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### STATE OF MICHIGAN

COURT OF APPEALS

CNJ FINANCIAL GROUP, LLC,

Plaintiff,

and

MARTIN’S CONSTRUCTION & MANAGEMENT LLC,

Plaintiff-Appellee, UNPUBLISHED October 18, 2016

v No. 327547 Wayne Circuit Court BETTY MCKENNEY, LC No. 12-003522-NZ

Defendant-Appellant,

and

R & F FLOORING & MORE,

Defendant,

and

TODD E. BRIGGS, receiver,

Appellee.

Before: M URRAY , P.J., and C AVANAGH and W ILDER , JJ.

P ER C URIAM

. Defendant, Betty McKenney, appeals as of right an order confir ming an arbitration award. For the reasons stated he rein, we affirm in part, rever se in part, and remand for modification of the judgment.

I. FACTS AND PROCEDURAL HISTORY-2- This appeal arises out of a real estate transaction between pl aintiffs, McKenney and CNJ, Financial Group, LLC (“CNJ”) and M artin’s Construction & Manage ment, LLC (“Martin’s Construction”). On June 3, 2010, McKenney entered into a writt en real estate transaction agreement to sell her propert y located at 16716 Shaftbury, Detr oit, Michigan (“the property”) to CNJ and Martin’s Construction for $25,000 upon completion of re novations performed by Martin’s Construction, with c losing to occur on June 22, 2011. After entering into the agreement, Martin’s Construction contracted with R & F Flooring to complete the renovations. Prior to the closing date, and after Martin’s Construction had expended time and money making the renovations, McKenney called Martin’s Construction and info rmed it that she was no longer willing to sell the property.

As a result, CNJ and Martin’s C onstruction filed a complaint a lleging breach of contract, which was subsequently amended to include counts of fraud and u njust enrichment. In response, McKenney filed a countercomplaint and third-party complaint all eging (1) breach of contract against CNJ and Martin’s Constr uction, (2) negligence against R & F Flooring for the repairs it performed, and (3) civil conspirac y against CNJ, Martin’s Const ruction, and R & F Flooring.

The day before trial, the parties agreed to submit the case to binding arbitration. The parties appeared before the arbitrator and the arbitrator subse quently determined that McKenney breached the real estate transaction agreement when she refused to sell the property to Martin’s Construction. As a result, the arbitrator ordered McKenney to either (1) sell the property to Martin’s Construction for $25,000 within 30 days of the date of the arbitration award (by May 13, 2015) or, alternatively, (2) rei mburse Martin’s Constructio n $65,000.

After receiving the favorable arbitration award, Martin’s Cons truction filed a motion to enter judgment on the arbitration award. McKenney opposed and filed a motion to vacate the arbitration award, asserting th at the arbitrator exceeded her a uthority and that the award was against controlling principles of law. McKenney primarily argu ed that the arbitrator erred when she relied on various text messages in the opinion when those s ame text messages were not properly admitted at the arbitration hearing. In addition, McK enney argued that the arbitrator failed to properly apply the substantive law because, with rega rd to plaintiffs’ breach of contract claim, the arbitrator found that McKenney did not have a contra ct with Martin’s Construction. In addition, McKenney argued that Martin’s Construction was pre cluded from recovery under the Residential Builder’s Act, because it was not a licensed co ntractor. McKenney also argued that Marc Martin, the owner of Martin’s Construction lied at th e arbitration proceeding, making the award a result of fraud or corruption.

The trial court rejected McKenney’s arguments and entered an o rder granting plaintiff’s motion to confirm the arbitrati on award. In addition, the tria l court ordered McKenney to transfer title to the property t o Marc Martin’s in exchange for $25,000, and the trial court appointed a receiver to facilitate the transfer of the property

.

II. ANALYSIS

A. VACATE ARBITRATION AWARD-3- McKenney first argues that the trial court erred in failing to vacate the arbitration award. We review de novo a circuit court’s decision to enforce, vacate , or modify an arbitration award. Cipriano v Cipriano , 289 Mich App 361, 368; 808 NW2d 230 (2010). “Whether an arbi trator exceeded his authority is also reviewed de novo.” Washington v Washington , 283 Mich App 667, 672; 770 NW2d 908 (2009).

The circuit court’s power to vaca te an arbitration award is li mited. Gordon Sel-Way, Inc v Spence Bros, Inc , 438 Mich 488, 495; 475 NW2d 704 (1991).

