TOLL BROTHERS INC V JULIE FEKETE
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STATE OF MICHIGAN
COURT OF APPEALS
TOLL BROTHERS, INC.,
UNPUBLISHED
February 21, 2008
Plaintiff-Appellant/Cross-Appellee,
v
No. 274964
Oakland Circuit Court
LC No. 2006-077774-CZ
JULIE FEKETE,
Defendant-Appellee/CrossAppellant.
Before: Fitzgerald, P.J., and Murphy and Borrello, JJ.
PER CURIAM.
Plaintiff Toll Brothers, Inc., appeals as of right from a circuit court judgment denying its
motion to vacate an arbitration award and granting defendant Julie Fekete’s motion to confirm
the award. Defendant cross appeals the circuit court’s decision denying her request for postarbitration attorney fees. We affirm the circuit court’s decisions, but hold that defendant is
entitled to reasonable appellate attorney fees and remand for the singular purpose of the trial
court making a determination of those fees.
This appeal arises from a claim initiated by defendant following her termination from
employment with plaintiff. Defendant filed a demand for arbitration against plaintiff on October
17, 2005, alleging gender discrimination. The parties stipulated that (1) defendant began work as
an assistant project manager with plaintiff on October 21, 2002; (2) that she was off work on
maternity leave from April 7, 2003, to July 28, 2003; (3) that her annual salary for 2002-2003
was $65,000, and that, based on her 2003 performance; (4) she received a 4.6 percent increase in
her base salary for 2004 to $68,000. The parties also stipulated that plaintiff terminated
defendant’s employment on October 28, 2004, and that defendant’s supervisor, William Bye, and
evaluating supervisor, John Oberlin, both recommended her termination.
The arbitrator determined that plaintiff’s decision to terminate defendant’s employment
was motivated in part by gender discrimination, contrary to Title VII of the Civil Rights Act of
1964, 42 USA 2000 et seq., and Michigan’s Civil Rights Act (CRA), MCL 37.2102 et seq.
Plaintiff thereafter filed a circuit court complaint to vacate the arbitrator’s decision and defendant
filed a motion to confirm the award. The circuit court found no basis for disturbing the
arbitrator’s decision and confirmed the award.
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On appeal, plaintiff argues that the arbitrator failed to provide written conclusions of law
and that he exceeded his authority by improperly basing his decision on speculation and his own
personal views, and by ignoring controlling principles of law.
This Court reviews de novo a circuit court’s decision involving an arbitration award.
Saveski v Tiseo Architects, Inc, 261 Mich App 553, 554; 682 NW2d 542 (2004). A court’s
power to modify, correct, or vacate an arbitration award is limited. An arbitration award may be
vacated if it was procured by corruption, fraud or undue means, was the result of partiality or
misconduct, or if the arbitrator exceeded his or her powers, or conducted the hearing in violation
of the requirements of the court rule. MCR 3.602(J)(1). When a party claims that an arbitrator
exceeded the scope of his authority or committed a material error of law, “a reviewing court’s
ability to review an award is restricted to cases in which an error of law appears from the face of
the award, or the terms of the contract of submission, or such documentation as the parties agree
will constitute the record.” Dohanyos v Detrex Corp (After Remand), 217 Mich App 171, 175176; 550 NW2d 608 (1996). Therefore, arbitrators exceed their powers whenever they act
beyond the material terms of the contract from which they primarily draw their authority, or in
contravention of controlling principles of law. Id. at 176. Moreover, “[t]he character or
seriousness of an error of law which will invite judicial action to vacate an arbitration award . . .
must be error so material or so substantial as to have governed the award, and but for which the
award would have been substantially otherwise.” DAIIE v Gavin, 416 Mich 407, 443; 331
NW2d 418 (1982). The arbitrator’s findings of fact are not reviewable. Id. at 429.
