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S T A T E O F M I C H I G A N

C O U R T O F A P P E A L S

JOHN THOMAS MILLER and BG&M, INC.,

Plaintiffs-Appellants,

UNPUBLISHED

December 21, 2017

v No. 334731

Clinton Circuit Court

DENNIS J. DUCHENE, II, ANN DUCHENE, 

JOHN DOES-BOARD OF ADVISORS 

MEMBERS, CATALYST HOLDINGS, LLC, 

INSPIRED MARKETING, LLC, and INSPIRED 

BUSINESS DEVELOPMENT, LLC,

LC No. 16-011533-CK

Defendants-Appellees.

Before: MURPHY, P.J., and M. J. KELLY and SWARTZLE, JJ.

PER CURIAM.

Plaintiffs appeal as of right the trial court’s order granting summary disposition in favor 

of defendants under MCR 2.116(C)(7) in this suit involving claims arising out of certain loans, a 

home energy-efficiency franchise, a licensing agreement, and fairly complex business 

operations. The trial court concluded that an agreement to arbitrate governed the dispute, 

rejecting plaintiffs’ contentions that defendants waived any defense predicated on the arbitration 

agreement and that the arbitration agreement did not encompass some defendants. We reverse 

and remand for further proceedings.

Resolution of this appeal does not require us, for the most part, to delve into the 

complicated details and business arrangements underlying this case. Pertinent here, defendant 

Inspired Business Development, LLC, and Inspired Green Columbus, LLC, entered into a 

licensing agreement, with defendant Dennis Duchene, II, signing on behalf of the former 

company and plaintiff John Thomas Miller signing on behalf of the latter company. The 

licensing agreement provided, in relevant part, as follows:

The Parties agree that any claim or dispute between them or against any 

agent, employee, successor, or assignee of the other, whether related to this 

Agreement or otherwise, and any claim or dispute related to this Agreement shall 

be first taken to binding arbitration. Any award of the arbitrator may be entered as 

a judgment in any court of competent jurisdiction. 
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In May 2015, plaintiffs filed suit in district court against defendants Dennis Duchene, II, 

Inspired Marketing, LLC, and Inspired Business Development, LLC (collectively “initial 

defendants”), alleging claims of fraud, violation of the Michigan Franchise Investment Law

(MFIL), MCL 445.1501 et seq., and rescission. Initial defendants filed an answer to the 

complaint and affirmative defenses, absent any mention of an agreement to arbitrate. In July 

2015, the district court issued a scheduling order that allowed for 60 days of discovery. In 

August 2015, a stipulated order was entered extending discovery for an additional 45 days. In a 

September 2015 letter from counsel for initial defendants to plaintiffs’ attorney, defense counsel 

asked for extra time to answer interrogatories and document-production requests, which request 

was apparently granted. In October 2015, plaintiffs filed a motion to compel compliance with 

discovery requests. Around that time, initial defendants issued a notice of deposition, scheduling 

a deposition of plaintiff Miller. The district court issued an order in late October 2015, which 

provided that “mediation and open discovery will be extended for 90 days until January 19, 

2016.” Also in October 2015, initial defendants filed a pretrial statement, served plaintiffs with 

interrogatories and document-production requests, and stipulated to a protective order regarding 

some discovery matters. The record contains emails from November 2015 showing settlement 

discussions. 

In January 2016, initial defendants filed their own motion to compel compliance with 

discovery requests. In mid-January 2016, the district court again extended mediation and open 

discovery; this time for 90 days until April 11, 2016. Also in January 2016, plaintiffs and initial 

defendants litigated plaintiffs’ motion that sought, in part, to amend their complaint and to 

remove the case to the circuit court. The district court entered an order allowing plaintiffs to file 

an amended complaint, with the order also providing that the case would be transferred to the 

circuit court after the amended complaint was filed. In April 2016, plaintiffs filed an amended 

complaint, naming as defendants, in addition to initial defendants, Ann Duchene, John Does –

Board of Advisors Members, and Catalyst Holdings, LLC (these new defendants will be 

collectively referred to as “subsequent defendants”). Plaintiffs retained the old claims alleging 

fraud, rescission, and violation of the MFIL, while adding fresh claims of civil conspiracy and 

violation of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 USC 1962(c)

and (d).

In July 2016, all defendants filed a joint motion for summary disposition under MCR 

2.116(C)(7), arguing that they were entitled to summary disposition on the basis of the 

agreement to arbitrate. Plaintiffs argued that defendants had waived enforcement of the 

arbitration agreement, given that more than a year of litigation had elapsed without defendants 

raising the issue of arbitration. Plaintiffs also contended that subsequent defendants were not 

covered by the arbitration agreement. The trial court ruled that defendants did not waive the 

arbitration defense and that all of the claims in the amended complaint were subject to arbitration 

given the broad language of the arbitration agreement. Plaintiffs appeal as of right.

