Court Opinion

ID: 9369921
Source: CourtListenerOpinion
Date Created: 2023-02-10 05:05:33.383471+00
Date Added: 2024-06-11T17:16:17.926843
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

LEGACY CUSTOM BUILDERS, INC.,                                         FOR PUBLICATION
                                                                      February 9, 2023
               Plaintiff-Appellant,                                   9:15 a.m.

v                                                                     No. 359213
                                                                      Oakland Circuit Court
SALLY A NOERR ROGERS,                                                 LC No. 2021-187535-CH

               Defendant-Appellee.

Before: LETICA, P.J., and SERVITTO and HOOD, JJ.

HOOD, J.

         Plaintiff, Legacy Custom Builders, Inc. (Legacy), appeals as of right the trial court’s order
granting summary disposition and compelling arbitration in favor of defendant, Sally A. Noerr
Rogers (Rogers). The trial court correctly enforced a valid agreement to arbitrate, but it should
have stayed proceedings pending arbitration instead of dismissing the case. We, therefore, affirm
in part, reverse in part, and remand for proceedings consistent with this opinion.

                                        I. BACKGROUND

       This case arises out of a contract dispute over the construction of a home on a vacant
residential property in White Lake, Michigan. Rogers is the owner of the property. Legacy is a
home construction company.

         In July 2020, Rogers contracted with Legacy to build a house on her vacant land. Relevant
to this appeal, the contract contained an arbitration provision. Under Article XVI, entitled
“Disputes,” the contract provided that Legacy and Rogers resolve any dispute through arbitration.
In its relevant part, Article XVI stated:

       Any dispute between Builder and Purchaser about this Contract, including the
       interpretation of this Contract and adequacy of performance of this Contract, shall
       be resolved by arbitration before a single arbitrator who is mutually acceptable to
       Builder and Purchaser. . . . The decision of the arbitrator on any dispute shall be
       final and binding on the parties and enforceable in any court of appropriate
       jurisdiction. In any arbitration proceeding under this Article subject to the award

                                                 -1-
       of the arbitrator, each party shall pay its own expenses, [and] an equal share of the
       fees and expenses of the arbitrator. The arbitrator shall have the power to award
       recovery of costs and fees (including reasonable attorney fees, administrative fees,
       and arbitrator’s costs and fees) among the parties as the arbitrator determines to be
       equitable under the circumstances.

        In January 2021, the parties had a dispute. Legacy claimed that Rogers failed to pay
invoices and failed to make selections and decisions related to work on the project. Rogers
disputed invoices, asked for documentation supporting Legacy’s invoices, and appears to have
sought an accounting to determine how Legacy used money on the project. Through their
attorneys, each party accused the other of breaching the contract. Legacy threatened to file a
construction lien, and Rogers indicated she was seeking to invoke the arbitration clause of the
parties’ agreement. On January 12, 2021, Legacy furnished its last labor or supplies on the project.

        On February 4, 2021, Legacy recorded a claim of lien related to Rogers’s property and later
served a copy of the claim of lien on Rogers’s attorney. The claim of lien indicated that Legacy
had received $548,653.46 related to the construction project, but claimed a lien for $177,905.83,
plus interest, costs, and attorneys fees under the contract. The claim of lien indicated that this did
not include $232,432.17 “of the contract which was not completed due to the termination of [the]
contract.”

        On April 20, 2021, Legacy filed a complaint suing Rogers. The complaint raised five
claims: (1) breach of contract; (2) promissory estoppel; (3) quantum meruit; (4) declaratory relief;
and (5) foreclosure of the construction lien. It alleged Rogers breached the parties’ contract when
she failed to respond to inquiries regarding the construction project and failed to pay various
invoices. Based on Rogers’s alleged failure to pay Legacy, it also sought foreclosure of the
construction lien it recorded against Rogers’s property.

        In June 2021, in lieu of an answer, Rogers moved for summary disposition of Legacy’s
complaint under MCR 2.116(C)(7) and (D)(2), and sought to compel arbitration. Rogers argued
that summary disposition was appropriate because the parties’ contract included an arbitration
provision that required the parties to arbitrate “any” dispute arising under the contract between
Legacy and Rogers. Rogers asserted that if Legacy continued to refuse to comply with arbitration
and continued litigation, Legacy could be held to have waived its right to arbitration. Rogers also
sought fees and costs under the contract for Legacy’s purported failure to comply with the
arbitration agreement.

