Arbitration terms of construction agreements; An agreement to arbitrate as a contract; Ferndale v. Florence Cement Co.; Beck v. Park W. Galleries, Inc.; Arbitrability; Huntington Woods v. Ajax Paving Indus., Inc.; Principle that when there are several agreements relating to the same subject matter, the intention of the parties must be gleaned from all the agreements; Omnicom of MI v. Giannetti Inv. Co.; Whether defendants waived their right to assert arbitration; Madison Dist. Pub. Sch. v. Myers; North W. MI Constr., Inc. v. Stroud

The court held that the trial court erred by denying defendants-builders’ motion for summary disposition because they were entitled to arbitration under the terms of the construction agreements entered into by the parties. Plaintiffs-homeowners sued defendants under theories of fraud and innocent misrepresentation, alleging defendants’ actions diminished the values of their properties and that defendants knew or should have known about the conservation easement. Defendants contended that plaintiffs’ claims were covered by the arbitration clause in the construction agreements, and filed a counterclaim alleging “plaintiffs breached the construction agreements by not proceeding to arbitration.” On appeal, the court agreed with defendants that the trial court erred by denying their motion for summary disposition because they were entitled to arbitration under the terms of the agreements. “The construction and purchase agreements in this case establish the parties’ intent to arbitrate because they are temporally and substantively integral to one another such that they must be construed together.” When they signed the construction agreements containing an arbitration clause, plaintiffs “agreed to arbitrate not only disputes regarding the construction of the homes, but also disputes regarding the purchase of the lots on which the homes were to be constructed.” The court rejected their argument that the arbitration clauses should not apply because they did not allege a violation of the construction agreements, finding their complaints “necessarily arose out of the construction agreements.” Finally, it determined that defendants did not waive their right to invoke the arbitration clause, concluding plaintiffs “failed to meet their heavy burden of demonstrating prejudice, in that they failed to raise this waiver issue” sooner, and defendants’ “delay in litigating their arbitration defense is less significant than previous cases in which” the court has found a waiver of arbitration. “Because the purpose of arbitration is to preserve the time and resources of the courts in the interests of judicial economy, the time frame and relatively efficient manner in which defendants have litigated this case disfavors a finding of waiver. Simply put, defendants have not taken action which clearly waives their arbitration claims.” Reversed and remanded.