If this opinion indicates that it is “FOR PUBLICATION,” it is subject to 

revision until final publication in the Michigan Appeals Reports.

-1-

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

SALVATORE CANGEMI,

Plaintiff-Appellant,

UNPUBLISHED

June 9, 2022

v No. 356069

Oakland Circuit Court

PRESTIGE CADILLAC, INC., LC No. 2019-177457-NZ

Defendant-Appellee.

SALVATORE CANGEMI,

Plaintiff-Appellant,

v No. 356069

Macomb Circuit Court

PRESTIGE CADILLAC, INC., LC No. 2020-001510-NZ

Defendant-Appellee.

Before: CAMERON, P.J., and O’BRIEN and SWARTZLE, JJ.

PER CURIAM.

In this action arising from plaintiff’s purchase of a used automobile from defendant, 

plaintiff appeals as of right the trial court’s order granting defendant’s motion for summary 

disposition under MCR 2.116(C)(7) and (C)(10). The trial court dismissed most of plaintiff’s 

claims under MCR 2.116(C)(7), holding that they were subject to an arbitration clause in the 

vehicle purchase agreement, and dismissed plaintiff’s remaining claim under the Magnuson-Moss 

Warranty Act (MMWA), 15 USC 2301 et seq., pursuant to MCR 2.116(C)(10). For the reasons 

set forth in this opinion, we affirm.
-2-

I. BACKGROUND

In 2018, plaintiff purchased a used 2016 GMC Yukon from defendant. Plaintiff explained 

that he found the Yukon on a website and then went to defendant’s showroom to see it. Before 

purchasing it, he spent about three hours at defendant’s dealership looking at and discussing the 

vehicle. He also took it on a test drive and did not notice any problems with it. According to 

plaintiff, the salesperson told him that the vehicle was a lease turn-in, had only one prior owner, 

and had gone through the dealership’s 72-point inspection. He was also told that the vehicle had 

not been involved in any accidents. Plaintiff agreed that he knew the vehicle was a used vehicle, 

but the purchase agreement incorrectly checked boxes indicating that the vehicle was both a “new” 

and a “demonstrator” vehicle. Plaintiff said that he did not check the vehicle’s history through a 

reporting service, such as CARFAX, before making the purchase. Plaintiff also said he was told 

that the vehicle was still subject to the manufacturer’s warranty.

On the way home from the dealership after making the purchase, the vehicle began to shake 

on the freeway at speeds over 60 miles per hour. Plaintiff reported the problem to defendant, who 

agreed to balance the tires, which seemed to address the problem. About three or four weeks later, 

however, plaintiff noticed that the bumper was melting, which he believed was because the muffler 

exhaust was too high. Defendant addressed the problem with the bumper, but when plaintiff 

received the vehicle back, the dashboard lights indicated a problem with the sensors on the vehicle, 

which were not working. Believing that the vehicle was still under General Motors’ warranty, 

plaintiff took it to two other GM dealerships, both of which indicated that there was damage to the 

frame that made the vehicle unsafe. There was also damage to the vehicle’s wiring, which had 

been sloppily repaired. Plaintiff learned that the vehicle had previously been involved in an 

accident and that GM would not honor the manufacturer’s warranty due to that accident. Plaintiff 

took the vehicle back to defendant, who assured him that there was nothing wrong with the frame.

In October 2019, plaintiff brought this action against defendant, alleging claims for (1) 

fraudulent inducement, (2) breach of warranty of title, (3) breach of express warranties, (4) breach 

of the implied warranty of merchantability, (5) revocation of acceptance and damages, (6) violation 

of the MMWA, (7) violation of the Michigan Consumer Protection Act, MCL 445.901 et seq., (8) 

violation of the motor vehicle code, MCL 257.248a, (9) mutual mistake, (10) innocent 

misrepresentation, and (11) violation of the Motor Vehicle Service and Repair Act, MCL 257.1301 

et seq. Service was accomplished by sending a copy of the summons and complaint to the 

Michigan Secretary of State pursuant to MCL 257.248(4). Although the documents were served 

on the Secretary of State on October 28, 2019, they were not forwarded to defendant until 

December 10, 2019. Yet, as of January 15, 2020—over a month after the complaint was forwarded 

to defendant—defendant had still not responded to the complaint, and, consequently, a default was 

entered against it. On February 10, 2020, defendant moved to set aside the default, and the trial 

court granted defendant’s motion.

Eventually, in October 2020, after discovery, defendant moved for summary disposition of 

all of plaintiff’s claims. Defendant argued that it was entitled to summary disposition of the 

MMWA claims under MCR 2.116(C)(10) because it disclaimed any implied warranty and no 

express warranty was offered. Defendant argued that all other claims were subject to dismissal 

under MCR 2.116(C)(7) because they were subject to an arbitration clause in the purchase 

agreement. The trial court granted defendant’s motion. This appeal followed.
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II. DEFAULT

Plaintiff first argues that the trial court erred by setting aside the default that was entered 

when defendant failed to timely respond to plaintiff’s complaint. We disagree.

This Court “review[s] for an abuse of discretion a trial court’s decision on a motion to set 

aside a default and whether to grant a default judgment.” Huntington Nat’l Bank v Ristich, 292 

Mich App 376, 383; 808 NW2d 511 (2011). A trial court abuses its discretion when its decision 

falls outside the range of principled outcomes. Id.

The policy of this state is generally against setting aside defaults that have been properly 

entered. Alken-Ziegler, Inc v Waterbury Headers Corp, 461 Mich 219, 229; 600 NW2d 638 

(1999). MCR 2.603(D)(1) provides that “[a] motion to set aside a default or a default judgment, 

except when grounded on lack of jurisdiction over the defendant, shall be granted only if good 

cause is shown and a statement of facts showing a meritorious defense, verified in the manner 

prescribed by MCR 1.109(D)(3), is filed.” Accordingly, a default will not be set aside unless the 

defaulting party demonstrates both “good cause” and a “meritorious defense.” Village of Edmore 

v Crystal Automation Sys, Inc, 322 Mich App 244, 255; 911 NW2d 241 (2017). In this case, 

plaintiff does not contest that defendant demonstrated the existence of a meritorious defense. He 

argues, however, that the trial court erred by finding that defendant demonstrated good cause to 

set aside the default.

