Court Opinion

ID: 9381881
Source: CourtListenerOpinion
Date Created: 2023-03-24 05:04:45.479337+00
Date Added: 2024-06-11T17:17:35.220466
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

MAHA BARADA and NABIL BARADA,                                        UNPUBLISHED
                                                                     March 23, 2023
               Plaintiffs-Appellants,

v                                                                    No. 359625
                                                                     Wayne Circuit Court
AMERICAN PREMIUM LUBRICANTS, LLC,                                    LC No. 20-016765-CB
OUSSAMA DABAJA, AHMAD ABADI, and
MOHAMMED DIAB,

               Defendants-Appellees.

Before: PATEL, P.J., and SWARTZLE and HOOD, JJ.

PER CURIAM.

        The parties entered into a business agreement that included a clause to settle all disputes
with the sole and exclusive remedy of arbitration. Plaintiffs sued defendants for failing to comply
with the terms of the contract. The trial court granted defendants summary disposition under MCR
2.116(C)(7) because plaintiffs were bound to arbitration by the terms of the agreement. We affirm.

       The business agreement entered into by the parties delineated the parties’ responsibilities.
Specifically, certain defendants were responsible for “accounting and financial responsibilities” as
well as “sales.” No further specificity with regard to these parties’ duties were included in the
agreement. The arbitration clause contained in the business agreement stated:

               The parties mutually agree that arbitration shall be the sole and exclusive
       remedy with respect to the resolution of any dispute, claim or controversy
       (ADispute@) [sic], involving the interpretation of this Agreement or the terms,
       conditions or termination of this Agreement. The parties intend that any decision
       resulting from arbitration shall be final and binding upon the parties and that any
       and all disputes shall be resolved and submitted to arbitration.

              The parties acknowledge that since arbitration is the exclusive remedy,
       neither party has the right to resort to any federal, state or local court or
       administrative agency concerning alleged breaches of this Agreement, except for
       the purposes of obtaining injunctive relief as provided below. The decision of the

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       arbitrator shall be a complete defense to any suit, action or proceeding instituted in
       any federal, state or local court or before any administrative agency with respect to
       any Dispute which is arbitrable as set forth in this Agreement.

               The provisions of this paragraph shall, with respect to any Dispute, survive
       the termination or expiration of this Agreement.

        Plaintiffs sued defendants, alleging, among other things, that defendants failed to timely
disclose documents to the Internal Revenue Service, failed to pay creditors, failed to pay certain
plaintiffs a salary, and transferred large amounts of equipment to a certain defendant without
consent. Plaintiffs requested an injunction against defendants to prevent them from “wasting
assets and violating” the contract further.

        In lieu of an answer, defendants filed separate motions for summary disposition under
MCR 2.116(C)(7) among other provisions. Included in each of defendants’ arguments was that
plaintiffs were bound by the arbitration clause, and, thus, the complaint should be dismissed.
Defendants also asserted arbitration as an “affirmative defense” to plaintiffs’ complaint.
(Defendants made this assertion in their motions rather than a responsive pleading. MCR
2.111(F)(3); MCR 2.116(D)(2).) Plaintiffs responded that injunctive relief was not covered under
the arbitration clause and, further, that defendants’ fraud and misrepresentation invalidated the
contract.

         Plaintiffs then moved to strike defendants’ “affirmative defense” of arbitration, arguing
that defendants had waived their right to arbitration because they were participating in the
litigation. Namely, defendants had filed witness lists, participated in depositions, and stipulated
to add parties as codefendants after having asserted their “affirmative defense” to arbitration.

        The trial court granted defendants summary disposition, holding that the arbitration clause
plainly stated that arbitration was the exclusive remedy to disputes under the contract and that
there was no carve out for injunctive relief.

       Plaintiffs now appeal.

         “We review de novo a trial court’s decision to grant or deny a motion for summary
disposition.” Sherman v City of St Joseph, 332 Mich App 626, 632; 957 NW2d 838 (2020)
(citations omitted). Summary disposition is proper under MCR 2.116(C)(7) when a claim is barred
because of “an agreement to arbitrate.” Tinsley v Yatooma, 333 Mich App 257, 261; 964 NW2d
45 (2020). “If there is no factual dispute, whether a plaintiff’s claim is barred under a principle
set forth in MCR 2.116(C)(7) is a question of law for the court to decide. If a factual dispute exists,
however, summary disposition is not appropriate.” RDM Holdings, Ltd v Continental Plastics Co,
281 Mich App 678, 687; 762 NW2d 529 (2008).

