Opinion ID: 2682638
Heading Depth: 2
Heading Rank: 2

Heading: Existence of a valid agreement to arbitrate

Text: In the second and third steps of its analysis, the district court determined that Meyers=s “argument against the validity of the 2000 SERP . . . is flawed for other reasons.” The court faulted Meyers for “relying on Metaldyne’s declarationCmade without [TriMas’s] involvementCthat the 2000 SERP was invalid@ and for then making “his own declaration that the 1995 SERP was somehow reinstated after Metaldyne=s purported invalidation of the 2000 SERP.” According to the court, neither Metaldyne’s unilateral declaration, nor Meyers’ reliance upon it, binds this Court or has the operation of law. This is a declaratory action, not a contract case. The 2000 SERP’s validity is an issue . . . for [the] Meyers I court to decideCnot one a non-party (Metaldyne) may adjudicate by fiat. As there is nothing to indicate otherwise, the Court presumes that the 2000 SERP remains effective. R. 18 Page ID 978 (emphasis added). This reasoning is confusing: The court avoids TriMas’s request for a declaratory judgment that the 1995 SERP is unenforceable, yet the court simultaneously presumes the 2000 SERP is valid. Skipping any legal or factual inquiry into the validity or continuing existence of 11 the 1995 and 2000 SERPs, the court ruled that Meyers, by signing the 2000 SERP, expressly waived any claims he had against TriMas so that “TriMas has no obligation to go to arbitration, as the arbitration clause was part of the 1995 SERP, not the 2000 SERP.” The latter part of this statement is perplexing because both the 1995 SERP and the 2000 SERP contain identical arbitration clauses. Finally, the court said, even assuming the 2000 SERP was somehow invalidated, nothing in the record indicated that the 1995 SERP containing the arbitration clause was automatically reinstated. The court ultimately held that no reasonable jury could find TriMas must arbitrate Meyers’s claim for SERP benefits. Because TriMas has no obligation to arbitrate the dispute or pay benefits under the 1995 SERP, the court denied Meyers’s Motion to Compel Arbitration and Dismiss the Complaint and granted summary judgment for TriMas. We disagree with the district court’s analysis. Interpreting the Federal Arbitration Act (FAA), we have previously stated that “[a] written agreement to arbitrate disputes arising out of a transaction in interstate commerce ‘shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.’” Javitch v. First Union Sec., Inc., 315 F.3d 619, 624 (6th Cir. 2003) (quoting 9 U.S.C. ' 2). The FAA allows a stay of proceedings when an issue is referable to arbitration, as well as an order “compelling arbitration when one party has failed or refused to comply with an arbitration agreement.” Id. (citing 9 U.S.C. '' 3 & 4). The FAA manifests a “liberal federal policy favoring arbitration agreements,” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983), and “guarantee[s] the enforcement of private contractual arrangements” by creating federal substantive law to regulate the duty to honor one’s agreement to arbitrate. Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 625 (1985); Prima Paint v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403 (1967). 12 Before compelling a party to arbitrate, the district court must decide whether the dispute is arbitrable; the court must determine that a valid agreement to arbitrate exists between the parties and that the specific dispute at hand falls within the substantive scope of the arbitration agreement. See Oxford Health Plans LLC v. Sutter, 133 S. Ct. 2064, 2068 n.2 (2013) (observing that “gateway matters,” such as whether a valid arbitration agreement exists and whether an arbitration clause applies to the controversy, are for the courts to decide); Hergenreder, 656 F.3d at 415. Because arbitration agreements are contracts, courts evaluate the enforceability of an arbitration agreement in accordance with applicable state contract law. Hergenreder, 656 F.3d at 416. TriMas does not dispute the making of the 1995 SERP or that Meyers’s benefits were initially paid under that agreement. Rather, TriMas contends that the 1995 SERP was extinguished when Meyers and Metaldyne executed the 2000 SERP. Under that agreement, Metaldyne assumed “all of TriMas= obligations” to Meyers under the 1995 SERP, and the 2000 SERP “amend[ed] and replace[d] in its entirety” the 1995 SERP. Furthermore, in the 2000 SERP, Meyers expressly waived all claims against TriMas. For his part, Meyers also does not dispute the formation