A court may not review an arbit rator’s factual findings or deci sion on the merits. Rather, a court may only decide w hether the arbitrator’s award ‘draws its essence’ from the contract. If the arbitrator in granting the award did not disregard the terms of his employment and the scope of his authority as expre ssly circumscribed in the contract, judicial review effectively ceas es. [ Fette v Peters Const Co , 310 Mich App 535, 541; 871 NW2d 877 (2015), quoting Police Officers Ass’n of Mich v Manistee Co , 250 Mich App 339, 343; 645 NW2d 713 (2002).]

Stated differently, judicial review exists over whether the arb itrator acted within the scope of his contractual authority or for an e rror of law that clearly appea rs on the face of the award or in the reasons stated for the decision. 36th Dist Court v Mich AFSCME Council 25, Local 917 , 295 Mich App 502, 508-509; 815 NW2d 494, rev ’d in part on other gro unds, 493 Mich 879 (2012).

McKenney argues that the award was procured by corruption and fraud because Martin’s testified at the arbitration proceedings that he paid $74,000 t o R & F Flooring for renovation work, but an employee at R & F Flooring testified that it only received $41,000. However, even assuming this occurred at the arbitration proceeding, 1 this merely amounts to conflicting testimony, not fraud or corruption. When there is conflicting testimony—as there is in the majority of cases—it is the responsibility of the arbitrator to assess the credibility of the witnesses. See Belen v Allstate Ins Co , 173 Mich App 641, 645; 434 NW2d 203 (1988) (the arbitrators “must remain free to reject any testimony . . . tha t they find unpersuasive.”). Absent certain and direct proof of corruption or fraud, we cannot conc lude that the trial court erred in confirming the arbitration award.

McKenney next argues that the trial court relied on two pieces of evidence 2 that were not admitted at the arbitration hear ing. However, we are unable to determine whether these pieces of

1 The arbitration proceeding was not recorded, thus, we are unab le to determine what occurred at the proceeding. While McKenney’s attorney has submitted an aff idavit of what occurred at the arbitration proceeding, that is not a record of the arbitration proceeding nor have the parties agreed that the documentation is part of the record. See Hope-Jackson v Washington , 311 Mich App 602, 613-614; 877 NW2d 736 (2015).

2 The two pieces of evidence are a letter from Marsha Bruhn and various text messages from McKenney.-4- evidence were admitted at the arbitration hearing as there is n o written record of the arbitration proceedings.

Reviewing courts can only act upon a written record. . . . Thu s, . . . a reviewing court’s ability to review an award is restricted to cases in wh ich an error of law appears from the face of the award, or the terms of the contrac t of submission, or such documentation as the parties agree will constitute the rec ord. [ Hope-Jackson v Washington , 311 Mich App 602, 613-614; 877 NW2d 736 (2015), citing DAIIE v Gavin , 416 Mich 407, 428-429; 331 NW2d 418 (1982).]

Here, there is no written record of the arbitration proceedings and the parties have not agreed as to what is considered the record. Because our review is restri cted to errors of law that appear from the face of the award, Hope-Jackson , 311 Mich App at 613-614, we are unable to provide relief to McKenney on this basis.

We reject McKenney’s assertion that an error of law appears on the face of the arbitration award because the arbitrator determined McKenney was in breach of contract a lthough it found that McKenney did not have a c ontract with Martin’s Constructio n. Contrary to McKenney’s argument, the arbitration award states: “While [McKenney] wants to claim she only had an agreement with CNJ, her actions belie her testimony. . . . Acco rdingly, this Arbi trator finds that [McKenney], breach[ed] the Real Estate Transaction Agreement wi th the Plaintiff, Martin’s Construction . . . .” Thus, the arbitrator found that McKenney entered into an agreement with CNJ and Martin’s Construction and that she breached that contra ct. Thus, no error of law appears from the face of the award and the trial court did not err in refusing to vacate the award on this basis.

McKenney next asserts that the arbitrator misapplied the law a s Martin’s Construction is not entitled to damages under the Residential Builder’s Act, MC L 339.2412, because Martin’s Construction was an unlicensed c ontractor and had unclean hands . McKenney is essentially requesting that we review the arbitrator’s decision on the meri ts, a task this Court is not permitted to do as we will not substitute our judgment for that of the arbitrator’s. Dohanyos v Detrex Corp (After Remand) , 217 Mich App 171, 177; 550 NW2d 608 (1996); Fette , 310 Mich App at 535. As such, McKenney’s argument to vacate the award i n this regard is without merit.

