On December 9, 1981, plaintiffs, SCA Services, Inc., Tri-County Sanitation Systems, Inc., and Sanitation Systems, Inc., filed a complaint against the defendant, alleging that on October 1, 1981, the defendant, General Mill Supply Company, filed a demand for arbitration with the American Arbitration Association relating to certain contracts between plaintiffs and defendant. Plaintiffs requested a stay of arbitration, contending that General Mill waived its right to arbitrate by presenting its claims under these contracts to the United States District Court for the Southern District of Illinois. In that case, SCA, the parent *227 company of the other two plaintiffs, originally brought the action. General Mill filed a counterclaim, alleging breaches of the contracts. SCA then brought a motion to stay the proceedings on the counterclaim since the contracts in dispute were subject to an arbitration provision. On July 6, 1976, the district court judge granted SCA’s motion, finding that, although General Mill had repudiated its obligation to enforce arbitration, SCA had elected to insist on performance of the arbitration provisions. The district court judge stated that, by moving to stay the proceedings, SCA had "served notice upon GM that it expects GM to submit its claims to arbitration if it desired further to pursue them”.
General Mill filed its demand for arbitration on October 1, 1981. On December 9, 1981, plaintiffs filed their complaint requesting the trial court to stay arbitration based upon General Mill’s alleged waiver. General Mill moved for summary judgment. The trial court granted General Mill’s motion and plaintiffs filed this appeal. Pending our determination of this appeal, we note that the parties have completed arbitration which resulted in an award for General Mill. That award was certified by the trial court.
We first consider whether SCA waived its right to contest arbitration by participating in the arbitration proceedings. SCA vigorously disputed the authority of the arbitrator to determine the waiver question, both in the courts and during the arbitration proceedings. As stated by the Court in
Detroit Demolition Corp v Burroughs Corp,
"While it is true that one who volitionally and without objection participates in arbitration proceedings may well have waived his right subsequently to object *228 to the arbitrability of previously decided issues, cases so holding would not appear applicable to the case at bar. As stated in 33 ALR3d 1242, § 4, p 1250:
" 'A number of cases indicate that a party’s participation in arbitration proceedings will not result in waiver of his right to raise the issue of arbitrability of the dispute if he has made a timely objection to arbitrability before a hearing on the merits.’ ”
See also
American Fidelity Fire Ins Co v Barry,
Certainly, SCA’s actions in both the arbitration proceeding and the courts manifested an opposition to the arbitration proceeding on the ground that General Mill had waived its right to arbitration. SCA was not required to file a motion to vacate the arbitration award in order to preserve these objections.
Arrow Overall Supply Co v Peloquin Enterprises,
We next consider whether the trial court correctly decided that the issue of waiver should be resolved by the arbitrator. The trial court relied on
Northland Ins Co v Sny,
"[I]f the opposing party denies the existence of the agreement to arbitrate, the court shall proceed summarily to the determination of the issue so raised and shall order arbitration if found for the moving party, *229 otherwise the application shall be denied.” GCR 1963, 769.2(1).
In a recent decision, the Supreme Court stated:
"Whenever the jurisdiction of an arbitrator is questioned, it must be determined in order to make an award on arbitration binding. 2 The existence of a contract to arbitrate and the enforceability of its terms is a judicial question which cannot be decided by an arbitrator. 3
The Michigan Supreme Court has also vacated one of this Court’s previous decisions which affirmed a trial court’s granting of summary judgment which was based on
Sny. Joba Construction Co v Monroe County Drain Comm’r,
We next consider whether General Mill waived its right to arbitrate. Plaintiffs argue that General Mill made such a waiver by filing a counterclaim in federal court, conducting discovery relating to the disputed contracts, and delaying its demand for arbitration. Filing a counterclaim may constitute a waiver of arbitration. 98 ALR3d 767, 781-787. SCA, however, successfully persuaded the federal court to stay proceedings pending arbitra
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tion on the merits of the case. SCA’s current argument, that filing the counterclaim was a waiver, is inconsistent with its previous argument that the merits of the case should be submitted to arbitration. SCA is estopped from making its current argument to this extent.
Bowerman v Detroit Free Press,
SCA, however, is not estopped from arguing that General Mill’s actions subsequent to the federal court’s stay pending arbitration constituted a waiver, since these actions occurred after SCA argued in favor of arbitration. SCA contends that General Mill conducted discovery on the contracts after the federal court stayed the proceedings on them. Proceeding with discovery may be a waiver of the right to demand arbitration.
Winter v Arvida Corp,
404 So 2d 829 (Fla App, 1981). Pursuing discovery in a court may be viewed as being inconsistent with demanding arbitration since discovery is not generally available in arbitration,
Dearborn v Freeman-Darling, Inc,
The mere fact that during discovery certain facts about the contracts now in dispute were discussed does not constitute a waiver by General Mill. On remand, if the trial court finds that General Mill conducted this discovery to defend against SCA’s action in the federal court, there was no waiver. If it is found that this discovery was unnecessary for General Mill’s defense in the federal court, there was a waiver.
The trial court, in its opinion, failed to address the issue of laches. This appears to be SCA’s major argument for waiver, since it concedes in its brief that it would not have argued for a waiver had
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General Mill promptly demanded arbitration. This Court has recognized that laches can give rise to a waiver of arbitration.
Buckley v Small, 52
Mich App 454;
Reversed and remanded.
Notes
"2 In
Waterford Ass’n of Educational Secretaries v Waterford School Dist,
"3 See
Detroit Demolition Corp v Burroughs Corp,
If waiver is predicated upon failure to comply with procedural aspects of an arbitration agreement, the issue is properly resolved by the arbitrator.
The trial court also found that General Mill’s actions in the lower court did not terminate the arbitration provision but that res judicata may apply. This Court in
Auto Owners Ins Co v Higby,