Court Opinion

ID: 9840067
Source: CourtListenerOpinion
Date Created: 2023-09-15 05:07:44.436979+00
Date Added: 2024-06-11T10:06:30.118488
License: Public Domain

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
                 revision until final publication in the Michigan Appeals Reports.

                           STATE OF MICHIGAN

                            COURT OF APPEALS

ORTMAN COMMERCIAL REAL ESTATE, LLC,                                  UNPUBLISHED
and ROBERT ORTMAN,                                                   September 14, 2023

               Plaintiffs-Appellees,

v                                                                    No. 362566
                                                                     Oceana Circuit Court
JC CONSTRUCTION COMPANY, INC, and                                    LC No. 21-14892-CK
JASON R. COFFELL,

               Defendants-Appellants.

Before: SWARTZLE, P.J., and O’BRIEN and FEENEY, JJ.

PER CURIAM.

        Plaintiffs contracted with defendants to rebuild their cottage. Dissatisfied with the work
done, plaintiffs filed suit alleging various claims based upon breach of contract. The parties
stipulated that “this matter” would be submitted to arbitration and that the “Arbitrator’s
ruling/awards shall be final and finding upon the parties.” (12/13/2021 Stipulation and Order.)
The arbitration was conducted, resulting in an award in favor plaintiffs. The trial court entered its
order enforcing the arbitration award in the amount of $38,888.44.1 Defendants now appeal and
we affirm.

       Defendants first argue that the trial court erred by failing to vacate the arbitration award
because the arbitrator awarded damages on a matter not submitted for arbitration. We disagree.
Defendants argue that the only matter submitted to arbitration was “this matter,” meaning the
lawsuit filed in circuit court. They further argue that, because the original complaint did not seek

1
 The arbitrator also ruled that defendants could keep the $63,885 that plaintiffs had already paid
defendants. (Arbitration Award, p3.)

                                                -1-
consequential damages, the arbitrator did not have the authority to award consequential damages
for lost rent, which makes up part of the arbitration award.2

      As explained in TSP Services, Inc v National-Standard, LLC, 329 Mich App 615, 619-620;
944 NW2d 148 (2019), there is limited judicial review of arbitration awards:

               In general, courts have a limited role in reviewing arbitration awards. This
       Court reviews de novo a circuit court's decision whether to vacate an arbitration
       award. Hope-Jackson v Washington, 311 Mich App 602, 613; 877 NW2d 736
       (2015). “A court may not review an arbitrator's factual findings or decision on the
       merits.” Ann Arbor v American Federation of State, Co, & Muni Employees
       (AFSCME) Local 369, 284 Mich App 126, 144; 771 NW2d 843 (2009). Instead, a
       court may only review an arbitrator's decision for errors of law. Detroit Auto Inter-
       Ins Exch v Gavin, 416 Mich 407, 443; 331 NW2d 418 (1982) (DAIIE); Saveski v
       Tiseo Architects, Inc, 261 Mich App 553, 554-555; 682 NW2d 542 (2004).

              Not every error of law by an arbitrator, however, merits subsequent court
       intervention.

                       “[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.” [DAIIE, 416 Mich at 443, quoting Howe v Patrons’
               Mut Fire Ins Co of Mich Ltd, 216 Mich 560, 570; 185 NW 864
               (1921).]

       Moreover, in determining whether there is legal error, the court cannot engage in a
       review of an arbitrator's mental process, Hope-Jackson, 311 Mich App at 614, but
       instead must review “the face of the award itself,” Washington v Washington, 283
       Mich App. 667, 672, 770 NW2d 908 (2009).

      TSP Services is particularly relevant to this case as it too involved an issue of the award of
consequential damages:

               National-Standard challenges both the arbitrator's award of consequential
       damages and the construction lien securing those damages. Considering the first
       challenge, there is no basis to disturb the award of consequential damages.
       Generally speaking, a party asserting a breach of contract may recover damages
       that are “the direct, natural, and proximate result of the breach.” Alan Custom
       Homes, Inc v Krol, 256 Mich App. 505, 512; 667 NW2d 379 (2003). The arbitrator

2
 The arbitrator awarded two-thirds of the ten-week total of full rentals for the summer 2021season,
representing $21,312 of the total award. The remainder of the award was attributed to plaintiffs’
claim for defective workmanship. (Arbitration Award, p3.)

                                                -2-
       here recognized that both parties were aware that TSP intended to recover the steel
       from the demolition site and sell that steel for a profit. The arbitrator concluded
       that National-Standard had breached the contract, causing TSP to be unable to
       recover and sell the steel. The arbitrator further concluded that TSP potentially lost
       profits from the sale of the steel, and the lost profits could reasonably be considered
       a result of National-Standard's breach. [TSP Services, 329 Mich App at 620-621.]

Accordingly, regardless of whether the original complaint explicitly requested an award for
consequential damages, because consequential damages are an element of damages in a claim for
breach of contract, that issue was before the arbitrator. In short, a breach of contract claim was
submitted to the arbitrator and the arbitrator awarded damages for a breach of contract.

        Defendants also argue that the trial court should have vacated the arbitration award because
the award shows evidence of partiality by the arbitrator, corruption by the arbitrator, or misconduct
prejudicing defendants’ rights. Defendants’ support for this argument generally falls into these
categories: ignoring evidence (such as plaintiffs’ admitted breach of contract),3 the arbitrator
stating that it was not considering credibility,4 and a variation on the argument regarding
consequential damages. Defendants present no actual evidence of partiality, bias or other
misconduct. Rather, they base their claims on a differing interpretation of the evidence presented
to the arbitrator.5 In sum, defendants wish to relitigate this case in order to have the arbitration
award vacated because they do not agree with it.6

        But, as pointed out in TSP Services, a court does not review an arbitrator’s factual findings
or the decision on the merits. Id. 329 Mich App at 620. Nor does a court review the arbitrator’s
mental process. Id. Defendants rely only on their disagreement with the arbitrator’s factual
findings, the evidence the arbitrator found relevant to his decision, and the arbitrator’s ultimate
decision. None of these points are relevant to a court’s determination whether to enforce or vacate

3
 Defendants assert that plaintiffs breached the contract by failing to make the required progress
payments under the contract in a timely manner. But defendants did not sue plaintiffs for a breach
of contract; accordingly, any such issue was not before the arbitrator.
4
  In his decision, the arbitrator stated that none of the parties “were particularly forthcoming in a
number of aspects of their testimony” and that the arbitrator was “left with significant
contradictions in testimony.” But the arbitrator concluded that “because this is a Breach of
Contract case based on the Four Corners of the Contractor Agreement, I don’t reach having [sic]
to decide on which version of the sworn testimony is accurate.” (Arbitration Award, p2.)
5
  And, of course, there is no record of the arbitration proceedings to be reviewed. The only
“evidence” is the defendants claims in their brief (and defendants counsel’s statements at the oral
argument in the trial court. See e.g., 7/25/22 Hearing Tr. p 16.) regarding what happened at the
arbitration.
6
  Indeed, defendants set forth a lengthy recitation of their version of the facts giving rise to this
dispute, as they also did in the trial court. But the merits of the underlying claim, including the
facts giving rise to it, are not relevant to the resolution of this case.

                                                 -3-
an arbitration award. Simply put, defendants agreed to submit this matter to binding arbitration
and to accept the result. We find no basis to disturb the arbitration award.

       Affirmed. Plaintiffs may tax costs.

                                                           /s/ Brock A. Swartzle
                                                           /s/ Colleen A. O’Brien
                                                           /s/ Kathleen A. Feeney

                                              -4-