Seton Company v. Lear Corporation

The Hon. Danny C. Reeves, United States District Judge for the Eastern District of Kentucky, sitting
*
by designation.
NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 06a0731n.06
Filed: October 4, 2006
No. 05-2489
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
SETON COMPANY,
Plaintiff-Appellee,
v.
LEAR CORPORATION,
Defendant-Appellant.
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ON APPEAL FROM THE UNITED
STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF MICHIGAN
Before: MARTIN and DAUGHTREY, Circuit Judges, and REEVES, District Judge.*
PER CURIAM. The defendant, Lear Corporation, appeals from two district court
rulings, one approving a $30,000,000 jury verdict in favor of the plaintiff, Seton Company,
based upon the defendant’s anticipatory repudiation of a contract between the parties, and
the other assessing Lear an additional $4,725,415.39 in prejudgment interest. Before this
court, the defendant raises the same allegations of error addressed by the district judge
in orders denying the defendant’s motion for judgment notwithstanding the verdict or for
a new trial and granting Seton prejudgment interest. Specifically, Lear asserts that any
agreement between the parties did not satisfy the requirements of the “merchant
exception” to the Michigan Statute of Frauds; that Lear did not unqualifiedly refuse to

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perform under the alleged agreement; that the district court erred in admitting into evidence
allegedly improper testimony that Lear maintains prejudiced its position in this litigation;
and that the district judge refused to give a requested jury instruction that Lear contends
would have prevented jury confusion. The defendant further argues on appeal that Seton
cannot properly rely upon the alternative theory of promissory estoppel in order to
circumvent the application of the Michigan Statute of Frauds, and that the district court
erred in awarding prejudgment interest to the plaintiff for periods of time before Seton
actually suffered any financial injury.
FACTUAL AND PROCEDURAL BACKGROUND
Prior to the 1999 introduction of its GMT 800 Program, General Motors Corporation
contracted with defendant Lear to provide the automobile manufacturer with leather seats
for its trucks and sport utility vehicles. Lear in turn reached an agreement with Seton in
October 1998 for the plaintiff to provide Lear with the actual cut-to-pattern leather that went
into the seat assemblies. Additionally, Seton agreed to provide Lear with percentage
rebates on various shipments of the leather in the expectation that Lear would then pass
those savings on to General Motors in fulfillment of Lear’s contractual obligations with the
automaker. Despite the relative enormity of this commercial undertaking, Seton and Lear
initially failed to reduce their agreement with each other to writing. By the fall of 1999,
however, the principals who negotiated the Seton-Lear agreement had left their respective
positions within their companies. Thus, following a change in the initial rebate practices

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that the parties had followed, Lear’s new director of purchasing requested that his
counterpart at Seton provide him with a written memorialization of the now-modified
agreement.
On November 23, 1999, Seton’s Ingo Griessmann responded to Lear’s request in
a one-page correspondence purporting to recap “the agreement reached by Messrs. M.
Duross, Director of Purchasing for Lear Corporation and N. Showich, Vice-President of
Sales and Marketing for Seton Company” in 1998. In pertinent part, the 1999 confirmation
stated that “Lear is to award Seton the entire GMT 800 Program cut to pattern business
for the life of the program” in return for various payments and rebates. Even though the
letter ended with a request that Lear “[k]indly return with acknowledgement [sic] signature,”
Lear did not do so.
The parties continued to do business with each other in accordance with the terms
outlined in the November 23, 1999, letter for two additional years. In late 2001, however,
Lear informed Seton that General Motors was planning to use water buffalo hide for the
seats on some of its GMT 800 Program vehicles beginning in mid-2002. Although General
Motors had actually rejected the water buffalo-hide suggestion and had informed Lear that
it would not need such materials from its suppliers, Lear representatives continued to
request proposals from Seton for water buffalo hides, proposals that the plaintiff was
unable or unwilling to provide. Finally, concerned about the parties’ business relationship
with each other, Seton sent Lear a letter on January 25, 2002, demanding that the

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defendant affirm its commitment to deal exclusively with Seton for its leather needs for the
life of the GMT 800 Program. When Lear made clear its position that no life-of-the-
program agreement had been reached by the parties, Seton filed suit on January 29, 2002,
against the defendant for anticipatory repudiation of the contract.
The suit was originally filed in federal district court in New Jersey, but was then
transferred to the Eastern District of Michigan. On April 17, 2002, Seton filed an amended
complaint asserting numerous state law causes of action. In response to motions by the
defendant, the district judge dismissed many of those claims, but held a jury trial on the
plaintiff’s assertions of anticipatory repudiation and promissory estoppel. The jury returned
a verdict in favor of Seton on the anticipatory repudiation claim, thus rendering
unnecessary a further ruling on the promissory estoppel cause of action. The district court
denied subsequent motions for judgment notwithstanding the verdict and for a new trial,
entered judgment in favor of the plaintiff in the amount of $30,000,000, and awarded Seton
prejudgment interest of an additional $4,725,415.39. From those rulings, Lear now
appeals.
DISCUSSION
A. Judgment Notwithstanding the Verdict
The district court expertly addressed all issues now raised by the defendant on
appeal. The court first recognized that the threshold issue in the case involved Seton’s