        Legacy responded arguing that enforcing the arbitration agreement would prevent it from
complying with the one-year limitation period for recording and foreclosing on a lien even if it
was successful. It further argued that the arbitrator did not have authority to determine an interest
in land. Finally, it argued that Rogers was required to identify her claims prior to arbitration and
that Legacy was not required to arbitrate unknown issues. Legacy also sought sanctions, arguing
that Rogers’s motion and request for sanctions was frivolous and intended to delay and harass
Legacy.

                                                 -2-
       On September 22, 2021, the trial court entered an order granting Rogers’s motion for
summary disposition and compelling arbitration. The trial court dispensed with oral argument and
found that the contract “clearly directs ‘any’ dispute arising out of the contract be arbitrated.”
Accordingly, the trial court granted Rogers’s motion for summary disposition under MCR
2.116(C)(7) and ordered arbitration.

       Legacy moved for reconsideration. In addition to previously raised arguments, Legacy
argued that, instead of dismissing its lien foreclosure claim, the trial court should have stayed that
portion of the lawsuit and “allowed it to pick back up after” there was an arbitration award. This
appears to have been Legacy’s first explicit request for the court to stay proceedings. Although
Legacy claims to have offered Rogers’s counsel to stay proceedings, it did not file a motion to stay
proceedings pending arbitration, and it did not request a stay as alternative relief in its response to
Rogers’s motion for summary disposition. The trial court denied the motion for reconsideration.
This appeal followed.

                                  II. STANDARDS OF REVIEW

        This Court reviews de novo a trial court’s decision on a motion for summary disposition.
Tinsley v Yatooma, 333 Mich App 257, 261; 964 NW2d 45 (2020). In RDM Holdings, Ltd v
Continental Plastics Co, 281 Mich App 678, 687; 762 NW2d 529 (2008), this Court articulated
the rules governing dispositive motions filed under MCR 2.116(C)(7):

       Under MCR 2.116(C)(7) . . . , this Court must consider not only the pleadings, but
       also any affidavits, depositions, admissions, or other documentary evidence filed
       or submitted by the parties. The contents of the complaint must be accepted as true
       unless contradicted by the documentary evidence. This Court must consider the
       documentary evidence in a light most favorable to the nonmoving party. 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. [Citations omitted.]

Summary disposition is proper under MCR 2.116(C)(7) when a claim is barred because of “an
agreement to arbitrate . . . .” See Tinsley, 333 Mich App at 261, citing Altobelli v Hartmann, 499
Mich 284, 294-295; 884 NW2d 537 (2016) (stating the same). “Whether a claim is subject to
arbitration is also reviewed de novo, as is the construction of contractual language.” Id. (citation
omitted).

        A trial court’s decision regarding sanctions is reviewed for an abuse of discretion. Kaftan
v Kaftan, 300 Mich App 661, 668; 834 NW2d 657 (2013). We will not disturb a trial court’s
decision on whether to impose sanctions unless it is clearly erroneous. See Meisner Law Group,
PC v Weston Downs Condo Ass’n, 321 Mich App 702, 730; 909 NW2d 890 (2017). The proper
interpretation and application of a court rule is reviewed de novo. Garrett v Washington, 314 Mich
App 436, 450; 886 NW2d 762 (2016).

                                    III. LAW AND ANALYSIS

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                                   A. CONSTRUCTION LIENS

       The issues in this case revolve around arbitration related to a construction lien. A
construction lien is a security interest that a participant on a construction project takes in real
property as security for their payment expectations. See MCL 570.1103; MCL 570.1107(1).
Construction liens are governed by the Construction Lien Act (CLA), MCL 570.1101 et seq.
“ ‘Construction lien’ means the lien of a contractor, subcontractor, supplier, or laborer, as
described in [MCL 570.1107].” MCL 570.1103. MCL 570.1107(1) states in relevant part:

               Each contractor, subcontractor, supplier, or laborer who provides an
       improvement to real property has a construction lien upon the interest of the owner
       or lessee who contracted for the improvement to the real property, . . . the interest
       of an owner who has subordinated his or her interest to the mortgage for the
       improvement of the real property, and the interest of an owner who has required
       the improvement. . . . [MCL 570.1107(1).]

