Court Opinion

ID: 4097175
Source: CourtListenerOpinion
Date Created: 2016-11-10 08:08:19.704042+00
Date Added: 2024-06-11T14:08:59.074322
License: Public Domain

STATE OF MICHIGAN

                            COURT OF APPEALS

KAY BEE KAY HOLDING COMPANY, LLC,                                    UNPUBLISHED
and KAY BEE KAY PROPERTIES, LLC,                                     November 8, 2016

               Plaintiffs/Counter-
               Defendants/Third-Party Defendants,

v                                                                    No. 327077
                                                                     Wayne Circuit Court
PNC BANK, NA,                                                        LC No. 12-006105-CZ

               Defendant,

and

SAID TALEB,

               Defendant/Counter-Plaintiff/Third-
               Party Plaintiff-Appellee,

v

KEITH B. KRAMER,

               Third-Party Defendant/Appellant.

Before: WILDER, P.J., and CAVANAGH and SERVITTO, JJ.

PER CURIAM.

       Third-Party defendant, Keith B. Kramer (Kramer), appeals as of right the order
confirming the arbitration award issued in this matter and entering judgment in favor of
defendant/counter-plaintiff/third-party plaintiff, Said Taleb (Taleb). We affirm.

        Kramer asserts that the trial court erred in permitting Taleb to file a countercomplaint and
third-party complaint in response to the amended complaint. Specifically, Kramer contends that
Taleb’s counterclaim for defamation exceeded the applicable one-year statute of limitations
period and should not have been allowed to proceed. He further argues that the defense of
privilege precluded the defamation claim, which was premised on statements made by Kramer to
the police and Attorney Grievance Commission. Finally, Kramer challenges the trial court’s

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granting of Taleb’s motion for relief from judgment pertaining to the dismissal of Taleb’s initial
countercomplaint and third-party complaint for lack of timeliness, having been brought more
than a year after the dismissal of Taleb’s original pleadings.

        In response, Taleb asserts that the claims of error by Kramer are simply an attempt to
sidestep or avoid the parties’ subsequent arbitration agreement and its various provisions. He
contends that Kramer’s arguments are rendered moot because he is attempting to obtain a review
of rulings that were resolved in his favor based on the dismissal of the claims without prejudice
to permit their resolution in arbitration. Finally, Taleb argues that the right to appeal the pre-
arbitration rulings was waived by the agreement to arbitrate, citing to the specific language in the
agreement to give “full legal effect” to the trial court’s “prior rulings and decisions.”

        “Generally, an issue must be raised, addressed, and decided in the trial court to be
preserved for review.” Dell v Citizens Ins Co of America, 312 Mich. App. 734, 751-752 n 40; 880
NW2d 280 (2015). Taleb filed a motion in the trial court seeking relief from the previous
dismissal of his counterclaims. Kramer and KBK opposed this motion and also requested the
trial court to strike Taleb’s newly submitted countercomplaint and third-party complaint.
Because the trial court ruled on this issue it is preserved for appellate review.

       In addition, Kramer and KBK submitted a motion for summary disposition, asserting that
Taleb had not sufficiently pleaded his claims, preclusion by the statute of limitations, the defense
of privilege to the claim of defamation, and the impropriety and dilatory nature of Taleb’s
motion for relief. These issues were not, however, addressed or ruled on by the trial court
because of the parties’ stipulation to refer the matter to binding arbitration and the concurrent
dismissal of the claims asserted in the trial court without prejudice. As such, the issues are not
preserved for appellate review.

        The grant or denial of summary disposition is reviewed de novo. Bill & Dena Brown
Trust v Garcia, 312 Mich. App. 684, 692; 880 NW2d 269 (2015). A trial court’s decision on a
motion for relief from judgment is reviewed for an abuse of discretion. Peterson v Auto-Owners
Ins Co, 274 Mich. App. 407, 412; 733 NW2d 413 (2007) (citation omitted). This Court reviews
de novo whether a claim is barred by the applicable statute of limitations. Stephens v Worden Ins
Agency, LLC, 307 Mich. App. 220, 227; 859 NW2d 723 (2014). Issues pertaining to the proper
interpretation of contracts are also reviewed de novo as questions of law. In re Smith Trust, 480
Mich. 19, 24; 745 NW2d 754 (2008). Unpreserved issues are reviewed for plain error. Kern v
Blethen-Coluni, 240 Mich. App. 333, 336; 612 NW2d 838 (2000). “To avoid forfeiture under the
plain error rule, three requirements must be met: 1) the error must have occurred, 2) the error
was plain, i.e., clear or obvious, 3) and the plain error affected substantial rights.” Id. (citation
omitted).

