Rooyakker v. Plante & Moran

• Decision Date: 15 May 2007
• Docket Number: Docket No. 273173.
• Citation: 276 Mich. App. 146,742 N.W.2d 409
• Court: Court of Appeal of Michigan — District of US
• Parties: ROOYAKKER & SITZ, P.L.L.C., Mathew David Rooyakker, George Michael Sitz, and Sandra K. Burns, Plaintiffs-Appellants, v. PLANTE & MORAN, P.L.L.C., Kevin Lang, and Michelle Carrol, Defendants-Appellees.

742 N.W.2d 409

276 Mich. App. 146

ROOYAKKER & SITZ, P.L.L.C., Mathew David Rooyakker, George Michael Sitz, and Sandra K. Burns, Plaintiffs-Appellants, v. PLANTE & MORAN, P.L.L.C., Kevin Lang, and Michelle Carrol, Defendants-Appellees.

Docket No. 273173.

Court of Appeals of Michigan.

Submitted April 10, 2007, at Lansing.

Decided May 15, 2007.

Approved for Publication June 26, 2007, at 9:15 a.m.

Released for Publication October 11, 2007.

Michael T. Edwards, Gaylord, for the plaintiffs.

Butzel Long, P.C. (by James J. Giszczak and Michael F. Smith), Bloomfield Hills, for the defendants.

Before: SERVITTO, P.J., and TALBOT and SCHUETTE, JJ.

SCHUETTE, J.

Plaintiffs appeal as of right¹ from the circuit court's September 8, 2006, order granting summary disposition in defendants' favor. We affirm.

I. FACTS

This case arises out of the employment of the individual plaintiffs, Mathew D. Rooyakker, George M. Sitz, and Sandra K. Burns, with defendant Plante & Moran, PLLC, an accounting and business consulting firm, at its Gaylord office.

As a condition of the individual plaintiffs' employment, they each signed a "Practice Staff — Relationship Agreement" (agreement), which was drafted by Plante & Moran, and contained both a "client solicitation" clause and an "arbitration clause." The client solicitation clause states as follows:

During the staff member's employment and during the two year period thereafter the staff member shall not, directly or indirectly, render professional accounting, tax, consulting or any other service provided by the Firm at the date of termination (whether voluntary or involuntary), other than as a bona fide, full-time employee of a client, to any Firm client.

If there is a breach of this Agreement, the former staff member shall pay to the Firm an amount equal to the greater of (a) the billings to such client by the Firm during the twelve month period immediately preceding the effective date of termination or (b) the average annual billings to such client by the Firm during the three year period preceding the effective date of termination. The payments are due to the Firm at the time the staff member first renders services to such client(s) of the Firm.

No breach will be deemed to have occurred if the staff member did not participate in any solicitation of such client or was not directly or indirectly responsible for the client becoming a client of the former staff member (or related entity) so long as the former staff member performs no professional services for such client within two years of termination from the Firm. The Firm, in its sole discretion, may waive or reduce the amount of the required payment for the breach upon consideration of the circumstances and effects of such waiver or adjustment. If the staff member requests, the Firm's Managing Partner (or designee) will meet and discuss such waiver or adjustment, without either party being further obligated.

For purposes of this Agreement, a "Firm Client" is any person or entity for whom the Firm was providing services of any kind at the time of the staff member's termination of employment or at any time during the 24 months preceding such termination and any successor or assign of any such person or entity.

The arbitration clause provides:

At the option of the Firm, any dispute or controversy arising out of or relating to this Agreement, may be settled by arbitration held in Oakland County, Michigan, following the rules then in effect of the American Arbitration Association. The arbitrator may grant injunctive or other relief. The decision of the arbitrator will be final, conclusive and binding on the parties. Judgment may be entered based on the arbitrator's decision in any court having jurisdiction. The Firm and the former staff member will each pay one-half of the arbitrator's costs and expenses, and each will separately pay their respective legal fees, expert fees and related expenses.

On July 13, 2005, the individual plaintiffs were informed that Plante & Moran had decided to close its Gaylord office. The individual plaintiffs were offered the opportunity to move to Plante & Moran's Traverse City office,² but they decided to remain in Gaylord, terminate their employment with Plante & Moran, and open their own office. The individual plaintiffs resigned from Plante & Moran and commenced working for plaintiff Rooyakker and Sitz, PLLC, on December 2, 2005. Plante & Moran officially closed its Gaylord office on February 3, 2006.

Several of Plante & Moran's Gaylord clients hired plaintiffs to provide accounting and tax services. When Plante & Moran learned or suspected that the individual plaintiffs were providing services to its former clients, it initiated arbitration proceedings against those plaintiffs for violation of the client solicitation clause contained in the agreement. In March 2006, Mathew Rooyakker and George Sitz received an arbitration demand from Plante & Moran, claiming that the amount in dispute was $140,000. Burns received a similar letter dated March 2, 2006, demanding payment of $4,545.

