Lexus Financial Services, Inc v. Trombly Tindall, PC
Lexus Financial Services, Inc v. Trombly Tindall, PC
Opinion of the Court
Appellant Michael Tindall challenges the trial court’s determination that his claim against appellee Lexus Financial Services, Inc., should go to arbitration. We reverse in part and affirm in part.
Appellant argues that he never signed an arbitration agreement with Lexus, so his claim belongs in the circuit court. We agree. We recognize that the trial court’s order effectively granted summary disposition based on MCR 2.116(C)(7). Therefore, we review de novo this and the other legal questions presented. Maiden v Rozwood, 461 Mich 109, 118; 597 NW2d 817 (1999).
Appellant’s law firm signed a lease for a Lexus vehicle, and the lease included an agreement to arbitrate. The firm defaulted on payments and Lexus repossessed the vehicle with the help of the police and notwithstanding appellant’s desperate and clumsy attempt to keep it in his possession. When Lexus sued the firm for payments owed, appellant personally counter-sued, alleging that Lexus violated his constitutional rights. Appellant then moved to send Lexus’s claims to arbitration pursuant to the lease, but refused to arbi
When parties have agreed to settle their disputes through federal arbitration, federal policy requires trial courts to compel arbitration and dismiss all arbitrable claims. Kauffman v Chicago Corp, 187 Mich App 284, 287, 292; 466 NW2d 726 (1991). A court may only compel arbitration, however, when the parties have expressly agreed to arbitrate their dispute. Horn v Cooke, 118 Mich App 740, 744; 325 NW2d 558 (1982). "While appellant eventually agreed to arbitrate his claims, it was only when faced with the Hobson’s choice of either arbitrating all the claims or trying all the claims, and neither of those options would have been proper. Because we do not find a binding agreement between Lexus and appellant to arbitrate, appellant’s personal claims will remain in the trial court. His firm’s claims, as well as Lexus’s, will go to federal arbitration. While we recognize that appellant’s claims, if they possess any legal merit, may be theoretically resolved by the result of the underlying arbitration, the arbitrator’s decision alone might not resolve appellant’s claims and cannot legally bind him. Horn, supra. Therefore, we must reverse the portion of the trial court’s order that sent appellant’s personal claims to arbitration.
We will not disturb, however, the trial court’s equitable attempt to maintain the status quo by establishing an escrow account pending the arbitrator’s decision.
We also note that appellant’s constitutional claims appear to be spurious, and we recommend that the trial court scrutinize them for any merit. If they lack merit, we suggest dismissing them completely and considering sanctions that would properly deter such an abuse of the court’s resources and a waste of its time. Sanctions against appellant might also include an appropriate monetary amount that would deter him from abusing the “seven-day rule” by submitting orders that fail to comport in good faith with the court’s verbal instructions. We make no decision on the propriety of these actions, leaving that determination to the trial court, which has become most familiar with appellant and his legal tactics.
Reversed in part, affirmed in part, and remanded for disposition consistent with this opinion. We do not retain jurisdiction.
The dissent has requested publication of this opinion in order to address the bankruptcy/standing issue. We believe the issue may have merit; unfortunately, the issue was not raised or decided in the lower court nor was it raised in the briefs or at oral argument. Under these facts, we decline to address an issue that has not been briefed. After adequate briefing, the parties may address this issue on remand.
Dissenting Opinion
(dissenting). I respectfully dissent from the majority opinion in this case.
A careful review of the record indicates that Tindall & Co. purports to be the successor in interest to the lease. This is an impossibility. Defendant Trombly Tindall filed for bankruptcy. Fursuant to federal law, all property in which defendant Trombly Tindall had a
A careful review of the record also reveals the perplexing fact that it was appellant who requested arbitration and even requested sanctions against plaintiff for bringing the case in circuit court as opposed to arbitration. As the bankruptcy estate is the only entity with an interest in the lease, the bankruptcy trustee is the only party with standing to assert a claim or defense regarding the lease.
Once an executory contract or unexpired lease is rejected by the estate, the aggrieved party’s claim is treated as if it arose just prior to the commencement of the bankruptcy case.
It is clear from paragraph 44 of the lease agreement that nothing in the agreement may be construed to prevent plaintiff from seeking repossession, replevin or judicial foreclosure. Plaintiff was not required to arbitrate under the circumstances and no party with standing requested arbitration. Therefore, plaintiffs claims were properly brought in the circuit court.
I would reverse the decision of the trial court. Plaintiff was entitled to seek repossession of the leased vehicle in the circuit court. As the bankruptcy estate failed to request arbitration, and Tindall & Co. and Michael Tindall individually had no standing to make such a request, plaintiff was required to try the case in the circuit court. Michael Tindall kept and used the vehicle throughout this action; therefore, plaintiff was also entitled to the escrow account. I would note from oral arguments that, according to plaintiff, Michael Tindall has now returned the vehicle to Lexus.
11 USC 541(a)(1)
The trustee is the representative of the estate. 11 USC 323 (a). Therefore, the trustee is the only party with power to control the estate’s assets.
11 USC 365(f)(2).
11 USC 365(g).
Estate property only reverts to the debtor upon the estate’s express abandonment of the property subsequent to court approval. See 11 USC 554.
11 USC 323(b); 11 USC 558 (the estate has “the benefit of any defense available to the debtor as against any entity other than the estate”).
11 use 502(g).
Barnett v Blachura, 242 Mich App 395, 401-402; 618 NW2d 777 (2000).
Reference
- Full Case Name
- LEXUS FINANCIAL SERVICES, INC v. TROMBLY TINDALL, PC
- Cited By
- 2 cases
- Status
- Published