Bosquett & Company v. Sterling Benefits LLC

CourtMichigan Court of Appeals
DecidedJanuary 14, 2020
Docket345615
StatusUnpublished

This text of Bosquett & Company v. Sterling Benefits LLC (Bosquett & Company v. Sterling Benefits LLC) is published on Counsel Stack Legal Research, covering Michigan Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bosquett & Company v. Sterling Benefits LLC, (Mich. Ct. App. 2020).

Opinion

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to revision until final publication in the Michigan Appeals Reports.

STATE OF MICHIGAN

COURT OF APPEALS

BOSQUETT & COMPANY, UNPUBLISHED January 14, 2020 Plaintiff-Appellee/Cross-Appellant,

v No. 345615 Macomb Circuit Court STERLING BENEFITS LLC, LC No. 2016-000218-CB

Defendant-Appellant/Cross- Appellee.

Before: RIORDAN, P.J., and SAWYER and JANSEN, JJ.

PER CURIAM.

Following a bench trial, defendant Sterling Benefits LLC (“Sterling”) appeals as of right the trial court’s order that plaintiff Bosquett & Company (“Bosquett”) is entitled to money damages and statutory interest on its breach of contract claim against Sterling. Sterling also appeals the trial court’s grant of additional damages to Bosquett. Bosquett has cross-appealed on those same issues. For the following reasons, we affirm the trial court.

I. FACTS & PROCEDURAL HISTORY

This case arises out of the sale of a business. Bosquett was an insurance agency owned by David Fischer. In 2009, Fischer sold Bosquett to Sterling, a company owned by Joe Haney and Paul Mattes, in what Fischer described as a “fire sale.” The parties entered into an asset purchasing agreement (the “APA”) on September 4, 2009. Under the terms of the contract, Sterling agreed to pay Bosquett for certain assets. In particular, this dispute involves Bosquett’s personal lines of business, commercial lines, and a benefits book. Each of these items represents a revenue stream of commissions generated by Bosquett’s book of business.

Regarding the personal lines, Sterling agreed to pay $350,000 total, with $150,000 due up front and the remaining $200,000 payable over two years in $50,000 installments every six months. Each of those installments was conditioned on Sterling meeting a certain “benchmark.” This benchmark required that certain accounts be reviewed and if more than 88% of those accounts were retained, then Sterling would pay the installment, but if less than 70% of the benchmark was retained, then no such payment was due, and the purchase price was reduced by

-1- this $50,000.00. The APA also provided that Bosquett was “entitled to regular reports from carriers as to commissions received by [Sterling] in connection with the purchased books.”

Regarding the commercial lines and benefits book, the APA provided that Sterling would pay Bosquett in the following manner:

45% of commissions actually received for any type of insurance sold to customers from the Commercial Book and 35%· of commission actually received for any type of insurance sold to customers in the Benefits Books by [Sterling] during the subsequent three (3) years, based on the Commercial Book and the Benefit Book as determined from insurance provider reports for the year preceding September 1, 2009.

Bosquett filed a complaint in January 2016, alleging breach of contract and requesting an accounting and specific performance of the contract.1 Bosquett contended Sterling breached the APA by failing to pay it as agreed despite the achievement of the APA’s benchmarks, by failing to provide periodic reports pursuant to the APA, and by failing to pay commissions on the commercial lines and benefits book.

At trial, the parties presented evidence regarding the value of the benchmark. Sterling contended that the benchmark value was $800,000 based on the book of business report provided by Bosquett during negotiations. Bosquett maintained that the benchmark was $315,000 based on the summary page for Bosquett’s personal lines business in the 14 months before the sale, which was provided to Sterling at closing. In addition, the trial court considered Sterling’s internal reports demonstrating the amount of business that was generated from Bosquett’s former clients.

Fischer testified that he sold Bosquett to Sterling because his license was being suspended and he wanted to ensure that his clients had continuity of coverage. During negotiations with Sterling, Bosquett provided a “book of business report” in order to give Sterling an approximation of the volume of Bosquett’s clients. He said that at the time of the sale, the benefits book business size alone was worth between $30,000 to $80,000 and it was impossible for that business to drop to zero overnight. Fischer testified that he never received notice from Sterling that the benchmarks had not been met, that there were any claims against his errors and omissions coverage, or that the commercial line clients had left Sterling. Fischer reviewed the reports that Sterling had submitted as evidence of the commissions on the commercial lines and he believed that the reports were incomplete. Several months after closing, Fischer also testified, he received a Bosquett phone bill of $10,000, which he paid at his attorney’s behest. However, he believed that Sterling was obligated to repay him.

1 Bosquett initially filed a complaint in 2012, which was dismissed without prejudice in August 2014, due to a conflict of interest by Bosquett’s attorney.

-2- Sterling’s Haney testified that he ran reports on the commissions generated on the personal lines and Sterling did not hit any of the benchmarks. Haney admitted that the book of business report was inaccurate and that the numbers that were included on many of the line items to get to $800,000 “were simply wrong.” Regarding the commercial lines, Haney could not recall generating any reports, but he believed that Sterling did not owe Bosquett any payments. Internal reports by Sterling, however, demonstrated that it had received over $143,000 on commissions from former Bosquett clients. Haney explained that no money was owed on these commissions because they were actually not Bosquett’s clients. Several Bosquett employees transferred to Sterling as independent contractors at the time of the sale, and accordingly to Haney, the clients associated with these “producers” were not Bosquett’s clients because they belonged to the producers. Additionally, some of Bosquett’s former clients had left Sterling, but had returned after concerted efforts by Sterling and therefore they no longer could be classified as belonging to Bosquett. Other clients had left Sterling and were owed a refund, which Sterling took out of the money owed to Bosquett.

Haney further testified that one client in particular, Hartford, believed that Bosquett owed Hartford money, and Sterling had made a separate deal with Hartford allowing it to keep some portion of commissions otherwise due to Sterling as a payment on Bosquett’s behalf. Another client, Wireless Vision, had been listed as an excluded asset in the APA because, at the time of the sale, Sterling was a small company and had not intended to purchase that relatively large account, but had intended instead for it to stay with the producer who was servicing that client, Patrick Parke. However, Sterling’s internal reporting system had designated Wireless Visions as a Bosquett client through a clerical error.

Mattes also testified that Sterling “never came close” to hitting the benchmark on the personal lines, but admitted that Sterling’s reports might be inaccurate. Regarding the commercial lines, Wireless Vision had been listed as an excluded asset because it was Parke’s book of business and Sterling did not have enough money at the time of the sale to buy Bosquett’s book of business along with Parke’s account. While Fischer initially helped Sterling try to retain clients, Mattes said that Fischer stopped returning calls and emails. Due to Fischer’s lack of cooperation, Mattes believed that Bosquett was not entitled to any portion of the commissions on the commercial lines.

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Bosquett & Company v. Sterling Benefits LLC, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bosquett-company-v-sterling-benefits-llc-michctapp-2020.