Case Title: Beck v. Park West Galleries, Inc. (Opinion on Application)

Citation: 

Docket Number: 151687

State: michigan

Court: Michigan Supreme Court

Date: 2016-03-24T00:00:00Z

Document:
BECK v PARK WEST GALLERIES, INC 
 
 
Docket No. 151687.  Decided March 24, 2016. 
 
 
Brian Beck, Audrey Mahoney, David and Felice Oppenheim, Patty Brown, and others 
brought an action in the Oakland Circuit Court against Park West Galleries, Inc., and others, 
alleging, inter alia, breach of contract and fraud.  Plaintiffs had purchased art from defendants on 
separate occasions over a period of years.  Each sale was accompanied by an invoice under 
which the parties agreed to the terms of the transaction.  By 2007 the invoices included a 
standard arbitration clause, but earlier invoices did not include the arbitration agreement.  
Plaintiffs brought suit claiming that the art they had purchased from Park West was not worth 
what Park West had represented as its value.  The court, Nanci J. Grant, J., granted summary 
disposition in favor of defendants, determining that the arbitration clause was enforceable and 
required arbitration of all disputes arising from transactions with invoices containing the 
arbitration clause.  The court further determined that the remaining claims brought by the 
Oppenheims, which concerned purchases made in 2003 and 2004, were barred by the statute of 
limitations.  Mahoney, Brown, and the Oppenheims appealed.  Defendants cross-appealed, 
disputing the circuit court’s ruling that not all the Oppenheims’ claims were subject to 
arbitration.  In an unpublished opinion, the Court of Appeals reversed in part, holding that the 
arbitration clause in invoices for the later transactions extended to earlier transactions for which 
the invoices did not contain an arbitration clause.  Mahoney, Brown, and the Oppenheims sought 
leave to appeal. 
 
 
In a unanimous opinion per curiam signed by Chief Justice YOUNG and Justices 
MARKMAN, ZAHRA, MCCORMACK, VIVIANO, BERNSTEIN, and LARSEN, the Supreme Court, in 
lieu of granting leave to appeal and without hearing oral argument, held: 
 
 
Arbitration is a matter of contract, and a party cannot be required to arbitrate an issue that 
he or she did not agree to submit to arbitration.  In this case, plaintiffs’ purchases were of unique 
pieces of art purchased on different cruise ships in various international waters in different years.  
Each unique transaction, accompanied by a separate invoice, constituted a separate and distinct 
contract, capable of independent enforcement.  Michigan law requires that separate contracts be 
treated separately.  The invoices pertaining to the Oppenheims’ 2003 and 2004 purchases did not 
require any dispute arising from those purchases to be arbitrated.  The arbitration clause 
contained in later invoices could not be applied to disputes arising from the 2003 and 2004 
purchases.  The only claims subject to arbitration were those arising from invoice agreements 
 
Michigan Supreme Court 
Lansing, Michigan 
Syllabus 
 
Chief Justice: 
Robert P. Young, Jr. 
 
Justices: 
Stephen J. Markman 
Brian K. Zahra 
Bridget M. McCormack 
David F. Viviano 
Richard H. Bernstein 
Joan L. Larsen 
This syllabus constitutes no part of the opinion of the Court but has been  
prepared by the Reporter of Decisions for the convenience of the reader. 
Reporter of Decisions: 
Corbin R. Davis 
containing an arbitration clause.  A general policy favoring arbitration cannot trump the actual 
intent and agreement of the parties.  Each transaction at issue involved a separate and distinct 
contract, and the facts did not support a conclusion that the parties intended for the arbitration 
clause contained in the later invoices to apply retroactively to the earlier contracts.   
 
 
That portion of the Court of Appeals judgment that extended the arbitration clause to the 
parties’ separate, prior transactions reversed; case remanded to the Court of Appeals for 
consideration of the issues raised in plaintiffs’ appeal that the Court did not previously address to 
the extent those issues related to claims not subject to arbitration.  Leave denied in all other 
respects. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
©2016 State of Michigan 
FILED  March 24, 2016 
 
 
S T A T E  O F  M I C H I G A N 
 
SUPREME COURT 
 
 
BRIAN BECK, GUY HANSON, KAREN 
HANSON, RAYMOND FAVICHIA, 
MARGARET FAVICHIA, JUDITH 
SCHLEBECKER, JOHN SCHLEBECKER, 
and BERNADETT STEINER, 
 
 
Plaintiffs, 
and 
 
AUDREY MAHONEY, DAVID 
OPPENHEIM, FELICE OPPENHEIM, and 
PATTY BROWN, 
 
 
 
Plaintiffs-Appellants, 
 
 
v 
No. 151687 
 
PARK WEST GALLERIES, INC., ALBERT 
SCAGLIONE, MORRIS SHAPIRO, 
ALBERT MOLINA, and PLYMOUTH 
AUCTIONEERING SERVICES, LTD., 
 
 
 
Defendants-Appellees. 
 
