When parties to active litigation agree to shift their dispute to arbitration, the details of that transition matter. The Michigan Court of Appeals for-publication opinion in Nucast, LLC v. Livonia Pre Cast LLC, MCOA No. 367941, provides a recent example of how a self-labeled “final order” sending the remnants of protracted litigation to arbitration may not provide the finality required to permit the Court of Appeals to immediately address prior rulings of the trial court on appeal.
Nucast, LLC v. Livonia Pre Cast LLC arose from a commercial dispute over the purchase of concrete-business assets out of bankruptcy. After years of contentious litigation, the trial court granted summary disposition in plaintiff’s favor and dismissed the defendants’ counterclaims. Rather than proceed to trial on the narrowed remaining issues, the parties entered into an arbitration agreement to submit the remaining claims to an arbitrator. The resulting stipulated order dismissed the case without prejudice, expressly allowed the parties to move to reopen the case to enforce any arbitration award, and stated it was a “final order” resolving “the last pending claim” and closing the case. Following entry of the so-called “final order,” Defendants filed an appeal of right challenging various pre-trial orders of the trial court and the dismissal of its counterclaim.
After more than two years and full briefing, the Court of Appeals dismissed the appeal for lack of jurisdiction holding that the “final order” was no such thing. The Court reasoned that under MCR 7.203(A)(1), the court has jurisdiction over appeals as of right from a “final order,” defined by MCR 7.202(6)(a)(i) as the first order that disposes of all claims and adjudicates the rights and liabilities of all parties. Because the stipulated order of dismissal of Plaintiff’s remaining claims was without prejudice, it did not resolve the merits of those by adjudicating the rights and liabilities of all parties. The Court further reasoned that the trial court’s order permitting the parties to move to reopen the case to enforce the arbitration award was “akin to the trial court retaining jurisdiction.” That the trial court labeled its order of dismissal as a “final order” did not matter, as it does not control the Michigan Court of Appeals jurisdiction and no law or court rule provided jurisdiction.
In addition to dismissing the appeal, the Court of Appeals also provided direction concerning the appropriate disposition of the case on remand. Specifically, and rather than dismiss the action, the Court noted that “our governing law compels the trial court to enter an order staying the proceedings pending arbitration.” This is the correct disposition under MCL 691.1687(7) and MCR 3.602(C): when parties agree to arbitrate a claim subject to pending litigation, the trial court must stay the judicial proceedings – not dismiss them.
For practitioners navigating the transition from litigation to arbitration, Nucast offers a clear warning and direction. A stipulated dismissal without prejudice, however well-intentioned, does not preserve the ability to appeal pre-arbitration rulings. The stay mandated by MCL 691.1687(7) and MCR 3.602(C) preserves the pre-arbitration litigation framework, maintains the trial court’s jurisdiction to enforce any eventual award, and avoids the jurisdictional trap that the Nucast defendants discovered too late.