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UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF MICHIGAN 

SOUTHERN DIVISION 

J.R. DAVIS COMPANY, INC., 

 Plaintiff, 

v. Case No. 15-10066 

JACOBSON MFG., LLC, HON. AVERN COHN 

 Defendant. 

_______________________________________/

MEMORANDUM AND ORDER GRANTING IN PART AND DENYING IN PART 

DEFENDANT’S MOTION TO DISMISS 

PLAINTIFF’S FIRST AMENDED COMPLAINT (DOC. 17)1

I. INTRODUCTION

 This is a post-termination sales commission dispute case. Defendant Jacobson 

MFG., LLC (Jacobson) terminated Plaintiff J.R. Davis Company, Inc. (Davis) as its sales 

representative to Tennecco Automotive, Toyota, and AW North Carolina. Davis is suing 

Jacobson alleging a breach of contract and a violation of the Michigan Sales 

Representatives Commission Act (SRCA), M.C.L.A. § 600.2961. 

 The first amended complaint (Doc. 16) is in three counts, phrased by Davis as 

follows: 

 Count I: Breach of Contract (failure to pay post-termination commission); 

Count II: Violation of Sales Representatives Commission Act, M.C.L.A. § 

600.2961; and 

Count III: Declaratory Judgment (failure to pay post-termination commission). 

 

1 Although originally scheduled for hearing, upon review of the parties’ papers, the Court 

deems this matter appropriate for decision without oral argument. See Fed. R. Civ. P. 

78(b); E.D. Mich. LR 7.1(f)(2). 

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 Now before the Court is Jacobson’s motion to dismiss the first amended 

complaint on the grounds that the contract is silent as to post-termination commissions 

and Davis has failed to allege there are post-termination sales for which it was entitled 

to a commission (Doc. 17). 2 For the reasons that follow, the motion is GRANTED IN 

PART AND DENIED IN PART. 

II. BACKGROUND

A. 

 Because Jacobson has filed a motion to dismiss, the facts as alleged in the first 

amended complaint are accepted as true and summarized below. Hensley Mfg. v. 

ProProde, Inc., 579 F.3d 603, 609 (2009)(citing Bell Atlantic Corp. v. Twombly, 550 U.S. 

544 at 555, 127 S.Ct. 1955 (2007)). When considering a motion to dismiss for failure to 

state a claim, the Court must “construe the complaint in the light most favorable to the 

plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the 

plaintiff.” Directv Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007). 

B. 

Davis is a Michigan corporation and an independent manufacturer’s sales 

representative agency representing principals to the automotive industry in Michigan 

(Doc. 16 at ¶ 1). Jacobson is a Delaware LLC and manufactures custom engineered 

cold form components used in the assembly of automobiles (Doc. 16 at ¶2). 

 On November 3, 2005, Davis and Jacobson entered into a written sales 

representation agreement (the Agreement) under which Davis was retained as the sales 

 

2 On August 7, 2015, Davis filed a motion for leave to file a second amended complaint 

(Doc. 20). The Court granted Davis’ motion (Doc. 22). Davis filed its second amended 

complaint on August 13, 2015 (Doc. 23). However, Davis withdrew its second amended 

complaint the same day (Doc. 24). As such, the first amended complaint (Doc. 16) is the 

governing complaint before the Court. 

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representative of Jacobson and certain affiliated companies to Tenneco Automotive 

(Tenneco) (Doc. 16 at ¶ 5). Under the Agreement, Davis was to receive sales 

commissions at the rate of 5% on all new sales to Tenneco for the first three years of 

the life of the product, and at the rate of 3% thereafter (Doc. 16 at ¶ 5). The Agreement 

was later amended to include accounts such as Toyota and AW North Carolina (Doc. 16 

at ¶ 6). 

 In regards to termination, the Agreement stated as follows: 

This agreement can be terminated by either party at any time with written 

notification providing notification to the other party at least thirty (30) days 

prior written notice of its desire to do so. In highly competitive situations, a 

lower commission rate may be paid based on mutual consent between 

Jacobson Mfg and J.R. Davis Company Inc. 

(Doc. 16, Ex. A). The Agreement is silent regarding post-termination sales commissions 

(Doc. 16 at ¶ 7). 

 Between November 2005 and November 2014, Davis was successful in 

procuring a substantial amount of business for Jacobson from the accounts covered by 

the Agreement (Doc. 16 at ¶ 8). 