 
 
BEFORE THE ENTIRE BENCH 
 
PER CURIAM.  
 
Michigan Supreme Court 
Lansing, Michigan 
OPINION 
 
Chief Justice: 
Robert P. Young, Jr. 
 
 
Justices: 
Stephen J. Markman 
Brian K. Zahra 
Bridget M. McCormack 
David F. Viviano 
Richard H. Bernstein 
Joan L. Larsen 
 
 
 
 
 
 
2 
This case requires the Court to consider whether an arbitration clause included in 
invoices for plaintiffs’ artwork purchases applies to disputes arising from plaintiffs’ 
previous artwork purchases when the invoices for the previous purchases did not refer to 
arbitration.  We agree with plaintiffs that the arbitration clause contained in the later 
invoices cannot be applied to disputes arising from prior sales with invoices that did not 
contain the clause.  Each transaction involved a separate and distinct contract, and the 
facts do not reasonably support a conclusion that the parties intended for the arbitration 
clause to retroactively apply to the previous contracts. 
Accordingly, we reverse that part of the Court of Appeals judgment that extends 
the arbitration clause to the parties’ prior transactions that did not refer to arbitration.  We 
remand this case to the Court of Appeals for consideration of the issues raised in 
plaintiffs’ appeal that the Court did not address to the extent those issues relate to claims 
that are not subject to arbitration.  In all other respects, leave to appeal is denied because 
we are not persuaded that the remaining question presented should be reviewed by this 
Court. 
I.  BASIC FACTS AND PROCEEDINGS 
Defendant Park West Galleries, Inc. (Park West) sold art on various cruise ships 
traversing international waters.  Plaintiffs1 purchased art from Park West on multiple 
occasions over the course of several years while on different cruise ships in different 
locations. 
                                              
1 The action was originally filed by 12 plaintiffs, but most agreed to dismiss their claims, 
leaving only plaintiffs Audrey Mahoney, David Oppenheim, Felice Oppenheim, and 
Patty Brown.   
 
 
 
 
3 
With each sale, Park West provided plaintiffs with a certificate of authentication 
and a written appraisal, both of which were signed by agents of defendants.2  All the 
purchases made by plaintiffs were also accompanied by a signed invoice under which the 
parties agreed to the terms of the transaction.  By 2007, the invoices that Park West 
provided with plaintiffs’ purchases contained an agreement to arbitrate all claims 
concerning the transaction, which provided in pertinent part: 
ARBITRATION OF CLAIMS AND DISPUTES AND WAIVER 
OF JURY TRIAL.  Any disputes or claims of any kind, including but not 
limited to the display, promotion, auction, purchase, sale or delivery of art, 
items, or appraisals shall be brought solely in non-binding arbitration and 
not in any court or to any jury. . . .  All decisions respecting the arbitrability 
of any dispute shall be decided by the arbitrator(s).   
However, prior invoices provided with plaintiffs’ purchases contained no such clause.3 
According to plaintiffs, years after they made their purchases, they discovered that 
the art purchased from Park West was not actually worth the represented value and that 
some of the art was forged.  Plaintiffs filed the instant suit against defendants on 
September 28, 2011, asserting claims of breach of contract, breach of warranty of fitness, 
fraud, negligent misrepresentation, conspiracy, conversion, negligence, intentional 
                                              
2 The owners of Park West, Albert Scaglione and Albert Molina; the gallery director, 
Morris Shapiro; and Plymouth Auctioneering Services, Ltd., are also defendants in this 
matter.  All defendants are in the same position for purposes of this appeal.  
3 All the invoices for the 2007 and 2008 purchases made by Mahoney and Brown 
contained the arbitration clause, but only some of the invoices for the Oppenheims’ 
purchases did.  The Oppenheims purchased four pieces of art from defendants: one in 
2003, one in 2004, one in 2008, and one in 2009.  The invoices for the Oppenheims’ 
purchases in 2003 and 2004 did not contain the arbitration clause, but the invoices for 
purchases made in 2008 and 2009 did.    
 
