Summary
holding an appellate court may take judicial notice of the AAA medical malpractice rules, where the arbitration agreement stated it would be governed by them
Summary of this case from Palmetto Homes, Inc. v. BradleyOpinion
No. 206692.
Submitted June 8, 1999.
Decided August 20, 1999 at 9:10 a.m. Updated November 29, 1999.
Appeal from Wayne Circuit Court, Michigan, LC No. 97-700524 NH,
Cummings, McClorey, Davis Acho, P.C. (by Jonas Sniokaitis), for the plaintiffs, Livonia.
Garan, Lucow, Miller Seward, P.C. (by David M. Shafer and Robert A. Obringer), for the defendants, Detroit.
Before: Zahra, P.J., and Saad and Collins, JJ.
Plaintiffs appeal as of right from an order granting defendants' motion for summary disposition pursuant to MCR 2.116(C)(7). We affirm.
I. FACTS AND PROCEEDINGS
In 1994, plaintiffs Carolyn and Frank Hetrick filed a medical malpractice suit against defendants, alleging that defendant David Friedman, DPS, negligently performed podiatric surgery on Carolyn (1994 action). Blue Cross and Blue Shield (BCBS) intervened as a plaintiff in the 1994 action, asserting a contractual lien against any judgment or settlement for reimbursement of benefits it paid under an insurance policy. Subsequently, plaintiffs and defendants agreed to submit plaintiffs' claims to arbitration, to be conducted pursuant to the rules and procedures of the American Arbitration Association. BCBS did not sign the arbitration agreement. The trial court dismissed the 1994 action pursuant to the arbitration agreement, but plaintiffs subsequently tried to reinstate their claims first by moving to set aside the dismissal, then by filing a new action against defendant (1997 action). In response to the 1997 action, defendants maintained that plaintiffs' action was barred by the arbitration agreement, and moved for summary disposition under MCR 2.116(C)(7). Plaintiffs argued that the agreement provided for common-law arbitration, rather than for statutory arbitration, and that plaintiffs were therefore free to revoke the agreement to arbitrate their claim. The trial court disagreed and granted defendants' motion, dismissing the 1997 action. Plaintiffs now appeal the dismissal of the 1997 action.
We use the term "plaintiffs" to refer only to Carolyn and Frank Hetrick, and not to BCBS.
II
This Court reviews a trial court's grant or denial of a motion for summary disposition pursuant to MCR 2.116(C)(7) de novo. We determine whether the moving party was entitled to judgment as a matter of law. Limbach v. Oakland County Bd of County Road Com'rs, 226 Mich. App. 389, 395; 573 N.W.2d 336 (1997).
Plaintiffs contend that the arbitration agreement was not valid because BCBS did not sign the agreement. We disagree. The Michigan Supreme Court has stated that "a party cannot be required to arbitrate an issue which he has not agreed to submit to arbitration . . . [and] a party cannot be required to arbitrate when it is not legally or factually a party to the agreement." St Clair Prosecutor v. AFSCME, 425 Mich. 204, 223; 388 N.W.2d 231(1986); see also KND School District v. Teachers, 393 Mich. 583; 227 N.W.2d 500 (1975); Whitehouse v. Hoskins, MFG Co, 113 Mich. App. 138; 317 N.W.2d 320 (1982); and, DAIIE v. Straw, 96 Mich. App. 773; 293 N.W.2d 704 (1980). However, plaintiffs' reliance on these cases is misplaced. None of these cases states that all of the parties to an action must sign an arbitration agreement in order for the agreement to be binding on those parties who did sign it. Instead, these cases stand for the proposition that a party cannot be required to arbitrate an issue which he has not agreed to submit to arbitration. Because BCBS did not enter into the arbitration agreement, it could not be required to arbitrate any claim it had against defendants. However, plaintiffs agreed in writing to submit their claim against defendants to arbitration, and thus, they are bound by the arbitration agreement.
As an intervening plaintiff, BCBS had the status of a party in interest in judicial proceedings for the purpose of enforcing a right to reimbursement. Blue Cross v. Eaton Rapids Com Hosp, 221 Mich. App. 301, 312; 561 N.W.2d 488 (1997); MCL 550.1401(6); MSA 24.660(401)(6). This status does not free plaintiffs from their obligations under the arbitration agreement.
III
Plaintiffs also argue that they were entitled to revoke the arbitration agreement because the agreement was for "common-law arbitration" rather than for "statutory arbitration" We disagree.