       The most efficacious manner of dealing with the parties’ arguments on this issue is to
begin from the broad perspective asserted by Taleb regarding the concepts of waiver and
mootness before determining the need to proceed or address Kramer’s claims of error on this
issue.

       Arbitration is a matter of contract and, as such, arbitration agreements “must be enforced
according to their terms to effectuate the intentions of the parties.” Bayati v Bayati, 264 Mich

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App 595, 599; 691 NW2d 812 (2004). For purposes of the examination of the issue, the relevant
provision of the arbitration order states: “Only the claims and defenses asserted as between
Taleb and the Kramer Parties shall be submitted to binding Arbitration in the same legal position
existing at the time this order is entered, with full legal effect given to all prior rulings and
decisions of the Court during the pendency of the action. . . .” At the time the arbitration order
was entered Kramer’s October 22, 2013 amended complaint and Taleb’s November 20, 2013
countercomplaint and third-party complaint were the “claims and defenses” existing, which were
pending before the trial court and were to be given “full legal effect.” The arbitration order
mandated that “all prior rulings and decisions” by the trial court, which would encompass the
February 28, 2014 orders granting Taleb relief from judgment and denying Kramer’s motion to
strike Taleb’s new countercomplaint and third-party complaint, were within the authority of the
arbitrator.

        Importantly, Kramer does not raise any argument seeking to rescind the arbitration order
or suggesting that it was not an enforceable agreement between the parties. See Bank of
America, NA v First American Title Ins Co, 499 Mich. 74, 101; 878 NW2d 816 (2016). As
routinely recognized:

       The United States Supreme Court has listed the right to make and enforce
       contracts among those fundamental rights which are the essence of civil freedom.
       We respect[] the freedom of individuals freely to arrange their affairs via contract
       by upholding the fundamental tenet of our jurisprudence . . . that unambiguous
       contracts are not open to judicial construction and must be enforced as written,
       unless a contractual provision would violate law or public policy. [Bloomfield
       Estates Improvement Ass’n, Inc v City of Birmingham, 479 Mich. 206, 212; 737
       NW2d 670 (2007) (quotation marks, emphasis, and citations omitted).]

Thus, “when parties have freely established their mutual rights and obligations through the
formation of unambiguous contracts, the law requires . . . enforce[ment of] the terms and
conditions contained in such contracts[.]” Id. at 213 (citation and footnote omitted). The
language of the stipulated order clearly demonstrates Kramer’s agreement to submit all of the
claims and defenses that were pending to the arbitrator and should be enforced as written.

       Further, a waiver is routinely defined as “[t]he voluntary relinquishment or
abandonment—express or implied—of a legal right or advantage. . . . The party alleged to have
waived a right must have had both knowledge of the existing right and the intention of forgoing
it.” Reed Estate v Reed, 293 Mich. App. 168, 176; 810 NW2d 284 (2011) (citation omitted). In
turn, “[a]n ‘implied waiver’ is defined as ‘[a] waiver evidenced by a party’s decisive,
unequivocal conduct reasonably inferring the intent to waive.’ ” Id. at 177, quoting Black’s Law
Dictionary (9th ed). “Proof of express words is not necessary, but the waiver may be shown by
circumstances or by a course of acts and conduct which amounts to an estoppel.” Klas v Pearce
Hardware & Furniture Co, 202 Mich. 334, 339; 168 N.W. 425 (1918) (citation omitted).

        In this instance, Kramer stipulated to the removal of this matter and the existing issues
and disputes, including “the claims and defenses asserted,” from the trial court to binding
arbitration. The terms of the arbitration order are clear and unambiguous and Kramer cannot
now contend that earlier procedural errors by the trial court supersede or take precedence over

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the content of the arbitration order. “One who waives his rights under a rule may not then seek
appellate review of a claimed deprivation of those rights, for his waiver has extinguished any
error.” Varran v Granneman (On Remand), 312 Mich. App. 591, 623; 880 NW2d 242 (2015)
(citation omitted).

