engaging in de novo contract review before arbitration to enforce contractual arbitrator selection requirements, and specifically noting that, after arbitration, “it is very improbable that a court will offer relief”
How later courts described this case
- engaging in de novo contract review before arbitration to enforce contractual arbitrator selection requirements, and specifically noting that, after arbitration, “it is very improbable that a court will offer relief”
Written by the judges who cited it.
The opinion
JANSEN, J.
(dissenting). Because I conclude that the circuit court reached the correct result in this case, albeit for the wrong reason, I must respectfully dissent.
The circuit court dismissed plaintiffs complaint for declaratory and injunctive relief, concluding that defendant American Arbitration Association (AAA) had fully complied with the plain language of the arbitration agreement when it selected Michael Hayslip as the lawyer-member of the arbitral panel. The circuit court ruled that plaintiff was “reading into the arbitration [agreement] a requirement that does not exist.”
The circuit court reached the correct result by dismissing plaintiffs complaint, even though it did so for the wrong reason. For purposes of this appeal, it actually makes no difference whether the arbitration agreement required AAA to appoint a lawyer-member with a particular number of years of construction litigation experience. Irrespective of the exact requirements set forth in the arbitration agreement at issue in this case, it is well settled that “[a]ppellants cannot obtain judicial review of. . . decisions about the qualifications of the arbitrators . . . prior to the making of an award.” Cox v Piper, Jaffray & Hopwood, Inc, 848 F2d 842, 843-844 (CA 8, 1988). The Federal Arbitration Act (FAA), 9 USC 1 et seq., “does not provide for pre-award removal of an arbitrator.” 1 Aviall, Inc v Ryder System, *62 Inc, 110 F3d 892, 895 (CA 2, 1997). Indeed, “ ‘it is well established that a . . . court cannot entertain an attack upon the qualifications ... of arbitrators until after the conclusion of the arbitration and the rendition of an award.’ ” Id., quoting Michaels v Mariforum Shipping, SA, 624 F2d 411, 414 n 4 (CA 2,1980). “The [FAA] does not provide for judicial scrutiny of an arbitrator’s qualifications to serve, other than in a proceeding to confirm or vacate an award, which necessarily occurs after the arbitrator has rendered his service.” Florasynth, Inc v Pickholz, 750 F2d 171, 174 (CA 2, 1984); see also Gulf Guaranty Life Ins Co v Connecticut Gen Life Ins Co, 304 F3d 476, 490-491 (CA 5, 2002).
Of course, a court would have the authority to remove a particular arbitrator prior to issuance of the arbitral award if the dispute concerning the arbitrator’s qualifications implicated “grounds ... at law or in equity for the revocation of [the] contract.” 9 USC 2; see also Aviall, 110 F3d at 895 . However, it is appropriate for the court to make such a preaward removal “only when there is a claim, for example, that there was ‘fraud in the inducement’ or some other ‘infirmity in the contracting process’ regarding the parties’ establishing arbitral qualifications, which ground would invalidate the agreement to arbitrate.” Gulf Guaranty, 304 F3d at 491 , quoting Aviall, 110 F3d at 896 . Similarly, preaward removal may be permissible under § 2 of the FAA when “the arbitrator’s relationship to one party was undisclosed, or unanticipated and unintended, thereby invalidating the contract.” Aviall, 110 F3d at 896 .
In the present case, there is no claim that AAA’s selection of Hayslip as the lawyer-member of the arbitral panel involved fraud or any other fundamental infirmity in the contracting process that would com *63 pletely invalidate the arbitration agreement. See 9 USC 2; see also Gulf Guaranty, 304 F3d at 491 . Nor is there any claim that Hayslip had an inappropriate relationship with either party. See Aviall, 110 F3d at 896 . It may well be that Hayslip did not meet the specific requirements for appointment set forth in the arbitration agreement. But plaintiff was required to wait until after issuance of the arbitral award and raise this matter in a proceeding to vacate. See 9 USC 10; see also Gulf Guaranty, 304 F3d at 490-491 ; Florasynth, 750 F2d at 174.
