BDD Group, LLC v. Crave Franchising, LLC et al

Filing 23

ORDER denying 22 Motion to Correct the Court's Order. Signed by District Judge Judith E. Levy. (WBar)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
BDD Group, LLC,
Plaintiff,
v.
Crave Franchising, LLC, et al.,
Defendants.

Case No. 24-cv-10035
Judith E. Levy
United States District Judge
Mag. Judge Elizabeth A. Stafford

________________________________/
ORDER DENYING PLAINTIFF’S MOTION TO
CORRECT THE COURT’S ORDER [22]
Before the Court is Plaintiff BDD Group, LLC’s motion “to Correct
The Court’s May 10, 2024 Order Regarding Defendant Crave
Franchising, LLC’s Motion to Dismiss and Compel Arbitration Pursuant
to FRCP 60(a).” (ECF No. 22, PageID.1783–1784.) Plaintiff requests that
the Court “enter an order modifying its May 10, 2024 [order] to provide
that Michigan substantive law will govern the arbitration proceedings
between Plaintiff, BDD Group, LLC and Defendant Crave Franchising,
LLC, and that those arbitration proceedings are to take place in
Michigan.” (Id. at PageID.1784.)

First, the Court declines to enter an order that the “arbitration
proceedings are to take place in Michigan.” (Id.) Defendant Crave
Franchising, LLC stated several times on the record that it “only seeks
to compel arbitration to occur in Michigan where Plaintiff is domiciled.”
(ECF No. 13, PageID.1016 (emphasis in original); see also ECF No. 22-3,
PageID.1901.) This order would be unnecessary.
Second, the Court will not enter an order stating that Michigan
substantive law governs the arbitration proceedings between Plaintiff
and Crave Franchising. Plaintiff does not cite any statute or caselaw
suggesting that the Court has the authority to order an arbitrator to use
the law of a particular state. See Am. Exp. Co. v. Italian Colors Rest., 570
U.S. 228, 233 (2013) (“[C]onsistent with [the Federal Arbitration Act],
courts must rigorously enforce arbitration agreements according to their
terms, including . . . the rules under which that arbitration will be
conducted.” (internal citations and quotation marks omitted)).
The Court will clarify the rulings made at the May 9, 2024 hearing.
The Court held that Michigan law should govern its interpretation of the
contract, only for the purpose of determining if arbitration should be
compelled. The parties’ franchise agreement states that any conflicts

arising from this contract should be interpreted using Delaware law. (See
ECF No. 13-2, PageID.1080.) Using the conflict of law rules of the forum
state, Michigan, the Court determined that Michigan law, not Delaware
law, should govern its interpretation of the franchise agreement,
including the arbitration provision.1 (See ECF No. 22-3, PageID.1903.)
The Court subsequently resolved Plaintiff’s challenges to the arbitration
provision; specifically, Plaintiff argued that the arbitration provision was
invalid because it (1) “lacks mutuality of obligation,” (ECF No. 16,
PageID.1395) and (2) is preempted by the Michigan Francise Investment
Law. (Id. at PageID.1400.) The Court determined that Plaintiff’s first
challenge was meritless under Michigan contract law and that Plaintiff’s
second challenge was moot because Defendant agreed to arbitrate in
Michigan. (ECF No. 22-3, PageID.1907.) As a result, the Court granted
Defendant’s motion to compel arbitration. (ECF No. 19.)

In diversity actions, courts use state law to determine the meaning and
validity of contracts. Certified Restoration Dry Cleaning Network, L.L.C. v. Tenke
Corp., 511 F.3d 535, 541 (6th Cir. 2007). “When interpreting contracts in a diversity
action, [courts] generally enforce the parties’ contractual choice of forum and
governing law.” Id. Here, however, the Court determined that Delaware has “no
substantial relationship” to the parties or the transaction and, as a result, Michigan
law should apply. (ECF No. 22-3, PageID.1903–1904.)
1

The Court attempted to clarify this holding with its May 13, 2024
Text-Only Order. (Id. (“[T]he parties are reminded that the arbitration
will be governed by the commercial arbitration rules of the American
Arbitration Association, not by Michigan law.”).) The Court has no
holding as to what law the arbitrator should use, and there is no
indication that the Court has any authority to order an arbitrator to use
Michigan law.
Accordingly, Plaintiff’s motion to correct (ECF No. 22) is DENIED.
IT IS SO ORDERED.
Dated: June 5, 2024
Ann Arbor, Michigan

s/Judith E. Levy
JUDITH E. LEVY
United States District Judge

CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing document was served
upon counsel of record and any unrepresented parties via the Court’s
ECF System to their respective email or first-class U.S. mail addresses
disclosed on the Notice of Electronic Filing on June 5, 2024.
s/William Barkholz
WILLIAM BARKHOLZ
Case Manager