Court Opinion

ID: 9953448
Source: CourtListenerOpinion
Date Created: 2024-03-22 06:07:29.904244+00
Date Added: 2024-06-11T07:52:41.859759
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

RICHARD EMERZIAN,                                                     FOR PUBLICATION
                                                                      March 21, 2024
               Plaintiff-Appellant,                                   9:10 a.m.

v                                                                     No. 365100
                                                                      Wayne Circuit Court
NORTH BROS FORD INC.,                                                 LC No. 22-000894-CZ

               Defendant-Appellee.

Before: CAVANAGH, P.J., and JANSEN and MALDONADO, JJ.

PER CURIAM.

       Plaintiff appeals as of right the trial court order granting defendant’s motion for dismissal
under MCR 2.116(C)(7) because of an agreement to arbitrate in the parties’ lease agreement for a
vehicle. We affirm.

                  I. BACKGROUND FACTS AND PROCEDURAL HISTORY

        Plaintiff filed a complaint, styled as a class-action, alleging fraudulent business practices.
Plaintiff alleged that defendant was required by the financer of the parties’ lease agreement, Ford
Credit, to have customers purchasing vehicles sign completed “pricing sheets” detailing all agreed-
upon charges, including the vehicle price, fees, and after-market add-ons. Plaintiff alleged that
defendant would have customers sign blank pricing sheets and fill in inflated prices for after-
market add-ons, for instance charging hundreds of dollars for a $50 wheel lock. Plaintiff alleged
that, upon purchasing a vehicle from defendant, he was not given a copy of his pricing sheet until
he demanded one after purchase when he discovered that he was charged $359 for $170 floor mats,
and hundreds of dollars for wheel locks. The complaint alleged fraud in the inducement, fraudulent
misrepresentation, breach of contract, unjust enrichment, and violation of consumer-protection
laws, and sought declaratory and injunctive relief in addition to damages.

         Defendant moved to dismiss the complaint on the ground that it was exercising a provision
in the lease agreement stating that either party may select arbitration to settle any claim related to
the lease agreement. In particular, the lease agreement states that “[e]ither you or Lessor/Finance
Company/Holder (“us” or “we”) (each, a “Party”) may choose at any time, including after a lawsuit
is filed, to have any Claim related to this contract decided by arbitration.” The lease agreement

                                                 -1-
also indicated that defendant immediately assigned its rights under the agreement to specified
finance companies.

        Plaintiff moved for class certification according to MCR 3.501(B) with himself as class
representative. The motion argued against enforcing the arbitration provision because plaintiff
was basing his claims not on the lease agreement, but rather on the price sheet, and also because
defendant did not retain any rights under the lease agreement for having assigned its rights to a
holder, Cab West LLC.

         At the hearing on the motion, the trial court stated that the lease agreement was “the
underlying contract that governs this transaction,” and that the pricing sheet would not exist
without the lease agreement. The trial court continued that the language of the lease agreement
included defendant in the arbitration provision, and covered every “resulting transactional
relationship,” such as the price sheet. The trial court found that defendant, as lessor, was a party
to the lease contract, which afforded it the right to arbitrate a claim. The trial court also found that
the language of the arbitration clause indicated the intent that claims against defendant be subject
to arbitration even though the contract was assigned concurrent with its execution. The trial court
granted defendant’s motion for dismissal under MCR 2.116(C)(7), and plaintiff now appeals.

                                   II. STANDARD OF REVIEW

        Summary disposition is granted under MCR 2.116(C)(7) when dismissal of the action is
appropriate because of “an agreement to arbitrate or to litigate in a different forum.” This Court
reviews de novo a trial court’s decision on a motion for summary disposition under MCR
2.116(C)(7). Champine v Dep’t of Transp, 509 Mich 447, 452; 983 NW2d 741 (2022) In
reviewing a motion under MCR 2.116(C)(7), this Court accepts as true, and construes in plaintiff’s
favor, well-pleaded allegations in the pleadings, affidavits, depositions, admissions, and
documentary evidence submitted by the parties to determine whether a genuine issue of material
fact exists. Childers v Progressive Marathon Ins Co, 343 Mich App 257, 266; 997 NW2d 273
(2022). This Court reviews the interpretation of a contract de novo, including whether a claim is
within the scope of an arbitration provision. See Lichon v Morse, 507 Mich 424, 436; 968 NW2d
461 (2021).

