Opinion
No. 342441
02-26-2019
CHECKPOINT CONSULTING, LLC, Plaintiff-Appellee, v. NICOLE A. HAMM, Defendant-Appellant.
If this opinion indicates that it is "FOR PUBLICATION," it is subject to revision until final publication in the Michigan Appeals Reports. UNPUBLISHED Oakland Circuit Court
LC No. 2017-161739-CK Before: CAVANAGH, P.J., and BORRELLO and REDFORD, JJ. PER CURIAM.
Defendant appeals as of right an order denying her motion for summary disposition and confirming plaintiff's arbitration award. We reverse and remand for entry of an order vacating the arbitration award.
This case arises out of an employment dispute. Defendant was employed by plaintiff under an employment agreement, which contained an arbitration clause. Through defendant's employment, she provided project leadership services to Delaware North Corporation (Delaware North). Subsequently, defendant terminated her employment with plaintiff, but then entered into an independent contractor agreement with plaintiff. Defendant, as an independent contractor, assisted in the deployment of software at Delaware North. After defendant's independent contractor relationship with plaintiff ended, defendant entered into a professional service agreement with Delaware North.
Plaintiff then filed a demand for arbitration, alleging that defendant violated the noncompete clause of her employment agreement by working for Delaware North. The arbitrator determined that he had jurisdiction over the dispute because the noncompete clause from the employment agreement survived the subsequent independent contractor agreement. The arbitrator ultimately issued an award in favor of plaintiff. Plaintiff then filed a complaint in Oakland Circuit Court, seeking confirmation of the award. Defendant filed a motion for summary disposition and requested the trial court vacate the arbitration award. Defendant argued that the arbitrator did not have jurisdiction over the dispute because there was no arbitration agreement between the parties. The trial court concluded that it could not substitute its own judgment for that of the arbitrator; thus, it denied defendant's motion and confirmed plaintiff's arbitration award. This appeal followed.
Defendant argues that the trial court erred when it determined that there was no basis to vacate the arbitration award because there was not a valid arbitration agreement between the parties. We agree.
Although defendant moved for summary disposition under MCR 2.116(C)(7), defendant's motion was essentially a motion to vacate the arbitration award, as the trial court noted. We review de novo the trial court's decision on a motion to vacate an arbitration award, including related legal issues. Washington v Washington, 283 Mich App 667, 671; 770 NW2d 908 (2009). "Whenever the jurisdiction of an arbitrator is questioned, it must be determined in order to make an award on arbitration binding." Arrow Overall Supply Co v Peloquin Enterprises, 414 Mich 95, 98-99; 323 NW2d 1 (1982). "The determination of whether an arbitration contract exists is for the courts to decide, applying general contract principles." Madison Dist Pub Sch v Myers, 247 Mich App 583, 591; 637 NW2d 526 (2001) (quotation marks and citations omitted).
In this case, the arbitrator determined that it had jurisdiction over the dispute because the independent contractor agreement did not void the noncompete clause of the employment agreement. However, an arbitrator derives his authority to act from an arbitration agreement between parties. Krist v Krist, 246 Mich App 59, 62; 631 NW2d 53 (2001); see also Gordon Sel-Way, Inc v Spence Bros, Inc, 438 Mich 488, 496; 475 NW2d 704 (1991). Therefore, the primary issue is whether the arbitration clause in the employment contract remained operative.
Defendant first argues that the merger clause in the independent contractor agreement—which did not contain an arbitration clause—voided the prior employment agreement, which contained an arbitration clause.
"The cardinal rule in the interpretation of contracts is to ascertain the intention of the parties." Ferndale v Florence Cement Co, 269 Mich App 452, 458; 712 NW2d 522 (2006). "We enforce contracts according to their terms, as a corollary of the parties' liberty of contracting." Holland v Trinity Health Care Corp, 287 Mich App 524, 526; 791 NW2d 724 (2010). "An unambiguous contractual provision reflects the parties' intent as a matter of law, and if the language of the contract is unambiguous, we construe and enforce the contract as written." Id. at 527 (quotation marks and citation omitted). "Parol evidence of contract negotiations, or of prior or contemporaneous agreements that contradict or vary the written contract, is not admissible to vary the terms of a contract which is clear and unambiguous." Barclae v Zarb, 300 Mich App 455, 480; 834 NW2d 100 (2013) (quotation marks and citations omitted).
In this case, the independent contractor agreement contained a merger clause that stated:
19. Entire Understanding. This document and any exhibit attached constitute the entire understanding and agreement of the parties, and any and all prior agreements, understandings, and representations are hereby terminated and canceled in their entirety and are of no further force and effect.According to the unambiguous language of the merger clause, "any and all prior agreements" between the parties were terminated, not just those agreements related to the formation of the independent contractor agreement. Because the language of the merger clause is unambiguous, it reflects the intent of the parties that the prior employment agreement, and thus the arbitration clause contained therein, was "terminated and canceled in [its] entirety and [is] of no further force and effect." Therefore, there was no valid arbitration agreement between the parties because the independent contractor agreement voided all prior agreements, including the arbitration clause within the employment agreement.
Defendant alternatively argues that if the merger clause in the independent contractor agreement did not void the arbitration agreement in the employment agreement, the terms of the independent contractor agreement control over the terms of the employment agreement because both agreements covered the same subject matter. "When two agreements cover the same subject matter and include inconsistent terms, the later agreement supersedes the earlier agreement." CMI Int'l, Inc v Intermet Int'l Corp, 251 Mich App 125, 130; 649 NW2d 808 (2002). The two agreements covered the same subject matter, namely defendant's business relationship with plaintiff. The two agreements also had inconsistent terms because the employment agreement contained an arbitration clause, while the independent contractor agreement contained a choice of law clause instead of an arbitration clause. Therefore, the subsequent independent contractor agreement's choice of law term superseded the employment agreement's arbitration clause.
Because either the merger clause of the independent contractor agreement voided the arbitration clause in the employment agreement, or the choice of law term of the subsequent independent contractor agreement superseded the arbitration clause of the employment agreement, the arbitrator did not have jurisdiction to adjudicate the dispute. Accordingly, the trial court erred when it confirmed the arbitration award because there was a ground to vacate the award—there was not a valid arbitration agreement between the parties. See MCR 3.602(J)(2). On remand, the trial court is directed to enter an order vacating the arbitration award.
Reversed and remanded for entry of an order vacating the arbitration award. We do not retain jurisdiction.
/s/ Mark J. Cavanagh
/s/ Stephen L. Borrello
/s/ James Robert Redford