived

the employee’s rights to post-termination commissions. Id. at 209. But Michigan courts have

distinguished Walters and enforced contractual bans on post-termination commissions where the

employer has not “subsequently changed th[e] terms” of employment and merely enforces certain

“conditions” to which the employee agreed at the outset. Gerard Thomas Co. v. Swanson, No.

226163, 2001 WL 1335937, at *2 (Mich. Ct. App. Oct. 30, 2001). Because Eungard acknowledges

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that this commission agreement was the same one given to him when he began his employment, he

has no basis for extending Walters here.

Second, Michigan’s “procuring cause” doctrine, see generally Reed v. Kurdziel, 89 N.W.2d

479, 483 (Mich. 1958), does not override these contractual terms either. In APJ Associates, we held

that parties “may only obtain an award as the procuring cause of post-termination sales where the

written agreement is silent,” 317 F.3d at 616; see also Muqtadir v. Micro Contacts, Inc., 148 F.

App’x 348, 352 (6th Cir. Aug. 5, 2005), and that is not the case here. 

Finally, Eungard’s implied contract claim—premised upon McGourty’s alleged promise that

Eungard “would be paid [his] commission”—lacks merit. McGourty’s statement provides no basis

for concluding which commission payments would be paid, and of course at least one commission

was paid. More fundamentally, “[a]n implied contract cannot be enforced where the parties have

made an express contract covering the same subject matter.” Scholz v. Montgomery Ward & Co., 468 N.W.2d 845, 849 (Mich. 1991). The parties’ express compensation agreement governs the

entirety of Eungard’s substantive claims, and we remand the case so that a jury may resolve the

ambiguities in that contract. 

IV.

For these reasons, we reverse. 

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