*1 Bros v Sullivan 1979] CO, SULLIVAN MINISTRELLI CONSTRUCTION INC v BROTHERS EXCAVATING, INC 3, 1978, Rapids.— Docket No. 77-4466. Submitted November at Grand denied, appeal 406 Mich 1979. to Decided March Leave 1013. Co., Inc., Plaintiff, general contractor on Ministrelli Construction project, Michigan Highway Department construction Inc., Excavating, defendant, Sullivan Brothers a subcon- sued money project, for due which counterclaimed tractor subcontract, unpaid. to the terms of the and Pursuant arbitration, to which resulted in an matter was submitted to affirm the award and Defendant moved defendant. plaintiff’s plaintiff the award. The basis moved to vacate that, subsequent to the arbitration hear- motion to vacate was ing prior each the three arbitrators had an but witness, and, parte telephone in one conversation with a ex case, questions exper- outside his field of the witness answered Ingham damages. concerning calculation of Circuit tise Brown, J., Court, that the motion to vacate Thomas L. ruled timely ordered award vacated and the cause filed and panel. ap- new Defendant remanded for arbitration before a peals by granted. Held: leave 1. An to the circuit courts to set aside an arbitra- upon predicated tion award fraud or other undue within such means must be made after known or should have been known. 2. An vacated for arbitrator should be ex misconduct each of the three arbitrators made an where witness,

parte telephone contact with one of whom answered expertise his field of calculation outside

Affirmed. J.,

M. B. hold dissented. He would ^[1] [2] [3, Time for 5 Am Jur Am Jur 5 Am Jur impeaching 2d, 2d, 2d, References Arbitration Arbitration and Award §§ arbitration award. 85 for Points in Headnotes Award §§ Award § 177, 179. 186. ALR2d 779. 185. App 111 based on misconduct an arbitration award to vacate evidence both must show clear an arbitrator that, the re- when He would hold misconduct *2 findings specific these two viewing as to make court fails to reviewing issues, Appeals to the remand should the Court findings. specific for court

Opinion the Court — — of Award Timeliness Vacation 1. Arbitration and Award Application — Rules. Court to set aside an arbitration to the circuit court An means predicated upon or other undue fraud known or after such made within 20 must be (GCR 1963, 769.9[2]). have been known should — — 2. Arbitration Arbitrator Vacation Award and Award Misconduct. may for arbitrator misconduct be vacated An arbitration award parte telephone an ex arbitrators made each of the three where witness, out- of whom answered with a one contact expertise calculation of side his field of B.

Dissent M. — — 3. Arbitration Arbitrator of Award Award Vacation and Policy Favoring — — of Proof Public Misconduct Burden Finality. Award awards; policy finality a of arbitration Public favors the award based on misconduct to vacate an arbitration convincing both and evidence the arbitrator must show clear misconduct and — — Burden of of Award 4. Arbitration and Award Vacation Appeal Findings — — Error. of Fact and Proof court, reviewing miscon- award for arbitrator A duct, specific to the existence of fact as should make a applying prejudice, or nonexistence of misconduct proofs, appropriate standard clear and findings Appeals specific where the Court of should remand for findings. specific to make such the lower court failed Doyle, Hess, P.C., & Carruthers plaintiff. for Perry, R. John for defendant. Bros v Sullivan op Opinion the Court and M. P.J., B. B. R. Burns Cynar,

Before: JJ. Breighner,* panel awarded An R. Burns, (hereinafter Excavating, Inc. Brothers

Sullivan Sullivan) against Ministrelli Construction $214,000 Ministrelli). (hereinafter Upon Ministrel- Co., Inc. application, vacated the trial court li’s before be rearbitrated the matter ordered appeals. panel. We affirm. Sullivan new Michigan general Ministrelli, contractor on project, Department Highway construction against Sullivan, brought court suit in circuit project. counter- Sullivan on the subcontractor paid. money not Pursuant but earned claimed subcontract, the matter was the terms of the Hearings the arbi- before to arbitration. submitted *3 1976, 3, the award June trators were concluded parties 30, 1976, the were made June was promptly made a Sullivan notified of the award. July in circuit court the award motion to affirm August 4, 1976, answered 21, 1976. On the award. motion to vacate and made a indicate that in circuit court Facts established 30, 1976, each and June June between parte telephone contact ex arbitrator made an Ministrelli’s called arbitrator with witness. One office, office, called Sullivan’s another arbitrator Michigan the the third arbitrator called and Highway Department. called who The arbitrator employee, spoke to a Ministrelli Ministrelli’s office exper- field of outside his who answered concerning The em- tise ployee calculation employer until one or did not inform his July, 1976. the third week two weeks after judge Minis- determined The circuit court * assignment. Appeals by sitting judge, on the Court Circuit Opinion of the Court of misconduct raised an issue timely had

trelli con- arbitrators, parte the ex inferred that the nature, and ruled that prejudicial of a tracts were vacated. the award be the upon be vacated may An arbitration 1963, 769.9(1), pro- which in GCR stated part: vides vacate party, the court shall application of a

"Upon where: an award "(a) by corruption, fraud or procured The award means; undue

other "(b) partiality by an arbitrator evident There was corruption any of the appointed as a neutral rights any prejudicing or misconduct arbitrators party;