        It is difficult to ascertain Kramer’s actual contention of error or harm. He asserts the trial
court failed or ignored his statute of limitations and privileges defenses and improperly granted
Taleb’s motion for relief from judgment. Yet, the stipulated order removing the litigation to
arbitration specifically included the “claims and defenses” that existed between the parties. In
other words, with regard to Kramer’s claim of error regarding the defenses raised in response to
Taleb’s counterclaim of defamation, the argument is without merit because any existing defenses
comprised part of the referral of this matter to arbitration. The order concomitantly dismissed
“without prejudice” in the trial court “the claims” asserted between the parties, which would of
necessity include Taleb’s defamation claim. As such, Kramer’s claim of error is rendered moot.
“A moot case is one which seeks to get a judgment on a pretended controversy, when in reality
there is none, or a decision, in advance, about a right before it has been actually asserted and
tested, or judgment upon some matter which, when rendered, for any reason cannot have
practical legal effect upon the then existing controversy.” NL Ventures VI Farmington, LLC v
City of Livonia, 314 Mich. App. 222, ___; ___ NW2d ___ (2016); slip op at 10-11, lv pending
(citation omitted).

        Having found that Kramer’s claims on this issue are waived or moot, we need not address
them.

        Next, Kramer contends the trial court erred in affirming the arbitration award because the
arbitrator exceeded his authority and miscalculated the award of damages. Specifically, Kramer
asserts that the arbitrator: (1) did not abide by the language of the arbitration order requiring him
to make specific findings on each claim and defense asserted; (2) disregarded the applicable
statute of limitations; (3) ignored the law of privilege as a defense to Taleb’s defamation claim;
(4) did not reduce the award of future damages to present value; and (5) improperly awarded
costs and attorney fees to Taleb.

        “This Court reviews 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 arbitrator exceeded his or her authority is also reviewed de novo.” Washington v
Washington, 283 Mich. App. 667, 672; 770 NW2d 908 (2009). Specifically:

        A reviewing court may not review the arbitrator’s findings of fact, and any error
        of law must be discernible on the face of the award itself. By “on its face” we
        mean that only a legal error that is evident without scrutiny of intermediate mental
        indicia, will suffice to overturn an arbitration award. Courts will not engage in a
        review of an arbitrator’s mental path leading to [the] award. Finally, in order to
        vacate an arbitration award, any error of law must be so substantial that, but for
        the error, the award would have been substantially different. [Id. at 672-673
        (internal quotation marks and citations omitted).]

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“Whether this Court has jurisdiction to hear an appeal is an issue reviewed de novo.” Varran,
312 Mich. App. at 598.

       Preliminarily, Taleb asserts that this Court lacks jurisdiction premised on provisions
within the arbitration order indicating the waiver of a right to appeal. The arbitration order
provides, in relevant part:

       (5) The arbitrator need not author a written opinion explaining the reasons for his
       decision, but shall author a decision that clearly identifies whether any party has
       succeeded or failed on each and every claim and/or defense asserted in the matter.
       Such decision will be binding, without right to appeal. The award of the
       arbitrator will represent a full and final resolution between the Taleb and Kramer
       Parties as to any amounts that may be due and owing, including any costs,
       interest, and attorney fees, which will be enumerated separately.

                                               * * *

       (7) The claims asserted only as between the Kramer Parties and Taleb are
       dismissed without prejudice, without costs or attorney fees to any party. The
       Kramer Parties and Taleb waive any right of appeal. [Emphasis added.]

        “ ‘No appeal’ provisions in contracts have long been recognized by this Court as valid
and binding.” Collier v Pruzinsky, 477 Mich. 1121; 730 NW2d 243 (2007). Our Supreme Court
has stated:

       Where an arbitration agreement provides that any controversy between the parties
       thereunder shall be submitted to the circuit court, and that its decision shall be
       final, such agreement is valid and binding on the parties, though it ousts the
       Supreme Court of jurisdiction of an appeal, and precludes a review of the decision
       of the circuit court. [Wyrzykowski v Budds, 325 Mich. 199, 202; 38 NW2d 313
       (1949) (citation omitted).]

