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STATE OF MICHIGAN
COURT OF APPEALS


MERRILL LYNCH, PIERCE, FENNER & SMITH, INC. and TOM PURSEL, Plaintiffs-Appellees, v TED J. WINIARZ and ELWIRA GOLYGOWSKA WINIARZ, Defendants-Appellants.

UNPUBLISHED July 16, 1996

No. 178188 LC No. 94-000912

Before: Murphy, P.J., and Griffin and E.R. Post,* JJ. PER CURIAM. Defendants appeal as of right a trial court order granting plaintiffs' motion to permanently stay arbitration proceedings and denying defendants' motion for summary disposition. We affirm. Defendants opened a Cash Management Account at plaintiff Merrill Lynch's Detroit office in February 1984. Plaintiff Tom Pursel was the Merrill Lynch financial consultant who serviced defendants' account. When they opened the account, defendants signed a Customer Agreement, which contained the following provisions: 11. Agreement to Arbitrate Controversies

It is agreed that any controversy between us arising out of your business or this agreement shall be submitted to arbitration conducted under the provisions of the Constitution and Rules of the Board of Governors of the New York Stock Exchange, Inc. or pursuant to the Code of Arbitration Procedure of the National Association of Securities Dealers, Inc., as the undersigned may elect. . . .

* Circuit judge, sitting on the Court of Appeals by assignment. -1

12. The Laws of the State of New York Govern

This agreement and its enforcement shall be governed by the laws of the State of New York . . . .

Defendants subsequently purchased interests in two limited partnerships. These transactions occurred on February 13, 1985, when defendants purchased ten units of MRI Business Properties Fund II limited partnership, and on April 19, 1985, when defendants purchased eight units of MLH Income Realty Partners V limited partnership. On December 21, 1993, defendants sent a letter to the National Association of Securities Dealers, Inc. (NASD) commencing arbitration proceedings against plaintiffs regarding the limited partnership units defendants purchased in 1985. According to the letter, defendants' claims against plaintiffs were based on fraud and deceit, negligence, breach of fiduciary duty, breach of contract, and, as to plaintiff Merrill Lynch, negligent supervision and negligent or fraudulent marketing. On February 18, 1994, plaintiffs filed a complaint and application for stay of arbitration, arguing that the dispute was ineligible for arbitration under

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Michigan Law