                      III. SCOPE OF THE ARBITRATION AGREEMENT

       The trial court did not err by granting summary disposition to defendant because the parties
agreed to have the option to arbitrate claims such as plaintiff’s.

         “An arbitration agreement is a contract by which the parties forgo their rights to proceed
in civil court in lieu of submitting their dispute to a panel of arbitrators.” Galea v FCA US LLC,
323 Mich App 360, 369; 917 NW2d 694 (2018) (quotation marks and citation omitted). An
agreement to arbitrate is a matter of contract. Ferndale v Florence Cement Co, 269 Mich App
452, 458; 712 NW2d 522 (2006). The primary task in the interpretation of a contract is to
“ascertain the intention of the parties,” and, if the court determines that an arbitration agreement
exists, whether its terms are enforceable. Id.

       Summary disposition under MCR 2.116(C)(7) is appropriate when the parties have
“entered a valid and enforceable arbitration agreement.” Registered Nurses, Registered

                                                  -2-
Pharmacists Union v Hurley Med Ctr, 328 Mich App 528, 535; 938 NW2d 800 (2019) (quotation
marks and citation omitted). To determine whether a dispute is exclusively subject to arbitration,
“courts must first determine whether an arbitration agreement has been reached by the parties.”
Galea, 323 Mich App at 369 (quotation marks and citation omitted). An arbitration agreement
does not exist “unless it was formed by the mutual assent of the parties.” Id. “A party cannot be
required to arbitrate an issue which it has not agreed to submit to arbitration.” Lichon, 507 Mich
at 437 (quotation marks, citation, and brackets omitted). A court determines whether an arbitration
agreement exists by applying general contract principles. Madison Dist Pub Schs v Myers, 247
Mich App 583, 591; 637 NW2d 526 (2001). In this case, the parties do not dispute that there is an
arbitration provision in plaintiff’s lease agreement for his vehicle, but do dispute whether his claim
of fraudulent business practices is subject to the arbitration agreement.

        Plaintiff’s claim, which the trial court determined was subject to an arbitration provision
in a lease agreement, was that defendant used highly inflated prices on “price sheets,” which were
not included when the customer signed the lease agreement or which defendant otherwise
obscured, resulting in unsuspecting customers overpaying for accessories defendant installed on
purchased or leased vehicles. Plaintiff alleged that he was charged $359 for $170 floor mats, and
“hundreds of dollars” (the price sheet actually reflects a $149.90 charge) for $50 wheel locks, and
that he did not discover the prices until he demanded a copy of the price sheet that he had signed.
Plaintiff insists that his claim is based on the price sheet, and not on the lease agreement.

         The price sheet was titled AXZD-Plans Pricing Agreement, with a subtitle stating that it
was a “plan price calculation.” The document lists the invoice price of the vehicle ($45,113.54),
and, in a separate section, lists “extra charge items” and “dealer added equipment,” in this case,
fees, floor mats, and wheel locks (all together an additional $1,407.90). The price sheet then adds
the sections to arrive at a “total selling price” ($46,521.44), and states that the “customer” agrees
to the invoice price to which “additional costs” of $1,407.90 have been added.

       The arbitration provision in the lease agreement states as follows:

       Arbitration is a method of resolving any claim, dispute, or controversy
       (collectively, a “Claim”) without filing a lawsuit in court. Either you or
       Lessor/Finance Company/Holder (“us” or “we”) (each, a “Party”) may choose at
       any time, including after a lawsuit is filed, to have any Claim related to this contract
       decided by arbitration. Neither party waives the right to arbitrate by first filing suit
       in a court of law. Claims include but are not limited to the following: 1) Claims in
       contract, tort, regulatory or otherwise; 2) Claims regarding the interpretation, scope,
       or validity of this provision, or arbitrability of any issue except for class
       certification; 3) Claims between you and us, our employees, agents, successors,
       assigns, subsidiaries, or affiliates; 4) Claims arising out of or relating to your
       application for credit, this contract, or any resulting transaction or relationship,
       including that with the dealer, or any such relationship with third parties who do
       not sign this contract.

