Court Opinion

ID: 4311474
Source: CourtListenerOpinion
Date Created: 2018-09-12 09:08:07.94671+00
Date Added: 2024-06-11T14:48:54.890680
License: Public Domain

STATE OF MICHIGAN

                          COURT OF APPEALS

JON WAALKES,                                                    UNPUBLISHED
                                                                September 11, 2018
              Plaintiff/Counterdefendant-
              Appellee,

v                                                               No. 341505
                                                                Kent Circuit Court
RESOURCE COMMUNICATIONS, INC.,                                  LC No. 15-009926-CK

              Defendant/Counterplaintiff/Third-
              Party Plaintiff-Appellant,
and

HENRY R. DUNNICK,

              Defendant-Appellant,

and

DESIGN CREATE SOLVE LLC,

              Third-Party Defendant.

Before: SAWYER, P.J., and STEPHENS and GADOLA, JJ.

PER CURIAM.

       Defendants Henry R. Dunnick and Resource Communications, Inc. (“RCI”) appeal as of
right an Order of Judgment entered on November 28, 2017 by Kent County Circuit Judge
Christopher P. Yates, denying their claim for monetary damages due to plaintiff Jon Waalkes’
breach of his employment agreement. We affirm.

                                       I. BACKGROUND

        Dunnick, on behalf of his company RCI, and Waalkes were the signatories to an October
5, 2010 employment contract. Under the agreement, Waalkes was to work full-time for RCI, and
was to be paid 50 percent of the gross profits on the sales he generated. The agreement also
established a financial goal of “total gross profits of $750,000” as the point at which the

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agreement would automatically terminate. On September 8, 2015, plaintiff provided a letter to
defendant Dunnick giving written notice expressing his intent to leave RCI and noting that he
was fast approaching the $750,000 goal. He communicated his plan to continue working in a
similar capacity with his current customer and vendor base under a newly formed company
Design Create Solve, LLC (“DCS”) to Dunnick. Plaintiff advised Dunnick that he would
complete all work in progress, even after transitioning to DCS. The parties began discussions on
the terms of an accelerated separation process. During these discussions the parties agreed that
the preliminary amount of received gross profits was $705,000 and an additional $30,000 was in
process through invoice orders and work in progress. They discussed an arrangement where the
remaining $15,000 would be offset against the amounts which would become payable to
Waalkes from RCI as commissions. However, prior to any formal modification of the written
agreement, Dunnick sent plaintiff an email on September 22, 2015 stating that plaintiff’s plans
were in violation of their employment agreement. From that point forward the relationship
between plaintiff and defendants became contentious. Dunnick locked plaintiff out of all of
RCI’s computer systems. This restriction made it impossible for plaintiff to directly access
customer files or issue computer based purchase orders. In order to service accounts, plaintiff
hand wrote purchase orders, took pictures of them and transmitted those photographs to Dunnick
on his phone. This process resulted in a time-sensitive order plaintiff secured with one of his
vendors being mishandled and delayed RCI’s receipt of payment.

        On October 26, 2015 plaintiff began operating under his new company DCS and filed an
action for declaratory relief seeking to have the parties’ respective rights under the employment
agreement clarified. RCI and Dunnick filed a counter claim for damages and injunctive relief to
protect RCI’s customer base. Most of the facts in the case were undisputed. There was no
dispute that Waalkes began working for DCS prior to meeting the $750,000 gross profit financial
goal of the employment agreement. They also agreed that RCI ultimately received $751,000 in
gross profits arising from Waalkes’ work on behalf of RCI and that at the time of Waalkes’
commencement of his new venture the invoices that generated that profit were “in progress.”
During the bench trial, defendants argued that plaintiff’s departure was premature because he did
not meet the $750,000 goal until February 12, 2016 and thus he breached the employment
agreement entitling them to monetary damages. Plaintiff conceded during the bench trial that he
stopped “soliciting work for RCI on October 26, 2015.” However he asserted that he continued
to work on all work in progress for RCI despite being locked out of the RCI computer system
which delayed his meeting the financial goal significantly. He emphasized that his efforts netted
RCI gross profits in excess of the contract target.