 On November 25, 2014, Jacobson sent written notice to Davis notifying it of two 

important changes to the Agreement (Doc. 16, Ex. B). First, effective January 1, 2015, 

the commission rate for sales to Tenneco would be reduced from 5% to 2% and Toyota 

would no longer be an account. Id. Second, the Agreement in its entirety would be 

terminated effective June 30, 2015. Id. 

 On December 20, 2014, Davis responded to Jacobson’s notice. In its letter, 

Davis acknowledged receipt of the November 25, 2014 notification and declined to 

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accept the changes to the Agreement based on their “fine working relationship.” (Doc. 

16, Ex. C). 

 On January 8, 2015, Davis filed the original complaint seeking declaratory 

judgment to pay post-termination sales commissions (Doc. 1). 

 On January 14, 2015, Jacobson sent Davis a second written notice stating that 

the Agreement would be terminated effective February 14, 2015, 30 days from the date 

of the letter (Doc. 16, Ex. D). 

 On June 30, 2015, Davis filed a first amended complaint (Doc. 16). Davis says 

that Johnson breached the Agreement by failing to pay any post-termination sales 

commissions on shipments subsequent to the February 14, 2015 termination date, 

violated the Michigan Sales Representatives Commission Act (SRCA), and seeks a 

declaratory judgment. 

III. LEGAL STANDARD 

A motion to dismiss under Fed. R. Civ. P. 12(b)(6) tests the sufficiency of the 

complaint. To survive a Rule 12(b)(6) motion to dismiss, the complaint’s “factual 

allegations must be enough to raise a right to relief above the speculative level on the 

assumption that all of the allegations in the complaint are true.” Bell Atlantic Corp. v. 

Twombly, 550 U.S. 544, 545 (2007). See also Ass’n of Cleveland Fire Fighters v. City 

of Cleveland, Ohio, 502 F.3d 545, 548 (6th Cir. 2007). The Court is “not bound to 

accept as true a legal conclusion couched as a factual allegation.” Ashcroft v. Iqbal, 

556 U.S. 662, 678 (2009) (internal quotation marks and citation omitted). Moreover, 

“[o]nly a complaint that states a plausible claim for relief survives a motion to dismiss.” 

Id. at 679. Thus, “a court considering a motion to dismiss can choose to begin by 

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identifying pleadings that, because they are no more than conclusions, are not entitled 

to the assumption of truth.” Id. “While legal conclusions can provide the framework of a 

complaint, they must be supported by factual allegations. When there are well-pleaded 

factual allegations, a court should assume their veracity and then determine whether 

they plausibly give rise to an entitlement to relief.” Id. To state a valid claim, Davis 

must show “entitlement to relief” by filing a complaint with either “direct or inferential 

allegations respecting all the material elements to sustain recovery under some viable 

legal.” LULAC v. Bredesen, 500 F.3d 523, 527 (6th Cir. 2007). In sum, “[t]o survive a 

motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, 

to state a claim for relief that is plausible on its face.” Id. at 678 (internal quotation 

marks and citation omitted). 

IV. DISCUSSION 

Jacobson seeks dismissal of Davis’ first amended complaint (Doc. 16) on three 

grounds. The Court will address each in turn. 

A. Breach of Contract 

1. 

Jacobson’s motion rests principally upon the language of the Agreement. 

Jacobson says that the complaint is facially defective and fails to state a claim, because 

the Agreement is silent as to post-termination commissions and Davis failed to allege 

there are post-termination sales for which it is entitled to a commission. 

This argument is without merit. Davis’ first amended complaint clearly includes all 

of the required allegations for a well-pleaded breach of contract claim. To establish a 

breach of contract claim, Davis must plead (1) the existence of a contract; (2) the terms 

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of the contract; (3) a breach of the contract; and (4) the breach caused injury. Webster 

v. Edward D. Jones & Co., L.P., 197 F.3d 815, 819 (6th Cir. 1999). The allegations in 

Count I of Davis’ first amended complaint address each of the required elements. First, 

paragraphs 5 and 6 established that the parties entered into the Agreement and that the 

Agreement requires Jacobson to pay Davis sales commissions. Next, paragraphs 9 and 

13 allege that Jacobson breached the Agreement. Finally, paragraph 14 establishes 

damages suffered as a result of the breach. As such, Davis sufficiently put Jacobson on 

notice of the breach of contract. 

2. 

