Moses Webb v. Fidelity Brokerage Services ( 2021 )

If this opinion indicates that it is “FOR PUBLICATION, ” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
MOSES WEBB, UNPUBLISHED
July 29, 2021
Plaintiff-Appellant,
Vv No. 354691
Genesee Circuit Court
FIDELITY BROKERAGE SERVICES d/b/a LC No. 18-111894-CZ
FIDELITY INVESTMENTS,
Defendant-Appellee.
Before: Hoop, P.J., and MARKEY and GLEICHER, JJ.
PER CURIAM.
Plaintiff Moses Webb appeals by right the trial court’s order granting summary disposition
in favor of defendant Fidelity Brokerage Services under MCR 2.116(C)(7). The trial court agreed
with Fidelity’s contention that the parties’ brokerage contract contained a valid and enforceable
agreement to arbitrate. We affirm.
I. THE COMPLAINT
On November 13, 2018, Webb filed a civil suit against Fidelity. Webb alleged that he
retired from General Motors (GM) after a 44-year career with GM. He stated that his retirement
funds consisted of 18,330 shares of GM common stock which had been and were entrusted with
Fidelity. Webb asserted that he “relied on the asset protection offered by . . . Fidelity and [its]
prudent investment advice.” He claimed that he had attempted to communicate with Fidelity
regarding the status of his shares in light of GM’s June 2009 bankruptcy, but he received “no clear,
acceptable answers to his questions[.]” Webb alleged that he had invested $79,404 of his hard-
earned income in the GM common stock, that the value of his shares was $7,905 in mid-2010, and
that Fidelity sent him a statement in March 2011 indicating that his stock was valued at $768.
According to Webb, Fidelity subsequently sent him “a statement reflecting less than a $500
balance in the account.” Webb maintained that Fidelity mailed him a gross distribution retirement
check in the amount of $.36 in June 2018. He contended that GM had offered stock buybacks, but
Fidelity failed to provide him with any information with regard to the possibility of a buyback of
his GM stock. Webb alleged that he made numerous demands—all ignored— seeking information
regarding steps that Fidelity could take to preserve his interest in the GM stock or to recoup his
investment. Webb also received no response when he asked Fidelity whether there was any action
that he could personally take to protect against loss.
In a single count, Webb alleged that Fidelity breached its fiduciary duty and responsibility
to protect invested assets, that Fidelity fraudulently withheld investment funds and earnings, and
that Fidelity failed to pursue recoupment of losses through a common stock buyback program
offered by GM. Webb contended that Fidelity owed a duty of prudence under the Employee
Retirement Income Security Act of 1974 (ERISA), 29 USC 1001 eft seq., specifically 29 USC
1104(a)(1), obligating Fidelity to regularly monitor Webb’s shares of GM stock for changed
circumstances, such as GM’s bankruptcy, in order to protect against or recoup investment losses,
including participation in the buyback program. Webb set forth allegations regarding GM’s
bankruptcy, the associated bailout or loan by the federal government, which resulted in the
government’s majority ownership of GM stock, partial repayment by GM to the government, and
GM’s handout of stock to GM executives valued at $1.3 million despite the bankruptcy.
Webb alleged that “[b]reach of fiduciary duty can be a continuing violation that extends
the limitations period for filing suit” and that “[e]ven though the investments were purchased more
than six years earlier, a trustee generally has a continuing duty to monitor investments after the
initial purchase.” Webb again asserted that Fidelity had a duty to take prudent action to preserve
or recoup his investment. In his prayer for relief, Webb sought compensatory damages in the
amount of $79,404, which represented the purchase price for the stock, plus interest, any punitive
damages for fraudulent conduct, attorney fees, costs, and any other relief that the court deemed
fair and just.
