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STATE OF MICHIGAN COURT OF APPEALS

HERSCHEL COHEN, RONALD HARLAN WOODY, III, CAROLE RYAN, SHARON DAY, DUANE RAYMOND, and SUSAN RAYMOND, Plaintiff-Appellants, and ALAN LEVENSON, PETER JANSSEN, ANETTE JANSSEN, HELEN BARBARA SORENSEN, NELSON ROBERT PARDA, PAMELA J. MADDERN, JACK C. BLEVINS, JR., RICHARD ENGLISH, TOM UNGAR, DOUGLAS ULRICH, RHONDA ULRICH, MATTIE KING, EDWIN HUANG, BRIAN FALK, SHELDON SHERMAN, WOLFGANG ROSENFELDER, GREG LEROY, MELISSA LEROY, ANTHONY CASTELLANO, and JOANNE CASTELLANO, Plaintiffs, v PARK WEST GALLERIES, INC., ALBERT SCAGLIONE, MORRIS SHAPIRO, ALBERT MOLINA, and PLYMOUTH AUCTIONEERING SERVICES, LTD., Defendant-Appellees.

UNPUBLISHED April 5, 2012

No. 302746 Oakland Circuit Court LC No. 2010-111282-CZ

Before: MURPHY, C.J., and HOEKSTRA and MURRAY, JJ. PER CURIAM. Plaintiffs appeal as of right the trial court's order denying reconsideration of its order granting summary disposition in favor of defendants on the ground that all of plaintiffs' claims are subject to an arbitration agreement. Because we conclude that the only claims subject to arbitration are those arising from invoice agreements containing an arbitration clause, we reverse and remand for further proceedings consistent with this opinion. -1-

I. FACTS & PROCEEDINGS The instant lawsuit arises from artwork sales by defendants to plaintiffs. Each plaintiff purchased different works of art from Park West. The artwork was purchased at different times and from different locations. The art sales were made on about 20 different cruise ships, and at land auctions in Michigan, California, Georgia, Texas, and Ohio. The purchases at issue in this case span several years, the first occurring in May 2001 and the last in February 2010. Each purchase was made pursuant to an invoice agreement that was signed by the purchaser. Park West also provided each purchaser with a certificate of authenticity signed by one of the individually named defendants, and an appraisal allegedly proving the value and authenticity of the artwork. Some of the invoice agreements contained agreements to arbitrate all claims against defendants, and some of the invoice agreements did not contain an arbitration clause. All six of the plaintiff-appellants in this case signed at least one invoice agreement containing the arbitration clause. When included in the invoice, the arbitration clauses were all identical. The arbitration agreement provided, in pertinent part, that "[a]ny disputes or claims of any kind including but not limited to the display, promotion, auction, purchase, sale or delivery of art, items, or appraisals shall be brought solely in nonbinding arbitration and not in any court or to any jury." Plaintiffs filed a complaint on June 22, 2010, alleging fraud, conversion, violation of the Michigan Consumer Protection Act, breach of contract, violation of the Michigan Art Multiples Sales Act, negligent misrepresentation, conspiracy, unjust enrichment, negligence, intentional infliction of emotional distress, and breach of warranty of quality of fitness. Plaintiffs generally alleged that defendants sold forged and fake artwork, misrepresented the authenticity of artwork and artist signatures, mislead and specifically lied about the rarity and value of artwork, overvalued and falsely appraised artwork, used deceitful sales practices to sell artwork, and refused to provide refunds. On July 14, 2010, defendants responded to plaintiffs' complaint by filing four motions to dismiss. Motion number one requested dismissal based on misjoinder of parties, motion number two requested dismissal pursuant to MCR 2.116(C)(7) because the parties agreed to arbitration, motion number three requested dismissal pursuant to MCR 2.116(C)(8), and motion number four requested dismissal of plaintiff Sharon Day because she previously brought an action against defendants regarding different artwork. A hearing on defendants' motions was held on November 3, 2010. The trial court granted defendants' second motion and dismissed the case based on its determination that an agreement to arbitrate required dismissal pursuant to MCR 2.116(C)(7). The trial court found that the arbitration agreements signed by the plaintiffs were sufficiently broad to encompass all past and future claims against defendants because of the broad language used in the clause and because there was no language limiting the arbitration agreements to the single invoice where the agreement was set forth. Further, the trial court found that plaintiffs failed to present any authority to support making an exception for statutory and tort claims. Based on its decision to grant defendants' second motion, the trial court determined that defendants' fourth motion was