         “Arbitration is a matter of contract.” Altobelli v Hartmann, 499 Mich 284, 295; 884 NW2d
537 (2016). “[W]hen interpreting an arbitration agreement, we apply the same legal principles
that govern contract interpretation.” Id. “Our primary task is to ascertain the intent of the parties
at the time they entered into the agreement, which we determine by examining the language of the
agreement according to its plain and ordinary meaning.” Id. “To ascertain the arbitrability of an

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issue, a court must consider whether there is an arbitration provision in the parties’ contract,
whether the disputed issue is arguably within the arbitration clause, and whether the dispute is
expressly exempt from arbitration by the terms of the contract.” Fromm v Meemic Ins Co, 264
Mich App 302, 305-306; 690 NW2d 528 (2004) (cleaned up).

        Plaintiffs first argue that the trial court erred because defendants had waived their right to
arbitration by participating in the litigation. “Whether one has waived his right to arbitration
depends on the particular facts and circumstances of each case.” Madison Dist Pub Sch v Myers,
247 Mich App 583, 588; 637 NW2d 526 (2001). “Waiver of a contractual right to arbitrate is
disfavored.” Id. “The party arguing there has been a waiver of this right bears a heavy burden of
proof and must demonstrate knowledge of an existing right to compel arbitration, acts inconsistent
with the right to arbitrate, and prejudice resulting from the inconsistent acts.” Id. (cleaned up).

       In Madison Dist Pub Sch, this Court noted:

       Various forms of participation by a [party] in an action have been considered by
       the courts in determining whether there has been a waiver of the [party]’s right to
       compel arbitration or to rely on arbitration as a defense to the action. It has been
       generally held or recognized that by such conduct as defending the action or
       proceeding with the trial, a [party] waives the right to arbitration of the dispute
       involved. A waiver of the right to arbitrration [sic] . . . has also been found from
       particular acts of participation by a [party], each act being considered independently
       as constituting a waiver. Thus, a [party] has been held to have waived the right to
       arbitration of the dispute involved by filing an answer without properly demanding
       or asserting the right to arbitration, by filing an answer containing a counterclaim
       . . . without demanding arbitration or by filing a counterclaim which was considered
       inconsistent with a previous demand for arbitration, by filing a third-party
       complaint or cross-claim, or by taking various other steps, including filing a notice
       of readiness for trial, filing a motion for summary judgment, or utilizing judicial
       discovery procedures. (quotation marks and citations omitted; alterations in
       original). [Id. at 589.]

         In this case, defendants did not file a responsive pleading, but instead asserted the right to
arbitration in a motion for summary disposition at the onset of the case. Even though defendants
participated in the litigation with regard to discovery and stipulated to the addition of a
codefendant, plaintiffs were already aware that defendants asserted their right to arbitration.
Plaintiffs continued to litigate this matter despite defendants asserting their right to arbitration as
their first motion to the trial court. Plaintiffs cannot demonstrate prejudice when defendants’ first
action was to assert their right to arbitrate and plaintiffs continued with the litigation anyway.
Plaintiffs have not demonstrated that defendants waived arbitration when defendants had been
asserting their right to arbitration from the very beginning.

        Lastly, plaintiffs argue that their claims were excepted from the arbitration agreement,
including their specific request for injunctive relief. Even though the arbitration clause states that
arbitration is the exclusive remedy “except for the purposes of obtaining injunctive relief as
provided below,” the agreement does not go on to describe the purposes for which obtaining
injunctive relief may be excepted.

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        Furthermore, the plain and ordinary language of the arbitration clause covers plaintiffs’
claims. The claims that defendants failed to disclose documents to the Internal Revenue Service,
failed to pay creditors, failed to pay certain plaintiffs a salary, and transferred large amounts of
equipment to a certain defendant without consent, are within the “accounting and financial
responsibilities,” as well as “sales” responsibilities, given to defendants in the agreement.

        The agreement clearly states that arbitration is the exclusive remedy for disputes arising
from the agreement. Plaintiffs’ claims fall squarely within the duties prescribed to defendants
under the agreement, and plaintiffs’ purpose for injunctive relief was not excepted from the
arbitration clause. Therefore, the trial court did not err in granting summary disposition to
defendants.

       Affirmed. Defendants, as the prevailing parties, may tax costs under MCR 7.219.

                                                             /s/ Sima G. Patel
                                                             /s/ Brock A. Swartzle
                                                             /s/ Noah P. Hood

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