Commercial lease dispute; The doctrine of impossibility/impracticability; Mutual mistake of fact; Assumption of risk; Action to vacate, modify, or correct an arbitration award; MCL 600.5081(2)

The court rejected plaintiffs’ argument that the commercial lease at issue was unenforceable due to impossibility or impracticability, and held that the arbitrator did not legally err in concluding the mutual mistake of fact defense did not apply. The court found that he “did not exceed his authority or make an error of law discernible on the face of the arbitration award.” Thus, it affirmed the trial court’s denial of plaintiffs-appellants’ motion to vacate the award and grant of defendant’s motion to confirm it. Plaintiffs-tenants entered into the lease intending to use the property to sell tires. After they took possession, the city issued corrections orders, and the tenants abandoned the premises. “The chief problem with the property was that it lacked an automatic sprinkler system, which was required to store tires on” it. The arbitrator later awarded defendant $411,131.50 plus interest. On appeal, appellants argued “the arbitration award must be vacated because the sprinkler system requirement rendered the tenants’ performance of their obligations under the lease impracticable, if not impossible.” But the court concluded they “failed to establish that the arbitrator exceeded his authority or made an error of law. [He] determined that the lease unambiguously required the tenants ‘at [their] own expense’ to comply with all laws and regulations necessary to operate their new tire sales business. He recognized that [it] did not require defendant to perform any work on the premises and instead placed the burden of compliance on the tenants.” He further recognized that they “accepted the property ‘as is,’ without a sprinkler system in place. As the trial court recognized, the tenants, rather than defendant, were in the better position to know what was legally required to operate their business.” And while defendant’s owner was willing to assist them “by meeting with city officials, the tenants did not show up to the meeting.” As to the mistake of fact defense, that they “were unable to use the premises as desired until a fire suppression system was installed did not affect ‘the whole substance of the agreement.’ Instead, [they] were required to make the premises suitable for their business, if necessary, as stated in the lease.” Finally, to the extent the arbitrator allocated any risk, this involved his “mental processes and factual determinations, which” were not reviewable.