       The provision continues with a section titled, “RIGHTS YOU AND WE AGREE TO GIVE
UP”:

                                                 -3-
       If either you or we choose to arbitrate a Claim, then you and we agree to waive the
       following rights:

       • RIGHT TO A TRIAL; WHETHER BY A JUDGE OR JURY

       • RIGHT TO PARTICIPATE AS CLASS REPRESENTATIVE OR A CLASS
       MEMBER IN ANY CLASS CLAIM YOU MAY HAVE AGAINST US
       WHETHER IN COURT OR IN ARBITRATION

       • BROAD RIGHTS TO DISCOVERY AS ARE AVAILABLE IN A LAWSUIT

       • RIGHT TO APPEAL THE DECISION OF AN ARBITRATOR

       • OTHER RIGHTS THAT ARE AVAILABLE IN A LAWSUIT.

        The provision goes on to list the rights that the parties do not give up by agreeing to
arbitrate, and addresses arbitration procedures and costs. The provision ends with the following:

       If a waiver of class action rights is deemed or found to be unenforceable for any
       reason in a case in which class action allegations have been made, the remainder of
       this arbitration provision shall be unenforceable. The validity and scope of the
       waiver of class action rights shall be decided by the court and not the arbitrator.

        Plaintiff argues that his claim does not even reference the lease agreement, but the trial
court found that the lease agreement was not merely the financing contract for a vehicle, but “the
underlying contract that governs this transaction,” and that the pricing sheet would not exist
without the lease agreement. The trial court noted that the language of the arbitration provision
included the defendant, as the subject dealer, and held that it subjected to arbitration any claims
from a “resulting transactional relationship,” such as the price sheet.

        At issue is whether plaintiff’s claim for fraudulent business practices regarding the prices
displayed in the price sheets was a “claim related to this contract.” The goal of contract
interpretation “is to determine and enforce the parties’ intent on the basis of the plain language of
the contract.” AFSCME v Detroit, 267 Mich App 255, 262; 704 NW2d 712 (2005). This Court
enforces “clear and unambiguous language as written.” Tuscany Grove Ass’n v Peraino, 311 Mich
App 389, 393; 875 NW2d 234 (2015). Any conflict should be resolved in favor of arbitration.
Fromm v Meemic Ins Co, 264 Mich App 302, 306; 690 NW2d 528 (2004).

        In this case, the plain language of the arbitration provision suggests that plaintiff’s claims
fell within the agreement. The arbitration provision was included in the lease agreement between
plaintiff, the lessee, and defendant, the lessor, and stated that, by signing, plaintiff would “agree
to lease the vehicle according to the terms” in “the lease.” The terms included the amount due at
signing, and the amount of the 24 monthly payments, as calculated from “the agreed upon value
of the vehicle” of $46,267. Plaintiff’s claims emanated from the amount that he was charged to
lease the vehicle, mainly the allegedly inflated costs on the price sheet. Plaintiff did not agree to
pay any amount, including the costs listed on the price sheet, until he signed the lease agreement.

                                                 -4-
Thus, the claim regarding the price sheet is “related to this contract,” insofar as the lease agreement
includes plaintiff’s promise to pay an amount that was, at least in part, delineated on the price
sheet.

         In Lichon, 507 Mich at 428-435, our Supreme Court considered whether two separate
claims made by two plaintiffs involving sexual misconduct at their workplace were precluded by
an agreement to arbitrate in their employment contracts. The Court examined whether the claims
were relative to employment as to fall within the bounds of the arbitration agreement, id. at 436-
437, and held that to determine this question, a court must “consider[] whether the claims could
be maintained without reference to the contract or relationship at issue,” id. at 444. The Court
remarked that employing this test would keep an arbitration clause from barring some litigation,
particularly those claims that have little relationship to the employment relationship. Id. at 440.
Even though the Court was considering whether a claim was “relative to” an employment
relationship, it stated that by implementing this test, the Court would “require more than the barest
factual connection for a claim to be relative to employment or another pertinent contractual
relationship.” Id. Thus, it appears that the Court approved the use of this independent standing
test to determine the arbitrability of a claim in contexts other than an employment relationship.