This Court has explained:

In determining whether a party has shown good cause, the trial court should 

consider the following factors:

(1) whether the party completely failed to respond or simply missed the 

deadline to file;

(2) if the party simply missed the deadline to file, how long after the 

deadline the filing occurred;

(3) the duration between entry of the default judgment and the filing of the 

motion to set aside the judgment;

(4) whether there was defective process or notice;

(5) the circumstances behind the failure to file or file timely;

(6) whether the failure was knowing or intentional;

(7) the size of the judgment and the amount of costs due under MCR 

2.603(D)(4);

(8) whether the default judgment results in an ongoing liability (as with 

paternity or child support); and
-4-

(9) if an insurer is involved, whether internal policies of the company were 

followed.

* * *

Neither of these lists is intended to be exhaustive or exclusive. 

Additionally, as with the factors provided in other contexts, the trial court should 

consider only relevant factors, and it is within the trial court’s discretion to 

determine how much weight any single factor should receive. [Village of Edmore, 

322 Mich App at 255-256, quoting Shawl v Spence Bros, Inc, 280 Mich App 213, 

238-239; 760 NW2d 674 (2008).] 

In this case, the summons was issued on October 22, 2019. Plaintiff served defendant in 

accordance with MCL 257.248(4), which provides that a licensed automobile dealer, as a condition 

precedent to the granting of a license, must stipulate and agree “that legal process affecting the 

dealer, served on the secretary of state or a deputy of the secretary of state, has the same effect as 

if personally served on the dealer.” According to the proof of service, the complaint and summons 

were served on the Bureau of Licensing Regulations Division in Lansing, Michigan, on October 

25, 2019. According to a letter from the Secretary of State, the documents were received there on 

October 28, 2019, but were not forwarded to defendant by mail until December 10, 2019. Thus, 

although service on the Secretary of State was a proper method of service, there was an 

approximate six-week delay before the Secretary of State forwarded the complaint to defendant, 

which appears to have received the complaint in mid-December 2019. The default was entered on 

January 15, 2020, after defendant failed to timely respond to the complaint. Defendant moved to 

set aside the default on February 10, 2020, which would have been approximately six to eight 

weeks after it would have received the complaint from the Secretary of State.

We agree with plaintiff that the manner of service, while unusual, was permissible. 

However, because the delay by the Secretary of State in forwarding the complaint to defendant 

contributed to defendant’s delay in responding to the complaint, it properly can be considered, 

among other factors, in determining whether defendant demonstrated good cause for setting aside 

the default. Accordingly, the trial court did not err by considering this factor in determining 

whether it supported setting aside the default.

Plaintiff complains that the trial court did not address the delay that occurred after the 

summons and complaint were forwarded to defendant. Defendant primarily attributed this delay 

to a change in its personnel. Defendant’s owner or general manager, Gregory Jackson, filed an 

affidavit in support of the motion to set aside the default. He averred that it was defendant’s 

practice to forward a summons and complaint to the office manager, who was responsible for 

forwarding it to defendant’s insurance carrier. When plaintiff’s complaint was received in 

December 2019, defendant was in the process of having another employee assume that position 

after the previous office manager had left. According to Jackson, the new office manager found 

the letter from the Secretary of State in late January 2020, and promptly alerted Jackson, who 

directed the new manager to forward it to defendant’s insurance carrier. Jackson characterized the 

delay in sending the complaint to the insurance carrier as a clerical error due to the change in office 

managers.
-5-

The record shows that the default was entered against defendant on January 15, 2020, but 

the trial court had not yet entered a default judgment. There is no indication that defendant’s delay 

in responding to the complaint was intentional. The former office manager may have neglected or 

chosen not to handle the complaint in a timely manner, but when defendant’s new office manager 

and Jackson learned of it, they acted promptly to ensure that it was forwarded to defendant’s 

insurance carrier. The period of delay after the complaint was received from the Secretary of State 

before defendant responded was approximately six to eight weeks, but once the delay was 

discovered, Jackson, the new office manager, the insurance company, and assigned counsel acted 

quickly to respond to the complaint. In sum, considering that defendant was not responsible for 

the Secretary of State’s initial delay in forwarding the summons and complaint to defendant, that 

defendant identified circumstances showing that the subsequent delay was attributable to a change 

in office personnel indicating that the failure to timely respond was not knowing or intentional, 

that defendant acted promptly upon discovering the summons and complaint, and that the duration 

between the entry of the default and the filing of defendant’s motion to set aside the default was 

brief and a default judgment had not yet entered, the trial court did not abuse its discretion by 

finding that there was good cause to set aside the default. As noted, plaintiff does not contest that 

defendant demonstrated that it has a meritorious defense. Accordingly, the trial court did not abuse 

its discretion by setting aside the default and denying plaintiff’s motion for entry of a default 

judgment.

III. ARBITRATION

Next, plaintiff argues that the trial court erred by granting defendant’s motion for summary 

disposition under MCR 2.116(C)(7) on the ground that all but one of plaintiff’s claims were subject 

to an arbitration agreement. We disagree.

