Court Opinion

ID: 4160592
Source: CourtListenerOpinion
Date Created: 2017-04-17 07:09:03.882384+00
Date Added: 2024-06-11T14:23:29.448550
License: Public Domain

Michigan Supreme Court
                                                                                            Lansing, Michigan

Syllabus
                                                                Chief Justice:         Justices:
                                                                Stephen J. Markman     Robert P. Young, Jr.
                                                                                       Brian K. Zahra
                                                                                       Bridget M. McCormack
                                                                                       David F. Viviano
                                                                                       Richard H. Bernstein
                                                                                       Joan L. Larsen
This syllabus constitutes no part of the opinion of the Court but has been             Reporter of Decisions:
prepared by the Reporter of Decisions for the convenience of the reader.               Kathryn L. Loomis

         BARTON-SPENCER v FARM BUREAU LIFE INSURANCE COMPANY OF MICHIGAN

               Docket Nos. 153655 and 153656. Decided April 14, 2017.

               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.

                                     ©2017 State of Michigan
                                                                   Michigan Supreme Court
                                                                         Lansing, Michigan

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

                                                               FILED April 14, 2017

                           STATE OF MICHIGAN

                                  SUPREME COURT

CYNTHIA BARTON-SPENCER,

              Plaintiff/Counterdefendant-
              Appellant, Cross-Appellee,

v                                                       Nos. 153655 and
                                                             153656

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.

BEFORE THE ENTIRE BENCH

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.

1
  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), pp 14-17.

                                           2
      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

2
 These extended earnings were a contractual benefit paid to agents after the termination
of the Agent Agreement.
3
  The amended complaint added a claim of defamation per se; the court subsequently
granted defendants summary disposition on this claim.

                                            3
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 for 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. The Court of Appeals largely affirmed the resolution of the

claims, but it reversed the trial court’s decision to grant defendants contractual attorney

fees, agreeing with plaintiff that defendants “failed to adduce evidence supporting the

                                               4
reasonableness of such fees at trial.” 4       The Court of Appeals held that contractual

attorney fees are “damages,” 5 and as such, plaintiff had a constitutional right under

Article 1, § 14 of Michigan’s 1963 Constitution 6 to have a jury determine the

reasonableness of the contractual fees. 7 The panel rejected defendants’ argument that

plaintiff agreed, through the provision in the Agent Agreement providing that attorney

fees and costs will be “fixed by the court,” to have the amount of reasonable fees and

costs determined by a judge rather than a jury. 8 The Court of Appeals concluded that this

provision “was not an express waiver”:

          [T]he “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

4
    Barton-Spencer, unpub op at 14.
5
    Id. at 15.
6
  Const 1963, art 1, § 14 (“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.”).
7
  Barton-Spencer, unpub op at 15-16, citing Madugula v Taub, 496 Mich 685, 705-706,
713; 853 NW2d 75 (2014) (“If the nature of the controversy would have been considered
legal at the time the 1963 Constitution was adopted, the right to a jury trial is
preserved. . . . [C]laims for money damages were generally considered legal in nature at
the time the 1963 Constitution was adopted.”) (citations omitted), and Zeeland Farm
Servs, Inc v JBL Enterprises, Inc, 219 Mich App 190, 199; 555 NW2d 733 (1996)
(holding that a jury could have concluded that the contractual attorney fees were
reasonable).
8
    Barton-Spencer, unpub op at 16.

                                                5
           intended to waive their constitutional right to a jury trial on the question of
           attorney fees.[9]

           Ultimately, the Court of Appeals reversed the trial court’s award of contractual

costs and attorney fees as well as the award of case evaluation sanctions. 10 The Court

held that the amount of the case evaluation sanctions was impermissibly “dependent on”

the judge’s improper determination of reasonable contractual attorney fees and costs. 11

The judge had calculated the sanctions award on the basis of the total amount of

reasonable fees incurred by defendants, minus the amount of overlapping payments

already awarded in the prior order granting contractual attorney fees and costs. 12

Accordingly, the Court of Appeals directed the trial court to recalculate the case

evaluation sanctions on remand.