Jacobson argues that Davis is not entitled to damages because the Agreement is 

silent regarding post-termination commissions. However, the argument lacks merit 

because of the applicability of the procuring cause doctrine. “Under the procuring cause 

doctrine, a sales representative is entitled to commissions, including post-termination 

commissions on sales that he generated.” Pfam, Inc. v. Indiana Tube Corp., 2006 WL 

3313772, *4 (E.D. Mich. Nov. 15, 2006)(citing to Reed v. Kurdziel, 352 Mich. 287, 295, 

89 N.W.2d 479 (1958)). “The procuring cause doctrine is an equitable remedy to ensure 

that a principal does not terminate an agent to avoid paying commissions on sales that 

the agent procured.” Bailey v. Fast Model Technologies, LLC., 2012 WL 2601882, *3 

(E.D. Mich. 2012). The procuring cause doctrine applies where the governing contract is 

silent as to post-termination commissions. Id. (citing APJ Assoc., Inc. v. North Am. 

Philips, Corp., 317 F.3d 610, 616 (6th Cir. 2003)). Therefore, the terms of the contract 

define the scope of pre-termination commissions. Id. The plaintiff bears the burden to 

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establish that its efforts were the “procuring cause” of any sales on which it seeks posttermination commission. Pfam, Inc., 2006 WL 3313772, *4. 

Here, the first amended complaint gives Jacobson sufficient notice that Davis 

seeks damages for post-termination sales commissions based on business procured 

under the parties’ Agreement. (Doc. 16 at ¶ 8: “Plaintiff was successful in procuring a 

substantial amount of business for Defendant from the customers and accounts covered 

by the sales representation agreement.” Doc. 16 at ¶ 13: “Defendant has breached the 

sales representation agreement by failing to pay any sales commissions to Plaintiff on 

shipments subsequent to February 14, 2015.”). The Agreement did not expressly 

address post-termination commissions. There is no contract term or any other evidence 

that the parties intended to forego post-termination commissions. As such, Davis has 

the burden to establish that it was the procuring cause of any sales for which it is 

seeking commissions. 

3. 

In the absence of a contractual clause limiting or foreclosing post-termination 

commissions, there is a plausible breach of contract claim for such commissions. Davis 

is allowed the opportunity to present a set of facts that it was the procuring cause of the 

business in question. The Court will DENY Jacobson’s motion for dismissal of the 

breach of contract claim. 

B. Violation of the Michigan Sales Representative Commission Act 

The SRCA, M.C.L. § 600.2961, states that a principal is required to pay all 

commissions due to a sales representative at the time of termination within forty-five 

days and to pay all commissions that become due after termination within forty-five days 

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after such commissions become due. M.C.L. § 600.2961(4). A principal who 

intentionally fails to comply with the SRCA is liable to the sales representative for both 

actual damages caused by the failure to pay the commissions when due as well as an 

amount equal to two times the amount of the overdue commissions or $100,000, 

whichever is less. M.C.L. § 600.2961(5). 

Jacobson says that the Court should dismiss the breach of the SRCA count, 

because Davis has failed to alleged sufficient facts to support a breach of contract 

claim, and, therefore, did not identify an independent basis upon which commissions 

are due. Jacobson also asserts that the SRCA does not establish an independent basis 

for recovery of post-termination commissions. This argument is without merit. As noted 

above, Davis alleged sufficient facts to support a plausible breach of contract claim, 

and, therefore, established an independent basis to support its claims for damages 

under the SRCA. The Court will DENY Jacobson’s motion for dismissal of the violation 

of the SRCA count. 

C. Request for Declaratory Judgment 

Declaratory judgment is not a freestanding claim, but rather a form of relief. See 

Stroh Props. v. City of Detroit, 2013 W.L. 626478, *3 (E.D. Mich. Feb. 20, 2013)(citing 

Int'l Ass'n of Machinists and Aerospace Workers v. Tenn. Valley Auth., 108 F.3d 658, 

668 (6th Cir.1997)). “Equitable relief is, by its nature, a remedy, rather than a cause of 

action.” Id. Accordingly, Count III for declaratory judgment will be dismissed but 

declaratory judgment remains a form of available relief moving forward. 

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V. CONCLUSION 

 For the reasons stated above, Jacobson’s motion to dismiss is GRANTED IN 

PART AND DENIED IN PART. Davis’ declaratory judgment claim is DISMISSED. 

 The remaining claims continue in the case as follows: 

 Breach of Contract; 

 Violation of the Michigan Sales Representative Commission Act. 

SO ORDERED. 

 S/Avern Cohn 

 AVERN COHN 

 UNITED STATES DISTRICT JUDGE 

Dated: September 22, 2015 

Detroit, Michigan 

 

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