A trial court’s decision on a motion for summary disposition is reviewed de novo. Spiek v 

Dep’t of Transp, 456 Mich 331, 337; 572 NW2d 201 (1998). Defendant moved for summary 

disposition under MCR 2.116(C)(7), which provides that summary disposition may be granted 

where “dismissal . . . is appropriate because of . . . an agreement to arbitrate or to litigate in a 

different forum[.]” In Turner v Mercy Hosps & Health Servs of Detroit, 210 Mich App 345, 348; 

533 NW2d 365 (1995), this Court explained:

A defendant who files a motion for summary disposition under MCR 

2.116(C)(7) may (but is not required to) file supportive material such as affidavits, 

depositions, admissions, or other documentary evidence. MCR 2.116(G)(3); 

Patterson v Kleiman, 447 Mich 429, 432; 526 NW2d 879 (1994). If such 

documentation is submitted, the court must consider it. MCR 2.116(G)(5). If no 

such documentation is submitted, the court must review the plaintiff ’s complaint, 

accepting its well-pleaded allegations as true and construing them in a light most 

favorable to the plaintiff.

If the pleadings or other documentary evidence reveal that there is no genuine issue of material 

fact, the court must decide as a matter of law whether the claim is barred. Holmes v Mich Capital 

Med Ctr, 242 Mich App 703, 706; 620 NW2d 319 (2000).
-6-

A. WAIVER OF ARBITRATION

Plaintiff argues that the trial court erred by ruling that defendant did not waive its right to 

compel arbitration of plaintiff’s claims. We disagree.

The existence and enforceability of an arbitration agreement is a question of law that this 

Court reviews de novo. Michelson v Voison, 254 Mich App 691, 693-694; 658 NW2d 188 (2003). 

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 Pub Sch v Myers, 247 Mich 

App 583, 588; 637 NW2d 526 (2001).

Defendant argued that it was entitled to summary disposition on all claims except the 

MMWA claim because the claims were subject to a contractual arbitration clause. The parties’ 

Vehicle Purchase Order provides, in relevant part: 

AGREEMENT TO ARBITRATE ANY CLAIMS. READ THE 

FOLLOWING ARBITRATION AGREEMENT CAREFULLY. IT LIMITS 

YOUR RIGHTS, INCLUDING YOUR RIGHT TO MAINTAIN A COURT 

ACTION. The parties to the agreement agree to arbitrate any claim, dispute or 

controversy, including all statutory claims and any state or federal claims, that may 

arise out of or are related to the purchase or lease of the automobile identified in 

this Motor Vehicle Retail Order and the financing thereof, including the validity of 

this agreement. The Arbitration Agreement is made pursuant to a transaction 

involving interstate commerce and should be governed by the Federal Arbitration 

Act, 9 U.S.C. §§ 1, and not by state law regarding arbitration. By agreeing to 

arbitration, the parties understand and agree that they are waiving their rights to 

maintain other available resolution processes, such as a court action or 

administrative proceeding, to settle their disputes. . . . There are no limitations on 

the type of claims that must be arbitrated except for new car lemon law claims, 

Magnuson-Moss Warranty Act claims, and small claims filed as court action, unless 

such small claim is then removed, transferred or appealed to a different court. . . .

Defendant agreed that plaintiff’s MMWA claim was not subject to arbitration, but argued that 

plaintiff’s remaining claims were subject to arbitration under this agreement, and argued that it 

preserved its right to compel arbitration by pleading arbitration as an affirmative defense. In 

response to defendant’s motion, plaintiff did not dispute that his claims were within the scope of 

the arbitration clause, but argued that defendant waived its right to arbitrate the claims by engaging 

in conduct inconsistent with demanding arbitration.

The trial court agreed that if the arbitration clause was enforceable, it required plaintiff to 

arbitrate all claims except the MMWA claim, and it rejected plaintiff’s argument that defendant 

waived its right to arbitrate the claims. The court stated:

Here, the Court is satisfied that Defendant did not waive its right arbitrate 

under the Vehicle Purchase Order. The cases cited by Plaintiff are distinguishable 

or do not constitute binding precedent regarding whether a party has waived its 
-7-

right to arbitrate. Nevertheless, the “party arguing there has been a waiver of this 

right bears a heavy burden of proof and must demonstrate” “prejudice resulting 

from” the “acts inconsistent with the right to arbitrate.” . . . The Court finds that 

Plaintiff has failed to demonstrate or even argue that he was prejudiced by 

Defendant’s allegedly inconsistent conduct. Accordingly, Plaintiff has failed to 

meet his heavy burden of proof regarding whether he suffered any prejudice as a 

result of Defendant’s conduct, which was allegedly inconsistent with Defendant’s 

right to arbitrate. [Citation omitted.]

The arbitration clause in this case is subject to the Federal Arbitration Act (FAA), 9 USC 

1 et seq. As explained in Kauffman v The Chicago Corp, 187 Mich App 284, 286; 466 NW2d 726 

(1991):

The federal arbitration act, 9 USC 1-15, governs actions in both federal and 

state courts arising out of contracts involving interstate commerce. Southland Corp 

v Keating, 465 US 1; 104 S Ct 852; 79 L Ed 2d 1 (1984); Scanlon v P & J 

Enterprises, 182 Mich App 347; 451 NW2d 616 (1990). . . . State courts are bound 

under the Supremacy Clause, US Const, art VI, § 2, to enforce the substantive 

provisions of the federal act. Scanlon, supra.

Plaintiff argues that because this case involves an arbitration agreement under the FAA, 

the trial court erred by failing to apply federal decisions to determine whether defendant waived 

its right to arbitration. In Kauffman, 187 Mich App at 291-292, this Court, applying federal 

caselaw, stated:

Waiver of a contractual right to arbitration is not favored. Fisher v A G 

Becker Paribas Inc, 791 F2d 691 (CA 9, 1986). Any examination of whether the 

right to compel arbitration has been waived must be conducted in light of the strong 

federal policy favoring enforcement of arbitration agreements. [Moses H Cone 

Mem Hosp v Mercury Const Corp, 460 US 1; 103 S Ct 927; 74 L Ed 2d 765 (1983)]. 