Because the dispute over Hayslip’s qualifications to serve as the lawyer-member did not constitute a sufficient ground to warrant revocation of the entire arbitration agreement, the circuit court was without authority to reach the issue at this stage of the proceedings. See 9 USC 2; see also Gulf Guaranty, 304 F3d at 491 (noting that “a court may not entertain disputes over the qualifications of an arbitrator to serve merely because a party claims that enforcement of the contract by its terms is at issue, unless such claim raises concerns rising to the level that the very validity of the agreement be at issue”). The dispute regarding Hay-slip’s qualifications to serve, although framed by plaintiff as a request to enforce the arbitration agreement according to its terms, “is not the type of challenge that the [circuit] court was authorized to adjudicate pursuant to the FAA prior to issuance of an arbitral award.” Id. at 492 . 2
*64 In my opinion, the circuit court reached the correct result, albeit for the wrong reason, when it dismissed plaintiffs complaint. “It is well settled that we will not reverse when the circuit court has reached the correct result, even if it has done so for the wrong reason.” Hare v Starr Commonwealth Corp, 291 Mich App 206, 226 ; 813 NW2d 752 (2011). I would affirm the circuit court’s dismissal of plaintiffs complaint.
*65 APPENDIX
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ALTFRNATTVE'Di.'sFUTE RESOLUTION AGREEMENT
IN COÑS!í)líRA7IOÑ ¿nhejfnuWa) promises etptaated fo thi» Altemthiys 'Disunite Rtisolutfqb Agreement ("Agreement"), .Oakíand'lyíacQmb Jmpr¿t?[Hór .Drain Drainage District-. '(^OMIDDD") and RIc-Mcn CojwtructíoQ, Ijjo. ('Ric-Man’’) agree- -la ¿mend Contract, j mid Contract, p as Identified below by-adding thair 'agreement fop ‘alternate, dispule resolution procedures pursuant to .Section 16.01 of the General conditions as follow?,’ effective ibis t'Z^ day flf Ap-t'rl__.201J;
.1; KFftlTALS
Oil or shorn January 19, 2üíQ QMIDDD and Ríc*Mau ónUaed.into a conti&CLfor thft construction of stiver access «id contrursimetwes designated us Installation ¿f Ploy,* -Control. ■McasuresBdfcop. Corridor.Interceptor,; Mtcomb County .Michigan designated’os Contract .1
Oft tir about iuttunQ*. J9i.2djp, OMIDDD miá Ric-Man entered pito a contract' foi the Installation of Flow Control -Measures Oakland Arm Interceptor Maconih County.Mic/wgiur 'designated as Coní?aeV2 ("Cotflttc* 2"). fU used hereíh, '-'FiOjKtif5 is defined as %. work performed or required to be psrforéncd ucder Couliact'í andCóntrüet.2,
During’construction of tho Projects', Ríc-Man bab'raisbd Various claims for •additional’ iiirie tsnd catfspensatiot* for perform fog the vork'aw) averted s?,lia work, including by example,, claims dleyedty arising under the Spéarin Doctrine asd-for ¿Jteged ciifíVring.site conditions. OM1DDD hc$ also raised claims agalnsf ftic-Map fof credits, reiniburfeíinánrt and other diiTjages allegedly arising from Rie.Miin's work on the Projects. Contract. 1 and 'Contract 2 provide Hint Hu panics.- may resow claTnis- Or’disputes'- thru ugh any Jorra of alternative dispute resolution agreed ypbn by foe-parties.
OMJDDD and Rlo-Man nfaSr-ieei: to amend Contract 1 and Contract. 2. by adding thwr agreemenfforajtemsta.dispmciesolutioft'procedures'pursu'ant.to Sectfon 16.01 oftbe.General, conditions for *he'r«diuiioii of any and' ail claims;.'disputes, or contioveraies 7fc#Jidmg ,the . Projects through bfoding'arbjtrattonfos follows:
If. AOKEEM^TfcjR ALTERNATIVE DISPUTE R^OLtJTION
§1.3 .-ARBITRATION AGREEMENT.
