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### STATE OF MICHIGAN

COURT OF APPEALS

SPENCE BROTHERS,

Plaintiff-Appellee, UNPUBLISHED March 14, 2017

v No. 329228 Washtenaw Circuit Court KIRBY STEEL, INC., LC No. 14-000546-CK

Defendant-Appellant.

SPENCE BROTHERS,

Plaintiff-Appellee,

and

CINCINNATI INSURANCE COMPANY,

Intervening Plaintiff-Appellee,

v No. 332083 Washtenaw Circuit Court KIRBY STEEL, INC., LC No. 14-000546-CK

Defendant-Appellant.

Before: C AVANAGH , P.J., and S AWYER and S ERVITTO , JJ.

P ER C URIAM

. This dispute is between a general contractor, plaintiff Spence Brothers, and its subcontractor, defendant Kirby St eel, Inc., regarding insurance coverage for an injury that defendant’s employee sustained while on plaintiff’s job site. Plaintiff was sued and then brought this lawsuit against defendant for breach of its obligations to provide plaintiff comprehensive liability insurance and to indemnify plaintiff for its losses u nder the parties’ Subcontract Agreement (Agreement). The trial court granted summary disposi tion for plaintiff and subsequently entered an order of judgment, awarding plaintiff a nd its insurer, intervening plaintiff Cincinnati Insurance Co mpany (hereinafter Cincinnati) , $127,823.88. Defendant-2- appeals by right the trial court’s order of judgment in Docket No. 332083 and the trial court’s summary disposition orders in Docket No. 329228. Because the t rial court erred by declining to order this matter to arbitrat ion pursuant to the plain terms of the Agreement, we reverse.

I. BACKGROUND

In 2011 through 2012, plaintiff was the project manager overse eing the University of Michigan’s expansion of the Crisler Arena. Defendant bid on th e structural and metal work for the project and plaintiff accepted its bid. In its acceptance letter, plaintiff directed defendant to obtain a Certificate of Liability Insurance listing plaintiff a s an “additional insured.” Defendant obtained said certificate. Thereafter, the parties entered int o the Agreement under which defendant agreed to procure comprehensive liability insurance c overage and to name plaintiff as an “endorsed named insured” therein. The Agreement also requir ed defendant to defend and indemnify plaintiff against all losses.

In April 2012, defendant’s employee, William Burtch, suffered injuries on the job site when he fell from a ladder. Burtch filed a negligence action a gainst plaintiff. Plaintiff asserted its right to a defense and indemn ification against defendant, b ut defendant’s insurer refused such coverage noting that plaintiff was only an “additional insured” under its policy with defendant.

Plaintiff then brought this laws uit against defendant for brea ch of the Agreement, alleging that defendant failed to obtain the comprehensive liab ility insurance coverage naming plaintiff as an “endorsed named insured” as required under para graph 13 of the Agreement and, further, that defendant breached paragraph 14 of the Agreement by failing to defend and indemnify plaintiff in the Burtch case. Defendant answered the complaint, asserting in its affirmative defenses that paragraph 22 of the Agreement require d that the matter be submitted to arbitration and moved to di smiss on the same ground.

At the hearing on the motion to dismiss, plaintiff responded t hat there was no dispute that a duty to indemnify unde r the Agreement exis ted—leaving nothing for an arbiter to decide—and, further, that it would be premature to order arbitration becaus e no disposition as to the underlying negligence case had been reached. Plaintiff’s couns el cited plaintiff’s concerns of “things getting done in a piecemeal fashion . . . .” Defendant countered that the Agreement required arbitration by its plain terms and that this matter in volves the breach of the Agreement, not the underlying negligence action.

After noting that the indem nity provision of paragraph 14 was very broad and not specific to negligence cases, the trial court denied defendant’s motion to dismiss and to order the matter to arbitration. The court stated:

[T]he reason I brought up the language in paragraph 14 and 22, if you were to read those strictly together I can see where the arbitration pr ovision would in fact take precedence, even in a negligence claim such as this; but g iven the allegations as to some alleged fault by the Plaintiff . . . I’m gonna deny the motion to dismiss, leave the matter here and see what we can do to resolve it.

