Hall v. Stark Reagan, PC

818 N.W.2d 367, 294 Mich. App. 88
CourtMichigan Court of Appeals
DecidedSeptember 13, 2011
DocketDocket No. 294647
StatusPublished
Cited by4 cases

This text of 818 N.W.2d 367 (Hall v. Stark Reagan, PC) is published on Counsel Stack Legal Research, covering Michigan Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hall v. Stark Reagan, PC, 818 N.W.2d 367, 294 Mich. App. 88 (Mich. Ct. App. 2011).

Opinions

GLEICHER, J.

The individual parties to this appeal are present and former shareholders in a law firm, defendant Stark Reagan, EC. Plaintiffs Patrick C. Hall and Ava Ortner filed a complaint against Stark Reagan and the individual defendants, asserting that age discrimination motivated defendants’ decision to terminate Hall’s and Ortner’s shareholder status. The circuit court granted defendants summary disposition pursuant to MCR 2.116(C)(7) and ordered the case to proceed to arbitration. We reverse and remand for further proceedings.

[91]*91I. UNDERLYING FACTS AND PROCEEDINGS

In 2003, Stark Reagan hired Hall and Ortner as associate attorneys. On January 1, 2004, they became shareholders in the firm, joining seven of the eight attorneys named as individual defendants in this case.1 Upon their election as shareholders in the firm, Hall and Ortner signed a shareholders’ agreement that included an arbitration clause.

At a January 8, 2009 shareholders’ meeting, defendant R. Keith Stark proposed the termination of Hall’s and Ortner’s interests in Stark Reagan. According to affidavits submitted by Hall and Ortner, Stark explained that their terminations were needed “to change the ‘demographics’ of the firm.” The affidavits attested that defendant Joseph Ahern expressed that “the demographics of the firm was [sic] a problem because older attorneys lose their client bases,” and that two younger attorneys “ ‘had more potential’ and their practices would be going up while ours would be going down.” At the request of Hall and Ortner, the meeting adjourned until the next week. During the continued meeting on January 12, 2009, Ortner and Hall announced that the termination of their employment “constituted illegal age discrimination,” and advised the other shareholders that they had retained legal counsel. On February 13, 2009, defendants Ahern and Jeffrey Fleury resigned as shareholders of Stark Reagan, effective immediately. The remaining shareholders voted to redeem the stock held by Hall and Ortner, terminating their employment effective March 1, 2009.

[92]*92In April 2009, Hall and Ortner filed a three-count complaint in the Oakland Circuit Court alleging that defendants violated the Civil Rights Act (CRA), MCL 37.2101 et seq., by discriminating against them on the basis of their ages, unlawfully retaliating against them when they retained counsel, and conspiring to violate the CRA. Defendants filed a motion for summary disposition under MCR 2.116(C)(7), contending that a binding arbitration agreement barred the lawsuit. Defendants also moved for summary disposition under MCR 2.116(C)(5), challenging the capacity of Hall and Ortner to sue under the CRA. The circuit court entered an opinion and order granting defendants’ subrule (C)(7) motion, reasoning as follows:

The Court finds that the arbitration [sic] is applicable to the case here in all respects. Michigan public policy favors arbitration to resolve disputes. Rembert v. Ryan’s Family Steak Houses, Inc, 235 MichApp. 118, 127-128 [596 NW2d 208] (1999). Further, the Shareholder Agreement governs disputes for the shareholders; additionally the Law Office Staff Manual can be said to have become part of the Shareholder Agreement for those who executed that Agreement.1
As to the issue of whether Plaintiffs are eligible to bring claims under the Elliott Larsen Civil Rights Act as employees of the law firm, the Court finds that issue is also subject to the arbitration clause....
Accordingly, Defendants’ motion for summary disposition pursuant to MCR 2.116(C)(7) is granted and this case is ordered to arbitration. In light of this decision, the Court finds that the other issues raised by defendants are moot here and can be raised before the Arbitrator.

[93]*93II. analysis

A. GOVERNING PRINCIPLES

Hall and Ortner maintain that the arbitration clause in the shareholder agreement does not apply to this dispute arising under the CRA. We review de novo a circuit court’s determination that an issue is subject to arbitration. In re Nestorovski Estate, 283 Mich App 177, 184; 769 NW2d 720 (2009).

A three-part test applies for ascertaining the arbitrability of a particular issue: 1) is there an arbitration agreement in a contract between the parties; 2) is the disputed issue on its face or arguably within the contract’s arbitration clause; and 3) is the dispute expressly exempted from arbitration by the terms of the contract. [Id. at 202 (quotation marks and citation omitted).]

“Arbitration is a matter of contract.. . .” City of Ferndale v Florence Cement Co, 269 Mich App 452, 460; 712 NW2d 522 (2006). Under the federal arbitration act (FAA), 9 USC 1 et seq., courts considering whether the parties agreed to arbitrate a certain matter “should apply ordinary state-law principles that govern the formation of contracts.” First Options of Chicago, Inc v Kaplan, 514 US 938, 944; 115 S Ct 1920; 131 L Ed 2d 985 (1995).2 The United States Supreme Court recently emphasized that although federal policy favors arbitration, “we have never held that this policy overrides the principle that a court may submit to arbitration only those disputes . . . that the parties have agreed to submit. Nor have we held that courts may use policy considerations as a substitute for party agreement.” Granite Rock Co v Int’l Brotherhood of Teamsters, 561 US _, _; 130 S Ct 2847, 2859; 177 L Ed 2d 567 (2010) [94]*94(quotation marks and citations omitted). “[W]hen parties have freely established their mutual rights and obligations through the formation of unambiguous contracts, the law requires this Court to enforce the terms and conditions contained in such contracts, if the contract is not contrary to public policy.” Bloomfield Estates Improvement Ass’n, Inc v City of Birmingham, 479 Mich 206, 213; 737 NW2d 670 (2007) (quotation marks and citation omitted). “ ‘The cardinal rule in the interpretation of contracts is to ascertain the intention of the parties.’ ” Goodwin, Inc v Orson E Coe Pontiac, Inc, 392 Mich 195, 209; 220 NW2d 664 (1974), quoting McIntosh v Groomes, 227 Mich 215, 218; 198 NW 954 (1924). “Where the language of a contract is clear and unambiguous, the intent of the parties will be ascertained according to its plain sense and meaning.” Haywood v Fowler, 190 Mich App 253, 258; 475 NW2d 458 (1991).

B. ARBITRABILITY OF HALL’S AND ORTNER’S CLAIMS

We first consider whether the arbitration clause language of the shareholders’ agreement governs this action brought under the CRA. Article 14 of the shareholders’ agreement, entitled “Miscellaneous Provisions,” sets forth, in relevant part, the following with respect to arbitration:

Any dispute regarding interpretation or enforcement of any of the parties’ rights or obligations hereunder shall be resolved by binding arbitration according to the rules of the American Arbitration Association in the County of Oakland, State of Michigan. The parties hereby irrevocably submit to personal jurisdiction of any State court in the County of Oakland or the Federal court in the County of Wayne, State of Michigan, in any action or other legal proceeding to enforce any award made by the arbitrators. ...

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Bluebook (online)
818 N.W.2d 367, 294 Mich. App. 88, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hall-v-stark-reagan-pc-michctapp-2011.