UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

STONEBRIDGE EQUITY LLC,

Plaintiff,

Case No. 09-11541 

v.

HONORABLE DENISE PAGE HOOD

CHINA AUTOMOTIVE SYSTEMS, INC.,

Defendant.

________________________________________/

ORDER GRANTING MOTION FOR JUDGMENT

CONFIRMING ARBITRATION AWARD

AND

DENYING MOTION TO VACATE OR APPEAL ARBITRATOR’S AWARD

I. BACKGROUND/FACTS

This matter is before the Court on Plaintiff Stonebridge Equity L.L.C.’s (“Stonebridge”)

Motion for Judgment Confirming Arbitration Award and Defendant China Automotive Systems,

Inc.’s (“China Automotive”) Motion to Partially Vacate Appeal Arbitrator’s Award and/or Vacate

Hearing Arbitrator’s Awards. Response and reply briefs have been filed.

On April 24, 2009, Stonebridge filed a Complaint against China Automotive before this

Court for Breach of Contract and Violation of the Michigan Sales Representatives Commission Act.

The Complaint was based on an Engagement Agreement entered in May 2008 between the parties.

The parties agreed to dismiss the case and to submit their claims to binding arbitration. The Court

retained jurisdiction to enforce the parties’ arbitration agreement, and to confirm, vacate, or correct

any arbitration award in accordance with the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-16.

(9/28/2009 Order, Doc. No. 16)

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The parties selected Gene Esshaki (“Arbitrator”) as their arbitrator who issued his Final

Award on February 4, 2011 who issued an award in favor of Stonebridge. (Stonebridge’s Br., Ex.

D) China Automotive appealed the award to the appeal arbitrator selected by the parties, retired

Wayne County Circuit Court Judge Pamela R. Harwood (“Appeal Arbitrator”). On June 23, 2011,

the Appeal Arbitrator issued an Opinion on Appeal. (Stonebridge’s Br., Ex. E) The Appeal

Arbitrator upheld the Arbitrator’s findings except for his finding that the commissions due to

Stonebridge would not change in the event of price fluctuations from the end customer.

On July 27, 2011, Stonebridge filed a Motion for Judgment Confirming Arbitration Award.

On August 18, 2011, China Automotive filed a Motion to Partially Vacate Appeal Arbitrator’s

Award and/or Vacate Hearing Arbitrator’s Awards.

II. ANALYSIS

A. Standard of Review under the FAA

The FAA presumes that arbitration awards will be confirmed. Dawahare v. Spencer, 210

F.2d 666, 669 (6th Cir. 2000). “It is well established that courts should play only a limited role in

reviewing the decisions of arbitrators.” Id. The power of the court to review an arbitration award

is “one of the narrowest standards of judicial review in all of American jurisprudence.” Way Bakery

v. Truck Drivers Local No. 164, 363 F.3d 590, 593 (6th Cir. 2004)(citing Tennessee Valley Authority

v. Tennessee Valley Trades and Labor Council, 184 F.3d 510, 515 (6th Cir. 199)). In deciding

whether to confirm or vacate an arbitration award, a federal court must ask:

Did the arbitration act “outside his authority” by resolving a dispute

not committed to arbitration? Did the arbitrator commit fraud, have

a conflict of interest or otherwise act dishonestly in issuing the

award? And in resolving any legal or factual disputes in the case,

was the arbitrator, “arguably construing or applying the contract”?

So long as the arbitrator does not offend any of these requirements,

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the request for judicial intervention should be resisted even through

the arbitrator made “serious,” “improvident” or “silly” errors in

resolving the merits of the dispute.

Michigan Family Resources, Inc. v. SEIU Local 517M, 475 F.3d 746, 753 (6th Cir. 2007)(en banc).

If a party has defenses to an arbitration award, that party should raise those defenses within the

period prescribed for actions to vacate an award rather than wait to raise them as defenses in a

confirmation hearing. Professional Administrators Limited v. Kopper-Glo Fuel, Inc., 819 F.2d 639,

642 (6th Cir. 1987). “Arbitration is meant to be a quick and final resolution by which parties are

bound.” Id. “[A]n action to confirm the award should be a summary proceeding, not a proceeding

in which the defendant seeks affirmative relief.” Id. The FAA provides that notice of a motion to

vacate, modify, or correct an award must be served upon the adverse party or his attorney within

three months after the award is filed or delivered. 9 U.S.C. § 12m. Failure to comply with this

requirement “forfeits the right to judicial review of the award.” Corey v. New York Stock Exchange,

692 F 2d 1205, 1212 (6th Cir. 1982).

Section 10(a)(4) of the FAA provides that a district court may vacate an order “where the

arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite

award upon the subject matter submitted was not made.” 9 U.S.C. § 10(a)(4). The burden of

proving that the arbitrators exceeded their authority is very great and courts must accord an

arbitrator’s decision substantial deference because it is the arbitrator’s construction of the agreement,

not the court’s construction, to which the parties have agreed. Solvay Pharmaceuticals, Inc. v.

Duramed Pharmaceuticals, Inc., 442 F.3d 471, 476 (6th Cir. 2006). Courts must refrain from

reversing an arbitrator simply because the court disagrees with the result or believes the arbitrator

made a serious legal or factual error. Id. If the arbitrator’s award draws its essence from the

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agreement, and is not merely the arbitrator’s own brand of industrial justice, the award is legitimate.