                                  II. STANDARD OF REVIEW

           This Court reviews questions regarding the proper interpretation of contractual

language de novo, giving contractual terms their ordinary meaning when those terms are

not defined in the contract itself. 13 Whether contractual language is ambiguous is also a

question of law reviewed de novo. 14

9
    Id.
10
     Id. at 17.
11
     Id.
12
     Id.
13
     Allstate Ins Co v McCarn (After Remand), 471 Mich 283, 288; 683 NW2d 656 (2004).
14
     Wilkie v Auto-Owners Ins Co, 469 Mich 41, 47; 664 NW2d 776 (2003).

                                                 6
                                       III. ANALYSIS

         In the Agent Agreement, the parties agreed that if defendants succeeded in any suit

against plaintiff alleging that defendants sustained damages “as a result of [plaintiff’s]

violation of any provision of” the agreement, plaintiff would “reimburse [defendants’]

attorney fees and costs as may be fixed by the court in which such suit or proceeding is

brought.” The relevant question now presented to the Court is whether, by agreeing that

attorney fees and costs would be “fixed by the court,” the parties agreed that attorney fees

would be fixed by a judge rather than a jury. If this language is most reasonably read as

an agreement to have a judge determine the amount of attorney fees, then when plaintiff

demanded a jury trial on the issue, she held the burden to avoid the agreement by

showing that this provision was invalid or unenforceable on contractual grounds. 15

         The Court of Appeals erred when it held that the Agent Agreement was

“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.” 16 Courts should

construe contracts “so as to give effect to every word or phrase as far as practicable.” 17 A

15
   See Morris v Metriyakool, 418 Mich 423, 439; 344 NW2d 736 (1984) (opinion by
KAVANAGH, J.) (“We reject plaintiffs’ allocation of the burden of proof to defendants.
The burden of avoiding these arbitration agreements, as with other contracts, rests with
those who would avoid them.”).
16
     Barton-Spencer, unpub op at 16.
17
   Klapp v United Ins Group Agency, Inc, 468 Mich 459, 467; 663 NW2d 447 (2003)
(citation and quotation marks omitted).

                                              7
contractual term is ambiguous on its face only if it is equally susceptible to more than a

single meaning. 18

       The phrase “fixed by the court” is not ambiguous. When the parties agreed to this

provision, they agreed that the amount of attorney fees and costs would be fixed by a

judge rather than by a jury. In ordinary parlance, the word “court” refers to judges. 19

Legal opinions often use the terms “court” and “judge” synonymously, 20 even when

18
   Raska v Farm Bureau Mut Ins Co of Mich, 412 Mich 355, 362; 314 NW2d 440 (1982)
(“[I]f a contract, however inartfully worded or clumsily arranged, fairly admits of but one
interpretation it may not be said to be ambiguous . . . .”). See also Lansing Mayor v Pub
Serv Comm, 470 Mich 154, 166; 680 NW2d 840 (2004) (“[A] provision of the law is
ambiguous only if it irreconcilably conflicts with another provision, or when it is equally
susceptible to more than a single meaning.”) (quotation marks, citation, emphasis, and
alteration omitted); id. at 165 n 6 (affirming that the rule “that ambiguity is a finding of
last resort applies with equal force whether the court is interpreting a statutory text or a
contractual one”) (punctuation omitted).
19
   See Merriam-Webster’s Collegiate Dictionary (11th ed) (defining “court” as “an
official assembly for the transaction of judicial business . . . a judge or judges in session”)
(emphasis added). Accord Black’s Law Dictionary (7th ed) (defining “court” as “[a]
governmental body consisting of one or more judges who sit to adjudicate disputes and
administer justice . . . [t]he judge or judges who sit on such a governmental body”)
(emphasis added).
20
   For instance, many cases contrast the “jury” with the “court,” using “court” as a
synonym for “judge.” See, e.g., Pirgu v United Servs Auto Ass’n, 499 Mich 269, 272; 884
NW2d 257 (2016) (“The trial court noted that the jury awarded plaintiff approximately
33% of the judgment amount sought, and therefore the trial court awarded $23,412.48 in
attorney fees, approximately 33% of the jury verdict.”) (emphasis added); In re Svitojus’
Estate, 307 Mich 491, 492; 12 NW2d 324 (1943) (“The heirs at law appealed to the
circuit court for the county of Kent where, upon trial by jury, the court directed a verdict
allowing the account with reduction of attorney fees to $4,000.”) (emphasis added). See
also Madugula, 496 Mich at 698 (examining whether a person bringing a shareholder-
oppression suit under MCL 450.1489 had a right to a jury trial for a damages claim and
reading statutory language referencing “circuit court” to refer to a judge rather than a
jury).