 
 
 
4 
infliction of emotional distress, violation of the sales of fine art act,4 violation of the Art 
Multiple Sales Act,5 and violation of the Michigan Consumer Protection Act.6   
On June 1, 2012, the trial court granted defendants’ first motion for summary 
disposition under MCR 2.116(C)(7) with respect to claims arising out of transactions 
with invoices that contained the arbitration clause.  The trial court determined that the 
clause was enforceable and required arbitration of all disputes arising from the purchases 
described in those particular invoices.  The trial court thus dismissed all claims brought 
by plaintiffs Audrey Mahoney and Patty Brown and some of the claims brought by 
plaintiffs David and Felice Oppenheim.  The trial court declined to dismiss any of the 
claims brought by the Oppenheims that involved purchases in which the invoices did not 
contain an arbitration clause, concluding that the arbitration clause in the later invoices 
did not extend to transactions with invoices that did not contain the clause. 
Defendants 
filed 
a 
second 
motion 
for 
summary 
disposition 
under 
MCR 2.116(C)(7), alleging that the rest of the Oppenheims’ claims were barred by the 
statute of limitations.  The trial court agreed in a September 6, 2013 order and opinion 
and dismissed the Oppenheims’ remaining claims.   
Mahoney, Brown, and the Oppenheims appealed in the Court of Appeals.  
Defendants cross-appealed, disputing the trial court’s ruling that not all the Oppenheims’ 
claims were subject to arbitration.  The Court of Appeals reversed in part, holding that 
                                              
4 MCL 442.321 et seq. 
5 MCL 442.351 et seq. 
6 MCL 445.901 et seq. 
 
 
 
 
5 
the arbitration clause in invoices for the later-executed transactions extended to prior 
transactions for which the invoices did not contain the clause.7  Consequently, all the 
Oppenheims’ claims were deemed subject to arbitration and dismissed.  Mahoney, 
Brown, and the Oppenheims then filed an application for leave to appeal in this Court, 
arguing in relevant part that the Court of Appeals erred by concluding that all their claims 
are subject to arbitration.8   
II.  STANDARD OF REVIEW 
This Court reviews de novo a trial court’s decision on a motion for summary 
disposition brought under MCR 2.116(C)(7).9  Under MCR 2.116(C)(7), summary 
disposition is appropriate if a claim is barred because of “an agreement to arbitrate . . . .”  
Whether an issue is subject to arbitration is also reviewed de novo.10   
                                              
7 Beck v Park West Galleries, Inc, unpublished opinion per curiam of the Court of 
Appeals, issued March 3, 2015 (Docket No. 319463).  The Court of Appeals majority 
adopted the reasoning of the dissent in a prior, virtually identical case involving different 
plaintiffs.  Id. at 4-7, citing Cohen v Park West Galleries, Inc, unpublished opinion per 
curiam of the Court of Appeals, issued April 5, 2012 (Docket No. 302746) (MURRAY, J., 
dissenting in part). 
8 While the Oppenheims, Mahoney, and Brown also argued in their application to appeal 
in this Court that the arbitration clauses themselves are invalid, we are not persuaded that 
this question should be reviewed by this Court.  Consequently, for purposes of this 
opinion, hereafter the term “plaintiffs” will refer to the Oppenheims, because they are the 
only plaintiffs at issue in this appeal who purchased art covered by invoices that did not 
contain the arbitration clause. 
9 Fane v Detroit Library Comm, 465 Mich 68, 74; 631 NW2d 678 (2001). 
10 In re Nestorovski Estate, 283 Mich App 177, 184; 769 NW2d 720 (2009). 
 
 
 
 
6 
III.  ANALYSIS 
“Arbitration is a matter of contract.”11  Accordingly, we must apply the same legal 
principles that govern contract interpretation to the interpretation of an arbitration 
agreement.  Our primary task in construing a contract is to give effect to the parties’ 
intentions at the time they entered into the contract, which requires an examination of the 
language of the contract according to its plain and ordinary meaning.12  We must interpret 
and enforce clear and unambiguous language as it is written.13 
With these principles in mind, the pertinent issue for our review is whether the 
Court of Appeals erred by concluding that the arbitration clause included in the parties’ 
later invoices encompassed disputes arising from earlier transactions when the invoices 
for the earlier transactions did not contain the clause.  We conclude that the Court of 
Appeals erred because “[a] party cannot be required to arbitrate an issue which he has not 
agreed to submit to arbitration,”14 and there is no evidence from which this Court can 
conclude that the parties’ intended to subject the earlier transactions to arbitration.  
Michigan law requires that separate contracts be treated separately.15  Plaintiffs’ 
purchases were of unique pieces of art purchased on different cruise ships in various 
                                              