A party arguing there has been a waiver of the right to arbitration bears a heavy 

burden of proof. The party must demonstrate knowledge of an existing right to 

compel arbitration, acts inconsistent with the arbitration right, and prejudice to the 

party opposing arbitration resulting from the inconsistent acts. Fisher, p 694. Even 

accepting the trial court’s finding that plaintiff has been prejudiced, there has been 

no showing that defendants acted inconsistently with their right to arbitration.

Defendants’ motion to compel arbitration in this case was their first 

responsive pleading to plaintiff’s complaint. They raised the arbitration agreement 

as an affirmative defense. They engaged in discovery and brought and responded 

to motions in the circuit court only after the court erroneously denied their motion 

to compel arbitration. Their counterclaim for a preliminary injunction, although 

not referring to their claim that the disputes between the parties were subject to 

arbitration, asked only for injunctive relief to preserve the status quo, not for money 

damages for any claimed breach of plaintiff’s covenant not to compete. There is 

no showing on these facts that defendants have at any time acted inconsistently with 

their claim of right to arbitration. Rush v Oppenheimer & Co, 779 F2d 885 (CA 2, 
-8-

1985). We believe any prejudice suffered by plaintiff in terms of time and expense, 

although unfortunate, was self-inflicted. Fisher, p 698. Plaintiff chose the forum 

in violation of his agreement to arbitrate disputes. The strong federal policy in 

favor of enforcing arbitration agreements in transactions affecting commerce 

requires the conclusion that defendants did not waive their right to arbitration.

See also Burns v Olde Discount Corp, 212 Mich App 576, 580, 582; 538 NW2d 686 (1995) 

(applying Kauffman in a matter also subject to the FAA).

In Salesin v State Farm Fire & Cas Co, 229 Mich App 346, 356-357; 581 NW2d 781 

(1998), this Court, citing Burns, stated:

However, a party may waive the right to have a matter decided by 

arbitration:

A party may waive its right to arbitration, and each case must 

be decided on the basis of its individual facts. However, waiver of 

a contractual right to arbitration is not favored. A party arguing 

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

The party must demonstrate knowledge of an existing right to 

compel arbitration, acts inconsistent with the right to arbitrate, and 

prejudice resulting from the inconsistent acts. [Burns v Olde 

Discount Corp, 212 Mich App 576, 582; 538 NW2d 686 (1995) 

(citations omitted).]

In general, “defending the action or proceeding with the trial,” that is defending an 

action without seeking to invoke a right to compel arbitration, constitutes a waiver 

of the right to arbitration. See North West Michigan Constr, Inc v Stroud, 185 Mich 

App 649, 651-652; 462 NW2d 804 (1990), and Hendrickson v Moghissi, 158 Mich 

App 290, 299-300; 404 NW2d 728 (1987), quoting 98 ALR3d 767, § 2, pp 771-

772. State Farm is the appellant with regard to the trial court’s decision in favor of 

Salesin on the merits of this case. Given that State Farm drafted the insurance 

policy at issue with its arbitration provision, State Farm certainly knew of its right 

to arbitration. Nevertheless, State Farm apparently refused to arbitrate its dispute 

with Salesin and further litigated the merits of its dispute with Salesin in the trial 

court without seeking an order to have the dispute settled in accordance with the 

contractual right to arbitrate.

Thus, State Farm acted in a manner inconsistent with its right to arbitration. 

Further, Salesin would be prejudiced if we vacated the trial court’s decision and 

referred the matter to arbitration at this point after Salesin expended resources to 

litigate the merits of this case in the trial court, and this Court, as a result of State 

Farm’s refusal to arbitrate. State Farm has waived any right to arbitration. Thus, 

we will not disturb the trial court’s judgment on the merits in favor of Salesin with 

respect to his personal claim on the basis of the failure of the parties to arbitrate this 

dispute.
-9-

In Madison Dist Pub Sch, 247 Mich App at 588, this Court reaffirmed the requirements in 

Salesin and Burns that a party raising the issue of waiver has a heavy burden of proof, and must 

demonstrate that the opposing party had knowledge of the right to compel arbitration, performed 

acts inconsistent with that right, and was prejudiced by the inconsistent acts. This Court also 

explained that although these requirements are based on federal law, they also apply to arbitration 

proceedings under state law, stating:

Defendant disputes the propriety of requiring a showing of prejudice to 

establish a waiver of arbitration. Defendant correctly asserts that unlike this case, 

Burns, supra at 580-582, involved the federal arbitration act. In light of the 

reference to Michigan law in the instant agreement and its provision for 

enforcement of the arbitrator’s decision in the Oakland Circuit Court, this case 

involves Michigan statutory arbitration. MCL 600.5001; MCR 3.602; Hetrick v 

David A Friedman, DPMO, PC, 237 Mich App 264, 268; 602 NW2d 603 (1999). 

Defendant ignores, however, that Salesin did not involve federal arbitration, but 

nonetheless incorporated into its waiver analysis the federal prejudice requirement. 

To the extent that defendant challenges the soundness of the Salesin panel’s 

reference to the prejudice requirement, we note that we are bound by the Salesin

decision, MCR 7.215(I)(1), and that defendant fails to cite any cases utilizing a 

different waiver analysis under the Michigan Arbitration Act, thus abandoning this 

subissue. Mudge v Macomb Co, 458 Mich 87, 104-105; 580 NW2d 845 (1998). 

[Madison Dist Pub Sch, 247 Mich App at 588 n 1.]

In this case, the trial court did not directly apply federal caselaw in its waiver analysis, but 

it relied on state cases that applied the federal standards, notably Nexteer Auto Corp v Mando 

America Corp, 314 Mich App 391, 397; 886 NW2d 906 (2016), in which this Court, quoting 

Madison Dist Pub Sch, 247 Mich App at 588, observed that “[t]he 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.” Accordingly, we reject plaintiff’s argument that the trial court did not apply 

the correct standard for determining whether there was a waiver of the right to arbitration.