We review de novo a trial court’s decision on a motion for summary disposition. 

Altobelli v Hartmann, 499 Mich 284, 294-295; 884 NW2d 537 (2016). The question whether a 

claim is subject to arbitration is also reviewed de novo, as is the construction of contractual 

language. Id. at 295. This Court likewise reviews “de novo the question of law whether the 

relevant circumstances establish a waiver of the right to arbitration, and we review for clear error 

the trial court's factual determinations regarding the applicable circumstances.” Madison Dist 
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Pub Sch v Myers, 247 Mich App 583, 588; 637 NW2d 526 (2001). Pursuant to MCR 

2.116(C)(7), summary disposition is proper when a claim is barred because of “an agreement to 

arbitrate[.]”1 

The Michigan arbitration act (MAA), MCL 600.5001 et seq., was repealed by our 

Legislature pursuant to 2012 PA 370 and replaced by the uniform arbitration act (UAA), MCL 

691.1681 et seq., which was enacted pursuant to 2012 PA 371. The repeal of the MAA and the 

enactment of the UAA became effective July 1, 2013. See 2012 PA 370 and 371. The UAA 

provides that “[o]n or after July 1, 2013, this act governs an agreement to arbitrate whenever 

made.” MCL 691.1683(1). Given the timing of the instant lawsuit, which was commenced in 

May 2015, the UAA applies in this case. MCL 691.1686 provides, in pertinent part:

(1) An agreement contained in a record to submit to arbitration any 

existing or subsequent controversy arising between the parties to the agreement is 

valid, enforceable, and irrevocable except on a ground that exists at law or in 

equity for the revocation of a contract.

(2) The court shall decide whether an agreement to arbitrate exists or a 

controversy is subject to an agreement to arbitrate. 

In Altobelli, 499 Mich at 295-296, our Supreme Court discussed the nature of arbitration, 

observing:

Arbitration is a matter of contract. Accordingly, when interpreting an 

arbitration agreement, we apply the same legal principles that govern contract 

interpretation. Our primary task is to ascertain the intent of the parties at the time 

they entered into the agreement, which we determine by examining the language 

of the agreement according to its plain and ordinary meaning. In considering the 

scope of an arbitration agreement, we note that a party cannot be required to 

arbitrate an issue which it has not agreed to submit to arbitration. The general 

 1 In RDM Holdings, Ltd v Continental Plastics Co, 281 Mich App 678, 687; 762 NW2d 529 

(2008), this Court noted the general principles applicable to motions brought under MCR 

2.116(C)(7):

Under MCR 2.116(C)(7) . . ., this Court must consider not only the 

pleadings, but also any affidavits, depositions, admissions, or other documentary 

evidence filed or submitted by the parties. The contents of the complaint must be 

accepted as true unless contradicted by the documentary evidence. This Court 

must consider the documentary evidence in a light most favorable to the 

nonmoving party. If there is no factual dispute, whether a plaintiff's claim is 

barred under a principle set forth in MCR 2.116(C)(7) is a question of law for the 

court to decide. If a factual dispute exists, however, summary disposition is not 

appropriate. [Citations omitted.]
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policy of this State is favorable to arbitration. The burden is on the party seeking 

to avoid the agreement, not the party seeking to enforce the agreement. In 

deciding the threshold question of whether a dispute is arbitrable, a reviewing 

court must avoid analyzing the substantive merits of the dispute. If the dispute is 

arbitrable, the merits of the dispute are for the arbitrator. [Citations, quotation 

marks, and alteration brackets omitted.]

“A defense not asserted in [a] responsive pleading or by motion as provided by these 

rules is waived, except for the defenses of lack of jurisdiction over the subject matter of the 

action, and failure to state a claim on which relief can be granted.” MCR 2.111(F)(2). 

“Affirmative defenses must be stated in a party's responsive pleading[.]” MCR 2.111(F)(3). 

“[T]he existence of an agreement to arbitrate” is an affirmative defense. MCR 2.111(F)(3)(a). 

And MCR 2.116(D)(2) provides that “[t]he grounds listed in subrule (C)(5), (6), and (7) 

[agreement to arbitrate] must be raised in a party's responsive pleading, unless the grounds are 

stated in a motion filed under this rule prior to the party's first responsive pleading.” Here, under 

a plain application of the court rules, initial defendants waived a defense based on the agreement 

to arbitrate, where they failed to raise the defense in their answer or affirmative defenses, nor in a 

motion filed prior to their answer. Furthermore, outside the context of the court rules, this Court 

has stated: 

Waiver of a contractual right to arbitrate is disfavored. The party arguing 

there has been a waiver of this right bears a heavy burden of proof and must 

demonstrate knowledge of an existing right to compel arbitration, acts 

inconsistent with the right to arbitrate, and prejudice resulting from the 

inconsistent acts. [Madison Dist, 247 Mich App at 588 (quotation marks and 

citation omitted).]