        Construction liens, like other security interests, can be resolved through arbitration. See
Ronnisch Const Group, Inc v Lofts on the Nine, LLC, 499 Mich 544; 886 NW2d 113 (2016).
Because they affect real estate titles, however, parties must often look to the circuit court to enforce
arbitration awards related to construction liens. See id. at 558-562.

    B. THE TRIAL COURT DID NOT ERR BY ENFORCING A VALID ARBITRATION
                               AGREEMENT

        Legacy first argues that the trial court erroneously determined that the parties had to
arbitrate the claims in this case. We disagree.

         “Arbitration is a matter of contract.” Altobelli, 499 Mich at 295. “[A] valid agreement
must exist for arbitration to be binding.” Ferndale v Florence Cement Co, 269 Mich App 452,
460; 712 NW2d 522 (2006). In Lichon v Morse, 507 Mich 424, 437; 968 NW2d 461 (2021), our
Supreme Court recognized that “[a] party cannot be required to arbitrate an issue which [it] has
not agreed to submit to arbitration.” (Alterations in original.) “The existence of an arbitration
agreement and the enforceability of its terms are judicial questions for the court, not the
arbitrators.” Fromm v Meemic Ins Co, 264 Mich App 302, 305; 690 NW2d 528 (2004).

        “[W]hen interpreting an arbitration agreement, we apply the same legal principles that
govern contract interpretation.” Altobelli, 499 Mich at 295 (citation omitted). “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. (citation omitted).

       The general policy of this State is favorable to arbitration. The burden is on the
       party seeking to avoid the agreement, not the party seeking to enforce the
       agreement. In deciding the threshold question of whether a dispute is arbitrable, a
       reviewing court must avoid analyzing the substantive merits of the dispute. If the
       dispute is arbitrable, the merits of the dispute are for the arbitrator. [Id. at 295-296
       (quotation marks and citations omitted).]

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Ascertaining the arbitrability of an issue requires a court to consider whether the parties’ contract
contains an arbitration provision, whether the disputed issue arguably comes within the arbitration
clause, and whether the dispute is expressly exempted from arbitration by the contract. Fromm,
264 Mich App at 305-306 (citation omitted).

        Here, the court correctly enforced the arbitration agreement. The plain and ordinary
meaning of the disputes provision in the parties’ contract demonstrates an intent by Legacy and
Rogers to arbitrate any dispute arising under the contract. The dispute provision states, in relevant
part: “Any dispute between Builder and Purchaser about this Contract, including the interpretation
of this Contract and adequacy of performance of this Contract, shall be resolved by arbitration
before a single arbitrator who is mutually acceptable to Builder and Purchaser.” This language is
unambiguous: any dispute arising between Legacy and Rogers had to be submitted to arbitration
for resolution by an arbitrator agreed upon by both parties. Thus, the parties’ contract had a broad
arbitration provision that included any dispute between the parties, and there are no express
exemptions from arbitration mentioned in the contract. See Fromm, 264 Mich App at 305-306.
Accordingly, the trial court did not err in finding that the parties’ claims had to be submitted to
arbitration.