Applying the appropriate standards to the facts of this case, the trial court did not err by 

holding that defendant did not waive its right to enforce the arbitration clause. Plaintiff did not 

meet his heavy burden of proving a waiver. There is no dispute that defendant was aware of its 

right to compel arbitration of some of plaintiff’s claims because it included this defense in its 

answer. Plaintiff principally argues that defendant’s actions in this litigation were inconsistent 

with the right to arbitrate plaintiff’s claims. We disagree.

In Madison Dist Pub Sch, 247 Mich App at 589, this Court discussed the type of conduct 

that can waive a right to arbitrate:

In most jurisdictions, the right to arbitration may be waived 

by certain conduct, with each case decided on the basis of its 

particular facts and circumstances:
-10-

“Various forms of participation by a [party] 

in an action have been considered by the courts in 

determining whether there has been a waiver of the 

[party]’s right to compel arbitration or to rely on 

arbitration as a defense to the action. It has been 

generally held or recognized that by such conduct as 

defending the action or proceeding with the trial, a 

[party] waives the right to arbitration of the dispute 

involved. A waiver of the right to arbitrration 

[sic] . . . has also been found from particular acts of 

participation by a [party], each act being considered 

independently as constituting a waiver. Thus, a 

[party] has been held to have waived the right to 

arbitration of the dispute involved by filing an 

answer without properly demanding or asserting the 

right to arbitration, by filing an answer containing a

counterclaim . . . without demanding arbitration or 

by filing a counterclaim which was considered 

inconsistent with a previous demand for arbitration, 

by filing a third-party complaint or cross-claim, or by 

taking various other steps, including filing a notice 

of readiness for trial, filing a motion for summary 

judgment, or utilizing judicial discovery 

procedures.” [Hendrickson (v Moghissi, 158 Mich App 

290; 404 NW2d 728 (1987)), supra at 299-300, quoting 

anno.: Defendant’s participation in action as waiver 

of right to arbitration of dispute involved therein, 98 

ALR3d 767, § 2, pp 771-772.]

See also Salesin, supra (noting that defending an action without seeking to invoke 

a right to compel arbitration constitutes a waiver of the right to arbitration); North 

West Michigan Constr [, Inc v Stroud, 185 Mich App 649; 462 NW2d 804 (1990)], 

supra at 651-652, quoting Henderson [sic] [Hendrickson], supra at 300. A party 

does not waive the right to arbitrate, however, by litigating an issue that is not 

arbitrable. Auto Club Ins Ass’n v Lozanis, 215 Mich App 415, 421-422; 546 NW2d 

648 (1996), overruled in part on other grounds in Perry v Sied, 461 Mich 680, 690; 

611 NW2d 516 (2000).

In this case, it is clear that defendant asserted its right to rely on the arbitration clause in its 

answer. Defendant thereafter participated in discovery, but it is undisputed that one of plaintiff’s 

claims was not subject to arbitration. Defendant also sought to compel arbitration in an appropriate 

motion under MCR 2.116(C)(7). Further, it was plaintiff who moved to adjourn the hearing on 

defendant’s motion so that he would have additional time to conduct further discovery. While 

plaintiff argues that defendant’s procedural actions of relying on plaintiff’s jury demand, moving 

venue to another county, and filing a witness list are all inconsistent with the right to arbitrate, 

those actions were still necessary to the litigation of the MMWA claim, which was not subject to 
-11-

arbitration. Plaintiff also points to defendant’s participation in discovery as a reason to find that it 

waived its right to arbitration, but that argument is not persuasive considering that discovery still 

would have been necessary for plaintiff’s MMWA claim which was not subject to arbitration, and 

that some discovery related to the claims subject to arbitration likely would have been necessary 

if the matter was bifurcated into separate proceedings earlier. As defendant notes on appeal, its 

decision to not bifurcate the matter into separate proceedings earlier was the most economical use 

of the parties’ time and resources. On these facts, particularly that defendant needed to participate 

in discovery on at least one of plaintiff’s claims that was expressly excluded from arbitration, we 

cannot conclude that defendant intentionally relinquished its right to arbitration by participating in 

discovery.

The trial court also ruled that plaintiff’s waiver argument failed because he did not address 

whether he was prejudiced. On appeal, plaintiff argues that he is no longer required to show 

prejudice to establish that defendant waived its right to arbitration in light of the recent United 

States Supreme Court decision in Morgan v Sundance, Inc, 596 US ___; ___ S Ct ___; ___ L Ed 

2d ___ (2022). Assuming that plaintiff is correct that he did not need to show prejudice in light of 

Morgan, the trial court nevertheless did not err by ruling that plaintiff failed to meet his heavy 

burden of proving that defendant waived its right to enforce the arbitration clause for the reasons 

previously discussed.

B. VOID AB INITIO

Alternatively, plaintiff argues that arbitration is not available because the parties’ purchase 

agreement that contains the arbitration clause is void ab initio because it violates state law. The 

trial court determined that the validity of the parties’ purchase agreement was a matter for the 

arbitrator to decide. We agree.

Specifically, plaintiff argues that the entire agreement, including the arbitration provision, 

is void ab initio because the vehicle purchase agreement violated the motor vehicle code, MCL 

257.1 et seq., by inaccurately describing the vehicle as both a “new” and “demonstrator” vehicle, 

when it was actually a used vehicle.

MCL 257.33a defines a “new motor vehicle” as “a motor vehicle which is not and has not 

been a demonstrator, executive or manufacturer’s vehicle, leased vehicle, or a used or secondhand 

vehicle.” MCL 257.11a defines a “demonstrator” as “a motor vehicle used by a prospective 

customer or a motor vehicle dealer or his agent for testing and demonstration purposes.” It is 

undisputed that the subject vehicle was a used vehicle, and that the parties’ purchase agreement 

wrongly listed the vehicle as both a “new motor vehicle” and a “demonstrator.” Plaintiff argued 

that the inaccurate listing violated MCL 257.248a(1), which provides:

A motor vehicle dealer shall not advertise or represent a motor vehicle to be 

a demonstrator, executive or manufacturer’s vehicle, leased vehicle, new motor 

vehicle, or used or secondhand vehicle unless the vehicle so described is as defined 

in this act. 
-12-

Plaintiff’s complaint also alleged that defendant made other false statements that induced him to 

purchase the vehicle and included a claim for fraud in the inducement. This claim challenged the 

validity of the sales agreement as a whole, not just the arbitration clause.

