Cnj Financial Group LLC v. Betty McKenney
327547
Mich. Ct. App.Oct 18, 2016Background
- McKenney agreed in 2010 to sell her Detroit property to CNJ and Martin’s Construction for $25,000 contingent on renovations; Martin’s Construction hired R & F Flooring and performed work.
- Before closing, McKenney refused to sell; CNJ and Martin’s sued for breach of contract (and other claims); McKenney counterclaimed and third‑partied against others.
- The parties submitted the dispute to binding arbitration. The arbitrator found McKenney breached the Real Estate Transaction Agreement and awarded Martin’s Construction the choice: take the property for $25,000 within 30 days or receive $65,000 in reimbursement.
- Martin’s sought confirmation of the award; McKenney moved to vacate, asserting excess of authority, reliance on inadmissible texts, misapplication of law (unlicensed contractor / Residential Builder’s Act), and alleged perjury/fraud at arbitration.
- The trial court confirmed the award, ordered McKenney to transfer title for $25,000, and appointed a receiver to effectuate transfer; McKenney appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the arbitration award should be vacated for fraud or corruption | Award valid; arbitrator’s credibility findings control | McKenney contends testimony conflict and alleged perjury/fraud require vacatur | Vacatur denied; conflicting testimony is credibility determination for arbitrator, no direct proof of corruption |
| Whether trial court relied on inadmissible evidence (texts, letter) when confirming award | Award stands; record of arbitration not required beyond award | McKenney says court relied on evidence not admitted at arbitration | Denied relief; no arbitration record to review and courts limited to face of award/record per Hope‑Jackson |
| Whether arbitrator erred in finding a contract with Martin’s Construction | Martin’s Construction prevailed on breach; arbitrator found McKenney bound to agreement with both CNJ and Martin’s | McKenney argued arbitrator contradicted itself and there was no contract with Martin’s | Court found award shows arbitrator concluded McKenney contracted with CNJ and Martin’s; no error apparent on face of award |
| Whether trial court properly modified award by ordering sale (eliminating defendant’s option to pay $65,000) | Martin’s Construction sought specific performance / quiet title because McKenney refused to convey | McKenney argued award gave her election to pay $65,000 instead of conveying and court improperly removed that option | Reversed in part: trial court improperly modified award by eliminating McKenney’s option; modification not authorized under MCR 3.602(K)(1) |
Key Cases Cited
- Cipriano v. Cipriano, 289 Mich. App. 361 (2010) (standard of review — de novo review of confirmation/vacatur)
- Gordon Sel‑Way, Inc. v. Spence Bros., Inc., 438 Mich. 488 (1991) (judicial power to vacate arbitration awards is limited)
- Fette v. Peters Const. Co., 310 Mich. App. 535 (2015) (award must ‘draw its essence’ from the submission/contract)
- Hope‑Jackson v. Washington, 311 Mich. App. 602 (2015) (reviewing courts restricted to written arbitration record; absent agreed record, review limited to face of award)
- Dohanyos v. Detrex Corp., 217 Mich. App. 171 (1996) (courts will not substitute their judgment for arbitrator on merits)