Initial defendants do not claim, nor would they have any basis to assert, that they lacked 

knowledge of an arbitration defense when plaintiffs’ complaint was filed in May 2015; the 

defense was clearly available to them from the start of the suit. Moreover, initial defendants’ 

participation in the litigation throughout much of 2015 and several months in 2016, including 

fully engaging in discovery and agreeing to the extension of discovery deadlines as outlined

above, clearly constituted action that was inconsistent with the right to arbitrate. Madison Dist, 

247 Mich App at 596-597; Salesin v State Farm Fire & Cas Co, 229 Mich App 346, 356-357; 

581 NW2d 781 (1998). Finally, plaintiffs would be prejudiced by application of the arbitration 

agreement so deep into the court litigation, having expended time and resources on litigation that 

would have to be expended all over again from the ground up if the case were sent to arbitration. 

Madison Dist, 247 Mich App at 599-600; Salesin, 229 Mich App at 356-357. 

With respect to initial defendants, the question becomes whether their waiver can be 

forgiven or set aside on the basis that plaintiffs subsequently filed an amended complaint. We 

conclude that the waiver survived the amended complaint and that the amended complaint did 

not revive initial defendants’ ability to raise the arbitration agreement as a defense. The 

amended complaint did not significantly alter the scope or thrust of plaintiffs’ allegations or the 

general nature of the case. First, three of the claims in the amended complaint – fraud, 

rescission, and violation of the MFIL – were set forth previously in the original complaint. And 

the addition of the civil conspiracy and RICO claims relied on the same general course of 
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conduct alleged in the original complaint, which the amended complaint repeated and described 

in more detail. There is no argument or basis to conclude that the civil conspiracy and RICO 

claims gave rise to an arbitration defense that did not previously exist relative to the original 

complaint. In sum, initial defendants waived the defense of an agreement to arbitrate.2

However, the same conclusion simply cannot be reached with respect to subsequent 

defendants. They were not and could not be bound by a waiver made by other parties. The 

defense of an agreement to arbitrate was raised in timely fashion by subsequent defendants, 

where they raised it in a motion for summary disposition that was filed before their first 

responsive pleading. MCR 2.111(F)(2) and (3); MCR 2.116(D)(2). And subsequent defendants 

did not engage in any litigation, other than merely filing the motion for summary disposition. 

Subsequent defendants did not participate in acts inconsistent with the right to arbitrate. Though 

there might exist some close connections and relationships between initial and subsequent 

defendants, they are ultimately separate and distinct persons and entities. 

Although subsequent defendants did not waive an arbitration defense, it is not clear that 

subsequent defendants are parties actually encompassed by the arbitration agreement. “[A] party 

cannot be required to arbitrate an issue which it has not agreed to submit to arbitration.” 

Altobelli, 499 Mich at 295; see also MCL 691.1686(1). The arbitration agreement plainly 

indicated that plaintiffs agreed to arbitration with regard to disputes with initial defendants, or at 

least Dennis Duchene, II, and Inspired Business Development, LLC, and the issue is whether 

plaintiffs so agreed as to subsequent defendants; the question being whether each of the 

subsequent defendants can properly be characterized as being an “agent, employee, successor, or 

assignee” of Dennis Duchene, II, or Inspired Business Development, LLC. Plaintiffs argue that 

they did not agree to arbitrate matters with respect to subsequent defendants, and the trial court 

misconstrued their argument below, believing that plaintiffs were arguing that certain claims 

were not covered by the arbitration agreement. Plaintiffs concede that all of the claims in the 

amended complaint generally fall within the parameters of the arbitration agreement. Plaintiffs’ 

argument goes to whether subsequent defendants are protected by the arbitration agreement, 

regardless of the nature of the claims. We remand this case to the trial court to address this 

particular issue in the first instance.

Reversed and remanded for further proceedings consistent with this opinion. We do not 

retain jurisdiction. We decline to award taxable costs under MCR 7.219.

/s/ William B. Murphy 

/s/ Michael J. Kelly 

/s/ Brock A. Swartzle 

 2 We do note that, as to defendant Dennis Duchene, II, this Court has closed the case without 

prejudice due to his pending bankruptcy proceedings. Miller v Duchene, II, unpublished order of 

the Court of Appeals, entered October 12, 2017 (Docket No. 334731). Thus, our ruling does not 

encompass Mr. Duchene at this time.