Plaintiffs filed a suit on March 20, 2006, seeking a declaration that the agreement was unreasonable and unenforceable, and alleging that defendants Kevin Lang and Michelle Carrol interfered with Rooyakker and Sitz's business expectations or relationships, and that Lang defamed Rooyakker and Sitz. On June 2, 2006, the parties filed cross-motions for summary disposition. Defendants moved for summary disposition under MCR 2.116(C)(7), (8), and (10), asserting that the claims arising out of the agreement should be arbitrated, and the remaining claims should be dismissed for lack of evidentiary support. Plaintiffs also moved for summary disposition,³ contending that the parties' agreement was unenforceable because the client solicitation clause violated the Michigan Antitrust Reform Act (MARA), MCL 445.771 et seq., and because its purpose had been frustrated by the closing of Plante & Moran's Gaylord office. The trial court heard oral arguments on June 23, 2006, and it took the matter under advisement. On September 8, 2006, the trial court issued its written opinion and order granting summary disposition in favor of defendants. It concluded as follows:

The relationship agreement between the parties contains a statutory arbitration clause, because it is in writing and allows a circuit court to enter judgment based upon the decision of the arbitrator. A statutory arbitration clause may not be unilaterally cancelled. Thus, the agreement is binding on the parties.

Further, the agreement is valid because no issue in this case rescinds or revokes the relationship agreement. Plaintiffs' claim under the Michigan Antitrust Reform Act fails due to the language of the act. There is insufficient evidence to support Sitz's claim that a misrepresentation was made. Even if a misrepresentation was made, it would have been a contractual promise of something on which Sitz could not have reasonably relied. Nor has the relocation of the Defendant firm frustrated the purpose of the agreement. Since no issues revoke or rescind the contract in its entirety, the parties' agreement to arbitrate is valid.

This Court must reserve all issues for arbitration that fall within the scope of a valid and binding arbitration agreement, while resolving all doubts in favor of arbitration and avoiding the bifurcation of disputes. The relationship agreement between the parties states that "any dispute or controversy arising out of or relating to" the agreement will be arbitrated. Plaintiffs' claim for tortious interference of business, defamation, excessive damages, and violation of the Michigan Antitrust Reform Act all arise out of or relate to the relationship agreement. Thus, this Court reserves these issues for arbitration.

For these reasons, and the reasons stated above, the Plaintiffs' Motion for Summary Disposition is denied. Defendant[s'] Motion for Summary Disposition is granted. Specifically, the Plaintiffs' claim of frustration of purpose and Plaintiff Sitz's fraud claim [are] dismissed. The remaining issues are reserved for arbitration.

Plaintiffs now appeal.

II. SUMMARY DISPOSITION

A. Standard of Review

We review de novo a trial court's decision on a motion for summary disposition. Dressel v. Ameribank, 468 Mich. 557, 561, 664 N.W.2d 151 (2003). Likewise, statutory interpretation is a question of law that this Court reviews de novo. Reed v. Yackell, 473 Mich. 520, 528, 703 N.W.2d 1 (2005). And a trial court's determination that an issue is subject to arbitration is also reviewed de novo. Madison Dist. Pub. Schools v. Myers, 247 Mich.App. 583, 594, 637 N.W.2d 526 (2001).

B. Analysis

Plaintiffs argue that the trial court erred (1) in concluding that the parties' agreement is an irrevocable statutory arbitration agreement, (2) in referring to arbitration issues regarding the validity of the client solicitation clause, and (3) in summarily dismissing plaintiffs' fraud and frustration-of-purpose claims. We disagree.

1. Statutory Arbitration

An agreement to arbitrate under the Michigan arbitration act (MAA), MCL 600.5001 et seq., is valid, enforceable, and irrevocable except upon grounds that justify the rescission or revocation of any contract. Wold Architects & Engineers v. Strat, 474 Mich. 223, 230, 713 N.W.2d 750 (2006). Conversely, common-law arbitration agreements are unilaterally revocable before an arbitration award is made. Id. at 231, 713 N.W.2d 750.

To be an irrevocable statutory arbitration agreement subject to the MAA, the agreement to arbitrate must provide for a judgment of any circuit court to be rendered on the arbitrator's award. Wold, supra at 229, 713 N.W.2d 750. Indeed, MCL 600.5001(2) states as follows:

A provision in a written contract to settle by arbitration under this chapter, a controversy thereafter arising between the parties to the contract, with relation thereto, and in which it is agreed that a judgment of...