        Legacy argues that Rogers has never identified the specific dispute that must be submitted
to arbitration, and that this prevents the parties from arbitrating. This argument fails for four
reasons. First, nothing in the arbitration clause requires a party to identify the specific dispute
subject to arbitration as a threshold to filing an arbitration claim. Second, contrary to Legacy’s
argument, Rogers has identified the disputed issues. In an exchange of letters between January
and February 2021, Legacy’s counsel noted that Rogers disputed a specific invoice. In a separate
letter, Rogers’s counsel articulated her dispute, indicating that Rogers was concerned about
Legacy’s use of the money she had already paid and sought documentation and an accounting to
determine how Legacy used the money. Rogers, therefore, already identified the issues on some
level. Third, even if Rogers’s counsel had not identified the issues in their correspondences, the
disputed issues are obvious from a cursory review of the facts. They include whether Legacy
performed the agreed upon work, whether Rogers failed to pay, and whether Legacy had a reason
to stop performing under the contract. In other words, it is a breach of contract case. And fourth,
the arbitrator may evaluate a purported failure to identify the particular issues in dispute, rather
than the trial court. See Fed Kemper Ins Co v American Bankers Ins Co of Florida, 137 Mich App
134, 139; 357 NW2d 834 (1984) (“If a claim on its face is governed by the contract, it should be
decided by the arbitrator unless strong evidence demonstrates that the matter is outside the scope
of the arbitration provision.”) (Quotation marks and citation omitted).1 Here, the broad arbitration
clause in the parties’ contract governs any dispute between Rogers and Legacy. There is no dispute
that the contract containing the arbitration clause applied to the parties’ commercial relationship.
The relevant issue is simply whether Rogers’s particular grievance fell within the terms of the
arbitration clause. The breadth of the arbitration clause and apparent consensus that the issues

1
  Although Fed Kemper Ins Co is not strictly binding pursuant to MCR 7.215(J)(1) because it was
issued before November 1, 1990, as a published opinion, it nevertheless “has precedential effect
under the rule of stare decisis” pursuant to MCR 7.215(C)(2). This also applies to other pre-
November 1, 1990 cases of this Court cited in this opinion.

                                                -5-
arise out of the contract means that the failure to identify a precise issue does not exempt this case
from arbitration.

C. THE TRIAL COURT ERRED BY GRANTING SUMMARY DISPOSITION INSTEAD OF
            STAYING THE PROCEEDINGS PENDING ARBITRATION

         Legacy argues that the trial court erroneously dismissed the lien foreclosure portion of the
case. We agree. Although the trial court correctly enforced the arbitration agreement, it erred
when it summarily dismissed Legacy’s lien foreclosure claim. See MCL 691.1687(6) (requiring
the court to stay a proceeding involving a claim alleged to be subject to arbitration until it renders
a final decision, if a party moves for an order to arbitrate) and (7) (requiring the court, if it orders
arbitration, to stay proceeding involving a claim subject to arbitration and allowing it to limit a
stay to any severable issue); MCR 3.602(C) (requiring a stay in an action involving an issue subject
to arbitration if an order for arbitration or a motion for such an order has been made). Instead of
dismissing the claim, the Uniform Arbitration Act (UAA), MCL 691.1681 et seq., and Michigan
Court Rules both required the trial court to stay the lawsuit pending arbitration. See MCL
691.1687; MCR 3.602(C). Had the trial court stayed the lawsuit pending arbitration, instead of
dismissing, it would have enforced the arbitration agreement while protecting Legacy’s
compliance with the limitations period and ability to enforce the lien after arbitration.

        At the threshold, Legacy argues that foreclosure of the construction lien had to occur within
one year to comply with the limitations period. This is incorrect. Legacy was required to file its
suit within one year of recording its lien, but the statute of limitations does not require a case to be
completed within that time. See MCL 570.1111(1) (providing a 90-day threshold period of
limitations for recording a lien); MCL 570.1117(1) (providing a one-year period of limitations for
filing suit to foreclose interest subject to the lien).

        Construction liens have two periods of limitations: a threshold period of limitations for
recording the lien, and a period for filing suit to foreclose the lien. See MCL 570.1111(1); MCL
570.1117(1). The right to a construction lien “shall cease to exist unless, within 90 days after the
lien claimant’s last furnishing of labor or material” on the improvement, pursuant to the lien
claimant’s contract, the lien claimant records a claim of lien with the register of deeds in the county
in which the property is located. MCL 570.1111(1). In general, “[p]roceedings for the
enforcement of a construction lien and the foreclosure of any interests subject to the construction
lien shall not be brought later than 1 year after the date the claim of lien was recorded.” MCL
570.1117(1). This second period of limitations relates to the time for commencing a lawsuit, not
completing it or obtaining a final order or judgment. See id.