Relying on Buckeye Check Cashing, Inc v Cardegna, 546 US 440, 444-445; 126 S Ct 1204, 

1208; 163 L Ed 2d 1038 (2006), and Scanlon v P & J Enterprises, Inc, 182 Mich App 347, 350-

351; 451 NW2d 616 (1990), the trial court ruled that the validity of the purchase agreement was 

for the arbitrator to decide.

Under Michigan law, it is generally for the court, not an arbitrator, to determine whether 

there is a contract to arbitrate and whether its terms are enforceable. See Arrow Overall Supply 

Co v Peloquin Enterprises, 414 Mich 95, 99; 323 NW2d 1 (1982); Watts v Polaczyk, 242 Mich 

App 600, 603; 619 NW2d 714 (2000). On this point, Michigan law conflicts with federal law. 

Under federal law, courts may address and adjudicate a challenge to the validity of an arbitration 

clause itself, but if a claim challenges the validity of a contract as a whole, then courts will enforce 

the arbitration agreement and refer the matter regarding the validity of the contract to the arbitrator. 

See Buckeye Check Cashing, 546 US at 444-445 (holding that a challenge to the validity of a 

contract as a whole, and not specifically to the arbitration clause, must be decided by the arbitrator, 

not the court). Because this case is governed by the FAA, this Court must follow federal law 

regarding the arbitrability question. See Rent-A-Center, W, Inc v Jackson, 561 US 63, 70-72; 130 

S Ct 2772; 177 L Ed 2d 403 (2010).

This case is factually similar to Scanlon, 182 Mich App 347, on which the trial court relied. 

In Scanlon, the plaintiffs challenged the validity of franchise contracts that contained arbitration 

clauses, but did not challenge the validity of the arbitration clauses themselves. Id. at 349. The 

arbitration clauses provided that “[a]ny controversy or claim arising out of or relating to this 

Agreement, or the breach thereof,” shall be submitted to arbitration. Id. at 350. This Court held 

that because the case was governed by the FAA, under federal substantive law “any issue arising 

with respect to the contract, including a claim of fraud in the inducement of the entire contract,” 

was required to be submitted to arbitration. Id. This Court observed that “federal courts have 

uniformly held that even a claim of fraud in the inducement of an entire contract containing an 

arbitration clause is to be referred to arbitration under the federal arbitration act.” Id. at 350-351.

Similarly, in this case, plaintiff is challenging the arbitration clause only as part of his claim 

that the entire purchase agreement is void ab initio due to fraud. Because the FAA governs, the 

trial court correctly held that plaintiff’s challenge to the validity of the contract, including his 

claims of fraud in the inducement and that the agreement violated the motor vehicle code, are 

matters for the arbitrator to decide.

IV. PLAINTIFF’S MMWA CLAIM

Plaintiff next argues that the trial court erred by granting defendant’s motion for summary 

disposition with respect to plaintiff’s MMWA claim regarding express and implied warranties. 

We disagree.

Although defendant moved for summary disposition of the MMWA claim under both MCR 

2.116(C)(8) and (C)(10), the motion is properly reviewed under MCR 2.116(C)(10) because (1) 
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the parties were allowed to wait until discovery was completed, (2) defendant relied on evidence 

beyond the pleadings in support of its motion, and (3) the trial court considered evidence outside 

the pleadings in deciding the motion. A motion under MCR 2.116(C)(10) tests the factual support 

for a claim. A court must consider the pleadings, affidavits, depositions, admissions, and any other 

documentary evidence submitted by the parties, and view that evidence in the light most favorable 

to the nonmoving party to determine if a genuine issue of material fact exists. MCR 2.116(G)(5); 

Maiden v Rozwood, 461 Mich 109, 118-120; 597 NW2d 817 (1999). Summary disposition should 

be granted if, except as to the amount of damages, there is no genuine issue of material fact and 

the moving party is entitled to judgment as a matter of law. Babula v Robertson, 212 Mich App 

45, 48; 536 NW2d 834 (1995).

A. “AS IS” DISCLAIMER

The MMWA provides a cause of action for a consumer against a supplier or warrantor who 

breaches a written warranty, an implied warranty, or a service contract. Specifically, 15 USC 

2310(d)(1) provides:

[A] consumer who is damaged by the failure of a supplier, warrantor, or service 

contractor to comply with any obligation under this chapter, or under a written 

warranty, implied warranty, or service contract, may bring suit for damages and 

other legal and equitable relief.

To recover under the MMWA, plaintiff was required to establish: (1) that he was damaged by 

defendant’s failure to comply with an obligation under the MMWA, (2) that he was damaged by 

defendant’s failure to comply with an obligation under a written warranty; or (3) that he was 

damaged by defendant’s failure to comply with an obligation under an implied warranty.

Plaintiff argues that he established a claim under the MMWA involving express warranties 

made by defendant, and that the “as is” disclaimer accompanying the sale could not void the 

express warranties under the MMWA. Plaintiff argues that an express warranty was created under 

state law, specifically MCL 440.2313 of the Uniform Commercial Code (UCC), which provides:

(1) Express warranties by the seller are created as follows:

(a) An affirmation of fact or promise made by the seller to the buyer which 

relates to the goods and becomes part of the basis of the bargain creates an express 

warranty that the goods shall conform to the affirmation or promise.