        In this case, it is likely that plaintiff’s claims could not “be maintained without reference
to the contract or relationship at issue,” and thus were subject to the arbitration clause as claims
“related to” the lease agreement. Plaintiff argues that the price sheet claims were obviously not
related to, and could be maintained without reference to, the lease agreement, because neither the
complaint nor the price sheet mentioned the lease agreement. Plaintiff notes that the price sheet
specifically states: “This form does not impact the completion of the financing documents that
may be used in the course of the sale transaction. Specifically, the form does not determine the
cash price in a retail installation sale contract or the agreed upon value of a vehicle in a lease.”
Thus, there is some indication that the price sheet is separate from the lease agreement.

         However, the document described itself as a “plan price calculated” form, thus merely a
list of the costs of items relative to the specific vehicle that a customer was leasing. In plaintiff’s
case, this included the invoice amount of the vehicle he wanted to lease, some fees, and the costs
of wheel locks and floor mats that apparently did not come as part of the base model of the vehicle.
This form provided a “total selling price,” and, notably, signing the document did not obligate
either party actually to engage in the selling or leasing the vehicle referenced, or even state that
the vehicle leased or sold would include the added items specified on the form. The signatures on
the form indicated confirmation of only the invoice price of the vehicle, and the amount that would
be added to the invoice cost. The form says, “I, the customer, have read and agree to the AXZD
Plan Price on the invoice. I understand that any additional costs/added items . . . totaling $1,407.90
have been added to the plan price.” The form, on its own, would not have resulted in any harm or
loss to plaintiff because it set forth no obligation to act. Therefore, plaintiff’s claim could not be
maintained without reference to the lease agreement.

       Plaintiff states that the lease agreement and the price sheet are two different contracts with
two different purposes. However, the price sheet does not seem to be a contract, but more of a
breakdown of the price of the leased vehicle with added costs such as the floor mats and wheel
locks. There was no provision for acceptance of what was offered, and plaintiff promised no
consideration on this form. The form merely indicated recognition of the invoice price of the

                                                 -5-
vehicle and the price of fees and add-on accessories. The requirements for a valid contract are
“(1) parties competent to contract, (2) a proper subject matter, (3) a legal consideration, (4)
mutuality of agreement, and (5) mutuality of obligation.” Calhoun Co v Blue Cross Blue Shield
Mich, 297 Mich App 1, 13; 824 NW2d 202 (2012) (quotation marks and citation omitted). In this
case, the price sheet established no obligation, including consideration.

        Further, plaintiff’s claim seemingly could not be maintained without reference to the
relationship at issue. Plaintiff would not have leased a vehicle which included allegedly inflated
prices for accessories without the relationship between defendant as the lessor and dealer, and
plaintiff as the lessee. Plaintiff’s claims rely on defendant, as a business, deceiving its customers
to produce greater profit.

        Accordingly, plaintiff’s claims that defendant used its price sheet to defraud customers was
a “claim related to this [lease agreement]” subject to the arbitration clause. Even though the lease
agreement did not state that the price sheet provided the amount that plaintiff was responsible for
paying, the “agreed upon value of the vehicle ($45,622.44) and any items You pay over the lease
term” was equal to the invoice price on the price sheet ($45,113.54) plus the total cost of the wheel
locks and floor mats ($508.90) from the price sheet. The two documents thus agree on the total
price of the transaction, and bore the same date. Therefore, the price sheet “plan price calculated”
was demonstrably related to the lease agreement—the document obligating plaintiff to pay the
calculated price.

        Further, there was additional evidence from the language of the lease agreement that the
parties intended to have the option to arbitrate claims such as plaintiff’s. The lease agreement
provided nonexclusive examples of claims related to it, including claims from “any resulting
transaction or relationship, including that with the dealer.” Plaintiff’s claims involved his leasing
transaction with the dealer, which allegedly included inflated costs. Plaintiff’s complaint alleged
fraud in the inducement, fraudulent misrepresentation, breach of contract, unjust enrichment, and
violation of consumer-protection laws. The lease agreement listed such claims subject to
arbitration as “[c]laims in contract, tort, regulatory or otherwise.” Thus, the arbitration agreement
specified that claims such as those plaintiff alleged were related to the lease agreement.

