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Newman v Suburban Mobility Authority for Regional Transportation (COA – PUB 1/8/2019; RB #3835)

 

Michigan Court of Appeals; Docket # 342678; Published
Judges Letica, Cavanagh, and Meter; per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion.


 

STATUTORY INDEXING:
Not applicable

TOPICAL INDEXING:
Private Contract (Meaning and Intent)
Collateral Estoppel and Res Judicata


SUMMARY:

In this published per curiam opinion, the Court of Appeals affirmed summary disposition for Defendant Suburban Mobility Authority for Regional Transportation (“SMART”) regarding the meaning of an arbitration agreement and res judicata. The Court upheld the grant of summary disposition because it found that the term of the arbitration agreement, not the award amount, dictated the scope of the agreement and res judicata applied because a voluntary dismissal with prejudice acts as an adjudication for purposes of res judicata.

Plaintiff Stacy Newman (“Newman”) was injured while on a bus operated by SMART. The two parties submitted the case to arbitration, and both signed an arbitration agreement, which stated that it applied to “all past, present, and future PIP claims, known or unknown, claimed or unclaimed.” In May 2016, the arbitration panel awarded $50,000 to Newman and stated the award was for past and present injuries. The arbitration award did not mention future benefits or claims. The trial court approved the settlement and proposed distribution of the arbitration award and dismissed Newman’s case with prejudice. Subsequently, Newman brought an action for “past, present, and future” PIP benefits. SMART motioned for summary disposition arguing the case was barred by the arbitration agreement and res judicata. The trial court agreed and granted summary disposition for SMART. Newman appealed.

The Court of Appeals reasoned that Newman’s claims were barred by res judicata because the claims were within the scope of the arbitration agreement due to the fact that Newman’s claims were previously adjudicated in an arbitration. The Court first explained that the scope of an arbitration agreement is determined by the contract. Further, the Court explained the arbitration agreement determines the scope of an arbitration award even if the award does not explicitly state that it applies to everything listed in the arbitration agreement. Here, the arbitration agreement stated that it applied to all “past, present, and future PIP claims, known or unknown, claimed or unclaimed.” The Court reasoned that the language was clear on its face and addressed future PIP claims. Newman argued that PIP benefits cannot be paid until they are incurred, and so future obligations cannot be created. The Court disagreed and explained that a future payment cannot be mandated, but an insurer can voluntarily agree to do such. That is exactly what SMART agreed to do here. The Court then found that even though the award did not mention future benefits it was the arbitration agreement that controlled, and it did mention future obligations. Therefore, the arbitration agreement barred Newman’s claim by its terms.

“The arbitration agreement stated that the arbitration would be for all claims, including future PIP claims. Because the scope of an arbitration award is determined by the arbitration agreement, an arbitration award does not need to explicitly state something for it to be included in the arbitration award. See Dohanyos, 217 Mich App at 179. That is, a presumption exists that an arbitration award has the same scope as the arbitration agreement the award arises out of. See id. Accordingly, in this case, the arbitration award is deemed to have included an award for future PIP claims.”

The Court next found that res judicata barred Newman’s claim. The Court explained that res judicata applies when “(1) the prior action was decided on the merits, (2) the decree in the prior action was a final decision, (3) the matter contested in the second case was or could have been resolved in the first, and (4) both actions involved the same parties or their privies.” Also, a voluntary dismissal with prejudice acts as an adjudication for purposes of res judicata. Here, the Court found that the prior proceeding was decided on the merits by the arbitration panel, the trial court’s dismissal with prejudice was the final decision, the matters were decided in the first arbitration meeting, and both actions involved the same two parties. Therefore, res judicata barred Newman’s claim.

“The parties’ claims in the prior proceeding were decided on the merits by the arbitration panel, which awarded $50,000 to plaintiff for his injuries. There were no objections to the arbitration award, and plaintiff moved for the trial court to approve the settlement and proposed distribution of the arbitration award. The trial court granted plaintiff’s motion and dismissed plaintiff’s case with prejudice. The issue of the scope of the arbitration award, and specifically whether the award actually covered future PIP claims, could have been adjudicated in the prior proceeding. See MCL 691.1703-1704 (establishing the Uniform Arbitration Act’s standards for modifying and vacating arbitration awards). Finally, both the prior proceeding and the instant case involve the same parties. Thus, plaintiff’s claim that res judicata is inapplicable under the facts of this case is without merit.”

Thus, the Court found Newman’s claim was barred.

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