11 Kaleva-Norman-Dickson Sch Dist No 6 v Kaleva-Norman-Dickson Sch Teachers’ 
Ass’n, 393 Mich 583, 587; 227 NW2d 500 (1975). 
12 Miller-Davis Co v Ahrens Constr, Inc, 495 Mich 161, 174; 848 NW2d 95 (2014).   
13 Frankenmuth Mut Ins Co v Masters, 460 Mich 105, 111; 595 NW2d 832 (1999). 
14 Kaleva, 393 Mich at 587. 
15 See Mich Nat’l Bank v Martin, 19 Mich App 458, 462; 172 NW2d 920 (1969).  The 
Restatement of Contracts supports the notion that separate contracts are to be treated 
 
 
 
 
 
7 
international waters on different dates.  Each unique transaction, accompanied by a 
separate invoice, constituted a separate and distinct contract, capable of independent 
enforcement.  The invoices pertaining to plaintiffs’ 2003 and 2004 purchases did not 
require any dispute arising from those purchases to be arbitrated; those invoices 
contained absolutely no reference to arbitration.  There is, therefore, no basis on which to 
conclude that at the time of those purchases the parties intended to arbitrate any disputes 
that might arise. 
Accordingly, disputes arising from plaintiffs’ 2003 and 2004 purchases are subject 
to arbitration only if the arbitration clause contained in the 2008 and 2009 invoices can be 
retroactively applied to the earlier transactions.  Michigan law, however, has long 
                                              
separately.  For example, comment d regarding Restatement Contracts, 2d, § 231, pp 197-
198, provides in relevant part: 
The rules that protect parties whose performances are to be exchanged 
under an exchange of promises apply only when the promises are 
exchanged as part of a single contract. . . .  [I]f one or more promises by 
each party are not part of the consideration for one or more promises by the 
other party, there are instead separate exchanges. . . .  In deciding whether 
there is a single contract rather than separate contracts, the court must look 
to the actual bargain of the parties . . . to decide whether each promise on 
one side was sought and given as at least part of the exchange for each 
promise on the other side. 
Similarly, comment b regarding Restatement, § 240, p 230, provides in relevant part: 
If there are two separate contracts, one party’s performance under the first 
and the other party’s performance under the second are not to be exchanged 
under a single exchange of promises, and even a total failure of 
performance by one party as to the first has no necessary effect on the other 
party’s duty to perform the second. 
 
 
 
 
8 
recognized that contracts generally cannot be construed to operate retroactively,16 and 
there is no basis on which to find that the parties in the instant case intended for the later 
arbitration clauses to apply retroactively in contravention of this general principle.  The 
Court of Appeals erroneously concluded that the phrase “[a]ny disputes or claims of any 
kind” contained in the arbitration clause was sufficiently broad to encompass disputes 
arising under prior contracts that did not contain the clause.  However, it is significant 
that the plain language of the invoices that contained the arbitration clause does not refer 
to previous transactions between the parties let alone suggest that the clause was to apply 
to such transactions.  Similarly, the 2003 and 2004 invoices do not indicate that the terms 
of a subsequent contract between the parties might apply to the 2003 and 2004 
transactions.  Having examined all the facts, we are unable to conclude that the parties 
intended the interpretation adopted by the Court of Appeals.   
The Court of Appeals relied heavily on the proposition that Michigan courts 
“ ‘resolve all conflicts in favor of arbitration,’ ”17 and particularly on Kaleva-Norman-
Dickson Sch Dist No 6 v Kaleva-Norman-Dickson Sch Teachers’ Ass’n,18 in which this 
Court stated: 
                                              
16 See Hyatt v Grover & Baker Sewing-Machine Co, 41 Mich 225, 227; 1 NW 1037 
(1879) (holding that a surety contract would only apply prospectively given that the 
contract did not specify retroactive application); Brockway v Petted, 79 Mich 620, 626; 
45 NW 61 (1890) (stating that a surety contract only applies to future events unless 
otherwise provided in the contract).   
17 Beck, unpub op at 7 (citation omitted). 
18 Kaleva, 393 Mich at 592, quoting United Steelworkers of America v Warrior & Gulf 
Navigation Co, 363 US 574, 582-583; 80 S Ct 1347; 4 L Ed 2d 1409 (1960) (alteration in 
original). 
 