of the 1995 SERP or the 2000 SERP. But he argues that Metaldyne unilaterally invalidated the 2000 SERP in December 2006, and because that contract was invalided as void or voidable, the 1995 SERP was restored as a matter of contract law. Thus, TriMas is required to arbitrate and pay benefits under the restored 1995 SERP or as a result of TriMas=s obligations under the 2002 Stock Purchase Agreement. The district court completely bypassed these issues, but they must be tackled before the declaratory judgment suit finally can be resolved. The court correctly noted that the validity of the 2000 SERP is at issue in Meyers I, but that case has been stayed several years due to Metaldyne’s bankruptcy and we can only speculate when that case might reopen. The existence 13 of the Meyers I lawsuitCbetween Meyers and MetaldyneCdoes not relieve the district court of the obligation to decide in this caseCbetween TriMas and MeyersCwhether the 1995 SERP was revived when Metaldyne invalidated the 2000 SERP. The Meyers I court may decide eventually whether Metaldyne owes benefits to Meyers under the 2000 SERP, but the question awaiting resolution here is whether TriMas owes benefits to Meyers under the 1995 SERP. In Meyers II, Meyers seeks damages from Heartland and its founders for their alleged tortious interference with the 2000 SERP, but that case will not necessarily put to rest whether TriMas is obligated for benefits under the 1995 SERP or the 2002 stock purchase agreement. Considering the whole of the litigation that has been pending for five years, we think it unlikely that Meyers will ever obtain a double recovery. If that should come to pass, however, the courts are well-equipped to ensure that Meyers does not receive a windfall but only what is rightfully due to him. Returning to this case, the parties have identified questions of law and fact that must be explored before the district court can decide whether a valid agreement to arbitrate between these parties exists. See Hergenreder, 656 F.3d at 415. In Michigan “[i]t is undoubtedly the law that, if a void or voidable contract is substituted for a valid pre-existing obligation, and the substituted contract is later rescinded, because void or voidable, the pre-existing valid contract is restored, as if nothing had happened.” Travelers Ins. Co. v. Carey, 180 N.W.2d 68, 72 (Mich. Ct. App. 1970) (quoting Indiana Flooring Co. v. Grand Rapids Trust Co., 20 F.2d 63, 65 (6th Cir. 1927)); Simmons v. United Presidential Life Ins. Co., 911 F.2d 733 (6th Cir. 1990) (unpublished table opinion); Restatement (Second) of Contracts ' 279; 13-71 Corbin on Contracts, ' 71.1 (“If the power of avoidance is exercised, the avoided [substitute] contract is nullified both as an executory contract and as a discharge of the original claim. The prior claim is reinstated and again enforceable.”). This law may support Meyers’s argument that the 1995 SERP was restored upon 14 the invalidation of the 2000 SERP. Additionally the question arises whether the arbitration clause in the 1995 SERP persists after termination of the agreement by operation of the survival clause in the agreement. Further, a separate question remains as to whether TriMas reassumed liability for Meyers’s benefits in the 2002 Stock Purchase Agreement and if so, whether that dispute is arbitrable. The only indication about these matters in the record before us is Metaldyne’s 2007 letter to Meyers. That letter suggests that Metaldyne viewed the 1995 SERP as restored by its invalidation of the 2000 SERP because it did not dispute Meyers’s continued right to receive his benefits under that agreement, and in fact, Metaldyne continued to pay Meyers benefits until May 2009. On the present factual record, the most reasonable inference to be drawn is that Metaldyne continued to make the payments to Meyers under the 1995 SERP with indemnification by TriMas pursuant to the 2002 Stock Purchase Agreement. But that inference may be disproved by further discovery. We return these legal and factual issues to the district court for disposition. The present record is sufficient for us to decide that TriMas has not established its entitlement to summary judgment as a matter of law. Remand is necessary so the parties can conduct any necessary discovery and further brief the legal issues. Only then will the district court be in a position to undertake the necessary job of determining whether a valid contract to arbitrate exists and whether the parties’ dispute falls within the scope of that arbitration agreement. See Hergenreder, 656 F.3d at 415.