        The trial court issued an opinion and order that held that while plaintiff did breach section
8(b) of the employment agreement by engaging in business activities prior to reaching the goal in
February 2016, defendants failed to establish that they suffered any damages arising from the
breach. The court declined to award monetary damages because defendants had in fact received
the contractual benefit of the total gross profits of $750,000. However, the court issued an
injunction pursuant to sections 7 and 8 of the employment agreement, ordering plaintiff to honor
his contractual obligations to refrain from soliciting business from customers on defendants’
protected list. Defendants Dunnick and RCI now appeal as of right.

                                          II. DAMAGES

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        We review a trial court’s determination of damages following a bench trial for clear error.
Marshall Lasser, PC v George, 252 Mich. App. 104, 110; 651 NW2d 158 (2002). “Clear error
exists where, after a review of the record, the reviewing court is left with a firm and definite
conviction that a mistake has been made.” Id. A damage award is not clearly erroneous where
the damage award was within the range of the evidence presented, and the trial court was aware
of the issues in the case and appropriately applied the law. Alan Custom Homes, Inc v Krol, 256
Mich. App. 505, 516; 667 NW2d 379 (2003).

        Defendants first argue that the trial court erred in failing to find that the plaintiff breached
section 2 of the contract. While this Court agrees that plaintiff also breached Section 2 of the
employment agreement, we do not agree that this breach entitles defendants to monetary
damages for the same reasons the trial court stated on the record for its denial of monetary relief.

        “In an action based on contract, the parties are entitled to the benefit of the bargain as set
forth in the agreement.” Ferguson v Pioneer State Mut Ins Co, 273 Mich. App. 47, 54; 731
NW2d 94(2006). Under Section 2 of the agreement, plaintiff had a duty to “devote his full-time
business efforts to solicitation and promotion for sale of the employer’s products and services”
until such time as he was no longer an employee “i.e.” when the employment agreement
terminated. Plaintiff conceded at trial that he stopped his full-time efforts in procuring new
additional sales for defendants as of October 26, 2015 and he agreed that the financial goal was
not met until February 12, 2016. By ceasing to secure new orders for defendants prior to
attaining the $750,000 goal he failed to fulfill this obligation under Section 2 of the employment
agreement. “The rights and duties of parties to a contract are derived from the terms of the
agreement.” Wilkie v Auto-Owners Ins Co, 469 Mich. 41, 62; 664 NW2d 776 (2003).

       Nevertheless, defendants are not automatically entitled to damages because of plaintiff’s
breach. The party claiming a breach of contract “must establish by a preponderance of the
evidence that (1) there was a contract, (2) the other party breached the contract, and (3) the
breach resulted in damages to the party claiming breach.” Bank of Am, NA v First Am Title Ins
Co, 499 Mich. 74, 100; 878 NW2d 816 (2016).

        The trial court found two instances of breach and this court has determined that a third
breach occurred. Regardless of the error as to Section 2, the trial court correctly determined that
the defendants failed to prove they suffered any compensable damages arising from the
plaintiff’s breach. The general rule is that a remedy for breach of contract should make the
nonbreaching party whole or put the nonbreaching party in as good a position as if the breach
had not occurred. Roberts v Farmers Ins Exchange, 275 Mich. App. 58, 69; 737 NW2d 332
(2007). Put another way, the nonbreaching party is entitled to the monetary value of the bargain
made by the parties. Ferguson, supra at 54. As noted, the defendant ultimately received
“$751,000 and change” as a result of plaintiff’s efforts.

        Accordingly, because plaintiff satisfied his entire financial obligation to defendants, the
trial court did not err when it ruled that defendants were not entitled to any monetary damages as
a result of plaintiff’s breach.

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Affirmed.

                  /s/ David H. Sawyer
                  /s/ Cynthia Diane Stephens
                  /s/ Michael F. Gadola

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