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One Court of Justice Blog

April 19, 2017

MSC: Contracting parties waive their right to jury trial where contract requires an issue to be “fixed by the court”

The contractual phrase “fixed by the court” is not ambiguous, said the Michigan Supreme Court in Barton-Spencer v. Farm Bureau Life Insurance Company of Michigan, Nos. 153655 and 153656.  Accordingly, parties to a contract providing for attorney fees and costs to be “fixed by the court” plainly waive their right to a jury trial on that issue.

Cynthia Barton-Spencer (“Barton-Spencer”) worked for Farm Bureau Insurance Company of Michigan (“Farm Bureau”) as an independent insurance agent under an Agent Agreement entered into in November 2000.  The Agent Agreement provided that if Farm Bureau was successful in an action against Barton-Spencer, Barton-Spencer would “reimburse [Farm Bureau’s] attorney fees and costs as may be fixed by the court.”  In February 2013, Farm Bureau terminated the Agent Agreement for cause after Barton-Spencer allegedly misrepresented to clients the tax consequences of moving funds into a particular policy.  Barton-Spencer sued Farm Bureau, alleging, among other things, that she was owed commissions and post-termination benefits under the Agent Agreement, and demanding a jury trial on all issues.
 
Farm Bureau subsequently filed a counterclaim seeking to recover commissions paid on the sale of those policies that Farm Bureau had refunded because of Barton-Spencer’s misrepresentations, and also seeking attorney’s fees and costs under the Agent Agreement. The jury returned verdicts on Barton-Spencer’s claims and the counterclaim, but the issue of attorney’s fees was never submitted to the jury.  Farm Bureau filed a postjudgment motion seeking attorney’s fees and costs, and the trial court granted the motion.
 
The Court of Appeals reversed the trial court’s decision to grant fees to Farm Bureau, instead holding that Barton-Spencer had a constitutional right to have a jury determine the reasonableness of contractual fees.  It further concluded that the phrase “fixed by the court” was not an express waiver, but instead rendered the contract ambiguous as to whether the parties intended to have the reasonableness of attorney’s fees decided by the court rather than a jury. The court reasoned that an express waiver would have included the word “jury,” the phrase “jury trial,” or the word “waive.”
 
The Michigan Supreme Court, in a unanimous opinion and without hearing oral argument, disagreed with the Court of Appeals.  It reasoned that the Court of Appeals should have given proper effect to the word “court,” which refers in common parlance—including in legal opinions regarding a jury’s evaluation of reasonableness of attorney’s fees—to judges, as opposed to juries.  The parties, by agreeing to have that issue determined by a judge, thus expressly waived their right to a jury trial on that issue.  The Court accordingly reversed the Court of Appeals’ reversal of the trial court’s fee award, and vacated its judgment that Barton-Spencer had a constitutional right to a jury trial and did not relinquish that right by signing the Agent Agreement.

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