Domestic Uniform Rental v. A2 Auto Center, 355780

Background

Plaintiff and “A2 Auto Center” executed a uniform-rental agreement (signed by Majed Kahala as “Owner”) listing 1500 E Stadium, Ann Arbor, as the business address; the agreement incorporated AAA rules and an arbitration clause.
Plaintiff demanded arbitration with AAA; AAA sent notices to various A2 addresses (including 1500 E Stadium). Defendants did not participate in the arbitration until after an award issued and after plaintiff filed to confirm the award in circuit court.
In circuit court plaintiff moved to confirm the award; defendants moved to vacate, contending, among other things, lack of proper notice and that some defendants were not parties to the contract.
The trial court referred the question whether notice complied with AAA rules to the arbitrator; the arbitrator found notice proper, and the trial court confirmed the award.
On appeal defendants argued (1) two entities were not parties to the rental agreement, (2) the arbitrator improperly used expedited AAA procedures, and (3) the trial court impermissibly delegated the notice question to the arbitrator.
The Court of Appeals vacated the confirmation only as to A2 Auto Center Main, LLC (remanding for the trial court to determine whether that entity was a contracting party) and affirmed confirmation as to the remaining defendants.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether certain defendants (A2 Auto Center, Inc. and A2 Auto Center Main, LLC) were parties to the arbitration agreement	Agreement names “A2 Auto Center” and Kahala signed as owner; plaintiff enforced award against named entities	Defendants contend A2 Auto Center, Inc. and A2 Auto Center Main, LLC were not parties and thus did not consent to arbitration	Court affirmed confirmation as to A2 Auto Center, Inc. (defendants previously averred Kahala signed as manager of that entity) but vacated as to A2 Auto Center Main, LLC and remanded for trial-court determination whether it was a party
Whether arbitrator improperly used AAA expedited procedures	Plaintiff relies on arbitrator’s procedural choices under AAA rules and deference to arbitrators on procedure	Defendants argue expedited procedures were used contrary to AAA rules and prejudiced them	Issue was unpreserved; even on review defendants failed to show prejudice or outcome-affecting error, so no relief granted
Whether the trial court erred by referring the notice-of-arbitration question to the arbitrator	Plaintiff argued AAA rules (incorporated in contract) governed notice and the arbitrator could decide whether AAA notice requirements were met	Defendants argued the court impermissibly delegated the statutory notice/threshold question to the arbitrator	Court held the trial court properly determined AAA-rule notice would suffice and permissibly asked arbitrator to decide whether AAA notice was given; arbitrator’s finding on that specific question was allowable

Key Cases Cited

Altobelli v. Hartmann, 499 Mich 284 (2016) (trial court decides threshold question whether a dispute is arbitrable)
Radwan v. Ameriprise Ins. Co., 327 Mich App 159 (2018) (de novo review for whether arbitrator exceeded authority)
BG Group PLC v. Republic of Argentina, 572 US 25 (2014) (presumption that arbitrators decide procedural preconditions, like notice)
Nordlund & Assocs., Inc. v. Hesperia, 288 Mich App 222 (2010) (standard of review for arbitration-confirmation proceedings)
Fette v. Peters Constr. Co., 310 Mich App 535 (2015) (courts defer to arbitrators on procedural matters)
Hetrick v. Friedman, 237 Mich App 264 (1999) (nonparty cannot be compelled to arbitrate)