BLACKBURNE & BROWN MORTG. CO. v. Ziomek

• Decision Date: 16 February 2005
• Docket Number: Docket No. 248909.
• Citation: 692 N.W.2d 388,264 Mich. App. 615
• Parties: BLACKBURNE & BROWN MORTGAGE COMPANY, Plaintiff-Appellant, v. Christopher B. ZIOMEK, Defendant-Appellee, and Risko-Ziomek Funeral Home, Inc., Defendant.
• Court: Court of Appeal of Michigan — District of US

692 N.W.2d 388

264 Mich. App. 615

BLACKBURNE & BROWN MORTGAGE COMPANY, Plaintiff-Appellant, v. Christopher B. ZIOMEK, Defendant-Appellee, and Risko-Ziomek Funeral Home, Inc., Defendant.

Docket No. 248909.

Court of Appeals of Michigan.

Submitted October 5, 2004, 2004, at Detroit.

Decided December 21, 2004, at 9:05 a.m.

Released for Publication February 16, 2005.

Stuart M. Collis, P.C. (by Stuart M. Collis), Ypsilanti, for the plaintiff.

Angelo A. Plakas and Associates, P.C. (by Angelo A. Plakas and Mark A. McConnell), Westland, for the defendants.

Before: KIRSTEN FRANK KELLY, P.J., and GAGE and ZAHRA, JJ.

ZAHRA, J.

Relying on a forum-selection clause in a loan agreement allegedly executed by the litigants, plaintiff sought and obtained an arbitration award in California and subsequently obtained a California judgment confirming the arbitration award. Plaintiff commenced this action in Michigan to enforce the California judgment. At issue is whether the Michigan trial court erred in examining the alleged agreement to determine whether a valid contract existed that gave the California court jurisdiction over defendants. We hold that the court properly examined the agreement to determine jurisdiction. Because the trial court properly determined that a valid contract was never formed and that the California court consequently lacked personal jurisdiction over defendants, the court did not err in granting defendants' motion to quash the California judgment. We affirm.

I. Facts and Procedure

In 2001, defendants sought to refinance their commercial property, a funeral home located in Livonia, Michigan. They contacted a mortgage broker, who put them in touch with plaintiff, a California mortgage broker. Plaintiff sent defendants a loan approval letter (the loan agreement) and a good-faith estimate of closing costs. The loan agreement indicated that it was not valid unless it was accepted by defendants no later than July 13, 2001. The loan agreement included a clause that provided for liquidated damages in an amount equal to a percentage of the loan amount in the event of cancellation or breach of the agreement. The agreement also included an addendum containing an arbitration agreement, which stated that all disputes must be resolved in Sacramento County, California, by an arbitrator applying California law. The agreement had an integration clause providing that the loan approval letter and its addendum constituted the final expression of the agreement.

On the good-faith estimate of closing costs, defendants crossed out and reduced the amount of the mortgage broker's commission from 3.5 percent to 1.5 percent and initialed the change. Defendants did not make the same change to the loan agreement. Defendants signed the loan agreement, the addendum, and the good-faith estimate of closing costs on July 26, 2001, and returned the documents to plaintiff. At some point, defendants' change to the good-faith estimate of closing costs was crossed out, and the mortgage broker's commission was restored to its original amount of 3.5 percent. The parties dispute whether this change was made by defendants or plaintiff. In any case, plaintiff ultimately signed the documents that were returned by defendants. Defendants maintain that they did not subsequently hear from plaintiff and eventually arranged for financing through another broker.

When defendants failed to refinance through plaintiff, plaintiff sought recovery under the liquidated damages clause of the agreement. Plaintiff filed an arbitration demand in California, relying on the arbitration agreement addendum to the loan agreement. Following an arbitration hearing in June 2002, which defendants did not attend,¹ the arbitrator issued an award for plaintiff. Plaintiff subsequently filed a petition to confirm the arbitration award in the Superior Court of California. On December 5, 2002, the California Superior Court in Sacramento County confirmed the award and issued a judgment for plaintiff in the amount of $61,500.

Plaintiff commenced this action in the Wayne Circuit Court to enforce the California judgment. Defendants filed a motion to quash the judgment, arguing that the California court lacked jurisdiction to enter the judgment because a valid contract did not exist between the parties. The trial court examined the parties' transaction and determined that defendants had materially altered the terms of plaintiff's original offer when they changed the number of points they were willing to pay to the mortgage broker, resulting in a counteroffer. The court further determined that plaintiff rejected defendants' counteroffer by crossing out defendants' change and reinserting the original terms and that plaintiff never obtained defendants' assent to the original terms. Therefore, the court concluded that a valid contract never existed between the parties. Further, the court determined that the alleged agreement was the only basis for requiring arbitration and allowing a California court to assert personal jurisdiction over defendants. Because a valid contract never arose, defendants could not be required to arbitrate, and the California court lacked personal jurisdiction over defendants. Accordingly, the trial court concluded that the California judgment was void and unenforceable.