§ -1.1.1 This Agreement defines foe delusive-terms for'binding arbitration for any cjdrns arising ó¿t..of ofrelated-lo the. Pj-ojeci? as provided tiJJOd ngreemem.úf the. purties.m Section 16.01,of the. General .Cohditions of,Cobtraot.l andCamréclá.
i §i.-'l -2 Any claim1 pr díápure.anSirtgOUbOf ar related fo tire Prbjccts; b^ivteen OMJDDD sjid’Rte Man shall Ire ■subject to binding- arbitration administered by the American Arbitration Association (!'ÁAArj In occordarce with its Construction'industry -Arínimtícn Riñes which Include Laige, Complex ‘ConsifucUon'Dispute Rides la. effect on the dato of this Agreement. ax' modified by the tenosof this agreement.
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In no event símil e demand for arbitration be nitric after the date-when tljo institution of legal or equitable proceedings based on tee claimfs) would bebarred by tee applicable statute of llmttetitms of applicable contractual limitations period. For statute of limitations or contractual limitations purposes, receipt oí,a, written demand for arbitration.by the person or entity administering tee arbitration shall constitute tea institution, of legal or equitable proceedings based on (be claim(s). An arbitration demand shall only address claims arislngteom or related to the Projects. If demands for arbitration are Sled on both Contrae^ I and Contract X the demands wall be asserted in a single demand ter arbitration before a .tingle arbitration panel. Fcr purposes of statute of limitations, each claim from each Contract shall be considered separately and the rime for bringing a ¿kora based on one Contract will riot b® extended by time limits applicable to claims ter the other Contract.
Unless otherwise agreed by tee parties in writing, tee arbitration demand shall Include only claims and disputes between ÜNUD0D and Ric?Man.
§ 13 SELECTION OF ARBITRATORS. Any arbitration conducted pursuant to this agreement ¿ball be decided by a panel of three arbitrators. This panel shall consist, of two construrtion, industry professionals and one attorney with a background in construction litigation. Al! arbitrationlieariQgs shall be conducted at the AAA office in Southfield Michigan, uni css the parties agree to an alternate location in Southeastern Michigan,
Once a demand ter arbitration is filed, the parties shidljointly ark the AAA to distribute a list of at least IS approved construction arbitrators. The parties shfilUequcsi teat AAA provide a list of 25 potential construction arbitrators who best meet tee criteria set forth it? section t.3.4 below and who are closest geographically to tee Southfield office of AAA. Priority shall be given t3 proximity first and to the remaining criteria second without regard to priority of the rcnminmg criteria. The 100 mile limitation set-out ip § 13.3 below shall no! apply to this inltifti selection. Within iliiriy (30) days of tee date of receipt of (he Jist of crbilretora. the parties shall *67 virtually iigrfea.ii'poii tt panel of three arbitrators, who aje imjíifoliy acceptable end two uddfiioml arbitrators designated as altofhvtés (one eorómiérion lawyer «fid oua Industry profession,'ll) In the tvenf that one of dje icbctal arbítralo! s Heines ^available. If íhd -pántes ans.uhabte to ugrpo oii’thB necessary- number «i^ariiiTraliWs ftóm tiia.otiehtfl lity thsvfta panics jointly,the. AAA for. a fiu^hcr li?t of 25-adcfltJÚnáJ. approved construction .arbitrator^ irit'o best meet the criteria sb! foiih below and who, are thts-.ncKt'olcftes-t gcographicallinG the -Sombfidf] office of AAA, .Priority .shail tnj ¿venito pTOximllj' Íira1 ¿ud id tib r?roamipg criteria sccoffdAvifiiQu! rogará 'to pticnSy-ofthe .rtmainmg criteria. ‘the 1.00 briitO'mjleiicm sef out In Section 'U.3 hélóvy shall not apply to-this selection. If the pyrtits.lUil fa select opsnd.oJTbtes.arijitiatáts'and. two altemate.eíijiiratórs wthin thirty days of the date oí scr/‘cc of the second list bf potential erbltrafois. jhvq be.mmriitíngrporirfam\,rill-'b<? fitted byarbiirttors scbcieo íhróugli tilt n'üriiiiti. processor ibe AAA, Construction Indust/y Rules,' subject*;»-the fallowing pnttajiclcrs:
§ 1.3.J (Applicable ónly if the partid!- fgti lo agTcc ort’ácljHr¿¡(or(¿)l. No arbitrator shall bd selected V/bd'tvas'already rejected,by one ‘of the panics, A list of arbitrators thafwcw rejected fa initial díscússkmsi vrill HaprovidaJ byteeeft party vnfafa teri'OO) days cf Vrapiesi by the AAA,
§ 1,3.2 .(Applijrehlcoiitj If ibfpariiej fail to agree on arb¡iratori(j>))Í!i áildrtíon lo any • other gxpuD¿;on \vbzch a prospective- or&lraiw would He disqualifita under the AAA jlulcs to protect against- arbtjrstpr Hies.tJ»:.cotifiW3-of interest, ho erbitictor shall bo BEÍected..\vho''hú3 anycprmcctt'on, relationship id or Interest ip -any bf file parties» nay consultant. nnorqey, employee., subcontractor, or wítoe$s bf th¿ partías, The parties shall, provide c Ifct of all- such persons or «ifititT Y-itlirn tfeo’t \ 0j «toys Qt> request by itit AAA,
I' 2.3,3 '(Applicable oaly rf He parties fail to agre? ott arltitiitoríí]). Nu aiHilrator; will be selected -by the-.rtAA who'fasidy wrthm 100 miles of the offices of,círh¿r;pi?(tyr mclwfai&iield offibei bs well as the Florida office dr cny other subsidiary office o: lúe- Wart, •The parties will provide a list of-all.such addresses within ten fiO) clays of 6 request from the AAÁ.
§ I.3.-4 Arty selected arbitrator will be n'meraber of '.he AAA Constnirtion Pamjl. ThefirHitrólíOH -parid síiaií frtdudc one consti-ucllbn jav»-yct and i\\>o £onstr\ictiofl prófcssíqnids ügibtxT upon by -the parlies or. «-Iccicri in accordaacc wiih the criteria sei out bcloWlf any arHilrators are sejecteií'by AAA» «election criteria shaDbc applied la the following orderwith the pe,\t hysl of criteria applied only if ho candidates are tysjlablr.who the preceding criteria:
1-3AI Ccnalntciíonlawyer (l memberand S alternate)
.A Member of.the Large. Couple* Constnteticn dispute {"LCCDTpanei olid el Jsasi:20 years of experience i« construction law with in Cmphatis In hs&V/ co.iisiiuciiou,
At- least 20 years -of experience In construction lav?-with an emphasis xn-hsavy ccustwcticn,
A inemher- of the. LCCD panel ’and at 'least lO-years ol* BxpcrJestce wiih an empluisis InlieoVy Conalmction. ' ’ ’
At Jeu.vt Í 0 years árexperiente with an emphasáa in Heavy Construction,.
*68 A member of the LCCD' panel and at least 20 years of experience in construction law with some experience in heavy construction.
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A member of the LCCD pace! and at least 10'yeflrs of experience with some ftxjimenfirs in hynvy r.-msitvftdnn
At least 10 years of experience with some experience ih heavy construction.
1.3.4,2 Construction industry Professionals (2 members and 1 alternate).
A- member efthe LCCD panel and an advanced Civil Engineering Degree, with nt least 20 years of geotechnical experience emphasizing soils» soil loadings, dewatering, and structural steel design and leading.
An advanced Civil Engineering Degree with at least 20 years of geotechnical experience emphasizing soils, soil loadings» dewatering- end sLodural sled design mid 1 ceding.
A member of die LCCD panel and aa advanced Civil Engineering Degree with at least 10 years of geotechnical experience emphasizing soils, soil loadings, dasvaiering. and structural steel design, and loading.
An advanced Civil Engineering Degree with, at least 10. years of geotechnical experience emphasizing .soils, soil loadings, dewatering, and structural steel design «id loading,
A member of the LCCD panel and a Civil Engineering degree with, at least 20 years of geotechnical experience Emphasizing soils, soil loading, dewatering, end structural steel design and/or loading.
A CM) Engineering degree with at least 20 years of geotechnical experience emphasizing soils, soil loading, dewatering, and structural steel design and/or loading.
A member ofthe LCCD panel nod a Civil Engineering degree with st least 10 years of geotechnical experience emphasizing soils, soil loading, tltwittering» und slruuluruí meet dmatni and/or loiulln^.