"(c) powers; their exceeded The arbitrators hearing "(d) postpone refused The arbitrators or refused to being shown therefor upon cause sufficient controversy or otherwise evidence material hear substantially hearing as to conducted the so the rights party.” be application may time within which 1963, 769.9(2), which limited GCR brought provides: Rule shall be made within

"An under this award to the delivery copy of a 20 applicant, except fraud or other after that, predicated upon if means, made within undue it shall be have been grounds are known or should days after such known.” *4 Hawkins, Rules Michigan Court Honigman & (2d ed), p states:

Annotated apply by "A to vacate an award him of a delivery to twenty days after motion within support in grounds if the he advances copy of the award Minístrelo v Sullivan Bros Breighner, Dissent M. B. appear his motion on the face of the overtly (i.e., occurred in proceeding the arbitrators powers, 769.9(1)(c); exceeded their sub-rule or refused postponement cause, good evidence, refused material indulged conduct, otherwise in prejudicial sub-rule sub-rule 769.9(1)(d); or partiality, showed evident 769.9(1)(b)).Applications to vacate awards for the other (fraud, causes listed the sub-rule or other misconduct) must twenty be made within days after grounds known, such known. Sub-rule become or should have been 769.9(2).” (Emphasis supplied.) agree We the actions of the arbitrators constituted misconduct. Ministrelli applied to va- cate the award within 20 date such conduct became known and therefore applied in a timely manner.

Affirmed. Costs to plaintiff.

Cynar, P.J., concurred. M. B. I (dissenting). respectfully dissent.

Application Timely Was Filed I agree that plaintiff’s application was timely filed because alleged arbitrator misconduct did not occur on the face of the award nor overtly the proceedings. 5 Honigman Hawkins, & Michi- (2d gan ed), Court Rules Annotated p 449.

Application Adequate States To Grounds

Vacate In filing addition to a timely application, a party seeking to vacate an arbitration award must state 769.9(1). grounds under GCR That subsection states the sole for vacating *5 App 89 Mich 111

116 by Breighnek, M. B. Dissent Ex- Detroit Automobile Inter-Insurance award. 94, 98; 233 change Ayvazian, v Mich NW2d 62 (1975). arbitrator misconduct allegation Plaintiffs subsection to vacate under not state does 769.9(1)(a). intended to apply That subsection or third opposing parties to the conduct only Cf., themselves. than the arbitrators other parties, Legislation on Arbitration Persig, Some Comments Act, 10 Vand L Rev, 685, the Uniform (drafter’s (1957) identical lan interpretation Act). Plaintiffs Uniform guage a substantial issue of "mis does raise rights prejudicing any party”, conduct ground vacating is a which 769.9(1)(b). phrase The under subsection award 769.9(2) means” as used subsection "undue misconduct an arbitrator enough by to cover broad rights any prejudices party. By Supported To Not Decision Vacate Record strong public favoring exists final- policy There of arbitration awards. The ity heavy such an bears a burden of vacate Brush v clear proof by evidence. (1888). Fisher, 469; 38 NW 446 arbitrator support To a of prejudicial misconduct, positive be evidence of there must Misconduct a by both misconduct jury be sufficient to set verdict juror may aside influenced the showing without such misconduct contrast, verdict. of arbitrator mis- By showing fraud, conduct, corruption other than be positive before an coupled by proof The court arbitrator’s award will be set aside. Also, require. proceedings rules so Minístrelo v Sullivan Bros Dissent M. governed judicial not the same standards as proceedings. Callanan, 61 Port Huron & N R Co v (1887). 22; 34 Mich NW appeal judgment confirming

On from vacat- ing an arbitration this Court exercises a scope limited of review. v Werner The Travelers *6 Indemnity App Co, 390, 394; 222 NW2d (1974).

Although is there evidence on the of record this support findings case to of arbitrator misconduct prejudice, the record does not establish that prejudice, or, trial the prejudice, court found if it did find applied appropriate that it the standard proof. of

Testimony employee of Ministrelli’s was suffi- cient establish the fact the of nature the ex parte agreed generally It communication. is that subject outside consultation the matter warranting of an misconduct, arbitration award is setting the of aside the where such miscon- duct had an influence on the decision reached. Anno: Arbitrator's consultation with outsider or justifying outsiders as misconduct vacation of award, 47 ALR2d 1362. possible prejudice

It is to infer from other facts by in this case. Information revealed Ministrelli’s employee during parte the ex communication was actively solicited one the of arbitrators. This communication at was the behest of of all the thought arbitrators. This evidences that all it was important gathered to their decision. Information damage went to the heart of the issue. directly

However, the trial did court not deal prejudice. original hearing with the issue of At the plaintiff’s vacate, motion to the trial court specifically indicated it did not find On rehearing, hand, the other at the court the trial Mich Dissent M. * * * probable highly that the infor- "It found was gathered the decision”. ultimate mation influenced that calls "the fact the based on That was the the fact that information were made” and gathered issue” of dam- "the heart the went to suggested again ages. on, that the court Further positive proof prejudice not essential convincing. proof need not be clear that such proceed- analogized judicial It ing the situation with a miscon- that very arbitrators’ and concluded touchy situations, could duct, "under these impropriety, appearance in at least result * * * possibility prejudice, highly likely under these circumstances”. hearing in which the issue

I remand would ap- under the of propriate be determined should proof. standard