II. Analysis

Plaintiff first argues that the transaction was governed by the Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq., because the loan agreement contained an arbitration clause. However, plaintiff has failed to adequately brief this issue or point to specific language from the FAA supporting its position. "An appellant may not merely announce its position or assert an error and leave it to this Court to discover and rationalize the basis for its claims, unravel or elaborate its argument, or search for authority for its position." Wiley v. Henry Ford Cottage Hosp., 257 Mich.App. 488, 499, 668 N.W.2d 402 (2003). "Insufficiently briefed issues are deemed abandoned on appeal." Etefia v. Credit Technologies, Inc., 245 Mich.App. 466, 471, 628 N.W.2d 577 (2001). Therefore, we decline to address this argument.

Plaintiff next argues that the trial court erred by reexamining the merits of the arbitrator's decision in deciding whether to give full faith and credit to the California judgment. Our consideration of this issue requires review of the Uniform Enforcement of Foreign Judgments Act (UEFJA), M.C.L. § 691.1171 et seq., as well as the Full Faith and Credit Clause of the United States Constitution, U.S. Const., art. IV, § 1. Questions of statutory interpretation are reviewed de novo. Wayne Co. v. Hathcock, 471 Mich. 445, 455, 684 N.W.2d 765 (2004). Constitutional questions are also reviewed de novo. Id. This case also requires us to review the trial court's jurisdictional ruling, which is similarly reviewed de novo. Jeffrey v. Rapid American Corp., 448 Mich. 178, 184, 529 N.W.2d 644 (1995).

We interpret the UEFJA "to effectuate its general purpose to make uniform the law of those states which enact it." M.C.L. § 691.1178. The UEFJA provides, in pertinent part:

The clerk shall treat the foreign judgment in the same manner as a judgment of the circuit court, the district court, or a municipal court of this state. A judgment filed under this act has the same effect and is subject to the same procedures, defenses, and proceedings for reopening, vacating, or staying as a judgment of the circuit court, the district court, or a municipal court of this state and may be enforced or satisfied in like manner. [M.C.L. § 691.1173.]

A "foreign judgment" is "any judgment ... of a court of the United States or of any other court that is entitled to full faith and credit in this state." M.C.L. § 691.1172. "The Full Faith and Credit Clause requires that a foreign judgment be given the same effect that it has in the state of its rendition." Jones v. State Farm Mut. Automobile Ins. Co., 202 Mich.App. 393, 406, 509 N.W.2d 829 (1993). Although the Full Faith and Credit Clause requires recognition of the judgments of sister states, "collateral attack may be made in the courts of this [s]tate by showing that the judgment sought to be enforced was void for want of jurisdiction in the court which issued it." Delph v. Smith, 354 Mich. 12, 16, 91 N.W.2d 854 (1958), quoting Johnson v. DiGiovanni, 347 Mich. 118, 126, 78 N.W.2d 560 (1956).

The Due Process Clause of the Fourteenth Amendment limits the jurisdiction of state courts to enter judgments affecting the rights or interests of nonresident defendants. Kulko v. California Superior Court, 436 U.S. 84, 91, 98 S.Ct. 1690, 56 L.Ed.2d 132 (1978). As a result, a valid judgment affecting a nonresident's rights or interests may only be entered by a court having personal jurisdiction over that defendant. Int'l Shoe Co. v. Washington, 326 U.S. 310, 319, 66 S.Ct. 154, 90 L.Ed. 95 (1945). [Jeffrey, supra at 185, 529 N.W.2d 644.]

The United States Constitution does not compel Michigan courts to give a foreign judgment full faith and credit when the jurisdiction of the foreign court has been successfully attacked. California v. Max Larsen, Inc., 31 Mich.App. 594, 597-598, 187 N.W.2d 911 (1971). Thus, to be enforceable under the UEFJA, the foreign judgment must have been entered by a court with jurisdiction over the parties and the subject matter.

In Offerdahl v. Silverstein, 224 Mich.App. 417, 420, 569 N.W.2d 834 (1997), this Court stated:

A contractual forum selection clause, though otherwise valid, may not be enforced against one not bound by the contract. Just as the courts have jurisdiction to determine the threshold issue whether a party is bound to arbitrate pursuant to an agreement, we believe the courts of the state "where the cause of action arose," [²] have jurisdiction to determine the threshold issue whether a party is bound by the contract, and, accordingly, any forum selection and choice-of-law provision in the contract. [Citations omitted.] [³]

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