Thereafter, plaintiff moved for summary disposition under MCR 2.116(C)(10), asserting that no genuine issue of materia l fact existed that defendant b reached its insurance coverage and-3- indemnification obligations under the Agreement. The trial cou rt granted plaintiff’s motion for summary disposition, and subseque ntly entered an order of judgm ent awarding plaintiff and Cincinnati $127,823.88.

II. STANDARD OF REVIEW

Because arbitration is a matter of contract subject to contrac t interpretation principles, this Court’s review is de novo. Altobelli v Hartmann , 499 Mich 284, 295; 884 NW2d 537 (2016). In interpreting an arbit ration agreement, the Court di scerns the intent of the parties by examining the plain and ordina ry meaning of the agreement. Id

.

III. ANALYSIS

On appeal, defendant argues that the trial court erred by igno ring the plain terms of the arbitration provision in the par ties’ Agreement, which unequivo cally encompasses the disputed issues in this case. Defendant claims that the trial court err oneously considered the underlying negligence action in concluding t hat this matter did not arise out of or relate to the breach of the Agreement. We agree.

Arbitration is a matter of contract law and, thus, it follows that arbitration agreements “must be enforced according to the ir terms to effectuate the in tentions of the parties.” Bayati v Bayati , 264 Mich App 595, 599; 691 NW2d 812 (2004). Generally, “[a]n 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.” MCL 691.1686(1). Upon a motion to enforce an agreement to arbitrate, the trial court must, in the event a party opposes arbitration, order arbitration “unless it finds that there is no enforceable agree ment to arbitrate.” MCL 691.1687(1)(b).

“The existence of an arbitratio n agreement and the enforceabil ity of its terms are judicial questions for the court, not the arbitrators.” Fromm v MEEMIC Ins Co , 264 Mich App 302, 305; 690 NW2d 528 (2004). “A three-part test applies for ascertaini ng the arbitrability of a particular issue: 1) is there an arbitration agreement in a contract betwe en the parties; 2) is the disputed issue on its face or arguably with in the contract’s arbitration clause; and 3) is the dispute expressly exempted from arbitrat ion by the terms of the contrac t.” In re Nestorovski Estate , 283 Mich App 177, 202; 769 NW2d 720 ( 2009) (quotation marks and cit ation omitted). “Any doubts about the arbitrability of an issue should be resolved in favor of arbitration.” City of Huntington Woods v Ajax Paving Indus, Inc (After Remand) , 196 Mich App 71, 75; 492 NW2d 463 (1992). “However, a court should not int erpret a contract’s language be yond determining whether arbitration applies and should not allow the parties to divide their disputes between the court and an arbitrator.” Fromm , 264 Mich App at 306. “Whether the moving party is right or w rong is a question of contract interpret ation for the arbitrator.” Kaleva-Norman-Dickson Sch Dist No 6 v Kaleva-Norman-Dickson Sch Teachers’ Assoc , 393 Mich 583, 591; 227 NW2d 500 (1975) (quotation marks and citation omitted).

Paragraph 22, the arbitration pr ovision of the Agreement, prov ides:-4- All claims, disputes and other matters in question arising out of, or relating to, this Subcontract or the breach thereof shall be decided by Arbitration in accordance with the Construction Industry Ar bitration Rules of the America n Arbitration Association then existing unless the parties mutually agree oth erwise. This agreement to arbitrate shall b e specifically enforceable under the prevailing arbitration law. The award rende red by the arbitrators shall b e final, and judgment may be entered upon it in accordance with applicable l aw in any court having jurisdiction there of. [Emphasis added.]

Paragraph 22 unambiguously requi res arbitration of “[a]ll claim s, disputes, and other matters in question arising out of, or relating to, this [Agreement] or th e breach thereof . . . .” This provision is broadly phrased, to i nclude not only claims or dis putes that may be raised in a court of law, but also “other matters;” moreover, these encompassed i ncidents need not even arise out of the Agreement, but may merely be related to it. This broad language clearly reflects the parties’ shared intention to subm it any matters related to the Agreement to arbitration.