Id.; Michigan Family Resources, 475 F.3d at 752. Once it is established that the arbitrator was

construing or applying the contract and acting within the scope of his authority, it makes no

difference whether the arbitrator committed “serious,” improvident” or even “silly” errors in

resolving the merits of the dispute. Id. In order to determine whether the arbitrator was engaging

in interpretation of the contract, the question is whether the arbitrator was “arguably construing” the

agreement and if the decision on the merits was so “untethered” from the agreement that it raises

doubt as to whether the arbitrator was engaged in an interpretation of the agreement. Id. at 754.

B. Arbitrators’ Interpretation

Although filed second, the Court addresses China Automotive’s Motion to Partially Vacate

the Arbitration Award first since such a ruling is dispositive of Stonebridge’s Motion to Confirm

the Arbitration Award.

China Automotive argues that the arbitrators exceeded their powers and their decisions as

to their findings that Stonebridge is allowed to recover success fees for a pre-existing CAS

Customer. China Automotive submits two basis for its argument: 1) the arbitrators improperly

considered extrinsic evidence in determining whether the agreement between the parties was

ambiguous; and 2) they disregarded the plain language of the agreement which limited success fees

to “new” customers.

In response, Stonebridge claims that the arbitrators properly applied Michigan law once they

found that the agreement between the parties was ambiguous and in considering extrinsic evidence.

Stonebridge asserts that once the arbitrators construed the agreement as ambiguous, they properly

reviewed prior drafts of the agreement in their findings that the agreement did not limit fees to sales

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involving new customers only.

After review of both Arbitrators’ opinions and awards, it is clear that they engaged in an

interpretation of the agreement, as opposed to the implementation of their own brand of industrial

justice. Michigan Family Resources, 475 F.3d at 754. The Arbitrator’s Initial Award finds “as a

matter of law, that the contract is ambiguous.” (12/28/2010 Initial Award, p. 9) He sets forth several

reasons why the contract is ambiguous. The Arbitrator then states that based on his findings, “any

reference to new customer sales has been removed from the success fee section of the contract” and

that the other subsections do not have any relationship to subsection A. (12/28/2010 Initial Award,

p. 10)

The Appeal Arbitrator also engaged in interpretation of the contract, noting that the contract

was ambiguous and allowing extrinsic evidence to be offered. (6/23/2011 Appeal Arbitrator

Opinion, pp. 7-11) The Appeal Arbitrator found that the Arbitrator did not err in his findings. (Id.)

Applying the very narrow review of the Arbitrators’ interpretations of the contract at issue,

this Court finds that the Arbitrators’ interpretations construed the agreement between the parties.

There is no doubt that the Arbitrators engaged in the interpretation of the agreement. China

Automotive’s Motion to Vacate the Arbitration Awards must be denied since it has not shown that

the Arbitrators exceeded their authority.

C. Confirmation of the Award

Stonebridge moves to confirm the Arbitration Awards under 9 U.S.C. § 9, which provides

that upon agreement by the parties, any party may apply to the court to confirm the award. China

Automotive cites no other sections in its opposition to the Motion for Judgment Confirming the

Award to prevent entry of the Judgment confirming the award. China Automotive essentially argues

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that the proposed Judgment submitted by Stonebridge is inconsistent with the Initial Award, Final

Award and Appellate Opinion. China Automotive argues that the Judgment need only state that the

Awards are confirmed and that any additional terms are surplusage. Stonebridge replies that its

Judgment follows the Arbitration Awards and that it is entitled to entry of the Judgment.

A review of the proposed Judgment shows that it is based on the Awards issued by the

Arbitrators, other than the last paragraph providing documentation to parts which China Automotive

claims have been decreased by Chrysler. Stonebridge argues that if China Automotive did not

produce such documentation to support the amount or price decrease by Chrysler, no such

documentation is in evidence to support China Automotive’s allegation that the price has decreased.

Stonebridge claims that if China Automotive does not provide such documentation, they will be

back in Court litigating the issue, each time China Automotive claims the price has decreased.

The Court finds that Stonebridge has properly submitted the request to enter a Judgment

based on the Arbitration Awards. The Revised Proposed Judgment submitted by Stonebridge is

sufficient. The language regarding documentation to support China Automotive’s claim that the

price has decreased is necessary so that the parties are able to determine a more accurate amount.

III. CONCLUSION

For the reasons set forth above, 

IT IS ORDERED that Plaintiff’s Motion for Judgment Confirming Arbitration Award (Doc.

No. 17) is GRANTED. Plaintiff may submit the Proposed Judgment, including all the exhibits

incorporated in the Judgment, through the Court’s electronic filing system (CM/ECF), under the

proposed order procedure.

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IT IS FURTHER ORDERED that Defendant’s Motion to Vacate Appeal Arbitrator’s Award

(Doc. No. 22) is DENIED.

s/Denise Page Hood 

Denise Page Hood

United States District Judge

Dated: March 16, 2012

I hereby certify that a copy of the foregoing document was served upon counsel of record on March

16, 2012, by electronic and/or ordinary mail.

s/LaShawn R. Saulsberry 

Case Manager

 

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