        Legacy last provided labor and materials on January 12, 2021. It, therefore, had until April
12, 2021, to record its claim of lien. Legacy recorded its claim of lien on February 4, 2021, so it
complied with MCL 570.1111(1). Legacy then had until February 4, 2022, to file a lawsuit to
foreclose on the lien. See MCL 570.1117(1). It, therefore, complied with this second period of
limitations. There is nothing in MCL 570.1117(1) that requires the proceedings for the
enforcement of a construction lien and foreclosure of the lien be adjudicated within one year.
Rather, the case must simply be filed within that one year to avoid being barred by the one-year
limitations period. Legacy complied with that requirement when it filed its complaint on April 20,

                                                  -6-
2021, well within the one-year limitations period. Sending the case to arbitration would not affect
its ability to comply with the limitations period.

       This only becomes an issue, where, as here, the trial court dismisses the suit to foreclose
the construction lien, instead of staying it. Both the UAA and the court rules require the court to
stay proceedings in this instance. See MCL 691.1687; MCR 3.602(C). MCL 691.1687, which
deals with orders to compel or stay arbitration under the UAA, provides, in relevant part:

                 (6) If a party moves the court to order arbitration, the court on just terms
         shall stay any judicial proceeding that involves a claim alleged to be subject to the
         arbitration until the court renders a final decision under this section.

                 (7) If the court orders arbitration, the court on just terms shall stay any
         judicial proceeding that involves a claim subject to the arbitration. If a claim
         subject to the arbitration is severable, the court may limit the stay to that claim.
         [MCL 691.1687(6) and (7).]

Under these subsections, the trial court was required to stay the judicial proceedings as it related
to any claim subject to arbitration. Under MCL 691.1687(6), when Rogers moved to compel
arbitration, the trial court had to stay the proceedings until it rendered a final decision on the issue.
And when it decided to order arbitration, it should have stayed the judicial proceedings involving
any claim subject to arbitration—including the lien foreclosure claim—under MCL 691.1687(7).
Its failure to stay the proceedings went against the plain language of MCL 691.1687(6) and (7).
Similarly, MCR 3.602(C) requires a court to stay proceedings when issuing an order to compel
arbitration. Accordingly, the trial court erred in granting summary disposition in Rogers’s favor.

        The trial court’s dismissal of the lien foreclosure claim and order of arbitration, instead of
staying the claim, was also incorrect because arbitration does not toll the limitations period. See
MCL 600.5856 (tolling of statute of limitations or repose);2 Mair v Consumers Power Co, 419
Mich 74, 83-85; 348 NW2d 256 (1984) (concluding that an administrative action did not toll the
statute of limitations and that “the structure of the tolling statute precludes the conclusion that the

2
    MCL 600.5856 provides:
                The statutes of limitations or repose are tolled in any of the following
         circumstances:
                (a) At the time the complaint is filed, if a copy of the summons and
         complaint are served on the defendant within the time set forth in the supreme court
         rules.
                 (b) At the time jurisdiction over the defendant is otherwise acquired.
                 (c) At the time notice is given in compliance with the applicable notice
         period under section 2912b, if during that period a claim would be barred by the
         statute of limitations or repose; but in this case, the statute is tolled not longer than
         the number of days equal to the number of days remaining in the applicable notice
         period after the date notice is given.

                                                   -7-
Legislature intended it to include nonjudicial activity as tolling events”); see also James v Logee,
150 Mich App 35, 38-39; 388 NW2d 294 (1986) (citing Mair and concluding that jurisdiction was
not otherwise acquired through the defendants’ participation in nonjudicial proceedings before the
Board of Realtors); Varga v Heritage Hosp, 139 Mich App 358, 359-361; 362 NW2d 282 (1984)
(discussing Mair and noting persuasiveness of policy arguments for allowing an arbitration
proceeding to qualify as a tolling event but declining to create an exception to the statute of
limitations). If a lienholder timely records a claim of lien and timely files suit to foreclose on the
lien, but the court dismisses the suit due to a valid arbitration clause, the lienholder’s claims may
end up time barred because arbitration does not toll the statute of limitations pending arbitration.