II. PROCEDURAL HISTORY
On January 11, 2019, in lieu of filing an answer, Fidelity moved for summary disposition
pursuant to MCR 2.116(C)(7), arguing that Webb’s “claims are undeniably untimely and should
be dismissed.” Fidelity contended that all of the relevant acts and events at issue took place well
over six years ago and that a six-year period was the longest possible limitations period available
to Webb. According to Fidelity, because the alleged wrongful conduct occurred more than six
years before Webb’s complaint was filed, the action was time-barred, and summary dismissal was
required. Alternatively, Fidelity argued that Webb’s lawsuit should be dismissed because he
agreed to arbitrate any disputes with Fidelity in the Fidelity Brokerage Retirement Customer
Account Agreement (the brokerage contract). The brokerage contract, dated July 24, 2008,
contained the following arbitration clause:
Resolving Disputes — Arbitration
This agreement contains a pre-dispute arbi-
tration clause. Under this clause, which you
agree to when you sign your account applica-
tion, you and Fidelity agree: as follows:
A. All parties to this agreement are giving
up the right to sue each other in-court,
including the right to a trial by jury, except
as provided by the rules of the arbitration
forum in which a ‘claim is filed.
B, Arbitration awards are generally final and
binding; a party's ability to have a court
reverse or modify an arbitration award is
very limited.
C. The ability of the parties to obtain docu-
ments, witness statements, and other
discovery is generally more limited in
arbitration than in court proceedings.
D. The arbitrators do not have to explain the
reason(s) for their award
E, The pane! of arbitrators will typically
include a minority of arbitrators who were
or are affiliated with the securities industry.
F. The rules of some arbitration forums may
impose time limits for bringing a claim in
arbitration. In some cases,.a claim that is
ineligible for arbitration. may be brought
in court.
G.. The rules of the arbitration forum in which
the:claim is filed, and any amendments
thereto, shall be incorporated into this
agreement.
All controversies that may arise between you
and us'concerning any subject matter, issue,
or circumstance whatsoever (including,
but not limited to, controversies concern-
ing any account, order or transaction, or the
continuation, performance, interpretation
or breach of this or any other agreement
between you and_us, whether entered into
or arising before, on, or.after the date this
account is opened) shall be determined
by arbitration in accordance with the rules
then prevailing of the Financial Industry
Regulatory Authority. (FINRA) or any United
States securities self-regulatory organiza-
tion or United States securities exchange of
which the person, entity, or entities against
whom the claim is made is a member, as -you
may designate. If you designate the rules of
a United States self-regulatory organization
or United States securities exchange and
those rules fail to be applied for any rea-
son, then you shall designate the prevailing
rules of any other United States securities
self-regulatory organization or United States
securities exchange of which the person,
entity, or entities against whom the claim is
made is a member. If you do not notify us
in writing if your designation within five (5)
days after such failure or after you receive
from us a written demand for arbitration,
then you authorize us to make such dasigna-
tion on your behalf. The designation of
the rules of a self-regulatory organization
or securities exchange is not integral to the
underlying agreement to arbitrate. You
understand that judgment upon any arbitra-
tion award may be entered in any court of
competent jurisdiction.
No person shall bring a putative or certi-
fied class action to arbitration, nor seek to
enforce any predispute arbitration agree-
ment against any person who has initiated
in court a putative class action; or who is a
member of a putative class action who has
not opted out of the class with respect to
any claims encompassed by the putative
class action until: (i) the class certification is
denied; or (ii) the class is decertified; or (iii)
the customer is excluded from the class by
the court. Such forbearance to enforce an
agreement to arbitrate shall not constitute
a waiver of any rights under this agreement
except to the extent stated herein.
Fidelity did not submit the entire brokerage contract, and there was no signature page.
In response to Fidelity’s motion for summary disposition, Webb argued that breach of
fiduciary duty can constitute a continuing violation that extends the limitations period for filing
suit and that even though his purchase of stock occurred more than six years earlier, there was a
continuing duty to monitor the investment after the initial purchases that carried forward to this
day. With respect to the arbitration argument posed by Fidelity, Webb claimed “that he never
received, signed, nor agreed to waive his right to a jury trial on his claims . . . and that the asserted
arbitration provision is not supported by any admissible proof or verification, affidavit, or
otherwise, and should be disregarded.”