There also exists, however, the commensurate recognition that:

               A party who voluntarily agrees to submit a specific grievance to
       arbitration may be precluded from later challenging the “arbitrability” of that
       grievance. It does not follow, however, that by voluntarily submitting to arbitrate
       a specific grievance a party waives his rights completely to later challenge the
       arbitral award on the ground that the arbitrator exceeded his authority. [Port
       Huron Area Sch Dist v Port Huron Ed Ass’n, 426 Mich. 143, 161; 393 NW2d 811
       (1986) (internal citation and footnote omitted).]

        The wording of the arbitration order indicates that the arbitrator’s decision on the claims
and defenses of the parties is “binding, without right to appeal.” While this language indicates
that the arbitrator’s decision on the claims is final and without a right to appeal, it does not serve
to preclude a claim that the decision of the arbitrator was not legally proper. Hence, although
limited, this Court does not lack jurisdiction to address Kramer’s assertions that the arbitrator
exceeded his authority or committed an error of law.

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        Primarily, Kramer contends the arbitration award should have been vacated pursuant to
MCR 3.602(J)(2)(c). Arbitrators “exceed their power whenever they act beyond the material
terms of the contract from which they primarily draw their authority, or in contravention of
controlling principles of law.” Detroit Auto Inter-Ins Exch v Gavin, 416 Mich. 407, 434; 331
NW2d 418 (1982). In turn, errors of law are subject to review only if the arbitrator acted with
“manifest disregard of the law,” defined as an arbitrator having “been presented with controlling
precedent which they refused to apply.” Id. at 441-442. Specifically:

       “[W]here it clearly appears on the face of the award or the reasons for the
       decision as stated, being substantially a part of the award, that the arbitrators
       through an error in law have been led to a wrong conclusion, and that, but for
       such error, a substantially different award must have been made, the award and
       decision will be set aside.” [Id. at 443 (citation omitted).]

        Initially, Kramer asserts the arbitrator exceeded his authority by awarding costs and
attorney fees, by failing to apportion the damages awarded and miscalculating the award by
failing to reduce future damages to present value. Contrary to this position, the arbitration order
specifically permits the arbitrator to determine an award that “will represent a full and final
resolution . . . as to any amounts that may be due and owing, including any costs, interest and
attorney fees. . . .” As this Court has previously recognized,

       Remanding the arbitration award in this case would force the arbitrator to place
       the substance of his deliberations, mental impressions, and factual conclusions on
       the record, thwarting the arbitration’s natural efficiency and improperly
       expanding the court’s review of the case. This result would run contrary to our
       Supreme Court’s statement in Gavin, [416 Mich] at 429, that “[i]t is only the kind
       of legal error that is evident without scrutiny of intermediate mental indicia which
       remains reviewable.” Therefore, a trial court may not hunt for errors in an
       arbitrator’s explanation of how it determined who is liable under the arbitrated
       contract, and who owes what damages to whom. [Saveski v Tiseo Architects, Inc,
       261 Mich. App. 553, 558; 682 NW2d 542 (2004).]

Because the jurisdiction of the arbitrator is defined and established in accordance with the
contract of the parties to engage in arbitration, Beattie v Autostyle Plastics, Inc, 217 Mich. App.
572, 577-578; 552 NW2d 181 (1996), the arbitrator, in this instance, did not exceed the authority
granted to him in the arbitration order in rendering a decision on an award of costs and attorney
fees or by failing to reduce the award to present value or apportion damages.

        Kramer further contends the arbitrator exceeded his authority or committed an error of
law in failing to abide by the directive of the arbitration order requiring that he “clearly identifies
whether any party has succeeded or failed on each and every claim and/or defense asserted in the
matter” and the commensurate failure to address the defenses of the statute of limitations
expiration and privilege in regard to Taleb’s claim of defamation. As discussed by this Court in
City of Ann Arbor v American Federation of State, Co, and Muni Employees (AFSCME) Local
369, 284 Mich. App. 126; 771 NW2d 843 (2009):

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       Judicial review of an arbitrator’s decision is narrowly circumscribed. A court
       may not review an arbitrator’s factual findings or decision on the merits. . . . Nor
       may a court substitute its judgment for that of the arbitrator. [H]ence [courts] are
       reluctant to vacate or modify an award when the arbitration agreement does not
       expressly limit the arbitrators’ power in some way. The inquiry for the reviewing
       court is merely whether the award was beyond the contractual authority of the
       arbitrator. If, in granting the award, the arbitrator did not disregard the terms of
       his or her employment and the scope of his or her authority as expressly
       circumscribed in the contract, judicial review effectively ceases. Thus, as long as
       the arbitrator is even arguably construing or applying the contract and acting
       within the scope of his authority, a court may not overturn the decision even if
       convinced that the arbitrator committed a serious error. [Id. at 144-145 (internal
       quotation marks and citations omitted.)]