We likewise reject McKenney’s argument that the equitable natu re of the arbitrator’s award was improper, particularly because Martin’s Construction did not request specific performance in its initial compl aint. However, “[t]he fact tha t the relief could not or would not be granted by a court of law or equity is not ground for vacati ng or refusing to confirm the award.” MCR 3.602(J)(2). Accordingly, the trial court did not err when it refused to vacate the arbitration award.

B. MODIFICATION OF ARBITRATION AWARD

McKenney’s final argument is that the trial court erred when i t modified the arbitration award. As stated previously, th e arbitration award provided th at McKenney was required to either (1) sell the property to Martin’s Construction for $25,0 00 by May 13, 2015, or (2) reimburse Martin’s Constructi on $65,000. At the hearing to con firm the arbitration award,-5- Martin’s Construction informed the trial court that it was “rea dy, willing, and able” to pay $25,000 to McKenney for title to the property, but that McKenne y refused to sell the property. As such, Martin’s Construction re quested that the court enter a n order quieting title to the property to it. In response to Martin’s Constr uction’s argumen t, McKenney argued that the relief in the arbitration award was an e lection and that she had the o ption of selling the property to Martin’s Construction for $25,000 or reimbursing Martin’s Const ruction $65,000. McKenney wanted a judgment rendered against her in the amount of $65,000 because she did not want to sell the property.

After hearing arguments, t he trial court stated:

Well, in looking at the contract language here, the orders I s hould see, and I’ll just read it for the Record, as such defendant, Betty McKe nney, must sell the property to the plaintiff for the agreed upon amount of $25,000 within 30 days of today’s date, or in the alterna tive, reimburse Mark Martin’s th e sum of $65,000 in cashiers’ check or money order.

The construction company, [Martin’s Construction], has indicat ed that she failed to do that, and well , either of them.

* * *

Well, I’m not so sure of that, but in looking at this, so, the re’s a couple of things I can do.

One, I can appoint a receiver if the defendant, McKinney [sic] , does not comply with this arbitration aw ard. I can appoint a receiver o ver the property. That receiver, then, will comply with the arbitration award. T hat is, the receiver would have the authority, t hen, to do what, let’s see.

Well, the receiver, obviously, wouldn’t pay the construction c ompany $25,000. But, she has failed to pay the amount for the constru ction costs. Let me read this again.

Let’s go back, the order says as such defendant McKenney must sell the property to the plaintiff for the agreed upon amount of $25,000 . So, if I appoint a receiver, the receiver, then, takes, uhm, ownership of the prop erty for purposes of confirming this transaction. Your client transferred the [$]25 ,000 to the receiver. And then the receiver, then, would have the authority, then, to transfer the right to the property to the construction company. And that’s the end o f the case assuming that we accept the findings of the arbitrator. Becaus e she’s not cooperating.

While it is undisputed that McKenney was not “cooperating” wit h regard to the sale of the property, the arbitration aw ard gave her the option to sell the house or pay Martin’s Construction $65,000. By ordering McKenney to sell the house t o Martin’s Construction, the trial court effectively eliminated McKenney’s option to pay Mar tin’s Construction $65,000, thus modifying the arbitrator’ s award. This it could not do.-6- Pursuant to MCR 3.602(K)(1), a tri al court shall modify an arbi tration award if:

(a) there is an evident miscalculation of figures or an evident mistake in the description of a person, a thing, o r property referred to in th e award;

(b) the arbitrator has awarded on a matter not submitted to the arbitrator, and the award may be corrected without affecting the merits of the deci sion on the issues submitted; or

(c) the award is imperfect in a matter of form, not affecting t he merits of the controversy. [MCR 3.602(K)(1).]

Here, there is no evidence of an evident miscalculation of fig ures or mistake in the description of a person, thing, or property, nor did the arbitr ator make an award on a matter not submitted. Instead, the trial court’s rationale for ordering t he sale of the property was that McKenney had not already transferred the property to Martin’s C onstruction. In ordering the sale of the property, the trial court failed to recognize that, pursuant to the arbitration award, McKenney had the option to retain the property and pay Martin’s Construction $65,000. Because the trial court modified the arbitration award by elimi nating McKenney’s option of paying $65,000 to Martin’s Construction and retaining the house without adequate grounds for modification under MCR MCR 3.602(K )(1), the trial court erred i n modifying the arbitration award.

Affirmed in part, reversed in part, and remanded for modificat ion of the judgment. No costs, neither party having pr evailed in full. MCR 7.219(A). We do not retain jurisdiction.

/s/ Christopher M. Murray /s/ Mark J. Cavanagh /s/ Kurtis T. Wilder