In a reply brief, Fidelity argued that Webb’s contention that Fidelity had to continually
monitor the status of his GM shares was legally unsupportable and that Webb’s action was barred
by ERISA’s six-year statute of repose, which was triggered not later than March 2011 when Webb
admitted that he knew of his losses. In cursory fashion, Fidelity again asserted that, in the
alternative, the suit should be dismissed in light of the arbitration clause in the brokerage contract.
On March 4, 2019, a hearing was conducted on Fidelity’s motion for summary disposition.
The primary focus of the hearing was on the issue concerning the statute of limitations.' During
' On the day of the summary disposition hearing, Webb moved to stay the proceedings pending
the outcome of a petition for a writ of certiorari filed in the United States Supreme Court in a
federal case involving construction of ERISA’s statute of limitations. We note that the Supreme
one stage of the hearing, the trial court asked Fidelity whether it had a signed copy of the brokerage
contract containing the arbitration clause. Counsel for Fidelity indicated that the application for
the brokerage account was signed by Webb, which acknowledged and incorporated the arbitration
clause, and that it was somewhere in a “stack of documents.” Webb’s attorney observed that she
did not have a signed document by her client agreeing to arbitration and that, regardless, an
arbitration clause cannot preempt or usurp a statutory right to a judicial remedy under ERISA. At
the end of the hearing, the trial court indicated that it was taking the matter under advisement. The
court noted that it was going to look at a couple of cases and think about Webb’s motion for a stay.
A few days after the summary disposition hearing, Fidelity submitted a supplemental filing
in connection with its motion for summary disposition. Fidelity presented the trial court with a
customer account application signed by Webb in November 2008, and in the application there is a
provision indicating acknowledgement by the signor, Webb, that he received the brokerage
contract and that he had read, understood, and agreed “to be bound by its terms and conditions as
they are currently in effect and as they may be amended in the future.” There is an even more
specific provision immediately preceding the signature line in the application, stating as follows:
The IRA established with this application is governed by a predispute arbitration
clause, which is located on the last page of the ... [brokerage contract]. I
acknowledge receipt of the predispute arbitration clause.
On March 25, 2019, at which point the court had yet to rule on the motion for summary
disposition, Webb filed a response to Fidelity’s supplemental brief. Webb accurately noted that
the customer account application ostensibly executed by Webb also provides that the “agreement
shall be construed, administered, and enforced according to the laws of the Commonwealth of
Massachusetts, except as superseded by federal law or statute.” Webb also accurately indicated
that the arbitration clause in the brokerage contract states that “[i]n some cases, a claim that is
ineligible for arbitration may be brought in court.” Webb argued that the arbitration clause was
superseded by federal law and statute—ERIS A—and that his claims were ineligible for arbitration
and could thus be pursued in a court of law. He maintained that ERISA expressly preempts state
regulation of employee benefit plans and specifically provides for civil actions in 29 USC 1132.
Webb asserted that Congress, by enacting ERISA, intended to allow participants of employee
benefit plans to file civil lawsuits in order to enforce substantive rights. He also contended that
the customer account application and the brokerage contract were executed in 2008 and would
Court later granted certiorari and then issued an opinion in that case, Intel Corp Investment Policy
Comm v Sulyma, ___ US __; 140 S Ct 768, 773; 206 L Ed 2d 103 (2020), wherein the Supreme
Court stated and held:
[EJRISA[] requires plaintiffs with “actual knowledge” of an alleged
fiduciary breach to file suit within three years of gaining that knowledge rather than
within the 6-year period that would otherwise apply. The question here is whether
a plaintiff necessarily has “actual knowledge” of the information contained in
disclosures that he receives but does not read or cannot recall reading. We hold that
he does not... . [Citations omitted. ]
only apply, if at all, to those shares of GM stock that Webb rolled over into the IRA after the
effective dates of those documents. Webb stated that his 18,300 shares of GM stock were
purchased over his 44 years with GM and that he only purchased 2,000 of those shares after GM
filed for bankruptcy in 2009.
