Peter Karmanos Jr v. Compuware Corporation
327476
| Mich. Ct. App. | Oct 20, 2016Background
- Peter Karmanos, former executive chairman of Compuware, was terminated for cause after criticizing Compuware management; termination led to loss of stock options and RSUs.
- Karmanos sued in circuit court for conversion (including statutory treble damages), breach of contract, and unjust enrichment; Compuware counterclaimed.
- Parties agreed to dismiss the suit and submit all claims to binding arbitration under a "Submission to Dispute Resolution" adopting AAA Commercial Rules but expressly providing the arbitrator need not issue findings of fact or law.
- The arbitrator issued an unreasoned monetary award of $16,500,000 in favor of Karmanos ("inclusive of all interest, costs and legal fees").
- Compuware sought clarification, arguing the award necessarily included punitive treble damages and attorney fees and thus the arbitrator had to comply with UAA §21(5) by stating factual and legal basis and separately stating punitive amount; arbitrator denied clarification.
- Circuit court confirmed the award and entered judgment for $16.5 million; Compuware appealed arguing the award violated MCL 691.1701(5) of the UAA and should be vacated or modified.
Issues
| Issue | Karmanos' Argument | Compuware's Argument | Held |
|---|---|---|---|
| Whether the unreasoned arbitration award violated UAA §21(5) by failing to state factual/legal basis and separately state punitive damages amount | The parties had agreed the arbitrator need not issue findings; no §21(5) relief where parties waived such requirement | The $16.5M award must have included statutory treble (punitive) damages and fees; §21(5) required express factual and legal bases and separate punitive amount, so award is defective | Court: Compuware waived challenge by agreeing (and advocating) that arbitrator need not provide findings; no facially evident §21(5) error, so award confirmed |
| Whether court may vacate/modify award given lack of reasoning (and whether review would improperly re-litigate merits) | N/A (Karmanos argued for confirmation) | Compuware sought vacatur/modification arguing error apparent and substantial because treble damages require separate statement | Court: Cannot speculate about arbitrator's mental path; courts must not review merits or engage in factfinding; absent an error apparent on the face of the award, confirmation is proper |
Key Cases Cited
- Cipriano v. Cipriano, 289 Mich. App. 361 (discussing standards for reviewing arbitration confirmation/vacatur)
- Washington v. Washington, 283 Mich. App. 667 (arbitrator exceedance-of-authority standard; facially evident error concept)
- DAIIE v. Gavin, 416 Mich. 407 (arbitration awards often lack reasoned opinions; courts should be reluctant to vacate absent substantial, apparent error)
- Gordon Sel-Way, Inc. v. Spence Bros., Inc., 438 Mich. 488 (error must be material/substantial and evident on the face of the award to justify vacatur)