        If left uncorrected, that is likely what would happen here. As stated, Legacy had until
February 4, 2022, to file its complaint to foreclosure the construction lien. See MCL 570.1117(1).
The trial court entered its order dismissing Legacy’s complaint and compelling arbitration on
September 22, 2021. Legacy then moved for reconsideration, which the trial court denied on
October 21, 2021. There are 135 days between September 22, 2021, and February 4, 2022, and
106 days between October 21, 2021, and February 4, 2022. The parties, therefore, had between
3½ and 4½ months to arbitrate their claims before Legacy would have had to file suit to enforce
the lien and for foreclosure. In light of MCR 3.602(C), MCL 691.1687(6) and (7), MCL 600.5856,
and Mair (and its progeny), the trial court should have stayed the proceedings related to Legacy’s
lien foreclosure claim and sent the case to arbitration. Afterward, the parties could return to the
trial court to enforce the arbitration award and address the lien.

         Rogers, relying on Lockwood Building Co v Dempsey, unpublished per curiam opinion of
the Court of Appeals, issued December 30, 2003 (Docket No. 241508), argues that this Court has
already rejected an argument similar to Legacy’s argument that the one-year limitations period,
and the fact that an arbitrator cannot determine an interest in land, renders its foreclosure claim
unsuitable for arbitration. Lockwood involved a residential construction agreement that contained
an arbitration provision nearly identical to the one at issue here. Lockwood, unpub op at 1. As
here, the relationship between the Lockwood plaintiff and defendants broke down. Id. There, the
plaintiff builder demanded arbitration, and the defendant homeowners answered that demand and
filed a counterclaim for breach of contract. Id. The case proceeded to arbitration, and the arbitrator
issued an award. Id. at 2. The arbitrator determined that the plaintiff’s claim of lien was valid and
that “the lien should be considered foreclosed by the arbitration.” Id. After the award was handed
down, the plaintiff filed a petition seeking entry of a judgment confirming the award. Id. The trial
court ordered the defendants to pay plaintiff the amount awarded by the arbitrator, plus fees and
interest. Id. at 2-3.

        On appeal, this Court rejected the Lockwood defendants’ argument that the arbitrator
lacked jurisdiction to determine the validity of the lien or foreclose on it. Id. at 7-8. The Lockwood
Court reasoned that there was no dispute over ownership of the property and the arbitrator was
“not deciding title to the property,” but rather was “simply deciding if a lien existed.” Id. at 8.

                                                 -8-
The Lockwood defendants, like Legacy here, argued that MCL 570.1118(1)3 gives the circuit court
exclusive jurisdiction. Id. at 8-9. This Court, however, concluded that the statute, read as a whole,
“addresse[d] which county the action shall be brought in, not which court.” Id. at 9.

        Rogers’s reliance on Lockwood is misplaced for three reasons. First, Lockwood is an
unpublished decision of this Court. Accordingly, although it may be considered for its persuasive
value, it is not binding on this Court. See MCR 7.215(C)(1); Broz v Plante & Moran, PLLC, 331
Mich App 39, 47 n 1; 951 NW2d 64 (2020). Second, Lockwood differs from this case because,
there, the defendants contested an arbitrator’s decision and award amount after arbitration took
place. See Lockwood, unpub op at 1. Here, arbitration has not even started. Third, and most
importantly, this Court has already recognized that an arbitrator may properly rule on the validity
of, and the amount owed under, a construction lien. See, e.g., Ronnisch, 306 Mich App at 214.
See also TSP Servs, Inc v Nat’l-Standard, LLC, 329 Mich App 615, 622-623; 944 NW2d 148
(2019) (an arbitrator may properly determine damages at issue under a construction lien, up to the
amount due under the related contract). Lockwood is inapplicable and unpersuasive.

        Under the court rules and the relevant portions of the UAA, the trial court should have
stayed the proceedings on its own or in response to Legacy’s motion for reconsideration. We,
therefore, reverse the trial court’s decision dismissing Legacy’s suit.

    D. THE TRIAL COURT DID NOT ERR BY DENYING REQUESTED SANCTIONS

         Legacy argues that the trial court should have sanctioned Rogers and her attorneys because
one of her former attorneys falsely certified that he contacted Legacy’s attorney before filing
Rogers’s motion for summary disposition. We disagree. Legacy failed to present any evidence
below that the praecipe filed by Rogers’s former attorney was false and the trial court did not abuse
its discretion in failing to sanction Rogers or her attorneys.

