Advanced Integration Tech v. Baker Aerospace Tooling & MacHining
354302
| Mich. Ct. App. | Jul 15, 2021Background
- Plaintiffs (Advanced Integration Technology entities and owners Hutton and LaGrandeur) entered a Feb. 1, 2010 agreement with defendant (Baker/Rekab) providing month‑to‑month shop use and a contractual "right of first refusal" to bid on machining work plaintiffs outsourced.
- Plaintiffs vacated defendant’s premises in March 2010 but continued outsourcing machining work, sometimes to other vendors; relations soured and plaintiffs’ owner sent an email on March 24, 2013 indicating termination of the business relationship.
- Defendant sued for breach; parties agreed to arbitrate and stipulated that MCR 2.116 summary‑disposition standards and Michigan law apply; arbitrator could be appealed to circuit court for vacatur or errors of law.
- Arbitrator granted defendant summary disposition on liability, concluding the right‑of‑first‑refusal survived the 2010 move and was revoked by plaintiffs’ March 24, 2013 email; held an evidentiary hearing limited to damages and later awarded defendant $3,243,690 plus interest.
- Plaintiffs sought vacatur in circuit court, which remanded to the arbitrator for clarification; after clarification the circuit court confirmed the award. Plaintiffs appealed; the Court of Appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the contract’s right of first refusal terminated when plaintiffs vacated defendant’s building in 2010 | The agreement was a month‑to‑month tenancy; the right of first refusal expired when plaintiffs left | The agreement created a separate business relationship/right of first refusal that continued after the move until revoked | Held: Arbitrator reasonably found the right survived the move and was terminable at will; it was revoked by plaintiffs’ March 24, 2013 email, so no genuine factual dispute required trial on liability |
| Whether the arbitrator erred by granting summary disposition on liability while the contract scope (which jobs were covered) was ambiguous | Arbitrator improperly granted liability despite admitting ambiguity as to what jobs fell within the right of first refusal; extrinsic evidence was considered | Scope ambiguity concerned damages, not liability; arbitrator limited hearing to damages and developed facts thereon | Held: Arbitrator treated scope as a damages issue, took evidence at the hearing, and did not err or exceed authority in granting liability and later addressing scope at the damage hearing |
| Whether the circuit court abused its discretion by remanding to the arbitrator for clarification instead of vacating the award | Circuit court should have vacated an unclear award | Statute permits remand to clarify an award | Held: Remand for clarification was authorized under MCL 691.1700(4) and appropriate |
| Whether the arbitrator exceeded the scope of the remand by modifying the award | Arbitrator rewrote/modified the award beyond the remand scope | Arbitrator’s clarification explained that prior findings stood and ambiguity related only to damages; hearing evidence addressed damages | Held: Arbitrator did not exceed remand scope; clarification and factual development were consistent with initial findings and remand purpose |
Key Cases Cited
- Ann Arbor v. American Fed. of State, Co. & Mun. Employees (AFSCME) Local 369, 284 Mich. App. 126 (narrow judicial review of arbitration awards; courts may not reinterpret contracts)
- Miller v. Miller, 474 Mich. 27 (de novo review whether arbitrator exceeded powers)
- Washington v. Washington, 283 Mich. App. 667 (legal error must appear on the face of the award to vacate)
- Gordon Sel‑Way, Inc. v. Spence Bros., Inc., 438 Mich. 488 (exceeded‑powers claims require careful scrutiny to avoid merits review)
- Innovation Ventures v. Liquid Mfg., 499 Mich. 491 (contract interpretation focuses on parties’ intent and plain language)
- Kendzierski v. Macomb County, 503 Mich. 296 (unambiguous contracts are enforced as written)
- Klapp v. United Ins. Group Agency, Inc., 468 Mich. 459 (whether contract language is ambiguous is a question of law)
- D’Avanzo v. Wise & Marsac, P.C., 223 Mich. App. 314 (ambiguity requires factual development; summary disposition inappropriate)
- Lichnovsky v. Ziebart Int’l Corp., 414 Mich. 228 (agreements lacking duration/termination terms are generally terminable at will)
- Shay v. Aldrich, 487 Mich. 648 (extrinsic evidence inadmissible to vary unambiguous contract terms)
- Dohanyos v. Detrex Corp., 217 Mich. App. 171 (arbitrators derive authority from contract and must act within its terms)