                                              8
referring to amounts of money fixed by judgments of “the court.” 21 As the Court of

Appeals noted, juries have sometimes decided the question whether an attorney-fee

award is reasonable. 22 However, this does not suggest that the contractual term “court”

refers to a jury rather than a judge. Indeed, even in those cases in which juries evaluated

the amount of an attorney-fee award, the language of the opinion has contrasted those

“jury” determinations with the decisions of the “court.” 23

         The parties decided in the Agent Agreement that the amount of attorney fees and

costs would be fixed by a judge. Plaintiff seeks to avoid this agreement and therefore

holds the burden of proving that the contract is invalid. 24 It is unnecessary to reach the

question whether plaintiff had a constitutional right to a jury trial on the reasonableness

21
   See, e.g., People v Becker, 349 Mich 476, 480; 84 NW2d 833 (1957) (approving of
“the statutory sanction of requiring ‘restitution’ as a condition of probation,” which
required judges, without a trial as to the extent of damages, to “order[] the defendant in a
criminal case to pay to certain third persons . . . a sum of money fixed by the court itself”)
(emphasis added); In re Rite-Way Tool & Mfg Co, 333 Mich 551, 559; 53 NW2d 373
(1952) (modifying an order of distribution administered by a receiver and monitored by a
judge to pay “the fees of the receiver and his attorney as fixed by the court”) (emphasis
added). See also Derby v Gage, 60 Mich 1, 3; 26 NW 820 (1886) (applying “Section 15
of act No. 133 of the Session Laws of 1883,” which required railroad companies
condemning land to pay “in addition to the damages and compensation awarded by the
commissioners or jury, a reasonable attorney fee, to be fixed and determined by the court
when the report or verdict is confirmed”) (quotation marks omitted; emphasis added).
22
  See, e.g., In re Brewster’s Estate, 113 Mich 561, 563; 71 NW 1085 (1897); Swift v
Plessner, 39 Mich 178, 180 (1878); Zeeland Farm Servs, 219 Mich App at 199.
23
   See, e.g., Swift, 39 Mich at 180 (“The court below directed the jury to allow a
reasonable attorney fee on the application to dissolve the attachment . . . .”) (emphasis
added).
24
     Morris, 418 Mich at 439 (opinion by KAVANAGH, J.).

                                              9
of attorney fees because the nature of the inquiry into the validity of the agreement is the

same even if plaintiff was contracting away a constitutional right. 25 “The burden of

showing some ground for rescinding or invalidating a contract is not altered merely

because the contract entails eschewal of constitutional rights.” 26 Plaintiff has not raised a

contractual defense, such as coercion, mistake, duress, or fraud, to argue that the Agent

Agreement is invalid. Therefore, we conclude that the parties validly agreed to have a

judge determine the reasonableness of the attorney fees, and we reverse the portion of the

Court of Appeals’ opinion that reverses the award of attorney fees and costs.

                                    IV. CONCLUSION

         The Court of Appeals erred when it held that the parties’ agreement was

ambiguous. The text of the Agent Agreement is plain: plaintiff agreed “to reimburse

[defendants’] attorney fees and costs as may be fixed by the court.” The clear import of

the phrase “fixed by the court” is that the amount of reasonable attorney fees would be

determined by a judge rather than a jury. By agreeing to this contractual provision,

plaintiff waived any right she had to a jury trial, and if she seeks to avoid the contract, she

bears the burden of demonstrating that this provision is invalid. Therefore, we vacate that

portion of the Court of Appeals’ opinion holding that plaintiff had a constitutional right to

a jury trial and holding that she did not relinquish this right by signing the Agent

25
     Id. at 439-440.
26
  Id. Because it is unnecessary for us to reach the constitutional question, we merely
vacate that portion of the Court of Appeals’ opinion holding that plaintiff had a
constitutional right to a jury trial on the reasonableness of the contractual attorney fees;
we do not reach the question ourselves.

                                              10
Agreement. We reverse the Court of Appeals’ reversal of the trial court’s award of

contractual costs and attorney fees to defendants as well as the Court of Appeals’ reversal

of the award of case evaluation sanctions under MCR 2.403(O).

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

                                            11