On April 1, 2019, the trial court held a hearing to rule on the motion for summary
disposition and the motion for stay. The trial court summarized the principles applicable to a
(C)(7) motion and contract interpretation, noted the nature of Webb’s complaint, including the
claim of breach of fiduciary duty under ERISA, and determined that the arbitration clause was
enforceable, making it unnecessary to rule on Fidelity’s assertion that the action was time-barred.
The court quoted language in the arbitration clause, which provides that “[aJll parties to this
agreement are giving up the right to sue each other in court, including the right to a trial by jury,
except as provided by the rules of the arbitration forum in which a claim is filed.” The trial court
then ruled:
Given this language, it does appear . . . to this [c]ourt that [Webb’s] cause
of action must first be submitted to the mutually agreed upon pre-dispute arbitration
process.
So, for those reasons, the Court is granting . . . [Fidelity’s] motion for
summary disposition at which point the motion for the stay is moot.
We note that the trial court did not address any of Webb’s ERISA arguments. And Webb
subsequently moved for reconsideration in late April 2019. He argued that with respect to
violations of ERISA’s substantive standards of conduct, ERISA provides participants with the
right to obtain relief through civil actions. Therefore, according to Webb, agreements to arbitrate
such matters are not generally enforceable under ERISA. He renewed his assertion about
congressional intent authorizing civil suits for ERISA violations. Webb further contended that
under ERISA any waiver of substantive rights must be made knowingly and willingly. He also
indicated that the customer account application and the brokerage contract were two separate and
distinct documents and that the brokerage contract containing the arbitration clause was not
attached to the application that Webb allegedly signed. Webb continued:
Under basic contract principles, [Webb] should have had the writing which
he was affirming, agreeing to and accepting, attached and incorporated into the
document he was signing, so that he could have reviewed the specific provision that
waived his right to a civil action and limited him to arbitration as a sole remedy and
eliminating his statutory right to a civil action.
Webb additionally maintained that withholding information and engaging in deceit
constituted breaches of Fidelity’s substantive fiduciary duties. Webb complained that Fidelity
failed to disclose GM’s precarious financial situation to Webb and other investors and the impact
it would have on their investments. He further claimed that silence is recognized as a fiduciary
breach. Webb also repeated his earlier argument concerning the 2008 dates of the customer
account application and brokerage contract and the fact that most of his shares were purchased
beforehand.
On July 15, 2019, Webb moved for leave to file a supplemental brief in support of his
motion for reconsideration. Webb asserted that there was new evidence of fraudulent bookkeeping
practices by Fidelity as revealed in recent ERISA cases filed in federal courts. Fidelity filed a brief
in opposition to Webb’s motion for leave, arguing, in part, that Webb’s motion should be denied
because the issues raised by Webb were required to be heard in an arbitration forum. In September
2019, Webb moved for rulings on his motion for reconsideration and motion for leave to file a
supplemental brief, as the trial court had not yet issued any decisions on the motions. On
November 8, 2019, the trial court issued a written order denying Webb’s motion for
reconsideration. The court opined that Webb relied exclusively on ERISA. The trial court then
stated that “[w]hile not expressly discussed on the record, this [c]ourt found that ERISA is not
applicable to this matter given that [Webb’s] deposits appear to be personal and individualized
rather than as part of an employer designated employee retirement account.” With respect to
Webb’s argument that he signed the customer account application without the requisite knowledge
concerning arbitration, the trial court ruled that “the law is clear that one who signs an agreement,
in the absence of coercion, mistake, or fraud, is presumed to know the nature of the document and
to understand its contents, even if he or she has not read the agreement.” To the extent that Webb
was claiming that his signature was obtained through fraud or deceit, the court found that the
“argument was not previously raised and is not presently supported by evidence that might
demonstrate that this [c]ourt erred so egregiously that reversal is warranted.”
