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Calara v. PGI of Saugatuck, Inc.

United States District Court, E.D. Michigan, Southern Division

December 15, 2017

MANDY CALARA and NANCY CALARA, Plaintiffs,
v.
PGI OF SAUGATUCK, INC. d/b/a PALAZZLO'S, a Michigan corporation, Defendant.

          OPINION AND ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT [ECF NO. 10] AND GRANTING, IN PART, PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT [ECF NO. 11]

          LINDA V. PARKER U.S. DISTRICT JUDGE

         On October 7, 2016, Plaintiffs Mandy Calara and Nancy Calara (collectively “Plaintiffs”) commenced this lawsuit arising out of an Arbitration award issued in favor of Defendant PGI of Saugatuck, Inc. (“PGI”) and against Plaintiffs in the amount of $125, 725.50. (ECF No. 1.) Presently before the Court are the parties' cross motions for summary judgment filed July 7, 2017. (ECF Nos. 18 & 20.) The motions have been fully briefed. Finding the facts and legal arguments sufficiently presented in the parties' briefs, the Court dispensed with oral argument pursuant to Eastern District of Michigan Local Rule 7.1(f). For the reasons that follow, the Court grants Defendant's motion for summary judgment and grants, in part, Plaintiffs' motion for summary judgment.

         I. Factual and Procedural Background

         Plaintiff Mandy Calara is a member of Midwest Yogurt and Cup Supply, LLC (“Midwest Yogurt”). (ECF No. 2 at Pg ID 2; ECF No.11 at Pg ID 63.) PGI is a Michigan corporation and sells frozen yogurt products. (Id.) On January 16, 2015, Midwest Yogurt and PGI entered into a contract for the purchase and sale of PGI's yogurt products. (ECF No. 1 at Pg ID 2.) On that same day, Plaintiff Nancy Calara, who is not a member of Midwest Yogurt, executed a personal guaranty, which included an arbitration clause. (Id. at Pg ID 2, 12.) Plaintiff Mandy Calara was neither a signatory to the contract nor the personal guaranty.

         At some point, PGI claimed Midwest Yogurt failed to pay for $134, 778.80 worth of product and instituted an arbitration proceeding against Plaintiffs. (Id. at Pg ID 2.) A hearing was held on September 6, 2016 before Arbitrator Barbara Cook. PGI sought recovery for the nonpayment of its yogurt products through the enforcement of the personal guaranty against Plaintiff Nancy Calara and under a theory of promissory estoppel for Plaintiff Mandy Calara. (Id. at Pg ID 3.)

         Although Arbitrator Barbara Cook presided over the hearing, Arbitrator JoAnne Barron issued the September 30, 2016 award, making the following finding:

1. Mandy and Nancy Calara are to pay PGI $118, 825.50;
2. Mandy and Nancy Calara are to pay PGI $4, 150 in attorney fees;
3. The administrative fees of the American Arbitration Association totaling $1, 750 shall be borne by Mandy and Nancy Calara, and the compensation of the arbitrator totaling $2, 000.00 shall be borne by Mandy and Nancy Calara.
4. Therefore, Mandy and Nancy Calara shall reimburse PGI the sum of $2, 750.00, representing that portion of said fees in excess of the apportioned costs previously incurred by PGI.

(ECF No. 1 at Pg ID 4, 14.) The total awarded amount is $125, 725.50. (Id.) Plaintiffs allege the arbitrator exceeded her power in two ways. First, she issued an award against Plaintiff Mandy Calara, who, among other things, was neither a party to the contract nor the personal guaranty and should not have been subject to the arbitration proceedings. (Id. at Pg ID 5.) Second, she issued an award against Plaintiff Nancy Calara despite the language in the contract not binding Plaintiff Nancy Calara. (Id.) Alternatively, Plaintiffs request the Court to modify the arbitrator's award.

         On July 7, 2017, Defendant filed a motion for summary judgment as to Defendant Nancy Calara, asserting it is an undisputed fact that Plaintiff Nancy Calara signed the personal guaranty, which made her personally liable for Midwest Yogurt's indebtedness. Also on July 7, 2017, Plaintiffs filed a motion for summary judgment asserting it is an undisputed fact that the arbitrator exceeded her scope of power when she (1) subjected Plaintiff Mandy Calara to the arbitration proceeding and (2) found Plaintiff Nancy Calara personally liable for Midwest Yogurt's debts.

         II. Summary Judgment Standard

         Summary judgment pursuant to Federal Rule of Civil Procedure 56 is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The central inquiry is “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986). After adequate time for discovery and upon motion, Rule 56 mandates summary judgment against a party who fails to establish the ...


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