TSP SERVICES, INC., doing business as TSP ENVIRONMENTAL, Plaintiff/Counterdefendant-Appellee,
NATIONAL-STANDARD, LLC, and DW-NATIONAL STANDARD-NILES, LLC, doing business as NATIONAL-STANDARD, LLC, Defendant/Cross-Defendants-Appellants, and NATIONAL-STANDARD COMPANY, Defendant/Cross-Defendant, and ENVIRONMENTAL DEMOLITION GROUP, LLC, Defendant/Counterplaintiff/Cross-Plaintiff.
Berrien Circuit Court LC No. 2016-000018-CB
Before: Swartzle, P.J., and Gleicher and M. J. Kelly, JJ.
respect to a dispute over a construction contract, Michigan
law limits a construction lien to the amount of the contract
less any payment already made. Although a party suing for
breach of contract might recover consequential damages beyond
the monetary value of the contract itself, those
consequential damages cannot be subject to a construction
lien. The arbitrator in this case concluded otherwise, and
this clear legal error had a substantial impact on the award.
Accordingly, we reverse with respect to this portion of the
award, but affirm in all other respects.
National-Standard, LLC, and DW-National Standard-Niles, LLC
(collectively, National-Standard), appeal by leave granted
the trial court's order denying their motion to vacate an
arbitration award and confirming the arbitration award and
money judgment in favor of plaintiff, TSP Services, Inc. See
TSP Servs, Inc v National-Standard, LLC, unpublished
order of the Court of Appeals, entered August 8, 2018 (Docket
No. 342530). Although the parties raised several issues
during arbitration, this appeal centers primarily on whether
TSP's inability and failure to remove steel from a
construction site, and the potential lost profits from the
sale of that unrecovered steel, may properly be the subject
of a construction lien. Because the appeal involves a
discrete question, and because the nature of arbitration
disfavors this Court's review of the facts and merits of
the case, we will only briefly review the facts underlying
parties entered into a contract on August 30, 2013, under
which TSP was to perform asbestos abatement, demolition and
disposal of scrap steel and other waste, and site restoration
work at a National-Standard facility in Niles, Michigan. The
total price listed in the contract is $414, 950.00, to be
paid in installments-one third as a down payment and the
balance due "upon completion of abatement."
Critical to this appeal, the contract does not mention the
sale of scrap steel or TSP's potential profits from the
sale of scrap steel. Although it is clear from the
arbitration proceedings that both parties recognized that the
sale of scrap steel was a major part of the project, the
subject is not outlined in the contract, which provides for a
total payment of $414, 950.00 and includes an integration
project encountered various delays. Asbestos removal did not
begin until May 2014. Because the asbestos removal was
delayed, extraction of steel was also delayed. TSP completed
the asbestos-abatement work and was paid $273, 867.00, but
after several disputes, National-Standard requested that TSP
suspend all work on the project. At that point, TSP had
extracted only 9% of the available steel from the job site.
In April 2015, TSP filed a claim of lien in the amount of
$141, 083.00, the amount still unpaid under the contract,
plus additional damages, including the net value of the steel
that TSP was unable to extract from the site.
parties attended arbitration, and the arbitrator concluded
that National-Standard breached the contract. The arbitrator
awarded $782, 469.05 in damages to TSP, broken out as
follows-$141, 083.00 for the unpaid invoice under the
contract; $46, 557.39 for interest on that unpaid invoice;
$391, 809.00 for lost profits on steel inventory; $33, 793.00
for interest on those lost profits; and $169, 226.13 for
attorney fees and costs. (There is a discrepancy of 53 cents
between the total amount awarded by the arbitrator and the
sum of the components awarded, though neither party takes
issue with this de minimis discrepancy.) The arbitrator
further determined that TSP's construction lien was valid
as filed and could be enforced on the entire award.
subsequently moved the trial court to vacate the arbitration
award, arguing that the arbitrator committed clear legal
error. The trial court denied National-Standard's motion,
and this appeal followed.
LIMITED JUDICIAL REVIEW OF ARBITRATION AWARD
general, courts have a limited role in reviewing arbitration
awards. This Court reviews de novo a circuit court's
decision whether to vacate an arbitration award.
Hope-Jackson v Washington, 311 Mich.App. 602, 613;
877 N.W.2d 736 (2015). "A court may not review an
arbitrator's factual findings or decision on the
merits." Ann Arbor v American Federation of State,
Co, & Muni Employees (AFSCME) Local 369, 284
Mich.App. 126, 144; 771 N.W.2d 843 (2009) (citations
omitted). Instead, a court may only review an
arbitrator's decision for clear errors of law.
Detroit Auto Inter-Insurance Exch v Gavin, 416 Mich.
407, 433; 331 N.W.2d 418 (1982) (DAIIE); Saveski
v Tiseo Architects, Inc, 261 Mich.App. 553, 554-555; 682
N.W.2d 542 (2004).
every error of law by an arbitrator, however, merits
subsequent court intervention. Rather, the error must be
particularly egregious, have a material effect on the
outcome, disregard fundamental principles, or otherwise
"unequivocally generate a legally unsustainable
result." DAIIE, 416 Mich. at 430. Moreover, in
determining whether there is legal error, the court cannot
engage in a review of an arbitrator's mental process,
Hope-Jackson, 311 Mich.App. at 614, but instead must