        For these reasons, the language of the arbitration provision in the parties’ lease agreement
indicated the parties’ agreement to permissive arbitration of the claims plaintiff brought.
Accordingly, the trial court did not err by granting defendant’s motion to dismiss plaintiff’s
complaint under MCR 2.116(C)(7) in favor of arbitration.

                              IV. ASSIGNMENT OF THE LEASE

        The trial court did not err by finding that defendant retained the right to invoke the
arbitration provision in the lease agreement.

        Contractual rights may be assigned unless an assignment is expressly restricted. Jawad A
Shah, MD, PC v State Farm Mut Auto Ins Co, 324 Mich App 182, 197; 920 NW2d 148 (2018). In
an assignment, the assignor transfers the rights and interests of a contract to the assignee. Mecosta
Co Med Ctr v Metro Group Prop & Cas Ins Co, 509 Mich 276, 284; 983 NW2d 401 (2022). The
assignee succeeds to the rights of the assignor. Id. The assignee of a contract assumes the same

                                                -6-
rights and is subject to the same defenses because it stands in the position of the assignor. Custom
Data Solutions, Inc v Preferred Capital, Inc, 274 Mich App 239, 247; 733 NW2d 102 (2006).

        In this case, plaintiff argues that, because defendant assigned its rights in the lease
agreement, including the arbitration provision, to a third-party, defendant could no longer rely on
the arbitration provision in response to plaintiff’s claim.

      The lease agreement properly identifies defendant as the lessor, plaintiff as the lessee, Cab
West LLC as the “Holder,” and Ford Motor Credit Company as the “finance company.” The lease
agreement contains the following assignment provision:

               ASSIGNMENT AND ADMINISTRATION When You and Lessor sign
       this Lease, Lessor will assign it to Holder, Finance Company, or a substitute will
       administer this lease. You must then pay, in U.S. funds, all amounts due under this
       lease to Finance Company. If Finance Company is not the Holder of this lease,
       Holder has appointed Finance Company as its agent. As agent for Holder, Finance
       Company has the power to act on Holder’s behalf to administer, enforce, and defend
       this lease. If Lessor has agreed to repair or maintain the Vehicle, obtain any
       insurance or perform any other services, You will look only to the Lessor for those
       services.

Above defendant’s signature line, the lease provides that “[l]essor accepts this lease and assigns it
to Holder under the terms of the lease plan agreement between Lessor and Holder.” Above
plaintiff’s signature, the lease agreement states, “You signed it and notice of an assignment of this
lease by the Lessor to Holder.” Thus, defendant assigned its rights and interests in the lease
agreement to Cab West LLC, who assumed defendant’s rights and interests because it stood in
defendant’s place as the assignee.

       Regarding plaintiff’s argument that defendant could not properly exercise the arbitration
option because that option was a part of the contract that defendant had assigned, the trial court
reasoned as follows:

               In this particular case all the parties know at the outset that this lease is
       going to be assigned, it’s not similar to other situations, mortgages, et cetera, that
       are signed [sic] down the road. Everybody knows, all the parties up front know the
       contract’s gonna be assigned, because all of the relevant parties are listed on the
       lease contract, including the ultimate holder who’s Cab West, they’re on the lease
       contract.

               So if the parties know that at the get-go, why would there be language in
       the arbitration clause that, as the Court noticed, that the resulting transactions or
       relationships including that with the dealer are covered by the arbitration clause
       when all of these parties know at the time that they signed this lease.

                                                -7-
The trial court concluded that, because the contract was assigned concurrently with its signing,
treating the assignment as nullifying defendant’s arbitration option would “render a big portion of
the arbitration clause meaningless.” The trial court concluded that it “can’t find that the intent of
the parties to this contract is that those [arbitration] rights are assigned away immediately. Like
that there’d be no reason for that language in the arbitration agreement, which specifically
references the dealer, the claims relating to the dealer as part of those claims that are covered by
the arbitration contract, that that would just be meaningless.” The trial court elaborated:

               And so the Court finds that that right was not assigned away by nature of
       the fact that Cab West and/or Ford Motor Credit Company became on a practical
       level the servicer and the owners of the finance contract.