(b) A description of the goods which is made part of the basis of the bargain 

creates an express warranty that the goods shall conform to the description.

(c) A sample or model which is made part of the basis of the bargain creates 

an express warranty that the whole of the goods shall conform to the sample or 

model.

(2) It is not necessary to the creation of an express warranty that the seller 

use formal words such as “warrant” or “guarantee” or that he or she have a specific 
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intention to make a warranty, but an affirmation merely of the value of the goods 

or a statement purporting to be merely the seller’s opinion or commendation of the 

goods does not create a warranty, except as provided in the art multiples sales act 

and Act No. 121 of the Public Acts of 1970, being sections 442.321 to 442.325 of 

the Michigan Compiled Laws.

According to plaintiff, an express warranty was created when defendant’s salesperson 

represented that the subject vehicle was “new” and a “demonstrator,” and had been subject to a 

72-point inspection to ensure that it was safe to drive. Plaintiff further claims that he was told by 

the salesperson that the vehicle had one prior owner, was a lease turn-in, and had not been involved 

in any accident. 

The trial court rejected plaintiff’s claim that an express warranty under the UCC could 

support a claim under the MMWA because the MMWA requires a written warranty, an implied 

warranty, or a service contract. Further, the information identifying the vehicle as “new” and a 

“demonstrator” did not create an express warranty reduced to writing because it was undisputed 

that plaintiff knew that he was purchasing a used vehicle. 

The other representations about the vehicle passing a 72-point inspection, not having been 

involved in an accident, and having one owner arguably could create a warranty regarding the 

vehicle’s safety and fitness for the road. Inspection reports provided near the time of purchase 

have been held to create a written warranty. See Murphy v Mallard Coach Co, 179 AD2d 187, 

193-194; 582 NYS2d 528 (1992); Marine Midland Bank, NA v Carroll, 98 AD2d 516, 518-519; 

471 NYS2d 409 (1984). An inspection report could constitute an affirmative statement of fact 

related to the condition of the vehicle at the time of purchase, making it a part of the bargain. 

Compare Klanseck v Anderson Sales & Servs, Inc, 136 Mich App 75, 86-87; 356 NW2d 275 

(1984), aff’d 426 Mich 78 (1986); Ducharme v A & S RV Center, Inc, 321 F Supp 2d 843, 850 

(ED Mich, 2004), aff’d 127 Fed Appx 204 (CA 6, 2005) (holding that checklists regarding vehicles 

did not represent the condition of the products, and therefore, did not create express warranties). 

However, plaintiff did not produce evidence of a writing to support this theory. He relies 

only on verbal statements by the salesperson. Even if the salesperson’s statements created express 

warranties, the absence of a writing prevents plaintiff from establishing an express warranty 

enforceable under the MMWA, 15 USC 2310(d)(1). Without a writing, plaintiff cannot show that 

any express warranty supports a claim under the MMWA.

Plaintiff further argues that defendant’s disclaimers are ineffective because an express 

warranty was made. However, the purchase agreement states that there are no warranties, express 

or implied:

12. USED VEHICLE—WHETHER OR NOT SUBJECT TO 

MANUFACTURER’S WARRANTY

UNLESS A SEPARATE WRITTEN DOCUMENT SHOWING THE 

TERMS OF ANY DEALER WARRANTY OR SERVICE CONTRACT IS 

FURNISHED BY THE DEALER TO THE PURCHASER, THIS VEHICLE IS 

SOLD “AS IS” WITHOUT ANY WARRANTY EITHER EXPRESS OR 
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IMPLIED. THE PURCHASER WILL BEAR THE ENTIRE EXPENSE OF 

REPAIR OR CORRECTING ANY DEFECTS THAT PRESENTLY EXIST OR 

THAT MAY OCCUR IN THE USED VEHICLE.

In addition, the Buyer’s Guide for the vehicle indicates that the manufacturer’s warranty still 

applied, but further states that “[t]he dealership itself assumes no responsibility for any repairs, 

regardless of any oral statement about the vehicle. All warranty coverage comes from the 

unexpired manufacturer’s warranty.”

Plaintiff argues that the disclaimer is ineffective under 15 USC 2308 because of the express 

warranties that were made to him. 15 USC 2308 provides, in relevant part: 

(a) Restrictions on disclaimers or modifications

No supplier may disclaim or modify (except as provided in subsection (b)) 

any implied warranty to a consumer with respect to such consumer product if (1) 

such supplier makes any written warranty to the consumer with respect to such 

consumer product, or (2) at the time of sale, or within 90 days thereafter, such 

supplier enters into a service contract with the consumer which applies to such 

consumer product.

* * *

(c) Effectiveness of disclaimers, modifications, or limitations

A disclaimer, modification, or limitation made in violation of this section 

shall be ineffective for purposes of this chapter and State law.

To establish a violation of 15 USC 2308, plaintiff must present proof that defendant 

provided an express warranty in writing regarding the vehicle’s condition. Because plaintiff did 

not produce any evidence of a written warranty that conflicts with defendant’s disclaimer of any 

implied warranty, he cannot rely on 15 USC 2308 to argue that defendant’s “as is” disclaimer is 

ineffective.

Plaintiff also argues that the trial court erroneously rejected his argument that defendant’s 

offers to repair his vehicle at no cost amounted to a waiver of its disclaimer of any implied 

warranties of merchantability and fitness. While the trial court appears to have misunderstood 

plaintiff’s argument—stating, “Although Plaintiff also argues that Defendant waived any 

disclaimer by performing repairs on the Vehicle, he has not offered any evidence that the repairs 

were made pursuant to an express or implied warranty”—the record does not support plaintiff’s 

claim that defendant waived its disclaimer of implied warranties of merchantability and fitness.