Initially, we reject plaintiff’s argument that the arbitrator failed to provide written
conclusions of law. In Michigan, arbitration awards “must be in writing and contain findings of
fact and conclusions of law.” Rembert v Ryan’s Family Steak Houses, Inc, 235 Mich App 118,
165; 596 NW2d 208 (1999). The parties’ arbitration agreement also required that the arbitrator’s
decision be in writing and include the findings and conclusions upon which the decision was
based. In general, however, there are no specific requirements regarding the scope of formal
findings of fact or conclusions of law. See Gavin, supra at 429. The arbitrator issued an eightpage written opinion explaining his findings and conclusions. The arbitrator’s opinion indicates
that defendant’s gender discrimination claim was brought under both the federal Civil Rights Act
of 1964 and Michigan’s CRA, and that defendant had the burden of proving that her gender was
a reason for her termination and that the reasons for her termination offered by plaintiff were
pretextual. The arbitrator thereafter summarized the evidence presented by the parties and
determined that plaintiff’s decision to terminate defendant was “motivated at least in part by
gender discrimination in violation of state and federal law.” The arbitrator’s opinion satisfies the
requirement that it issue a written decision setting forth the findings and conclusions on which
the decision is based.
Plaintiff also argues that the arbitrator exceeded his powers and committed a material
error of law because there was no causal link between the alleged discriminatory conduct and
defendant’s termination. As our Supreme Court cautioned in Gordon Sel-Way, Inc v Spence
Bros, Inc, 438 Mich 488, 497; 475 NW2d 704 (1991):
an allegation that the arbitrators have exceeded their powers must be carefully
evaluated in order to assure that this claim is not used as a ruse to induce the court
to review the merits of the arbitrators’ decision. Stated otherwise, courts may not
substitute their judgment for that of the arbitrators and hence are reluctant to
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vacate or modify an award when the arbitration agreement does not expressly
limit the arbitrators’ power in some way.
Our Court has concluded that arbitrators have exceeded their powers whenever they act
beyond the material terms of the contract from which they primarily draw their authority, or in
contravention of controlling principles of law.” Dohanyos, supra at 175-176. As explained in
Gavin, supra at 429:
Arbitration by its very nature, restricts meaningful legal review in the
traditional sense. As a general observation, courts will be reluctant to modify or
vacate an award because of the difficulty or impossibility, without speculation, of
determining what caused an arbitrator to rule as he did. The informal and
sometimes unorthodox procedures of the arbitration hearings, combined with the
absence of a verbatim record and formal findings of fact and conclusions of law,
make it virtually impossible to discern the mental path leading to an award.
Reviewing courts are usually left without a plainly recognizable basis for finding
substantial legal error. It is only the kind of legal error that is evidence without
scrutiny of intermediate mental indicia which remains reviewable, such as that
involved in these cases. In many cases the arbitrator’s alleged error will be as
equally attributable to alleged “unwarranted” factfinding as to asserted “error of
law.” In such cases the award should be upheld since the alleged error of law
cannot be shown with the requisite certainty to have been the essential basis for
the challenged award and the arbitrator’s findings of fact are unreviewable.
“The character or seriousness of an error of law which will invite judicial action to vacate an
arbitration award . . . must be error so material or so substantial as to have governed the award,
and but for which the award would have been substantially otherwise.” Id. at 443.
Plaintiff’s arguments in this case are a reflection of its disagreement with the arbitrator’s
decision rather than evidence that the arbitrator exceeded his authority or committed a material
error of law.
Although plaintiff correctly observes that “stray remarks” are not direct evidence of
discrimination, Sniecinski v Blue Cross & Blue Shield of Michigan, 469 Mich 124, 135; 666
NW2d 186 (2003), nothing in the arbitrator’s decision demonstrates that the arbitrator found the
remarks at issue in this case to be “stray remarks.” Further, the arbitrator’s decision was not
based solely on the alleged discriminatory remarks. The arbitrator concluded that, although
plaintiff detailed performance reasons for defendant’s termination, the “key decision makers
came to the decision to terminate Claimant’s employment with a mindset that welcomed harsh
scrutiny on her everyday activities.” The arbitrator explained that the position of project
manager was “a very difficult, time-consuming position,” but that defendant was an assistant
project manager whose “immediate supervisor was expected to serve as a mentor, in a position of
support.” The arbitrator found that Bye had high expectations for defendant’s performance “with
little support or mentoring,” and “wanted everything to be done accurately and his testimony did
not reflect a desire to mentor or support” her. The arbitrator then held that a similarly situated
male was given areas to improve and time to make improvements ten months before his
termination, while defendant was not advised in writing of changes that needed to be made.
