Vascular Mgmt. Servs. of Novi v. EMG Partners, LLC
| Decision Date | 09 March 2023 |
| Docket Number | 360368 |
| Parties | VASCULAR MANAGEMENT SERVICES OF NOVI, LLC, and VCOA MANAGEMENT, LLC, Plaintiffs-Appellants, v. EMG PARTNERS, LLC, ENVISION MEDICAL GROUP, PLLC, and VILLAGEMD EASTERN MICHIGAN, LLC, Defendants-Appellees. |
| Court | Court of Appeal of Michigan — District of US |
UNPUBLISHED
Oakland Circuit Court LC No. 2021-191539-CB
Before: K. F. KELLY, P.J., and MURRAY and SWARTZLE, JJ.
Plaintiffs Vascular Management Services of Novi, LLC, and VCOA Management, LLC, appeal as of right an order compelling plaintiffs and defendants, EMG Partners, LLC; Envision Medical Group, PLLC; and VillageMD Eastern Michigan, LLC, to participate in binding arbitration. Plaintiffs also challenge a prior order denying their first motion for preliminary injunctive relief. We affirm but remand to the circuit court for further proceedings regarding arbitrability.
In January 2017, plaintiffs and EMG Partners entered into an operating agreement through which EMG Partners and VCOA Management became 50% members of Vascular Management Services of Novi, and Mordechai Grun was named manager of Vascular Management Services of Novi. The operating agreement contained an arbitration clause. Later that month, Vascular Management Services of Novi and Envision Medical Group entered into a management services agreement. Under the management services agreement, Vascular Management Services of Novi was required to "select and furnish the Practice with such space, fixed and mobile, as [was] reasonably required for the proper operation of the Practice's business, based on its volume and service contracts, including any necessary build-out, repair or replacement of such space...."
Envision Medical Group was required to operate the Practice "at least three (3) days per week." The management services agreement did not contain an arbitration clause.
VillageMD eventually expressed an interest in acquiring certain assets of Envision Medical Group. While VillageMD was not interested in purchasing the management services agreement, VillageMD and Grun engaged in negotiations concerning "a new Management Services Agreement" with Vascular Management Services of Novi. The negotiations were ultimately unsuccessful. VillageMD's negotiations with Envision Medical Group proceeded forward. The acquisition between VillageMD, Envision Medical Group, and others was finalized on December 2, 2021, through an Asset Purchase Agreement, wherein VillageMD "acquired certain of Envision [Medical Group's] assets." The management services agreement was "specifically excluded from the Asset Purchase Agreement." Because VillageMD does not consider vascular services to be part of its business model, the vascular services that were once provided by Envision Medical Services were discontinued.
Plaintiffs filed suit that same month. In the 10-count complaint, plaintiffs requested injunctive relief and monetary damages. Plaintiffs also filed an emergency motion for injunctive relief, requesting the trial court enter an ex parte order or schedule a show cause hearing as to why a preliminary injunction should not issue.
In opposing the motion for preliminary injunctive relief, defendants' argued that plaintiffs had an adequate remedy at law and were unlikely to succeed on the merits of their claims, while VillageMD also argued that plaintiffs' claims were subject to arbitration under the operating agreement. The initially scheduled show cause hearing was adjourned several times for reasons that will be discussed later in this opinion. In the meantime, in lieu of filing an answer to the complaint, defendants filed a joint motion for summary disposition under MCR 2.116(C)(7) ().
The show cause hearing was held in late January, 2022. At the beginning of the hearing, plaintiffs' counsel requested the trial court consider documentation that was not attached to their motion for preliminary injunctive relief. After defendants' counsel objected because they had not been provided with the documentation before the hearing, the trial court held it would not consider the documentation. The trial court expressed a willingness to adjourn the hearing, but plaintiffs wanted to move forward. During oral arguments, plaintiffs requested the trial court "tell the doctors who are now Village MD employees that they have to renew their obligations of operating the Vascular Services clinic at least three days a week and they have to actually do it in good faith." Plaintiffs also requested the trial court "direct Village MD [sic] to put any monies that they're going to pay" in the future "into the court." After hearing oral arguments from defendants, which included defendants referencing the pending motion for summary disposition, the trial court ruled:
The trial court entered orders that same day (1) denying plaintiffs' motion for injunctive relief and (2) requiring defendants to file a motion to compel arbitration by February 2, 2022, and setting a briefing schedule and oral arguments for February 9, 2022.
On February 2, 2022, plaintiffs filed a second motion for preliminary injunctive relief. Plaintiffs renewed their requests that the trial court order defendants to continue to perform medical services and procedures at the clinic pursuant to the management services agreement, and also requested the trial court "direct that any unpaid funds from the sale of the Envision Defendant's assets be transferred to the registry of th[e] Court or direct the Envision Defendants not to distribute any of the asset sale proceeds...."
As ordered, defendants also filed a timely joint motion to compel arbitration. The motion was essentially identical with the motion for summary disposition, with the exception that it provided authority concerning a trial court's authority to compel arbitration under the Uniform Arbitration Act, MCL 691.1681 et seq., and MCR 3.602(A). Plaintiffs opposed the motion, arguing there was not an enforceable arbitration agreement between the parties, and that defendants should be judicially estopped from relying on the arbitration clause contained in the operating agreement because defendants had argued in response to plaintiffs' motion for preliminary injunction that the operating agreement was not enforceable against them.
The court granted defendants' joint motion to compel arbitration, dismissed plaintiffs' complaint, and ordered all claims into arbitration. The trial court did not rule on plaintiffs' second motion for preliminary injunctive relief. This appeal followed. After filing the claim of appeal, plaintiffs filed an arbitration demand. Defendants moved to dismiss this appeal, arguing plaintiffs' voluntary action rendered this appeal moot, but the motion was denied. Vascular Mgt Servs of Novi, LLC v EMG Partners, LLC, unpublished order of the Court of Appeals, entered August 9, 2022 (Docket No. 360368).
VillageMD continues its argument that plaintiffs' arguments on appeal are moot. We again reject that argument.
Bailey v Antrim Co, ___ Mich.App. ____, ____; ____ N.W.2d ____ (2022) (Docket No. 357838); slip op at 3 (alterations in original; quotation marks and citation omitted). Trahey v Inkster, 311 Mich.App. 582, 591; 876 N.W.2d 582 (2015) (citation omitted).
Plaintiffs filing an arbitration demand was an involuntary act taken to comply with a court order. "A person may not disregard a court order simply on the basis of his [or her] subjective view that the order is wrong or will be declared invalid on appeal." In re Contempt of Dudzinski, 257 Mich.App. 96, 111; 667 N.W.2d 68 (2003). Rather, "[a] party must obey an order entered by a court with proper jurisdiction, even if the order is clearly incorrect, or the party must face the risk of being held in contempt and possibly being ordered to comply with the order at a later date." Id. at 110 (quotation marks and citation omitted). Accordingly, a party that "believes that [an] order is incorrect [has] the remedy [] to appeal, but absent a stay, [must] comply promptly with the order pending appeal." Id. at 112 (quotation marks and citations omitted). By initiating arbitration, after filing their claim of appeal, plaintiffs merely complied with the mandatory provision of the trial court's order. This involuntary action did not render the issues raised on appeal moot.
Plaintiffs argue that the trial court (1) abused its discretion by denying their first motion for injunctive relief, and (2) made several procedural errors on the way to that decision.
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