Flynn v. Flint Coatings, Inc

J. B. Sullivan, J.

In this interlocutory appeal, plaintiffs appeal by leave granted from an order granting partial summary disposition for defendant. The trial court held that the provisions of the sales representatives’ commissions act (SRCA), MCL 600.2961; MSA 27A.2961, were not available to plaintiffs because the act took effect after plaintiffs’ cause of action had accrued. We reverse.

The underlying facts are not at issue here and can be briefly summarized as follows. Plaintiff James Flynn is a manufacturer’s representative in the automotive industry and the owner of plaintiff Flynn & Associates, Inc., a manufacturers’ representative agency. Plaintiffs engage in direct representation of suppliers to the automotive industry. Apparently, *635defendant hired plaintiffs in 1987 and agreed to pay them five percent of all sales they generated. This arrangement continued until August of 1990, when defendant terminated its relationship with plaintiffs. In August of 1991, plaintiffs filed the current suit, alleging that they are owed commissions on sales that took place after their termination.

The only question before us on appeal is whether the srca should be applied retroactively. The relevant portions of the act provide:

(4) All commissions that are due at the time of termination of a contract between a sales representative and principal shall be paid within 45 days after the date of termination. Commissions that become due after the termination date shall be paid within 45 days after the date on which the commission became due.
(5) A principal who fails to comply with this section is liable to the sales representative for both of the following:
(a) Actual damages caused by the failure to pay the commissions when due.
(b) If the principal is found to have intentionally failed to pay the commission when due, an amount equal to 2 times the amount of commissions due but not paid as required by this section or $100,000.00, whichever is less.
(6) If a sales representative brings a cause of action pursuant to this section, the court shall award to the prevailing party reasonable attorney fees and court costs. [MCL 600.2961; MSA 27A.2961.]

The SRCA was passed and became immediately effective on June 29, 1992. Thus, at the time the SRCA became effective, plaintiffs’ claim had already accrued1 and this suit had already been filed.

*636The Michigan Supreme Court has outlined four rules regarding the retroactive application of statutes. The Court summarized the rules as follows:

First, is there specific language in the new act which states that it should be given retrospective or prospective application. See headnote no. 1, Hansen-Snyder Co v General Motors Corp, 371 Mich 480; 124 NW2d 286 (1963). Second, “[a] statute is not regarded as operating retrospectively [solely] because it relates to an antecedent event”. Hughes v Judges’ Retirement Board, 407 Mich 75, 86; 282 NW2d 160 (1979). Third, “[a] retrospective law is one which takes away or impairs vested rights acquired under existing laws, or creates a new obligation and imposes a new duty, or attaches a new disability with respect to transactions or considerations already past”. Hughes, supra, p 85; Ballog v Knight Newspapers, Inc, 381 Mich 527, 533-534; 164 NW2d 19 (1969). Fourth, a remedial or procedural act which does not destroy a vested right will be given effect where the injury or claim is antecedent to the enactment of the statute. Rookledge v Garwood, 340 Mich 444; 65 NW2d 785 (1954). [In re Certified Questions (Karl v Bryant Air Conditioning Co), 416 Mich 558, 570-571; 331 NW2d 456 (1982).]

Here, there is no specific language in the srca regarding whether it should be applied retroactively. In addition, it is clear that the second rule does not apply. See id. at 571. Thus, the question in this case is whether the SRCA is a rule three or a rule four case. If it “creates a new obligation and imposes a new duty,” it is a rule three case, and it may not be applied retroactively. Id. at 572. On the other hand, under rule four, “[statutes related to remedies or modes of procedure which do not create new or take away vested *637rights, but only operate in furtherance of a remedy or confirmation of rights already existing will ... be held to operate retrospectively and apply to all actions accrued, pending or future. . . .” Id., quoting headnote 1 of Hansen-Snyder, supra.

We do not believe that the srca creates any new duty on the part of employers. Under the SRCA, as under the common law, an employer is obligated to pay sales commissions when they are due. MCL 600.2961(4); MSA 27A.2961(4); Sorenson v Charlevoix Rock Product Co, 191 Mich 86; 157 NW 349 (1916). Thus, an employer who was not liable under the common law is not liable under the srca. Clearly, then, although the SRCA changes the remedy for failure to pay sales commissions, it does not create a new obligation or impose a new duty. This leads us to the conclusion that this is a rule four case and that the srca is properly applied retroactively. See In re Certified Questions, supra at 577-578.

Defendant argues for affirmance on the ground that the srca creates a new cause of action. Defendant cites two differences between the SRCA and the common law. First, defendant notes that a cause of action under the srca does not accrue until forty-five days after termination, or until forty-five days after the commission becomes due, MCL 600.2961(4); MSA 27A.2961(4), while a common-law cause of action accrues immediately after payment is due. However, we conclude that this difference is procedural and does not bar retroactive application of the statute. See Hansen-Snyder, supra at 485.

In further support of its argument that the SRCA creates a new cause of action, defendant cites the fact that the srca increases an employer’s liability for a *638prior transaction. Defendant’s argument is essentially that parties have vested rights in the particular remedy authorized by law when a cause of action accrues.2 Thus, defendant argues, the treble damages provision of the SRCA may not be applied retroactively. This argument has been rejected by our Supreme Court. As the Court noted in In re Certified Questions, supra at 575-576 (citing Rookledge, supra): “[T]he fact that the new statute changes the legal consequences of a prior act does not prevent a retrospective application of that statute, since that statute is remedial in nature.”3 Indeed, our Supreme Court has left no doubt that a statute that increases or decreases the damages available to a plaintiff may still be applied retroactively. See In re Certified Questions, supra; Rookledge, supra; Ballog, supra.

Because the SRCA does not create a new obligation or impose a new duty, and because it simply alters the remedy available to plaintiffs who have been denied their justly earned commissions, it is properly applied retroactively. Thus, the trial court erred in holding that the provisions of the SRCA were not available to plaintiffs in this case.

Reversed.

*639Sawyer, P.J., concurred.

It appears that plaintiffs are also claiming entitlement to commissions on sales that were not consummated until after the srca became effective. Theoretically, the srca might apply to those commissions even if it could *636not be applied retroactively. However, because the parties did not raise this issue, we decline to address it.

Defendant’s only authority for this position is Lewis v Grand Rapids Plastics, Inc, unpublished opinion per curiam of the Court of Appeals, issued July 11, 1995 (Docket No. 162962). However, unpublished opinions are not binding, and we decline to follow Lewis.

Here, as in Rookledge, there can be no doubt that the Legislature, in enacting this statute, intended to remedy an existing injustice. The Senate bill analysis notes that some employers withhold commissions, knowing that many sales representatives will accept distress settlements or forgo remuneration entirely in order to avoid costly and time-consuming litigation. The srca was intended to ensure that sales representatives receive the commissions to which they are entitled. See Senate Legislative Analysis, SB 717, June 15, 1992. Thus, the srca is properly regarded as remedial in nature. See Rookledge, supra at 453.