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moot. Conforming orders were entered on November 3, 2010. The trial court took defendants' first and third motions under advisement. Plaintiffs filed a motion for reconsideration on November 24, 2010. On December 27, 2010, the trial court issued an opinion addressing defendants' first and third motions to dismiss. The trial court determined that the parties were not joined properly and ordered severance of the parties, but not dismissal. The trial court granted in part and denied in part defendants' motion to dismiss pursuant to MCR 2.116(C)(8).1 On February 11, 2011, the trial court issued its opinion denying plaintiffs' motion for reconsideration of the trial court's decision to dismiss the complaint based on the parties' agreement to arbitrate. The trial court noted that plaintiffs' arguments for reconsideration were "reiterations" of their arguments opposing summary disposition. II. SCOPE OF THE ARBITRATION CLAUSE On appeal, plaintiffs first argue that the trial court erred when it concluded that the arbitration clause in some of the invoice agreements was sufficiently broad to encompass all claims brought by plaintiffs against defendants regardless of whether the claims arose from a purchase completed pursuant to an invoice agreement containing an arbitration clause. Plaintiffs also argue that even if their claims are subject to arbitration, their statutory and tort claims are not within the scope of the arbitration agreement. We review a trial court's decision on a motion for summary disposition pursuant to MCR 2.116(C)(7) de novo. Hoffman v Boonsiri, 290 Mich App 34, 39; 801 NW2d 385 (2010). Pursuant to MCR 2.116(C)(7), summary disposition is appropriate if a claim is barred because of an agreement to arbitrate. Whether an issue is subject to arbitration is also reviewed de novo. In re Nestorovski Estate, 283 Mich App 177, 184; 769 NW2d 720 (2009). The arbitrability of a particular issue is determined by applying a three-part test: "(1) is there an arbitration agreement in a contract between the parties; (2) is the disputed issue on its face or arguably within the contract's arbitration clause; (3) is the dispute expressly exempted from arbitration by the terms of the contract." Id. at 202 (quotation and citation omitted). Arbitration is favored, and doubts regarding the arbitrability of an issue should be resolved in favor of arbitration. Id.; Hall v Stark Reagan, PC, __ Mich App __, slip op at 6; __ NW2d __ (issued September 13, 2011). "An agreement to arbitrate is a contract." City of Ferndale v Florence Cement Co, 269 Mich App 452, 458; 712 NW2d 522 (2006). Accordingly, we apply the same legal principals as those that govern contract interpretation to the interpretation of an arbitration agreement. "The cardinal rule in the interpretation of contracts is to ascertain the intention of the parties. Id. The intent of the parties is ascertained according to the plain and ordinary meaning of unambiguous contract language. Dobbelaere v Auto-Owners Ins Co, 275 Mich App 527, 529; 740 NW2d 503

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The trial court's decision in regard to defendants' first and third motions is not challenged on appeal.

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(2007). Contract language should be read in context. See Shay v Aldrich, 487 Mich 648, 665; 790 NW2d 629 (2010). We must interpret and enforce clear and unambiguous language as it is written. Frankenmuth Mut Ins Co v Masters, 460 Mich 105, 111; 595 NW2d 832 (1999). The first factor, whether there is an arbitration agreement in a contract between the parties, In re Nestorovski Estate, 283 Mich App at 202, cannot reasonably be disputed in this case. Plaintiffs admit that some of the invoice agreements that were signed contained an arbitration clause. Accordingly, the first factor is satisfied at least in regard to some of the invoice agreements. Similarly, the third factor, whether the dispute is expressly exempted from arbitration by the terms of the contract, id., is not disputed because plaintiffs' claims are not expressly exempted by the terms of the arbitration clause. At issue in this case is the second factor, whether the disputed issue is on its face or arguably within the contract's arbitration clause. Id. The disputed issues all relate to the artwork sold by defendants to plaintiffs, and the specific issue is whether claims regarding artwork sold pursuant to an invoice agreement without an arbitration clause can still be subject to arbitration based on a subsequent invoice agreement containing an arbitration clause. The arbitration clause in this case states in pertinent part: "Any disputes or claims of any kind including but not limited to the display, promotion, auction, purchase, sale or delivery of art, items, or appraisals shall be brought solely in nonbinding arbitration and not in any court or to any jury." The trial court agreed with defendants and concluded that when plaintiffs agreed to arbitration of "any disputes of any kind," they agreed to arbitrate any dispute arising from past purchases, even if those purchases were made pursuant to invoice agreements that did not contain an arbitration clause. We disagree. Michigan law generally requires that separate contracts be treated separately. See, e.g., Seyburn, Kahn, Ginn, Bess, Deitch and Serlin, PC v Bakshi, 483 Mich 345, 361; 771 NW2d 411 (2009); Mich Nat'l Bank v Martin, 19 Mich App 458, 462; 172 NW2d 920 (1969). In Bakshi, 483 Mich at 354, the Court considered the proper accrual date for a claim by an attorney against his client for unpaid legal fees. The Court concluded that the parties entered into two separate contracts, one contract for legal services, and one contract for additional services regarding file review. Id. at 357, 361. The Court explained that the "additional services rendered after the termination [of the attorney-client relationship] equate to a separate contract apart from the parties' original contract. This separate contract is not governed by the terms included in the original contract." Id. at 361. In Martin, 19 Mich App at 461, the issue was whether the mortgagees' foreclosure on one property precluded subsequent foreclosure upon additional property in another county. This Court concluded that "[e]ach mortgage instrument constituted a separate and distinct contract, capable of independent enforcement." Id. at 462. Further, Michigan has long recognized the rule that contracts cannot be construed to operate retrospectively. See, e.g., DaimlerChrysler Corp v Wesco Distribution, Inc, 281 Mich App 240, 248; 760 NW2d 828 (2008); In re Slack Estate, 202 Mich App 627, 629; 509 NW2d 861 (1993). We note that our analysis of basic Michigan law is consistent with the Restatement of Contracts, which similarly supports the conclusion that separate contracts are treated separately.

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For example, comment d to Restatement Contracts, 2d,

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