               So for that reason the Court does find that the matter is subject to arbitration,
       it was clearly specified in the contract, all parties were there, so the Court does find
       that Defendant’s motion to have arbitration is well founded.

        There is merit in defendant’s and the trial court’s reasoning. “Assignment agreements are
considered contracts, and must be interpreted as such.” Centria Home Rehabilitation, LLC v
Allstate Ins Co, ___ Mich App ___, ___; ___ NW2d ___ (2023) (Docket No. 363699); slip op at 2.
The language of the lease agreement expressly informed the parties that defendant assigned the
lease immediately, but also, as discussed, that claims “related to this contract,” including those
against defendant, were subject to permissive arbitration. The language of the arbitration clause—
“Either you or Lessor/Finance Company/Holder (“us” or “we”) (each, a “Party”) may choose at
any time, including after a lawsuit is filed, to have any Claim related to this contract decided by
arbitration” (emphasis added)—explicitly indicated that defendant may choose arbitration, even in
light of defendant’s assignment of its financial interest in the contract. This language signaled the
parties’ agreement that defendant retained the option of arbitration of claims against it that were
related to the lease agreement even after assigning the lease.

        At issue is whether defendant’s retention of that right is contrary to the legal principle that
the assignee stands in the place of the assignor. An assignor may not assert control over, and thus
bind the assignee to, a defense to a contract that it has assigned. Aultman, Miller & Co v Sloan,
115 Mich 151, 154; 73 NW 123 (1897). However, in this case, plaintiff made a claim against
defendant, and not the assignee. Even though plaintiff argues that its claims were related to the
price sheets, plaintiff’s claims had to be based on the lease agreement because, as discussed, a
claim on the price sheets was “related to” the lease agreement and subject to the arbitration clause.
Plaintiff’s claim for damages against defendant, and even his standing to bring a claim against
defendant,1 stemmed from his having to pay for the lease of the vehicle with allegedly inflated

1
  “A real party in interest is the one who is vested with the right of action on a given claim, although
the beneficial interest may be in another.” Barclae v Zarb, 300 Mich App 455, 483; 834 NW2d
100 (2013) (quotation marks and citation omitted). The real-party-in-interest doctrine “recognizes
that litigation should be begun only by a party having an interest that will assure sincere and

                                                  -8-
added costs, which was the function of the lease agreement. By pursuing a claim against
defendant, which had to be based on the lease agreement, plaintiff implicitly recognized that
defendant retained some postassignment relationship to the lease agreement.

        Plaintiff argues that the assignment extinguished defendant’s rights and obligations under
the lease agreement, citing C C James Roofing Co v Regent Theater Co of Grand Rapids, 236
Mich 536, 539-540; 211 NW 85 (1926). However, it would be inconsistent to hold that plaintiff
could maintain a claim against defendant under his lease for use of defendant’s vehicle, but that
defendant could not invoke any of the rights the parties agreed to in the lease agreement in its
defense. There is no authority presented or located for the proposition that an assignment would
allow a claim against the assignor, but would prevent the assignor’s recourse to any defenses,
under the assigned agreement.

        In this case, the parties agreed that plaintiff would lease a vehicle, that claims against
defendant related to the lease would be subject to arbitration, and that the lease agreement was
assigned. Because plaintiff’s claims against defendant were related to his lease of the vehicle
under the agreement, the entire agreement between the parties should be considered, and defendant
should be able to enforce the terms, even though all financial rights under the lease had been
assigned.

       Affirmed.

                                                            /s/ Mark J. Cavanagh
                                                            /s/ Kathleen Jansen
                                                            /s/ Allie Greenleaf Maldonado

vigorous advocacy” and “protects a defendant from multiple lawsuits for the same cause of action.”
Id. (quotation marks and citation omitted).

                                               -9-