Webb filed a claim of appeal in this Court, and a motion to dismiss was granted because
there was no actual order granting summary disposition in favor of Fidelity in the record. Webb v
Fidelity Brokerage Servs, unpublished order of the Court of Appeals, entered January 14, 2020
(Docket No. 351770). Although the trial court had ruled from the bench that Fidelity’s motion for
summary disposition was granted, no order to that effect was ever entered. By order dated January
23, 2020, the trial court entered a nunc pro tunc order granting Fidelity’s motion for summary
disposition. Webb then moved for reconsideration in this Court in Docket No. 351770, which
filing was rejected as untimely. On August 11, 2020, the trial court entered an order on Webb’s
motion for reinstatement for issuance of a proper order granting summary disposition. The court
rescinded earlier orders and then entered, anew, orders granting summary disposition in favor of
Fidelity for the reasons stated on the record and denying Webb’s motion for reconsideration for
the reasons previously provided. Webb appealed again in this Court. And Fidelity again moved
to dismiss; however, this Court denied the motion, ruling that “[t]he August 11, 2020 [order],
qualifies as a final order for purposes of this Court’s jurisdiction under MCR 7.202(6)(a)(i).”. Webb
v Fidelity Brokerage Servs, unpublished order of the Court of Appeals, entered February 24, 2021
(Docket No. 354691).” We now tackle the issues presented on appeal.
? Fidelity also included this jurisdictional issue in its brief on appeal. Given this Court’s order on
jurisdiction, we need not delve into the matter any further.
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I. ANALYSIS
A. STANDARDS OF REVIEW
We review de novo a trial court’s decision on a motion for summary disposition. Altobelli
v Hartmann, 499 Mich 284, 294-295; 884 NW2d 537 (2016). The question whether a claim is
subject to arbitration is also reviewed de novo, as is the construction of contractual language. Jd.
at 295. Issues of statutory interpretation are likewise reviewed de novo, and this standard applies
to the construction of state and federal statutes. Johnson v Johnson, 329 Mich App 110, 118; 940
NW2d 807 (2019). “We review a trial court’s decision on a motion for reconsideration for an
abuse of discretion.” Frankenmuth Ins Co v Poll, 311 Mich App 442, 445; 875 NW2d 250 (2015).
B. PRINCIPLES GOVERNING SUMMARY DISPOSITION UNDER MCR 2.116(C)(7)
Pursuant to MCR 2.116(C)(7), summary disposition is proper when a claim is barred
because of “an agreement to arbitrate[.]” In RDM Holdings, Ltd v Continental Plastics Co, 281
Mich App 678, 687; 762 NW2d 529 (2008), this Court recited the principles pertaining to a motion
for summary disposition brought pursuant to MCR 2.116(C)(7):
Under MCR 2.116(C)(7) . . ., this Court must consider not only the
pleadings, but also any affidavits, depositions, admissions, or other documentary
evidence filed or submitted by the parties. The contents of the complaint must be
accepted as true unless contradicted by the documentary evidence. This Court must
consider the documentary evidence in a light most favorable to the nonmoving
party. If there is no factual dispute, whether a plaintiff’s claim is barred under a
principle set forth in MCR 2.116(C)(7) is a question of law for the court to decide.
If a factual dispute exists, however, summary disposition is not appropriate.
[Citations omitted. ]
C. DISCUSSION
Webb begins the argument section of his brief on appeal by addressing the standard of
review, which he claims is the “clear error” or “clearly erroneous” standard that is applied to
findings of fact. As indicated above, the pertinent standard of review is de novo in the context of
a ruling on a motion for summary disposition, the applicability of arbitration, and the construction
of contracts and statutes.