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anticipatory repudiation claim: if the plaintiff prevailed on that contract cause of action, the
jury had no need to render a verdict on the alternative, promissory estoppel claim. The
district judge then concluded that Lear, even if never claiming unequivocally that it would
sever its ties with Seton, did clearly breach the alleged agreement between the companies
by flatly rejecting the idea that such an agreement extended for the life of the GMT 800
Program. As explained by the district court, “repudiation of an essential part of a contract
constitutes repudiation of the contract,” and the plaintiff clearly “introduced evidence
establishing that the duration of the contract was an essential term.”
Lear nevertheless argues that the alleged contract was not enforceable because the
Michigan Statute of Frauds requires “a contract for the sale of goods for the price of
$1,000.00 or more” to be in writing and to be “signed by the party against whom
enforcement is sought.” MICH. COMP. LAW S ANN. § 440.2201(1) (2002). The parties do not
dispute that no such signed, written memorialization of the agreement between Seton and
Lear exists in this case. Under Michigan law, however:
Between merchants, if within a reasonable time a writing in confirmation of
the contract and sufficient against the sender is received and the party
receiving it has reason to know its contents, it satisfies the requirements [of
the Statute of Frauds] unless written notice of objection to its contents is
given within 10 days after it is received.
MICH. COMP. LAW S ANN. § 440.2201(2) (2002).

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Consequently, the attention of the jurors was focused upon two inquiries: first,
whether Seton actually produced a “writing in confirmation of the contract”; and second,
whether any such writing was sent to Lear “within a reasonable time.” The defendant
argues that the November 23, 1999, letter from Seton to Lear was not a confirmation of a
contract but, rather, an offer to contract. To bolster that argument, Lear now emphasizes
language in the letter stating, “We . . . hope that the above meets with your understanding
of this agreement.” The jury, however, obviously gave more credence to the opening
sentence of the letter directing Lear to “please find below the agreement reached by
Messrs. M. Duross, Director of Purchasing for Lear Corporation and N. Showich, Vice
President of Sales and Marketing for Seton Company.”
Similarly, a closer look at the language of the entire November 23 letter reveals the
falsity of the defendant’s claim that the fact that the correspondence asked for an
acknowledgment signature necessarily means that the letter was merely an offer that has
not yet been accepted by Lear. As explained by the district judge, “Seton’s November 23,
1999 letter did not require Lear to take an additional step in order to indicate its acceptance
of the letter’s terms. Therefore, . . . the Court does not conclude as a matter of law that
the letter merely was an offer.”
The defendant also contests the timeliness of the letter. Although recognizing that
the concept of a “reasonable time” for sending a written confirmation of the agreement
“depends on the nature, purpose and circumstances of such action,” MICH. COMP. LAW S

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ANN. § 440.1204(2), Lear argues that the 13-month period between the making of the
alleged contract and the letter is far too lengthy a period to be considered “reasonable.”
Again, the jury came to a contrary conclusion, possibly because the parties had engaged
in congenial business relations with each other without incident for a lengthy period of time
after negotiation of the 1998 agreement. Furthermore, a short time prior to issuance of the
letter, Lear and Seton modified the terms of their agreement to extend the rebates that the
plaintiff paid to the defendant. Even Lear does not argue that the period of time between
that subsequent modification and the November 23 letter should be considered
unreasonably long as a matter of law.
B. Motion for New Trial
The defendant also asserts that the district court erred in failing to order a new trial
because of improper evidentiary rulings by the district judge and because of the court’s
refusal to give a specially-requested jury instruction. To justify such extraordinary relief,
the movant must establish that the district judge abused his discretion in the rulings such
that the resulting judgment was inconsistent with substantial justice. See Beck v. Haik, 377
F.3d 624, 634-35 (6th Cir. 2004). For the reasons detailed by the district court in its denial
of the defendant’s motion for new trial, however, Lear has failed to satisfy his burden in this
regard.
C. Award of Prejudgment Interest

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Finally, Lear complains about the district court’s award to Seton of more than $4.725
million dollars in prejudgment interest. According to the defendant, the district judge erred
by calculating the entire award from the date the complaint was filed in federal court, rather
than from the date the damages to Seton actually accrued. Lear explains that the initial
complaint was filed in district court in New Jersey on January 29, 2002, but that the
plaintiff’s “lost profits damages did not start to accrue until mid-2002, when production
began for the 2003 model year vehicles for which Seton did not supply parts.”
Despite the fact that the applicable Michigan statute plainly provides that “interest
on a money judgment recovered in a civil action is calculated . . . from the date of filing the
complaint . . . ,” MICH. COMP. LAW S ANN. § 600.6013(8) (2002), Lear insists that various
Michigan state court decisions have recognized exceptions to that rule. In Perceptron, Inc.
v. Sensor Adaptive Machines, Inc., 221 F.3d 913, 923 (6th Cir. 2000), however, we took
note of, but found inapposite, the numerous Michigan state court decisions that the
defendant now cites in support of its position. As we explained in Perceptron, the Michigan
cases that have reached a result seemingly contrary to the plain wording of the statute
refused to award prejudgment interest from the date of the complaint only “[f]or claims that
arise after the complaint is filed.” Id. (citing Beach v. State Farm Mut. Auto. Ins. Co., 550
N.W.2d 580, 586 (Mich. App. 1996)). In Perceptron, as in this case, the actual legal wrong
(here, the anticipatory repudiation) predated the filing of the federal court action; it was only
the quantification of damages that awaited later events. Consequently, we are bound by
our earlier decision in Perceptron.

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CONCLUSION
In two separate opinions, the district judge expertly resolved the various issues
presented to him by post-trial motions in this diversity case. Having now had the benefit
of oral argument, and after consideration of the record, the briefs of the parties, and the
applicable law, we AFFIRM the judgment of the district court based upon the reasoning
more fully expressed by that court in its orders entered on September 27, 2005.

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