Plaintiffs appeal as of right
This case arises out of the employment of the individual plaintiffs, Mathew D. Rooyakker, George M. Sitz, and Sandra K. Burns, with defendant Plante & Moran, PLLC, an accounting and business consulting firm, at its Gaylord office.
As a condition of the individual plaintiffs' employment, they each signed a "Practice Staff — Relationship Agreement" (agreement), which was drafted by Plante & Moran, and contained both a "client solicitation" clause and an "arbitration clause." The client solicitation clause states as follows:
The arbitration clause provides:
On July 13, 2005, the individual plaintiffs were informed that Plante & Moran had decided to close its Gaylord office. The individual plaintiffs were offered the opportunity to move to Plante & Moran's Traverse City office,
Several of Plante & Moran's Gaylord clients hired plaintiffs to provide accounting and tax services. When Plante & Moran learned or suspected that the individual plaintiffs were providing services to its former clients, it initiated arbitration proceedings against those plaintiffs for violation of the client solicitation clause contained in the agreement. In March 2006, Mathew Rooyakker and George Sitz received an arbitration demand from Plante & Moran, claiming that the amount in dispute was $140,000. Burns received a similar letter dated March 2, 2006, demanding payment of $4,545.
Plaintiffs filed a suit on March 20, 2006, seeking a declaration that the agreement was unreasonable and unenforceable, and alleging that defendants Kevin Lang and Michelle Carrol interfered with Rooyakker and Sitz's business expectations or relationships, and that Lang defamed Rooyakker and Sitz. On June 2, 2006, the parties filed cross-motions for summary disposition. Defendants moved for summary disposition under MCR 2.116(C)(7), (8), and (10), asserting that the claims arising out of the agreement should be arbitrated, and the remaining claims should be dismissed for lack of evidentiary support. Plaintiffs also moved for summary disposition,
Plaintiffs now appeal.
II. SUMMARY DISPOSITION
A. Standard of Review
We review de novo a trial court's decision on a motion for summary disposition. Dressel v. Ameribank, 468 Mich. 557, 561, 664 N.W.2d 151 (2003). Likewise, statutory interpretation is a question of law that this Court reviews de novo. Reed v. Yackell, 473 Mich. 520, 528, 703 N.W.2d 1 (2005). And a trial court's determination that an issue is subject to arbitration is also reviewed de novo. Madison Dist. Pub. Schools v. Myers, 247 Mich.App. 583, 594, 637 N.W.2d 526 (2001).
Plaintiffs argue that the trial court erred (1) in concluding that the parties' agreement is an irrevocable statutory arbitration agreement, (2) in referring to arbitration issues regarding the validity of the client solicitation clause, and (3) in summarily dismissing plaintiffs' fraud and frustration-of-purpose claims. We disagree.
1. Statutory Arbitration
An agreement to arbitrate under the Michigan arbitration act (MAA), MCL 600.5001 et seq., is valid, enforceable, and irrevocable except upon grounds that justify the rescission or revocation of any contract. Wold Architects & Engineers v. Strat, 474 Mich. 223, 230, 713 N.W.2d 750 (2006). Conversely, common-law arbitration agreements are unilaterally revocable before an arbitration award is made. Id. at 231, 713 N.W.2d 750.
To be an irrevocable statutory arbitration agreement subject to the MAA, the agreement to arbitrate must provide for a judgment of any circuit court to be rendered on the arbitrator's award. Wold, supra at 229, 713 N.W.2d 750. Indeed, MCL 600.5001(2) states as follows:
Here, the parties' arbitration clause states as follows:
We reject plaintiffs' argument that because the parties' arbitration clause does not state that a "circuit court" may render judgment upon the award, but rather states that judgment may be entered "in any court having jurisdiction," this is a common-law arbitration clause, and the trial court erred in concluding to the contrary.
While our Supreme Court in Wold, supra at 238, 713 N.W.2d 750, did state that "[p]arties wishing to conform their agreements to MCL 600.5001(2) must put their agreements in writing and require that a circuit court may enforce them," this holding does not preclude a finding that the parties' arbitration agreement in this case is statutory and binding. Unlike in Wold, where there was no language providing for enforcement of the arbitration award by a court, the parties' agreement in this case clearly provides for enforcement by a court, even if it does not specifically identify the circuit court. Further, Michigan courts have concluded that arbitration agreements with similarly broad language were statutory arbitration clauses. Gordon Sel-Way, Inc. v. Spence Bros., Inc., 438 Mich. 488, 495, 475 N.W.2d 704 (1991) (stating that "[b]ecause the Spence/Sel-Way arbitration clause provides that judgment may be entered [in any court having jurisdiction] on the arbitration award, it falls within the definition of `statutory arbitration,' and is governed by MCL 600.5001 et seq."); Hetrick v. David A. Friedman, D.P.M., P.C., 237 Mich.App. 264, 269, 602 N.W.2d 603 (1999) (concluding that an arbitration agreement was statutory and irrevocable where it "included a provision for a judgment upon the arbitration award to be entered in a court having jurisdiction"). Moreover, Michigan public policy favors arbitration to resolve disputes, Rembert v. Ryan's Family Steak Houses, Inc., 235 Mich.App. 118, 128, 596 N.W.2d 208 (1999), so a finding that this is not a statutory arbitration agreement simply because it does not contain the words "circuit court" would seem contrary to that public policy. Therefore, we conclude that the trial court did not err in deciding that the language in the parties' agreement providing for enforcement by "any court having jurisdiction" was sufficient to meet the requirements set forth in MCL
2. Violations of the MARA
Plaintiffs allege that the agreement's client solicitation clause is a noncompetition agreement that violates § 2 of the MARA, MCL 445.772, and, therefore, is unenforceable.