A Civil Enginewing degree with at least 10 years of geotechnical experience emphástzi ng soils, soil loading, dewatering, and structural steel design and% loading.
*69 A .member of thq.DCCOpsnei and‘any Engineering degree wijii'ni leo&lD yi'?rs of- -geotechnical «penence ewpbastelua soils. soil loading.. dc«y{crlug.*íid jitmelural sic*} <14sign ind/or loading.
Any Eppirfcermg degree with at least 20 yeans ofgeQtwnnicaUxpsrifince empuasizing 'soil's.. sGj I loading; déWattring. apd structural. s?.«l design! chdVIoading,, ' *
An>emb$rcftheL£C¿'ponslnndanyEnginítnogdftgrtttwithaileast ID •yea# of goot^hvñc&l experience .empfeorisjwg soils, -soil loading* deivateiinp» and airwcturft) steel ¿«rigu w«d?o¿ typing;
Mtf Emjjmieripg.degToe with Gtj«¿Uüy«aS cfgíratóaltnichl expfcricnic Chipiw.sl'ZJti&soils, Kill hiding, dewTuering. wv! structural stwi design eodfpr loading.
A member of thq LCCD panel fiad áricasl 20 years ofVüióbtótl. c>¿eoí‘éch¡n«ii cxpenepcc in cpnsinjci|aa matiagcmcnl. or.’ design ¿ntyh¿3rafií* soils» sófi.ioadiags. d^alcmg,. and styusAwai design andi’or’loading;
At least20 yean oCgcdogicai cr-geoxechmea] eNperiencé Tuciinstrudkni oiflaastmaif or design implasiapngaoils, soil loading dewatering. t\hd Structural sled dcrigriímd/orjcading,
A .tocmbcr.’.of the LCCD-panel mid ot least 10 years of-gaolngkaf oi geóteáiinteai -experlcncd. -lit -epasimetion tHanagcnicrii ct design ¿mpbasiwng soiis»:?oii loadings,, dewatering; and structural steel design o»<tforJosdifi£.
AtJebst 1Ü years ofgeological cr gcatechaiccd eKpcriciictinconslniutjon incnnpviénl oí ¿taiga «njáiaslílng; soils* soil loadings, dewatering,-and 5 trasfitre! etefcl design ond/of.Ioading..
§ Í.’J DfSCOVF’.RY. Alb'díscovciypenmííed by the Mlthigan Siare. Ruit^of Court sViHU afeo luipínuiUrd in this arbitration places*» irpdw; ibis ^gra$me«»eúbjf5ci to-each party’s right Jo -iccj» y protccifyc* order if discovery becomes- harassing, pr cbu^yB, TJjcr &&/*, Construction Industry-ttuta* limitation on dfecnoíay. <dis1l -nnr; »pply: ■ Tbn«rhiiratioo paod E* hereby authorized tú decido.any olid all discovery ‘disputes pód issue appropriate sanctions Yfhfcw xvanaotid* The acburatfbn panel inéy'n-sotvé ‘disuovery disputa-tbrcugli any procedure •deemed prúdeñt b^.th’éarbitratqrs. iiicliidiiig Through', a c.cntarince.caU orij formal mo don. sad hearing.
.Notwilbwhdmg die tbrigolng. the- arbitration panel n^y liryifl discovery wh&e tfyj pend finds •tfssf ti)Bdr«pvi*ry rougbi slaVefno pcrjióít» oilier than io juoküco tbc'eHpcjioo.'cfTbe wbftrArion or lo Jvoss.ihe other party.