Webb argues that ERISA subjects plan fiduciaries to a duty of prudence and that Fidelity
had a continuing obligation to monitor the status of his GM shares for changed circumstances
following GM’s bankruptcy and to take steps to recoup the loss of Webb’s investment through
opportunities such as the buyback program.* This argument goes to the merits and substance of
3 “[A] fiduciary shall discharge his duties with respect to a plan solely in the interest of the
participants and beneficiaries and . . . with the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent man acting in a like capacity and familiar with such
Webb’s lawsuit and is entirely irrelevant to the question whether the court erred in ruling, as a
matter of law, that the dispute was subject to arbitration. Webb next states that “[e]ven though the
trial court did not base its ruling in granting summary disposition on the statute of limitations,
[Webb shall] discuss[] that issue throughout this appeal because it was briefed in the lower court”
and because Webb does not know whether this Court might consider the issue.* We shall not
examine the issue whether Webb’s lawsuit was time-barred nor entertain Webb’s arguments on
the matter because the trial court did not reach the issue, and Fidelity does not argue that the statute
of limitations constitutes an alternative basis by which to affirm the order of summary disposition.
Webb next contends that “[t]he Plan at issue in this case is governed by... ERISA[].” He
asserts that “Congress established a special kind of ERISA plan called an Employee Stock
Ownership Plan (ESOP).” Again, the trial court rejected Webb’s ERISA-based arguments on
arbitration, ruling that “[w]hile not expressly discussed on the record, this [c]ourt found that
ERISA is not applicable to this matter given that [Webb’s] deposits appear to be personal and
individualized rather than as part of an employer designated employee retirement account.” 29
USC 1107 provides, in relevant part:
(6) The term “employee stock ownership plan” [ESOP] means an individual
account plan--
(A) which is a stock bonus plan which is qualified, or a stock bonus plan
and money purchase plan both of which are qualified, under section 401 of Title
26, and which is designed to invest primarily in qualifying employer securities, and
(B) which meets such other requirements as the Secretary of the Treasury
may prescribe by regulation.
In Fifth Third Bancorp v Dudenhoeffer, 573 US 409, 411-412; 134 S Ct 2459; 189 L Ed
2d 457 (2014), the United States Supreme Court discussed ESOPs:
[ERISA] . . . requires the fiduciary of a pension plan to act prudently in
managing the plan’s assets. § 1104(a)(1)(B). This case focuses upon that duty of
prudence as applied to the fiduciary of an “employee stock ownership plan”
(ESOP), a type of pension plan that invests primarily in the stock of the company
that employs the plan participants.
We consider whether, when an ESOP fiduciary’s decision to buy or hold
the employer’s stock is challenged in court, the fiduciary is entitled to a defense-
friendly standard that the lower courts have called a “presumption of prudence.”
The Courts of Appeals that have considered the question have held that such a
matters would use in the conduct of an enterprise of a like character and with like aims[.]” 29
USC 1104(a)(1)(B).
* Despite devoting a great deal of attention to issues that are not relevant to this appeal, Webb
acknowledges that the arbitration matter “is the only issue upon review.”
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presumption does apply, with the presumption generally defined as a requirement
that the plaintiff make a showing that would not be required in an ordinary duty-of-
prudence case, such as that the employer was on the brink of collapse.
We hold that no such presumption applies. Instead, ESOP fiduciaries are
subject to the same duty of prudence that applies to ERISA fiduciaries in general,
except that they need not diversify the fund’s assets. § 1104(a)(2).
Although Webb does not directly state as much, his brief on appeal implicitly reflects a
position that his investments in GM common stock managed by Fidelity were part of an ESOP,
thereby triggering ERISA’s applicability. Webb cites Pfeil v State Street Bank & Trust Co, 806
F3d 377, 380 (CA 6, 2015), wherein the United States Court of Appeals for the Sixth Circuit
observed:
ERISA subjects plan fiduciaries to a duty of prudence. 29 USC §
1104(a)(1). This generally requires diversification. But... Congress established a
special kind of ERISA plan called an Employee Stock Ownership Plan (ESOP).