Plaintiff relies on Oregon Bank v Nautilus Crane & Equip Corp, 68 Or App 131, 139-140; 

683 P2d 95 (1984), to argue that a seller’s course of performance may operate to waive a disclaimer 

and reinstate implied warranties of merchantability and fitness for a particular purpose. Indeed, 

MCL 440.2316(3)(c) recognizes that a disclaimer of an implied warranty may be negated by a 

course of performance.
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In this case, after plaintiff purchased the vehicle, defendant agreed to balance the tires to 

address the vehicle’s shaking. It also replaced the bumper and repaired the muffler after the 

bumper began to melt. However, when plaintiff complained that additional, more extensive repairs 

were necessary to fix the vehicle’s frame and wiring, defendant declined to provide those repairs. 

Although defendant did provide some repairs that were inconsistent with disclaiming any liability 

for the vehicle’s condition, defendant’s attempts to placate plaintiff by making some gratuitous 

repairs shortly after the vehicle was purchased do not demonstrate a course of conduct that is 

inconsistent with the disclaimers included in the purchase agreement. “Waiver is the intentional 

relinquishment of a known right.” In re Gordon, 323 Mich App 548, 562; 919 NW2d 77 (2018). 

Merely because defendant agreed to perform some repairs that it was not obligated to perform does 

not demonstrate that defendant intentionally waived its rights under the disclaimers.

B. THE “USED CAR RULE”

Plaintiff also argues that the trial court erred by ruling that he failed to show that he has a 

valid claim under the “Used Car Rule” under the MMWA. We again disagree.

Pursuant to 15 USC 2309(b) of the MMWA, the Federal Trade Commission enacted 

regulations and rules dealing with warranties and warranty practices in connection with the sale of 

used motor vehicles. One such rule is the Used Motor Vehicle Trade Regulation Rule (the “Used 

Car Rule”), 16 CFR 455.1 et seq. A cause of action for violation of the Used Car Rule is authorized 

under 15 USC 2310(d)(1) of the MMWA, which allows a consumer to recover when he “is 

damaged by the failure of a supplier, warrantor, or service contractor to comply with any obligation 

under this chapter, or under a written warranty, implied warranty, or service contract . . . .” 15 

USC 2310(d)(1).

16 CFR 455.1 provides, in relevant part: 

(a) It is a deceptive act or practice for any used vehicle dealer, when that 

dealer sells or offers for sale a used vehicle in or affecting commerce as commerce 

is defined in the Federal Trade Commission Act:

(1) To misrepresent the mechanical condition of a used vehicle;

(2) To misrepresent the terms of any warranty offered in connection with 

the sale of a used vehicle; and

(3) To represent that a used vehicle is sold with a warranty when the vehicle 

is sold without any warranty.

(b) It is an unfair act or practice for any used vehicle dealer, when that dealer 

sells or offers for sale a used vehicle in or affecting commerce as commerce is 

defined in the Federal Trade Commission Act:

(1) To fail to disclose, prior to sale, that a used vehicle is sold without any 

warranty; and
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(2) To fail to make available, prior to sale, the terms of any written warranty 

offered in connection with the sale of a used vehicle.

(c) The Commission has adopted this Rule in order to prevent the unfair and 

deceptive acts or practices defined in paragraphs (a) and (b). It is a violation of this 

Rule for any used vehicle dealer to fail to comply with the requirements set forth in 

§§ 455.2 through 455.5 of this part. If a used vehicle dealer complies with the 

requirements of §§ 455.2 through 455.5 of this part, the dealer does not violate this 

Rule.

Plaintiff argues that he can establish a claim under 16 CFR 455.1(a)(1), which states that 

it is a deceptive practice for a dealer “[t]o misrepresent the mechanical condition of a used vehicle.” 

Plaintiff asserts that defendant misrepresented the condition of his vehicle. However, the Used 

Car Rule does not include an inspection requirement and it does not require that sellers of used 

automobiles disclose known defects. See Patton v McHone, 822 SW2d 608, 614-615 n 5 (Tenn 

App, 1991). Moreover, nothing in 16 CFR 455.1(a)(1) establishes liability solely because a dealer 

may have verbally misrepresented the condition of a vehicle. Reading the rule as a whole, it is 

apparent that it applies only to warranties, consistent with the MMWA.

Plaintiff also asserts in his reply brief that defendant violated 16 CFR 455.1(a)(2) and (3) 

by wrongly representing, including in the Buyer’s Guide, that the vehicle was still subject to the 

manufacturer’s warranty. However, it does not appear that plaintiff raised this argument in the 

trial court in response to defendant’s motion for summary disposition. This Court may decline to 

address an issue that is first raised on appeal. Green v Ziegelman, 282 Mich App 292, 300; 767 

NW2d 660 (2009). Moreover, this argument is raised for the first time on appeal in plaintiff’s 

reply brief. An appellant may not raise an issue for the first time in a reply brief. Kinder Morgan 

Mich, LLC v City of Jackson, 277 Mich App 159, 174; 744 NW2d 184 (2007); MCR 7.212(G) 

(reply briefs must be confined to rebuttal of the arguments in the appellee’s brief). For these 

reasons, we decline to consider this issue. Green v Ziegelman, 282 Mich App 292, 300; 767 NW2d 

660 (2009).1

 

1 We agree with plaintiff that the trial court appears to have improperly resolved a disputed issue 

of fact regarding whether plaintiff was provided with a CARFAX report for the vehicle before 

purchasing it. In his deposition, plaintiff stated that he did not receive the CARFAX report until 

after he took the vehicle to Genesis Cadillac, which was after he purchased it from defendant. A 

court may not determine disputed issues of fact when deciding a motion for summary disposition. 

Skinner v Square D Co, 445 Mich 153, 161; 516 NW2d 475 (1994). However, because this 

disputed issue is not material to whether plaintiff can establish a claim under the Used Car Rule, 

this error is harmless. MCR 2.613(A).
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Affirmed.

/s/ Thomas C. Cameron

/s/ Colleen A. O’Brien

/s/ Brock A. Swartzle