the Caden Companies Inc v. Mj Steps
332795
| Mich. Ct. App. | Sep 14, 2017Background
- Plaintiffs (Caden Companies and Belly Bandit) are U.S. companies; defendant (MJ Steps) is a foreign distributor headquartered in Switzerland/Spain. Parties executed a three-year distribution contract granting defendant exclusive European distribution rights for Belly Bandit products.
- The Contract designated Michigan law, exclusive venue in Oakland County, Michigan, and arbitration in Southfield, Michigan for disputes.
- Plaintiffs sued in Oakland Circuit Court seeking a declaratory order compelling defendant to arbitrate and alleging breach of contract and tortious interference.
- Defendant moved for summary disposition under MCR 2.116(C)(1), arguing the Contract was never fully executed and the court lacked personal jurisdiction; the trial court granted that motion and dismissed the case.
- Plaintiffs moved for reconsideration and submitted a new copy of the Contract signed by all parties; the trial court reconsidered, set aside dismissal, and ordered arbitration under MCR 2.116(C)(7).
- On appeal, the Court of Appeals reversed, holding the trial court abdicated its duty by failing to analyze whether Michigan could exercise jurisdiction under MCL 600.711 and the consent-to-jurisdiction requirements of MCL 600.745 before compelling arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether trial court properly compelled arbitration under MCR 2.116(C)(7) | Contract contains valid arbitration clause; clause authorizes Michigan court to order arbitration | Court lacked jurisdiction because Contract was not executed and defendant has no Michigan contacts | Reversed — court must ensure personal jurisdiction exists before ordering arbitration |
| Whether trial court could rely on forum-selection clause as consent to jurisdiction | Forum-selection clause constitutes defendant's consent to Michigan jurisdiction | Consent is valid only if statutory requirements of MCL 600.745 are satisfied | Reversed — trial court failed to analyze MCL 600.745 factors before relying on consent |
| Whether arbitrability questions are for court or arbitrator | Plaintiffs: court may decide existence of arbitration agreement and arbitrability gateway issues | Defendant: arbitrator decides enforceability under UAA | Court: trial court decides existence of agreement and arbitrability gateway, but only after establishing jurisdiction; arbitrator decides contract validity under UAA when appropriate |
| Whether trial court abused discretion by reconsidering dismissal and granting summary disposition without jurisdictional analysis | Plaintiffs: reconsideration appropriate upon new signed contract; ordering arbitration proper | Defendant: trial court abdicated duty by not evaluating statutory consent factors and convenience under MCL 600.745 | Held: abuse of discretion — remand for court to consider MCL 600.711 and MCL 600.745 before addressing arbitration |
Key Cases Cited
- Rooyakker & Sitz, PLLC v. Plante & Moran PLLC, 276 Mich. App. 146 (review standard for summary disposition)
- McCormick v. Carrier, 487 Mich. 180 (court reviews legal questions de novo)
- Klapp v. United Ins. Group Agency, Inc., 468 Mich. 459 (contract interpretation principles)
- Nexteer Auto Corp. v. Mando America Corp., 314 Mich. App. 391 (existence/enforceability of arbitration agreement)
- Yoost v. Caspari, 295 Mich. App. 209 (personal jurisdiction standards)
- Bienenstock & Assoc., Inc. v. Lowry, 314 Mich. App. 508 (court's inquiry limited to gateway arbitrability question)
- Watts v. Polaczyk, 242 Mich. App. 600 (existence of arbitration agreement is a judicial question)
- Lease Acceptance Corp. v. Adams, 272 Mich. App. 209 (MCL 600.745 requirements for consent-based jurisdiction)
- Turcheck v. Amerifund Fin., Inc., 272 Mich. App. 341 (enforcement of contractual forum-selection clauses)