       Here, Legacy argues that sanctions were appropriate under MCR 1.109. MCR 1.109
provides for sanctions for a violation of the court rule related to signatures and states, in relevant
part:

             (5) Effect of Signature. The signature of a person filing a document,
       whether or not represented by an attorney, constitutes a certification by the signer
       that:

               (a) he or she has read the document;

              (b) to the best of his or her knowledge, information, and belief formed after
       reasonable inquiry, the document is well grounded in fact and is warranted by

3
  MCL 570.1118 states, in relevant part: “An action to enforce a construction lien through
foreclosure shall be brought in the circuit court for the county where the real property described in
the claim of lien is located.”

                                                 -9-
       existing law or a good-faith argument for the extension, modification, or reversal
       of existing law; and

               (c) the document is not interposed for any improper purpose, such as to
       harass or to cause unnecessary delay or needless increase in the cost of litigation.

              (6) Sanctions for Violation. If a document is signed in violation of this rule,
       the court, on the motion of a party or on its own initiative, shall impose upon the
       person who signed it, a represented party, or both, an appropriate sanction, which
       may include an order to pay to the other party or parties the amount of the
       reasonable expenses incurred because of the filing of the document, including
       reasonable attorney fees. The court may not assess punitive damages.

        Legacy also references Oakland Circuit Court Local Rule 2.119, which relates to motion
practice and states, in relevant part:

       (B) Motion Praecipe; Motion Certification by Attorney.

               (1) A motion praecipe must be filed at least 7 days before the hearing.

               (2) Motion certification by attorney.

              (a) The following certificate signed by the attorney of record or by the party
       in propria persona shall be attached to or incorporate in the praecipe filed with the
       assignment clerk:

                I HEREBY CERTIFY that I have made personal contact with
       ______________on______________, ____, requesting concurrence in the relief
       sought with this motion and that concurrence has been denied or that I have made
       reasonable and diligent attempts to contact counsel requesting concurrence in the
       relief sought with this motion. [6th Circuit LCR 2.119(B).]

        The trial court did not abuse its discretion in failing to sanction Rogers or her attorneys for
three reasons. First, Legacy did not provide evidence supporting its argument. It did not present
to the trial court any evidence—such as an affidavit from its attorney or email conversations
between Legacy’s attorneys and Rogers’s attorneys related to the allegedly false certification—to
support its request for sanctions. Second, Legacy argued that the praecipe was false because
Rogers’s former attorney, Lawrence Gaad, “certified [that] he made personal contact with
[Legacy’s attorney] regarding the instant Motion when he did not . . . .” The statement in 6th
Circuit LCR 2.119(B)(2)(a) has two, alternative prongs, however. It requires the attorney to certify
that they have either made personal contact with opposing counsel requesting concurrence in the
motion at issue and concurrence was denied, or they made reasonable and diligent attempts to
contact opposing counsel requesting concurrence in the relief sought in the motion. Id. The second
prong of the local rule does not require actual contact be made, only that the attorney diligently
attempted to contact opposing counsel to request concurrence. See id. Third, there was not yet an
adjudication of the merits. If the trial court determines, once arbitration is complete and the case
returns to the circuit court, that there was noncompliance on Rogers’s part, then perhaps sanctions

                                                 -10-
would be appropriate. But without having yet reached the merits of the case, we cannot conclude
that the trial court abused its discretion in deciding not to award sanctions in Legacy’s favor.

                                     IV. CONCLUSION

        For the reasons stated above, we affirm in part and reverse in part. We affirm the trial
court’s enforcement of the valid arbitration agreement. We reverse the trial court’s decision to
grant summary disposition. The court should have stayed proceedings pending arbitration. We
affirm the trial court’s decision not to impose sanctions. We remand for proceedings consistent
with this opinion. We do not retain jurisdiction.

                                                           /s/ Noah P. Hood
                                                           /s/ Anica Letica
                                                           /s/ Deborah A. Servitto

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