ESOPs are designed to invest primarily in qualifying employer securities, rather
than to diversify across securities of many companies. ... .
This case concerns an ESOP for employees of General Motors (GM). In
2008, GM _ faced severe business problems that resulted, ultimately, in its
bankruptcy. Those events gave rise to this case. Plaintiffs ... were GM employees
who, prior to GM’s most recent financial difficulties, elected to invest in the GM
ESOP. Defendant . . . State Street Bank . . . served as fiduciary of certain pension
plans, including the Common Stock Plan, for employees of GM. [Quotation marks
and citations omitted. |
After citing Pfeil and without any attempt to particularly identify and establish Webb’s
Fidelity account as being part of aGM ESOP during the period of breach,” Webb submits a lengthy
argument describing how Fidelity failed to act prudently in managing Webb’s account and what it
should and could have done to protect the investment. He contends that the assessment of the
standard of prudence should not apply at the pleading stage and that there must be “discovery in
this case and the submission and evaluation of evidence by the court; not summary disposition
based solely on the pleadings.” As noted earlier, the discussion concerning the substance or merits
of the case is not pertinent to resolving this appeal, which is limited to the arbitration issue.
Moreover, the trial court never assessed or determined whether Fidelity breached any fiduciary
duty.
> In attachments to pleadings and other filings, Webb presented the trial court with numerous
account statements, transactional documents, and investment reports that Fidelity sent to Webb
over the years. These exhibits pertained to Webb’s Fidelity account. They specifically reference
Webb’s Fidelity Rollover IRA, which apparently was established in 2008 considering the dates on
the customer account application and brokerage contract. Nowhere in these documents is it
indicated that the Fidelity account is part of an ESOP, nor does Webb make such a claim.
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Following his discussion regarding Fidelity’s alleged breaches of duty, Webb states “that
he never received, signed, nor agreed to waive his right to a jury trial on his claims . . . and that
the asserted arbitration provision is not supported by any admissible proof or verification, affidavit,
or otherwise, and should be disregarded.” This excerpt was cut and pasted verbatim from Webb’s
initial response to Fidelity’s motion for summary disposition. The argument is undeveloped and
ignores the brokerage contract and the signed customer account application, which documents
Fidelity filed with the trial court. Moreover, Webb submitted an affidavit to the trial court, and
the affidavit lacked any averment in which Webb claimed that he did not receive and sign the
customer account application or that he did not receive the brokerage contract.
Webb next argues that while resolution of his procedural rights under ERISA may be
subject to arbitration pursuant to an agreement, his substantive rights under ERISA, including his
claims for breach of fiduciary duty, fraud, cover-up, and deceit, cannot be waived and made subject
to arbitration in light of 29 USC 1132(a)(1)(B) and (a)(3). Webb contends that these statutory
provisions reveal congressional intent to allow civil suits by plan participants for the purpose of
enforcing substantive rights. 29 USC 1132(a)(1)(B) provides that “[a] civil action may be brought
... by a participant or beneficiary . . . to recover benefits due to him under the terms of his plan,
to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the
terms of the plan[.]” And 29 USC 1132(a)(3) provides that “[a] civil action may be brought . . .
by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any
provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable
relief (1) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms
of the plan[.]”°
The trial court did not address these ERISA provisions because of its conclusion that there
was no ERISA plan at issue in the first place. Additionally, Webb fails to cite any caselaw
supporting his proposition that arbitration agreements concerning substantive rights under ERISA
© Although not cited by Webb, we note that 29 USC 1132(a)(2) provides that “[a] civil action may
be brought . . . by a participant, beneficiary or fiduciary for appropriate relief under section 1109
of this title[.]” And 29 USC 1109 provides:
Any person who is a fiduciary with respect to a plan who breaches any of
the responsibilities, obligations, or duties imposed upon fiduciaries by this
subchapter shall be personally liable to make good to such plan any losses to the
plan resulting from each such breach, and to restore to such plan any profits of such
fiduciary which have been made through use of assets of the plan by the fiduciary,
and shall be subject to such other equitable or remedial relief as the court may deem
appropriate, including removal of such fiduciary. ....