This Court distinguishes between "statutory arbitration" and "common-law" arbitration. "The Michigan arbitration statute provides that an agreement to settle a controversy by arbitration under the statute is valid, enforceable, and irrevocable if the agreement provides that a circuit court can render judgment on the arbitration award." Tellkamp v. Wolverine Mut Ins Co, 219 Mich. App. 231, 237; 556 N.W.2d 504 (1996) (emphasis supplied), citing MCL 600.5001; MSA 27A.5001. According to this Court's interpretation of the Michigan arbitration act (MAA), parties that want their arbitration agreement to be a statutory arbitration agreement must "clearly evidence that intent by a contract provision for entry of judgment upon the award by the circuit court." Tellkamp, supra, 219 Mich. App. 237, quoting EE Tripp Excavating Contractor, Inc v. Jackson Co, 60 Mich. App. 221, 237; 230 N.W.2d 556 (1975). Statutory arbitration agreements are irrevocable except by mutual consent. MCL 600.5011; MSA 27A.5011.
MCL 600.5001 et seq.; MSA 27A.5001 et. seq.
In contrast, if the arbitration agreement does not provide "that judgment shall be entered in accordance with the arbitrators' decision", the contract involves common-law arbitration rather than statutory arbitration. Beattie v. Autostyle Plastics, 217 Mich. App. 572, 578; 552 N.W.2d 181 (1996) (citing MCL 600.5001 et seq.; MSA 27A.5001 et seq.) Under the "unilateral revocation rule", when the agreement is for common-law arbitration, either party may unilaterally revoke the arbitration agreement at any time before the announcement of an award, regardless of which party initiated the arbitration. Tony Andreski, Inc v. Ski Brule, Inc, 190 Mich. App. 343, 347-348; 475 N.W.2d 469 (1991).
Here, the arbitration agreement included the provision, "Arbitration to be governed by American Arbitration Association medical malpractice arbitration rules." The agreement to arbitrate therefore incorporated these rules by reference. Although these rules were not part of the trial court record, we may take judicial notice of these rules pursuant to MRE 201(c) and (e). MRE 201(b) allows us to take judicial notice of a fact that is not subject to reasonable dispute because it is "capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." AAA's medical malpractice arbitration rules satisfy these requirements.
The AAA medical malpractice arbitration rules expressly provide that "[p]arties to these rules shall be deemed to have consented that judgment upon the arbitration award may be entered in any federal or state court having jurisdiction thereof." Because these rules were incorporated by reference into the arbitration agreement, the agreement included a provision for a judgment upon the arbitration award to be entered in a court having jurisdiction. Accordingly, the arbitration agreement is a statutory arbitration agreement and is not unilaterally revocable by plaintiffs. Because defendants did not consent to the revocation of that agreement, so the trial court properly granted summary disposition pursuant to MCR 2.116(C)(7).
This rule applied to both the 1989 rules in effect at the time the parties executed the arbitration agreement in 1995 and the amended rules which became effective 1996.
IV
Because the arbitration agreement at issue here provided for statutory arbitration, we are not obligated to address the unilateral revocation rule pertaining to common-law arbitration agreements. Nonetheless, we find it regrettable that this Court has perpetuated the anachronistic rule that common-law arbitration agreements are revocable — a rule based on superannuated precedent rather than reasoned analysis of law and public policy. Unhappily, this Court has reiterated this rule in decisions issued after November 1, 1990, which are binding precedent under MCR 7.215(H)(1). Beattie, supra and Tony Andreski, supra. If we had been forced to rule that the parties' contract was for common-law arbitration, and therefore revocable, we would have called for a conflicts panel pursuant to MCR 2.715(H). Reviewing the origins of the rule, we find no sound legal basis for its perpetuation.
The rule allowing unilateral revocation of common-law arbitration agreements has no statutory basis. Nothing in the MAA suggests that arbitration agreements not containing the "entry of judgment upon the award" language are revocable at the will of either party. Although the MAA expressly provides that statutory agreements are "valid, enforceable and irrevocable save upon such grounds as exist at law or in equity for the rescission or revocation of any contract", and that neither party may revoke the agreement without the other party's consent, it does not logically follow that common-law agreements are unilaterally revocable. MCL 600.5001(2), 600.5011; MSA 27A.5001(2); 27A.5001.
Reviewing the case law history of the unilateral revocation rule, we find no reason why it should still be the law in Michigan. Indeed, its continued existence brings to mind Justice Oliver Wendell Holmes' quote that "as precedents survive like the clavicle in the cat, long after the use they once served is at an end, and the reason for them has been forgotten, the result of following them must often be failure and confusion from the merely logical point of view." Holmes, Common carriers and the common law, 13 America L Rev 608, 630 (1879). Accordingly, there is no reason for the unilateral revocation rule to persist to this day merely because it appeared in nineteenth century judicial dicta that has no relevance or power of persuasion today.
