Bennett v. Shearson Lehman-American Exp., Inc.

• Decision Date: 08 June 1988
• Docket Number: LEHMAN-AMERICAN,Docket No. 88939
• Citation: 168 Mich.App. 80,423 N.W.2d 911
• Parties: Charles A. BENNETT and Marcia Bennett, Plaintiffs-Appellees, v. SHEARSONEXPRESS, INC., Defendant-Appellant. 168 Mich.App. 80, 423 N.W.2d 911
• Court: Court of Appeal of Michigan — District of US

Page 911

423 N.W.2d 911

Charles A. BENNETT and Marcia Bennett Plaintiffs-Appellees, v. SHEARSON LEHMAN-AMERICAN EXPRESS, INC. Defendant-Appellant.

Docket No. 88939.

168 Mich.App. 80, 423 N.W.2d 911

Court of Appeals of Michigan.

Submitted May 20, 1987.

Decided Oct. 22, 1987.

Released for Publication June 8, 1988.

[168 MICHAPP 81] Hurwitz, Karp, Hirschman & Wallach, P.C. by Miles Hurwitz and Peggy Goldberg Pitt, Dearborn Heights, for plaintiffs-appellees.

Hertz & Schram, P.C. by Bradley J. Schram and Gary M. Saretsky, Birmingham, for defendant-appellant.

Before HOLBROOK, P.J., and GRIBBS and C.W. SIMON ^*, Jr., JJ.

PER CURIAM.

On May 31, 1985, plaintiffs filed suit against defendant alleging negligence, violation of the Michigan Consumer Protection Act, M.C.L. Sec. 445.901 et seq.; M.S.A. Sec. 19.418(1) et seq., and breach of contract arising out of defendant's handling of plaintiffs' brokerage account. Defendant subsequently filed a motion to stay proceedings pending arbitration, asserting that, under paragraph thirteen of the customer agreement signed by plaintiffs, plaintiffs were required to submit to arbitration controversies arising out of or relating to their account. Plaintiffs opposed defendant's motion contending that they had attempted to resolve the controversy with defendant during 1984, and that defendant's agent terminated negotiations by letter dated June 26, 1984. Plaintiffs also contended that defendant's delay in seeking arbitration precluded its reliance on the arbitration[168 MICHAPP 82] provision in the contract. The circuit court agreed with plaintiffs and denied defendant's motion. Leave to appeal was granted by this Court following the denial by the circuit court of defendant's motion for rehearing or reconsideration. ¹

Defendant raises three claims of error with respect to the circuit court's ruling, one of which we find dispositive. Specifically, defendant did not have the burden of submitting the controversy at issue to arbitration and, hence, its delay in seeking arbitration was not cause for denial of its motion for a stay of proceedings pending arbitration.

The arbitration provision of the customer agreement does not place the burden of initiating proceedings on either party. Rather, the agreement states "any controversy ... shall be settled by arbitration." As noted by defendant, if there is no matter in dispute, there is no question to be arbitrated. Toledo S.S. Co. v. Zenith Transportation Co., 184 F. 391, 404 (CA 6, 1911). In this case, defendant could not have been aware that plaintiffs felt an arbitrable dispute existed until plaintiffs filed their complaint on May 31, 1985. Hence it obviously would not have initiated arbitration proceedings before that time. Upon becoming aware of the dispute by the filing of the complaint, defendant promptly demanded its right to arbitration.

Since plaintiffs were contractually bound to arbitrate any controversies arising out of their brokerage account, and since plaintiffs were the aggrieved parties and the only ones who were aware, between June 26, 1984, and May 31, 1985, that a dispute existed, the burden of initiating arbitration proceedings was on them. Affirmation of the trial court's decision that defendant should have initiated arbitration proceedings earlier than it did [168 MICHAPP 83] would be contrary to common sense and judicial economy. As a result of such a decision, a defendant would be forced to seek arbitration any time...