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The arbitrator also examined plaintiff’s reasons for defendant’s termination and
recognized that it is “a difficult task to discern an individual’s motives in making employment
decisions.” After summarizing the evidence presented by both parties, the arbitrator concluded
that “[plaintiff’s] decision to terminate [defendant’s] employment was motivated at least in part
by gender discrimination in violation of state and federal law.” The arbitrator’s remarks reflect
that he was aware that there must be a causal connection between the evidence of discriminatory
animus and the employment decision.
In sum, the arbitrator’s factual findings support his determination that defendant’s
termination was motivated in part by discrimination on the basis of gender. Although plaintiff
may disagree with those findings, it is not the function of a court to substitute its opinion for that
of the arbitrator or otherwise disturb the arbitrator’s findings of fact. Accordingly, pursuant to
the dictates set forth in Gavin, the circuit court did not err in confirming the arbitrator’s award.
On cross appeal, defendant argues that she was entitled to an award of post-arbitration
attorney fees incurred in the circuit court proceedings. She also requests an award of appellate
attorney fees.
We review a trial court’s decision to award attorney fees for an abuse of discretion.
Windemere Commons I Ass’n v O’Brien, 269 Mich App 681, 682; 713 NW2d 814 (2006).
The basis for an arbitration award is determined by the arbitration agreement. Port
Huron Area School Dist v Port Huron Ed Ass’n, 426 Mich 143, 150-151; 393 NW2d 811 (1986).
The parties’ arbitration agreement gave the arbitrator discretion to award all or some of either
party’s costs and attorney fees, “in addition to any such awards required by law.” In addition to
the arbitration agreement, the Civil Rights Act also permits an award of attorney fees at the trial
court’s discretion, MCL 37.2802; Grow v W A Thomas Co, 236 Mich App 696, 714; 601 NW2d
426 (1999), and appellate attorney fees. McLemore v Detroit Receiving Hosp & Univ Medical
Ctr, 196 Mich App 391, 402-403; 493 NW2d 441 (1992). An arbitration agreement may not
deprive an employee of his or her statutory rights. Rembert, supra at 156.
The arbitrator awarded defendant attorney fees in the amount of $22,500. The circuit
court declined defendant’s request for additional attorney fees in the amount of $3,925. The
parties’ arbitration agreement contemplated post-arbitration proceedings to vacate, modify, or
confirm the award and, as stated above, the CRA permits an award of attorney fees. The circuit
court therefore had the discretion to award post-arbitration attorney fees, but did not do so. In
denying defendant’s request for attorney fees for the post-arbitration action, the circuit court
observed that defendant had already been awarded attorney fees in the amount of $22,500, which
it suggested was sufficient to adequately compensate defendant. The circuit court’s decision not
to award additional attorney fees in the amount of $3,925 was within the court’s discretion.
Under the circumstances, the circuit court’s decision not to award additional attorney fees did not
constitute an abuse of discretion.
Although appellate attorney fees are not specifically provided for in the parties’
arbitration agreement, this Court has discretion to award appellate attorney fees under MCL
37.2808. McLemore, supra at 402-403. Although a post-arbitration hearing was required in
order to confirm the arbitration award, and plaintiff’s complaint to vacate the award and
defendant’s motion to confirm the award was merely a part of that process, plaintiff’s decision to
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appeal the trial court’s order required defendant to defend her arbitration award. “The purpose of
the CRA’s attorney fee provision is to encourage persons deprived of their civil rights to seek
legal redress, to ensure victims of discrimination access to the courts, and to deter
discrimination,” Grow, supra at 720, while the purpose of arbitration is to avoid protracted
litigation. City of Huntington Woods v Ajax Paving Industries, Inc (After Remand), 196 Mich
App 71, 75; 492 NW2d 463 (1992). Under the circumstances, we conclude that an award of
appellate attorney fees is appropriate and consistent with the purpose of the Civil Rights Act.
Grow, supra at 720. Accordingly, we remand this case to the trial court for a determination of
reasonable appellate attorney fees. McLemore, supra at 403.
Affirmed, but remanded for a determination of reasonable appellate attorney fees. We do
not retain jurisdiction.
/s/ E. Thomas Fitzgerald
/s/ William B. Murphy
/s/ Stephen L. Borrello
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