        Initially, the arbitrator clearly and unequivocally determined that the evidence and
testimony provided by Kramer “does not support the burdens of proof required to sustain the
allegations of liability . . . against SAID TALEB,” resulting in a “no cause for action” of
Kramer’s various claims. Clearly, the arbitrator’s decision was encompassing and inclusive
despite the failure to specify each individual claim raised by Kramer. While not specifying each
of Taleb’s counterclaims and any defenses raised in response, the arbitrator was explicit in
finding that Kramer exhibited a pattern of behavior regarding the dismissal of employees,
including Taleb that involved suspect criminal accusations. The arbitrator specifically noted the
allegations made by Kramer to the police and Attorney Grievance Commission, but also
indicated false assertions by Kramer to PNC “in its allowance of alleged Taleb check forgery,”
thus indicating communications by Kramer regarding criminal activity by Taleb to PNC.
Further, the arbitrator found, as fact, that “Kramer’s allegations of criminal activity are his
standard operating procedure and are malicious in their nature,” as well as “intentional.” As a
result, the arbitrator found that Taleb was entitled to lost wages, future wages, exemplary
damages “for mental anguish and loss of reputation,” costs, and attorney fees.

         In evaluating whether an arbitration award is subject to review for an alleged error of law,
it is generally acknowledged:

       A reviewing court may not review the arbitrator’s findings of fact, and any error
       of law must be discernible on the face of the award itself. By “on its face” we
       mean that only a legal error “that is evident without scrutiny of intermediate
       mental indicia,” will suffice to overturn an arbitration award. Courts will not
       engage in a review of an “arbitrator’s ‘mental path leading to [the] award.’ ”
       Finally, in order to vacate an arbitration award, any error of law must be “so
       substantial that, but for the error, the award would have been substantially
       different.” [Washington, 283 Mich. App. at 672 (citations omitted).]

There is no basis, discernible on the face of the award, to suggest or find “that the arbitrator’s
award was in contravention of controlling law.” Id. at 673-674. The various claims raised by
Taleb and any of Kramer’s asserted affirmative defenses were matters relegated to the arbitrator
for decision. There exists no indication on the face of the award as authored by the arbitrator to
indicate the manner in which the arbitrator applied the law to the facts of this case in ascertaining

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Taleb’s damages. As such, there is no error that is apparent on the face of the award. In
practice, Kramer seeks to have this Court evaluate the merits of the decision by the arbitrator,
which is not permissible. See Dohanyos v Detrex Corp, 217 Mich. App. 171, 177; 550 NW2d 608
(1996).

         Further, Kramer assumes that the damages awarded to Taleb are for defamation, but
ignores the equal probability that the award is premised on finding Taleb’s claim of abuse of
process, which has as its elements “(1) an ulterior purpose, and (2) an act in the use of process
that is improper in the regular prosecution of the proceeding.” Bonner v Chicago Title Ins Co,
194 Mich. App. 462, 472; 487 NW2d 807 (1992). “A meritorious claim of abuse of process
contemplates a situation where the defendant has availed himself of a proper legal procedure for
a purpose collateral to the intended use of that procedure[.]” Dalley v Dykema Gossett, PLLC,
287 Mich. App. 296, 322; 788 NW2d 679 (2010) (citation omitted). In this instance, the abuse of
process allegations pertain to the filing of a claim of embezzlement against Taleb to impugn his
reputation and improperly recoup monies for which there was no entitlement. Similarly, the
award for “mental anguish” could be attributable to Taleb’s claim of intentional infliction of
emotional distress. As such, it is not apparent from the face of the award that the arbitrator’s
decision regarding the claim of defamation and the defenses asserted in response thereto are
actually dispositive in terms of the award.

       Affirmed. Taleb is entitled to costs as the prevailing party. See MCR 7.219(A).

                                                           /s/ Kurtis T. Wilder
                                                           /s/ Mark J. Cavanagh
                                                           /s/ Deborah A. Servitto

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