The origins of the unilateral revocation rule lie in the nineteenth century, when American law disfavored arbitration as second-rate justice at best, or an unlawful usurpation of judicial authority at worst. Although early Michigan arbitration statutes permitted adults (except married women) to enter into agreements to submit disputes to arbitration and render judgment upon an arbitration award, until 1942, these statutes did not proscribe revocation or mandate enforcement. See CL 1948, § 645.1 et seq.; CL 1929, § 15394 et seq.; CL 1871, § 6889 et seq. While our legal system may have had only a lukewarm tolerance for arbitration in the past, it now embraces arbitration as an expeditious, inexpensive, and fair means of dispute resolution. New legislation, implementing the enforceability of arbitration agreements, replaced the older statutes which merely tolerated arbitration as long as neither party changed his mind. Congress enacted the Federal Arbitration Act in 1925. 9 U.S.C. § 1. Our Legislature adopted the Uniform Arbitration Act as the MAA in 1961. Meanwhile, the American judiciary abandoned its hostility toward arbitration. See, for example, the United States Supreme Court's " Mitsubishi Trilogy" cases. Consistent with the national movement favoring arbitration, Michigan Courts have upheld agreements to arbitrate a wide variety of disputes. See Rembert v. Ryan Family Steak House, 235 Mich. App. 118, 128-130 (1999). Whatever the rationale for the unilateral revocation rule may have been in the nineteenth century, it is no longer relevant.
Mitsubishi Motors v. Soler Chrysler-Plymouth, 473 U.S. 614; 105 S Ct 3346; 87 L Ed.2d 444 (1985), Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 107 S Ct. 2332, 96 L Ed.2d 185 (1987), and Rodriguez de Quijas v. Shearson/American Express, Inc, 490 U.S. 477, 109 S Ct 1917, 104 L Ed.2d 526 (1989).
Not only is the unilateral revocation rule anachronistic, it has never been a firmly entrenched rule in Michigan case law. When the rule has appeared in Michigan cases, it has been an aberration in our state, which has generally been favorable toward arbitration. Rembert, supra slip op at 128-133. Our Supreme Court's nineteenth century decisions did not consistently hold that common-law arbitration agreements are revocable whereas statutory agreements are not. In some cases, the Court at least suggested that either type of arbitration was revocable at the will of either party (which is arguably consistent with the nineteenth century statute, which did not provide that arbitration agreements were irrevocable). In McGunn v. Hanlin, 29 Mich. 475, the Court held that a common-law arbitration agreement that did not contain a covenant not to sue could not be enforced. Id., 480. However, the Court expressly declined to consider "whether a statutory agreement, before the arbitrators have acted, stands on a different basis", thereby leaving the possibility that even statutory agreements were revocable. Id. In Chippewa Lumber Co v. The Phenix Ins Co, 80 Mich. 116; 44 N.W. 105 (1890), the Court broadly stated that arbitration agreements in general are unenforceable — without analysis, without reference to any arbitration statute, and without any distinction between statutory and common-law arbitration. Id., 120. Notwithstanding this sweeping declaration, the Court ultimately held that the parties' arbitration agreement — which utilized arbitration only as a condition precedent to filing a lawsuit — was enforceable. Id., 120-121. Because the Court ultimately enforced the limited arbitration agreement, its statement that an agreement to submit all matters to binding arbitration would have been unenforceable is dicta, not a binding statement of law. Edelberg v. Leco Corp, ___ Mich. App. ___; ___ N.W.2d ___ (docket no 208126, rel'd 6/11/99), slip op at 3-4. Moreover, because these cases blurred the distinction between common-law and statutory arbitration agreements, neither case warrants application of the unilateral revocation rule today, under the MAA.
Interestingly, the Court described this arbitration procedure as " an expeditious, inexpensive, and proper method, if not a better one than is afforded by a suit."
Moreover, other early decisions rejected the unilateral revocation rule. In Norton v. Hayden, 109 Mich. 682; 67 N.W. 909 (1896), the plaintiff argued that he was entitled to revoke a common-law arbitration agreement. The Supreme Court gainsaid this proposition:
We are unable to agree with this contention [that a common-law arbitration provision in a contract was unenforceable]. We must construe the contract as the parties have made it. The arbitration agreed upon was just as much a part of the contract as was the agreement on the part of one to sell and of the other to buy. . . . It is too obvious to require further comment that Mr. Norton could not, at his will, revoke the arbitration, and hold Mr. Hayden liable upon the remainder of the contract. No case cited sustains any doctrine. A revocation of the arbitration portion of the contract by either party would have been a revocation on his part of the entire contract. [ Id., 685.]