"Michigan jurisprudence favors arbitration, and the employment context is no exception." Rembert, supra at 130, 596 N.W.2d 208. "By agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial, forum. It trades the procedures and opportunity for review of the courtroom for the simplicity, informality, and expedition of arbitration." Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985). In Rembert, supra at 126, 596 N.W.2d 208, this Court upheld an arbitration agreement where an employee of a restaurant filed suit in circuit court claiming state-law, civil-rights violations. This Court stated that "`if the Legislature wanted to preclude predispute agreements to arbitrate civil rights claims, it would have excluded such claims by name, just as it excluded collective bargaining agreements and certain real estate claims.'" Id. at 133, 596 N.W.2d 208, quoting Rushton v. Meijer, Inc. (On Remand), 225 Mich.App. 156, 175, 570 N.W.2d 271 (1997); see also Abela v. Gen. Motors Corp., 257 Mich.App. 513, 522, 669 N.W.2d 271 (2003), quoting Davis v. Southern Energy Homes, Inc., 305 F.3d 1268, 1280 (C.A.11, 2002) (stating that "`a statute's provision for a judicial forum does not preclude enforcement of a binding arbitration agreement . . . '").
Therefore, we conclude that the trial court did not err in referring this issue to arbitration. Just because the statute provides jurisdiction to the circuit court, it does not follow that it precludes arbitration. If the Legislature intended to exempt all antitrust actions from arbitration, it could have done so. Rather, because the parties expressly agreed to arbitrate all claims arising out of the contract, and the issue whether the client solicitation clause violates the MARA is a dispute arising from the contract, this issue, by the parties' own agreement, is subject to arbitration.
Plaintiffs further argue that the client solicitation clause is a noncompetition clause, which violates § 2 of the MARA. Conversely, defendants assert that this is an antipiracy clause, likening the instant case to Follmer, Rudzewicz & Co., PC v. Kosco, 420 Mich. 394, 362 N.W.2d 676 (1984), and Rehmann, Robson & Co. v. McMahan, 187 Mich.App. 36, 466 N.W.2d 325 (1991), where similar clauses were upheld as reasonable. However, regardless of what the clause is titled, and although the trial court did not reach the issue,
Section 4a(1) of the MARA provides as follows:
This Court recently addressed the issue whether a covenant not to compete violates the MARA in St. Clair Medical, P.C. v. Borgiel, 270 Mich.App. 260, 715 N.W.2d 914 (2006). In St Clair Medical, the plaintiff was attempting to enforce an agreement with its former employee that stated that the employee would be unable to practice within seven miles of a clinic owned by the plaintiff for at least one year following the employee's termination of employment. Id. at 262, 715 N.W.2d 914. "To be reasonable in relation to an employer's competitive business interest, a restrictive covenant must protect against the employee's gaining some unfair advantage in competition with the employer, but not prohibit the employee from using general knowledge or skill." Id. at 266, 715 N.W.2d 914. This Court held that the covenant was reasonable in relation to the situation because the doctor was not completely prevented from practicing medicine, he was merely unable to see patients of his former clinic within seven miles of the plaintiff's clinic for one year. Similarly, in this case, the clause merely prevents the individual plaintiffs from acting as accountants for former clients of Plante & Moran; it does not preclude them from performing accounting services.
Further, "[u]nder Michigan law, preventing the anticompetitive use of confidential information is a legitimate business interest." Whirlpool Corp. v. Burns, 457 F.Supp.2d 806, 812 (W.D.Mich., 2006). In this case, plaintiffs acquired confidential information, because of the nature of the accounting profession, regarding both Plante & Moran and its clients. The clause only prohibited the individual plaintiffs from soliciting or providing services to Plante & Moran's clients for a two-year period. Therefore, the duration of the agreement was reasonable. The clause only prevents the individual plaintiffs from rendering the same services to Plante & Moran's former clients and not different services. And while the clause failed to specify a geographic area, the statute provides for the limiting of noncompetition clauses to render them reasonable. MCL 445.774a(1). Therefore, we conclude that the client solicitation clause does not violate the MARA.