§RS VACAN'CtgSAbtn RP.yUAnEitTKKTOr AlHHTRATQRd’
In ihe-evcni that nn arbitrator "on the panol becomes unable io continue to serve as an irhitrator'white hrbítraiícn is pending th&rarbiirajion hqaring5.shali.be temporarily‘suspended *70 [until tris aUcrnaiWrepUe¿i!)cnl arbi(rafóní5 prepared toiprOcC'td.ivUh the. bean rrgj. Thi dlctfiMc arhUr^ións) íh¿l ipview the trmtscrip'is and evidence front hcarmgSbKnjkmsly.inducted In Hit matter-i!>d ihall thro replace the absenhiuticraior cri th&'pnih If additiór.aí értlÚMOrs'bcconta uníibie to continue lo .suyo. if arfci tritón»-im tty? .pauc]„ thin the parsesagree lipón [> rdphicMcnl arbitrator within ie,ir days, of the'date, that the tarings are 'suspended or If the pruiles are- unable to agrep. •the’ faÁÁ shall -select'a replacement •amittator, subject to the p?rapteier¿ sel tfutíitave, Tnc mahflup of the artytratlon paqrl (c»ng cpaRteOMkm ía<vye¿uptí W¿ Htltóstiy professionals) sball.be tMtttolned. .
9 i.b EPILM-aNd FtHMjrv oy Avt^Ttn. The .arbitration award ahfilf ba a,stWdard tiwardg l-Smvcvcr. the ^tíü-.s atso-dcstró a .éetemii/ialiüu of iIjk gwiund bastó .vf'lhp award, and •diitribuUón oj.’áñimmís awarded arid pflscl or deducted boaul oatli'a general Issues, lo'.allow -.assessment. of'the potential Culpability of Of rtóaYery .by (hJrd'panie? including sqbconlractQrn, coruAiitantS. .pfc suppliers. ''Chétcfíihs the patfi&s rcquÜsí tbirf. panel profile a breakdown o'fjhu Mount ofatif.firifil award tha't-idwtiílcs'tbó basis’íói thfl[aüi3UntViid sets’ ouí l he aciicial.Sssnea. ilr?t constitute ibfc.basis for caen donar amount added to qt deducted from ihe Qmount;of the itWüVd. Siidf determination shall nof be considered for -purposés of appeal oc.reviow oíftht •awarj.. tn tbaevent oi'sücíi araytetf Pn appeal* Uto special detemúu&skm shall nót beadmlssibfe rjitt; prtn^derediby the reviewing entity»* The.aifciuattoa proceedings.shah be recorded by a certified Court tcgorteriictecjM by agre'cmsnl of the patties afcd. if jhbyore unable'íó agree.'then by the AAA. TJ>e parties 3hall aluno the cCsl ¿filié rcpüricr«^u<illy. Tbs avvárd Tiaide^^ by die srbifraÍKMJ pane] shall be finid. binding, and jUdgttxijl.inay.br:'entered upon It tn ?<ccó«lú[icc wifi.; applicable id guy court having .competent jurisdiction thereof
F.yF.rÍTTiok\Pyvn^s^rÁTiQ'ÑsÁNtt W'/uRAN-riEg.
§ 1A Tills Agieroiem.shajj bind the parlies hereto-ar.ctbei'r. Jteiis, assigns, suqsidiitnes. pfltvnl compontes. crcdhuiá. reipisenlaitvek'cir heneijcbyW
:§1.1 Tito individuals ésecuitng this Agreement h?teby: warrant rhey ha\e qmhoriiy to sign.lilts Agrément oubahajíiof íbrlr respective enthy and,to bind ibn! entity to thV terms uftbls ^¿?e<yue¡n,
§23 Thiii Agreement shall amend! rod to the extent of any.ccnfliéf, sujjwswlu the terms and conditions ol Contract 1 and 'Contract 2 defined above.
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It is undisputed that the FAA applies in this case.
As the majority opinion correctly observes, “[djecisions from lower federal courts are not binding but may be considered persuasive.” Truel v City of Dearborn, 291 Mich App 125 , 136 n 3; 804 NW2d 744 (2010). At the same time, however, the Supremacy Clause precludes this Court from applying any state law or policy that is inconsistent with the FAA. See Abela v Gen Motors Corp, 257 Mich App 513, 524-525 ; 669 NW2d 271 (2003), aff'd 469 Mich 603 (2004). Both our Supreme Court and this *64 Court have looked to the decisions of lower federal courts when interpreting and applying the FAA. See, e.g., Abela v Gen Motors Corp, 469 Mich 603, 607 ; 677 NW2d 325 (2004); Scanlon v P&J Enterprises, Inc, 182 Mich App 347, 351 ; 451 NW2d 616 (1990).