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  • Writer's pictureRobert Lusk

Court of Appeals Complicates Enforcing or Challenging Arbitration Awards

The Court of Appeals unpublished decision in Waller v Blue Cross Blue Shield of Michigan (Case No. 360392, March 23, 2023) highlights a trap for unwary parties in arbitration cases under Michigan’s Uniform Arbitration Act (the Act).

The facts of the case were straightforward. Plaintiff filed a civil action in the Wayne County Circuit Court, alleging her employer had violated Michigan’s Whistleblowers Protection Act. The parties stipulated to dismiss the civil action and submit plaintiff’s claim to binding arbitration as required by their employment contract. Plaintiff prevailed on the merits, at least to some extent, and the arbitrator issued an “interim” award of economic and noneconomic damages on February 25, 2021. The “interim” award promised a separate decision on attorney’s fees and costs, which was issued on April 19, 2021. Plaintiff was, apparently, not satisfied with the “interim” award and, on July 19, 2021, filed a motion to modify or vacate the award without also filing a new civil action or attempting to reopen the original case. The circuit court denied plaintiff’s motion for two reasons: there was no pending case because the parties had agreed to dismiss the original case and the motion was untimely under the Act. Plaintiff appealed and the Court of Appeals affirmed.

The Court of Appeals agreed with the circuit court that, given there was no open case, the trial court lacked authority to rule on plaintiff’s motion to modify or vacate. The Court also relied on Sections 23 and 24 of the Act, MCL 691.1703 and 691.1704, which require motions to vacate or modify to be filed within 90 days. Here, the “interim” award was issued on February 25, 2021. However, the motion to vacate or modify was not filed until July 19, 2021, well outside the applicable 90-day window. To plaintiff’s argument that it made little sense to file any motion until the arbitrator issued a “final” award on attorney’s fees and costs, the Court replied the Act simply did not permit it such latitude.

Waller creates an obvious issue for parties in arbitration. They are forced to petition the court for relief from an interim award, even if other parts of the case remain unresolved. Thus, appeals from arbitration awards will, in some cases, be piecemeal.

Fortunately, there is at least a partial solution. Section 7 of the Act, MCL 691.1687, provides that when a court orders a party into arbitration the court should “stay” the pending case. A “stay,” as opposed to a dismissal, means the case remains open until the arbitration is completed. This provides a disappointed party with an open case in which to file a motion to enforce or challenge the award. Of course, a stay does nothing to avoid piecemeal appeals. For the same reason, when, as in Waller, parties agree a claim is subject to arbitration, they may wish to stipulate to a stay rather than a dismissal. At the other end of the arbitration, parties may wish to encourage arbitrators to issue one final award, rather than two or more partial awards.

Parties may find courts reluctant to “stay” rather than “dismiss” cases, as stayed cases remain on the court’s docket. In cases that are dismissed, rather than stayed, Waller stands for the proposition a party filing a motion to enforce or challenge an arbitrator’s award should also file a complaint to give the trial court the necessary jurisdiction to rule on the motion.

Because Waller is an unpublished case it is not binding precedent. Nevertheless, parties involved in enforcing or challenging arbitration awards will ignore Waller are their peril unless or until it is overruled or the Act is amended to address this issue.

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