3. Frustration of Purpose
Next, plaintiffs argue that the trial court erred in sending their frustration-of-purpose issue to arbitration because the court, not the arbitrator, must determine whether a contract that violates a statute or
The frustration-of-purpose doctrine provides an excuse for nonperformance of a contractual obligation. Liggett Restaurant Group, Inc. v. City of Pontiac, 260 Mich.App. 127, 133, 676 N.W.2d 633 (2003). Generally, the doctrine is "asserted where `a change in circumstances makes one party's performance virtually worthless to the other, frustrating his purpose in making the contract.'" Id. at 133-134, 676 N.W.2d 633, quoting Restatement Contracts, 2d, § 265, comment a, p. 335. While the Supreme Court has yet to consider the doctrine, this Court has in Molnar v. Molnar, 110 Mich.App. 622, 313 N.W.2d 171 (1981).
The following conditions must be met before a party may avail itself of the frustration-of-purpose doctrine:
In this case, the fact that the Gaylord office could (or maybe even would) close was reasonably foreseeable at the time the parties signed the agreement. Indeed, Sitz stated during his deposition that at his interview, Rooyakker presented him with a "three-year let's try to keep the office from not closing plan." And he also acknowledged that he believed that Plante & Moran was at least considering closing the Gaylord office on August 30, 2004, even before he signed the agreement. Further, we agree that Plante & Moran's closing of the Gaylord office did not necessarily frustrate the purpose of the agreement — protecting its client relationships. As the trial court pointed out, "[n]othing prevents an accounting firm from servicing clients who live an hour away." Therefore, we conclude that the trial court did not err in summarily dismissing plaintiffs' frustration-of-purpose claim.
4. Fraud in the Inducement
Plaintiffs also argue that the trial court erred in dismissing George Sitz's fraud claim because its decision was premature, given that discovery was still open on this issue, and because a genuine issue of material fact exists regarding whether Sitz was fraudulently induced to sign the agreement. Again, we disagree.
"`Generally, a motion for summary disposition is premature if granted before discovery on a disputed issue is complete. However, summary disposition may nevertheless be appropriate if further discovery does not stand a reasonable chance of uncovering factual support for the opposing party's position.'" Oliver v. Smith, 269 Mich.App. 560, 567, 715 N.W.2d 314 (2006), quoting Peterson Novelties, Inc. v. City of Berkley, 259 Mich.App. 1,
In Custom Data Solutions, Inc. v. Preferred Capital, Inc., 274 Mich.App. 239, 242-243, 733 N.W.2d 102 (2006), this Court recently reiterated the requirements for a fraud-in-the-inducement claim, explaining as follows:
Further, "`[f]raud in the inducement to enter a contract renders the contract voidable at the option of the defrauded party.'" Custom Data Solutions, supra at 243, 733 N.W.2d 102, quoting Samuel D. Begola Services, supra at 640, 534 N.W.2d 217.
Plaintiffs give cursory treatment to this issue and fail to allege a prima facie case of fraud in the inducement in their brief on appeal. Plaintiffs assert that Mathew Rooyakker's affidavit and further discovery would establish a genuine issue of material fact. However, they fail to indicate any facts in Rooyakker's affidavit, or other facts that further discovery might reveal, that would raise a genuine issue of material fact. In short, Rooyakker's affidavit alleges that Kevin Lang did everything to undermine the strategic and economic viability of the Gaylord office while representing to the individual plaintiffs that the office would remain open. But even if the allegations set forth in Rooyakker's affidavit are true, economic realities are such that one in the individual plaintiffs' shoes cannot reasonably rely on such representations. Changes in markets and economic conditions occur frequently, and one cannot reasonably expect an office, plant, or store that becomes not viable economically and not in the strategic interests of the owners to remain open. Therefore, we conclude that the trial court did not err in dismissing Sitz's claim of fraud in the inducement.
5. Nonparties to the agreement
Finally, plaintiffs argue that the trial court erred in sending to arbitration the claims involving Rooyakker & Sitz, PLLC, Kevin Lang, and Michelle Carroll because they are not parties to the agreement. However, plaintiffs failed to raise this argument below. Therefore, it
In this case, the broad language of the arbitration clause —"any dispute or controversy arising out of or relating to" the agreement—vests the arbitrator with the authority to hear plaintiffs' tortious interference and defamation claims, even if they involve nonparties to the agreement. Further, Michigan courts clearly favor keeping all issues in a single forum. Detroit Automobile Inter-Ins Exch. v. Reck, 90 Mich.App. 286, 289, 282 N.W.2d 292 (1979) (noting a strong public policy in Michigan in favor of arbitration as a single, expeditious means of resolving disputes, and that the policy in favor of this expeditious alternative to the judicial system is thwarted if all disputed issues in an arbitration proceeding must be segregated into arbitrable and nonarbitrable categories). Therefore, we do not believe that the trial court erred in referring plaintiffs' tortious interference and defamation claims to arbitration because they arise out of or relate to the individual plaintiffs' past employment with Plante & Moran.
DEBORAH A. SERVITTO, MICHAEL J. TALBOT, JJ., concur.