e-Journal Summary

e-Journal Number : 81421
Opinion Date : 04/11/2024
e-Journal Date : 04/23/2024
Court : Michigan Court of Appeals
Case Name : Garza v. Estate of Gutierrez
Practice Area(s) : Contracts Alternative Dispute Resolution
Judge(s) : Per Curiam – Gadola, K.F. Kelly, and Murray
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Issues:

Substantive due process claim challenging an arbitrator’s decision; Unfairness argument; Claim the arbitrator committed a contract law error; Rescission of a contract; An arbitrator’s authority; Contract interpretation

Summary

The court concluded plaintiff failed to show that the arbitration award at issue violated his due process rights or was unfair. Further, it found the award was consistent with the parties’ expressed intent and was within the arbitrator’s contractual authority. Thus, it affirmed the circuit court’s order confirming the award, which gave plaintiff “seven days to cure his $150,000 default on a parcel of real property he was buying from defendant, or to surrender the property to defendant.” Plaintiff contended the award should be vacated because the arbitrator denied him due process by giving him only seven days to pay. But the court noted that the arbitrator’s decision “was not a governmental action.” The parties stipulated to the arbitration services of a private company. The court found there was “no basis for regarding the arbitrator’s decision as governmental action. Plaintiff does not reference the trial court in his argument, and offers no support for the proposition that due-process protections apply to a privately mediated dispute.” The court also concluded he failed to show any unfairness. “The parties’ settlement agreement provided that any disputes regarding the agreement would ‘be decided by the mediator; acting as arbitrator[.]’” He did not challenge the validity of the arbitration agreement. Thus, he “consented to having the arbitrator resolve the dispute after [he] had defaulted on his payments.” As to the seven-day period, “the arbitration award simply allowed plaintiff to pay the balance owed under the agreements after [his] failure to make payments had resulted in three formal interventions to compel payments beginning in early 2019. Despite the seemingly short time constraint, it was not unfair that the award allowed [him] yet another opportunity to cure his defaults before he would be obliged finally to surrender his interest in the property.” He also asserted the arbitrator committed legal error, effectively rescinding the purchase contract “while failing to restore the parties to the positions they held before the contract.” But the court found no legal error apparent in the award. “Allowing plaintiff a short time to complete the purchase or surrender the property along with the 25% of the purchase price already paid, was not a demonstrably egregious error particularly given that the parties effectively agreed on this remedy for default in their settlement agreement.”

Full PDF Opinion