 
 
 
9 
“An order to arbitrate the particular grievance should not be denied unless it 
may be said with positive assurance that the arbitration clause is not 
susceptible of an interpretation that covers the asserted dispute. . . .”  
Absent an “express provision excluding [a] particular grievance from 
arbitration” or the “most forceful evidence of a purpose to exclude the 
claim”, . . . the matter should go to arbitration[.]  
A majority of the Court of Appeals panel determined that this language was controlling 
and resolved the issue in favor of defendants.19 
While this language recognized “[t]he policy favoring arbitration of disputes 
arising under collective bargaining agreements,” it does not remotely suggest that an 
arbitration agreement between parties outside the collective-bargaining context applies to 
any dispute arising out of any aspect of their relationship.20  That is, a general policy 
favoring arbitration cannot trump the actual intent and agreement of the parties.  This is 
not to say that an arbitration clause in a later contract can never be applied to a previous 
contract, but the facts of this case do not provide for such retroactive application.  
Consequently, there is no basis on which to conclude that disputes arising from plaintiffs’ 
2003 and 2004 purchases are subject to arbitration. 
Moreover, the analysis in Kaleva is inapplicable to the factual circumstances of 
the instant case.  In Kaleva, the relevant arbitration provision was contained in a 
collective-bargaining agreement, the terms of which governed the plaintiff’s employment 
with the defendant.  There was no dispute that the collective-bargaining agreement 
                                              
19 Judge HOEKSTRA disagreed with the majority’s conclusion that the arbitration clause 
included in later invoices applied to disputes over the earlier transactions for which the 
invoices did not contain the arbitration clause. 
20 Kaleva, 393 Mich at 591. 
 
 
 
 
10 
containing the clause was applicable to the parties’ employment relationship, and the 
relevant issue was simply whether the plaintiff’s particular grievance fell within the terms 
of the arbitration clause.  In contrast, the arbitration clause in the instant case was 
extended from distinct contracts concerning separate transactions to disputes over earlier 
transactions with their own distinct contracts.  Therefore, the facts and issues presented in 
Kaleva were very different from those presented here.  Consequently, the analysis in 
Kaleva is not helpful in resolving the instant matter and does not compel the result 
reached by the Court of Appeals. 
We are also not persuaded by the federal authority cited by the Court of Appeals.  
In those cases, the federal courts held that the terms of later-executed contracts applied to 
previous dealings between the same parties.  See Levin v Alms & Assoc, Inc, 634 F3d 260 
(CA 4, 2011), and Watson Wyatt & Co v SBC Holdings, Inc, 513 F3d 646 (CA 6, 2008).  
Those cases are distinguishable from the present case because the litigants’ transactions 
in the federal cases were ongoing and regular, evincing a steady and continuous business 
relationship.  In the instant case, the parties’ transactions were sporadic and irregular, 
evincing nothing more than the execution of separate and distinct transactions that were 
distant in time.  The inclusion of the arbitration clause in the later contracts at issue here 
did not put plaintiffs on notice that it was to apply to all previous contracts between the 
parties.   
In sum, the undisputed facts do not reasonably support the conclusion that the 
parties intended for the arbitration clause contained in the invoices for some transactions 
to apply to separate and distinct prior transactions.  There simply is no legal basis on 
which to retroactively insert an arbitration clause into the parties’ 2003 and 2004 
 
 
 
 
11 
contracts.  Consequently, only plaintiffs’ claims arising from purchases for which the 
invoices included the arbitration clause are subject to arbitration.  
IV.  CONCLUSION 
We disagree with the Court of Appeals’ conclusion that, by signing an invoice 
containing an arbitration clause, plaintiffs agreed to arbitrate not only disputes regarding 
transactions described in that invoice, but also disputes regarding past transactions, 
regardless of whether the invoices associated with the past transactions included an 
arbitration clause.  The plain language of plaintiffs’ 2003 and 2004 invoices makes no 
mention of arbitration, and there is no basis on which to conclude that the parties 
intended for the arbitration clause contained in their 2008 and 2009 invoices to 
retroactively apply to the earlier transactions.  
Because we conclude that the only claims subject to arbitration are those arising 
from invoice agreements containing an arbitration clause, we reverse that part of the 
Court of Appeals judgment that applied the arbitration clause to the parties’ prior 
transactions completed without reference to arbitration.  We remand this case to the Court 
of Appeals for consideration of the issues raised in plaintiffs’ appeal that the Court did 
not address to the extent those issues relate to claims that are not subject to arbitration.  In 
all other respects, leave to appeal is denied, because we are not persuaded that the 
remaining question presented should be reviewed by this Court. 
 
Robert P. Young, Jr. 
 
Stephen J. Markman 
 
Brian K. Zahra 
 
Bridget M. McCormack 
 
David F. Viviano 
 
Richard H. Bernstein 
 
Joan L. Larsen