Determining whether the present matter is an arbitrable disput e involves, as noted, analysis of three factors: whether an arbitration agreement ex ists; whether the disputed issue is within the contract’s arbitration clause; and whether the dispu te is exempted from arbitration by the terms of the contract. In re Nestorovski Estate , 283 Mich App at 202 (quotation marks and citation omitted). In this case, first, it is undisputed that paragraph 22 constitutes an agreement to arbitrate. Second, and contrary to plaintiff’s position, a breach of contract action, involving a breach of the subject Agreement like this matter, is expressly within the contemplation of the Agreement’s arbitration clause. To conclude that paragraph 22 does not compel arbitration, when plaintiff has alleged that defendant breached the Agreemen t, defies the unequivocal mandate that arbitration is required for “[a]ll claims, dispute s and other matters in question arising out of, or relating to, this [Agreement] or the breach thereof .” Indeed, plaintiff’s and the trial court’s interpretation eviscerates the parties’ intent an d ignores fundamental principles of contract construction that terms are not to be rendered nugator y. And, third, the Agreement contains no exceptions exempting this dispute from arbitration. Therefore, because this breach of contract action is an arbitrable dispute within the meaning of the Agreement, plaintiff’s claims are subject to arbitration. Accordingly, the trial court erred by denying defendant’s motion to dismiss and to compel arbitration.

Plaintiff, however, argues that denial of arbitration was prop er because the parties did not dispute the existence of the insurance coverage obligations (pa ragraph 13) and arbitration as to indemnity would be premature because liability had not been res olved in the underlying negligence action. Plaintiff cites no authority in direct supp ort of its position. It asserts that it would not be proper for an arbiter to render a decision on para graph 13 because “the question whether arbitration exists and its terms are enforceable . . . cannot be decided by an arbitrator.” However, that the question of arb itration is reserved to the ju diciary does not prohibit an arbiter from considering the substantiv e merits of the matter submitted to arbitration.

Plaintiff also urges this Court to consider factors outside, a nd contractual language beyond, that necessary to determine whether the dispute is subj ect to arbitration. The trial court adopted this line of reasoning, referring to the negligence cla im and the then-undetermined question of whether plaintiff had any fault in that matter to o bviate defendant’s duty to-5- indemnify under paragraph 14. 1 However, in considering whether a dispute is arbitrable, “a court should not interpret a c ontract’s language beyond determi ning whether arbitration applies[.]” Fromm , 264 Mich App at 306. By its pl ain language, paragraph 14 doe s not inform the scope of arbitration under th e present Agreement and does n ot otherwise contain an exception to the arbitration provi sion as the trial court appea red to hold. Therefore, the trial court erred by considering para graph 14, and other extrinsic ev idence, when determining whether arbitration applies.

In sum, the arbitration provision of the parties’ Agreement ma ndates that this matter involving the alleged breach of the Agreement be submitted to a rbitration. The trial court erred by determining otherwise. Accordingly, the trial court’s summa ry disposition orders and final order of judgment in favor of pl aintiff and Cincinnati are reve rsed and this matter is remanded to the trial court for entry of an order granting defendant’s moti on to dismiss and ordering this matter to arbitration. In light of our resolution of this disp ositive issue, we need not consider the other issues raise d by defendant on appeal.

Reversed and remanded for proceedings consistent with this opi nion. We do not retain jurisdiction. Defenda nt is entitled to tax costs as the prevai ling party. See MCR 7.219(A).

/s/ Mark J. Cavanagh /s/ David H. Sawyer /s/ Deborah A. Servitto

1 Paragraph 14 contained an excep tion to defendant’s duty of ind emnification in the event plaintiff was found to be solely n egligent for any liability. That provision provided: You shall protect, defend, indemn ify, and save harmless [plaint iff], the Owner, and the Architect, and its employees or agents from and against all losses, claims, demands, payment, damages, suits, actions, attorney’s fees, rec overies and judgments of every nature and de scription brought or recovered against [plaintiff], the Owner, and/or the Architect by you, your employees, agents, or subcontractors caused or arising in any manner whatsoever in th e course of or in connection with work performed or work not performed hereunder and regardless of the person or persons, including [plaintiff], the Owner, and /or Architect, whose act or omission to act, whether negligent or not negligent, cau ses, results in or contributes to such loss, claim, demand, payment, damages, suit , actions, attorney’s fees, recovery or judgment; provided that this i ndemnity shall not apply to any liability arising from the sole ne gligence of [plaintiff ], the Owner, and/or the Architect. [Emphasis added.]