e-Journal Summary

e-Journal Number : 62901
Opinion Date : 06/13/2016
e-Journal Date : 06/14/2016
Court : Michigan Supreme Court
Case Name : Altobelli v. Hartmann
Practice Area(s) : Business Law, Alternative Dispute Resolution
Judge(s) : Bernstein, Young, Jr., Markman, Zahra, McCormack, Viviano, and Larsen
Full Text Opinion

Scope of an arbitration clause requiring arbitration of any dispute between a law firm & a former principal; Kaleva-Norman-Dickson Sch. Dist. No. 6 v. Kaleva-Norman-Dickson Sch. Teachers’ Ass’n; McKinstry v. Valley Obstetrics-Gynecology Clinic, PC; Parties’ intent; Miller-Davis Co. v. Ahrens Constr., Inc.; Agency; Principle that corporations only act through officers & agents; Attorney Gen. v. National Cash Register Co.; Fraser Trebilcock Davis & Dunlap PC v. Boyce Trust 2350; The Michigan Limited Liability Company Act (MLLCA) (MCL 450.4101 et seq.); MCL 450.4401(a); MCL 450.4406; MCL 450.4402(4); Application of agency principles in interpreting arbitration clauses; Pritzker v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (3d Cir.); Arnold v. Arnold Corp.-Printed Commc’ns for Bus. (6th Cir.); Grand Wireless, Inc. v. Verizon Wireless, Inc. (1st Cir.); Determining the gravamen of an action; Maiden v. Rozwood; Adams v. Adams (On Reconsideration); Operating agreement (OA)


Holding that agency principles apply when determining who is included in an arbitration clause’s scope, the court concluded that the defendants (individual principals in the law firm in which the plaintiff was formerly a principal) were included in the meaning of “the Firm” in the OA’s arbitration clause. Further, plaintiff’s claims were covered by the arbitration clause. Thus, his dispute was subject to binding arbitration. The court reversed the portion of the Court of Appeals’ opinion that ruled the matter was not subject to arbitration, vacated the rest of the Court of Appeals’ opinion (concerning plaintiff’s partial summary disposition motion), and remanded the case to the trial court. After filing a demand for arbitration, and while the parties were selecting arbitrators, plaintiff filed this case in the trial court, naming as defendants seven individual principals in his former firm (but not the firm), including the CEO and managing directors. The arbitration clause covered any dispute or claim between a former principal and the firm of any kind, including those over compensation or bonuses. The court noted the principles that corporations can only act through agents and officers, and that the acts of corporate agents or officers, within the scope of their employment, are the corporation’s acts. It also noted that the MLLCA supported the application of agency principles to the interpretation of the OA’s arbitration clause. Other jurisdictions have likewise applied agency principles in arbitration clause interpretation. It concluded that plaintiff, by signing the OA and accepting the clause, knew that individuals would be operating on behalf of the firm. Under the facts of the case, defendants were those individuals. As to whether the clause covered the subject matter of the dispute, it found that the essence of plaintiff’s allegations was that their actions deprived him of bonuses and compensation he was due. In each of his claims, plaintiff took issue with their acts as agents making decisions for the firm, which he believed “interfered with his financial entitlements” under the OA.

Full Text Opinion