The Supreme Court implicitly rejected the unilateral revocation rule in Frolich v. Walbridge-Aldinger Co, 236 Mich. 425, 429; 210 N.W. 488 (1926). There, the Court stated that the parties' arbitration agreement was "not in conformity with our statutory requirements, 3 Comp. Laws 1915, § 13646 et seq., and makes no reference to the act, but in any event it is an agreement for a common-law arbitration." However, the Court did not refuse to enforce the arbitration agreement on the ground that a common-law arbitration agreement was revocable by either party. Instead, the Court held that the plaintiff was entitled to bring a lawsuit because the defendant failed to comply with the arbitration agreement by cooperating with plaintiff's effort to arbitrate. Id., 432. Indeed, it can be inferred from the Frolich decision that the Court would have enforced the parties' common-law arbitration agreement if the defendant had honored the agreement's terms.
In Siewek v. F Joseph Lamb Co, 257 Mich. 670; 241 N.W. 807 (1932), the Court implicitly distinguished between statutory and common-law arbitration agreements, and stated that the latter were revocable unless they came under one of two exceptions: arbitration as condition precedent to a lawsuit, or arbitration relating to construction, paving, or installation contracts. Id., 676. Again, the Court's reliance on an obsolete statute and two obsolete exceptions renders its statement of the unilateral revocation rule irrelevant under the MAA and modern, pro-arbitration public policy. Rembert, supra slip op at 8-10.
See also Detroit v. A W Kutsche Co, 309 Mich. 700, 708; 16 N.W.2d 128 (1944).
In sum, we trace the origins of the unilateral revocation rule in two decisions allowing for revocation of any arbitration agreement, one decision explicitly rejecting the unilateral revocation rule, one decision implicitly rejecting it, and one decision accepting the rule subject to certain exceptions — all decided under a defunct arbitration statute. This history scarcely warrants the continued viability of the unilateral revocation rule as a well-entrenched principle of law.
Most recently, in Brucker v. McKinlay Transport, Inc, 454 Mich. 8; 557 N.W.2d 536 (1997), and Gordon Sel-Way v. Spence Bros, 438 Mich. 488, 495; 475 N.W.2d 704 (1991), our Supreme Court merely noted that the parties' arbitration agreement qualified as a statutory agreement because it provided for entry of judgment on the arbitrator's decision.
Moreover, the unilateral revocation rule is an aberration in Michigan common law, which has generally been favorable toward arbitration. See Rembert, supra slip op at 4-7. Its appearance in the aforementioned Supreme Court cases seems almost accidental.
Unfortunately, in the MAA era, the unilateral revocation rule re-emerged in EE Tripp Excavating Contractor, supra, 60 Mich. App. 221. Without considering the difference between the historical arbitration statute and the MAA, the EE Tripp Court cited Frolich, supra for the proposition that "to avail themselves of the statutory arbitration provisions parties to a contract must clearly evidence that intent by a contract provision for entry of judgment upon the award by a circuit court." Id., 237. The Court did not mention that the Frolich Court found the agreement unenforceable for reasons other than the unilateral revocation rule. Without considering how the MAA or modern public policy might have rendered the old rule obsolete, the EE Tripp Court stated that "historically, common-law arbitration agreements could be revoked or repudiated at will by a party any time prior to announcement of the award". Id., 243-244. The Court then discussed the history of this issue in various other jurisdictions, noted the conflict among the Michigan Supreme Court decisions, acknowledged the "mushrooming" criticism of the unilateral revocation rule, but ultimately decided that the unilateral revocation rule remained the law. Id., 237, 241-250. Significantly, the Court's lengthy discussion of the unilateral revocation rule is dicta because it ultimately determined that the defendant had not, in fact, revoked the agreement. Id., 250.
Despite this highly questionable history, this Court revived the unilateral revocation rule in Tony Andreski, supra. Had we decided Tony Andreski, we would have exercised our discretion under MCR 7.215(H)(1) and declined to follow EE Tripp Excavating. The rule is the last vestige of that bygone judicial age when arbitration agreements were regarded as unlawful attempts to oust the courts of jurisdiction. This rule serves no useful purpose today, particularly when the overwhelming public policy of this state favors arbitration to resolve a wide variety of disputes. As we held in Rembert, supra, "our Legislature and our courts have strongly endorsed arbitration as an inexpensive and expeditious alternative to litigation." Id., slip op at 9. Indeed, even the EE Tripp Excavating Court, which revived the unilateral revocation rule for common-law arbitration, observed that judicial jealousy of arbitration had become obsolete. Id., 246-247. We see no reason to adhere to an antediluvian principle recited as dicta in the days of Ulysses S. Grant's presidency and Queen Victoria's reign. We would therefore enforce common-law arbitration agreements on the same terms as any other contract, and consign the unilateral revocation rule to legal history's dustbin.
Affirmed.