Kay Bee Kay Holding Company LLC v. Pnc Bank Na
327077
| Mich. Ct. App. | Nov 8, 2016Background
- Kay Bee Kay parties sued Kramer and Taleb; Kramer (third-party defendant) appealed confirmation of an arbitration award and entry of judgment for Said Taleb.
- Kramer argued the trial court erred in allowing Taleb’s amended countercomplaint/third-party complaint (defamation), claiming the defamation claim was time-barred and privileged, and that the court improperly granted Taleb relief from judgment.
- Parties stipulated to binding arbitration and the trial court entered an arbitration order dismissing claims without prejudice and giving the arbitrator “full legal effect” to prior rulings; the order required the arbitrator to identify success/failure on each claim and stated the award was binding without right to appeal.
- Arbitrator found Kramer’s accusations malicious and intentional, awarded Taleb lost and future wages, exemplary damages, mental anguish, costs, and attorney fees; trial court confirmed the award.
- On appeal, Kramer challenged preservation of issues, waiver/mootness by the arbitration agreement, and asserted the arbitrator exceeded authority (failure to address statute of limitations and privilege, failure to reduce future damages to present value, improper attorney-fee award).
- The Court of Appeals affirmed: it found Kramer waived/mooted his pre-arbitration challenges by consenting to arbitration and found no facial legal error or excess of arbitrator authority warranting vacatur of the award.
Issues
| Issue | Taleb's Argument | Kramer’s Argument | Held |
|---|---|---|---|
| Whether Kramer may challenge trial-court rulings (allowing Taleb’s countercomplaint) after stipulating to arbitration | Stipulation waived appeal of pre-arbitration rulings; prior rulings were submitted to arbitrator | Trial-court admission of counterclaim was untimely/statute-barred and privilege-defeated; relief-from-judgment was improper | Waived/moot: stipulation sent the claims and defenses to arbitration and gave "full legal effect" to prior rulings; Kramer cannot now seek review of those rulings |
| Whether the Court lacks jurisdiction because arbitration order waived appeals | Arbitration provision removed right to appeal of merits; limited review still permitted for excess-of-authority claims | Arbitration waiver does not bar review to determine whether arbitrator exceeded authority or committed legal error on the face of the award | Court retained limited jurisdiction to review whether arbitrator exceeded authority; appeal not categorically barred |
| Whether the arbitrator exceeded authority by awarding fees/costs, future damages, and not reducing to present value | Arbitration order authorized award of amounts, costs, interest, and attorney fees; arbitrator was within contract scope | Arbitrator miscalculated damages, should have reduced future damages to present value and apportion damages; awarding fees exceeded authority | Arbitrator acted within contract scope; no facial legal error shown; award stands |
| Whether arbitrator ignored statute-of-limitations and privilege defenses on defamation claim | Defenses and claims were submitted to arbitrator; award can rest on multiple theories (defamation, abuse of process, IIED) | Arbitrator failed to address limitations and privilege; thus exceeded authority | No facial showing that arbitrator disregarded controlling law or exceeded authority; factual findings not reviewable and award not vacated |
Key Cases Cited
- Dell v. Citizens Ins. Co. of Am., 312 Mich. App. 734 (preservation rule for issues raised in trial court)
- Bayati v. Bayati, 264 Mich. App. 595 (arbitration agreements enforced according to terms)
- Bloomfield Estates Improvement Ass’n v. City of Birmingham, 479 Mich. 206 (unambiguous contracts enforced as written)
- Varran v. Granneman, 312 Mich. App. 591 (waiver extinguishes appellate review of claimed procedural error)
- Detroit Auto Inter-Ins Exch v. Gavin, 416 Mich. 407 (arbitrator exceeds power when acting beyond contract or manifestly disregarding law)
- Port Huron Area Sch. Dist. v. Port Huron Ed. Ass’n, 426 Mich. 143 (voluntary arbitration submission does not eliminate review for arbitrator excess of authority)
- City of Ann Arbor v. AFSCME Local 369, 284 Mich. App. 126 (judicial review of arbitration awards is narrowly circumscribed)