While 29 USC 1132(a)(2) “does not provide a remedy for individual injuries distinct from plan
injuries, that provision does authorize recovery for fiduciary breaches that impair the value of plan
assets in a participant's individual account.” LaRue v DeWolff, Boberg & Assoc, Inc, 552 US 248,
256; 128 S Ct 1020; 169 L Ed 2d 847 (2008).
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are unenforceable pursuant to the “civil action” language of 29 USC 1132(a)(1)(B) and (a)(3).
Indeed, the caselaw is contrary to Webb’s position. In Bird vy Shearson Lehman/American Express,
Inc, 926 F2d 116, 122 (CA 2, 1991), the United States Court of Appeals for the Second Circuit
held:
Arbitration is not inconsistent with the underlying purposes of ERISA.
Appellees have not sustained their burden of demonstrating that the text, legislative
history, or underlying purposes of ERISA indicate that Congress intended to
preclude a waiver of a judicial forum for claims arising under it. Accordingly, we
hold that statutory claims arising under ERISA may be the subject of compulsory
arbitration.[7]
The United States Court of Appeals for the Fifth Circuit has held that Congress did not
intend to exempt statutory ERISA claims from being subject to arbitration agreements under the
Federal Arbitration Act (FAA), 9 USC 1 et seq.; therefore, the customer agreement containing the
arbitration clause at issue mandated arbitration of the ERISA claims. Kramer v Smith Barney, 80
F3d 1080, 1084 (CA 5, 1996). “In determining arbitrability, . . . no external legal restraints
foreclose the arbitration of ERISA claims” and “federal courts have held that Congress did not
intend to exclude actions arising under both the remedial and substantive portions of ERISA from
arbitration pursuant to the FAA.” Williams v Healthalliance Hosps, Inc, 158 F Supp 2d 156, 161
(D Mass, 2001). The United States Court of Appeals for the Sixth Circuit acknowledged that a
majority of courts have held that disputes arising under ERISA can be subject to arbitration if the
particular dispute falls within the parameters of an agreement to arbitrate. Simon v Pfizer Inc, 398
F3d 765, 774 (CA 6, 2005). Webb’s reliance on the author’s view in a 1986 law review article is
simply inapposite in light of the caselaw that has developed. See Manley, Civil Actions Under
ERISA Section 502(a): When Should Courts Require That Claimants Exhaust Arbitral or Intrafund
Remedies, 71 Cornell L Rev 952 (1986).
Webb maintains that if arbitration is required, MCR 3.602(J) would severely curtail his
rights if the award were adverse to Webb and he wished to appeal because the grounds for vacating
an arbitration award under MCR 3.602(J) are narrow and limited. Assuming the applicability of
Tn Mitsubishi Motors Corp v Soler Chrysler-Plymouth, Inc, 473 US 614, 628; 105 S Ct 3346; 87
L Ed 2d 444 (1985), the United States Supreme Court made the following general observations:
By agreeing to arbitrate a statutory claim, a party does not forgo the
substantive rights afforded by the statute; it only submits to their resolution in an
arbitral, rather than a judicial, forum. It trades the procedures and opportunity for
review of the courtroom for the simplicity, informality, and expedition of
arbitration. We must assume that if Congress intended the substantive protection
afforded by a given statute to include protection against waiver of the right to a
judicial forum, that intention will be deducible from text or legislative history.
Having made the bargain to arbitrate, the party should be held to it unless Congress
itself has evinced an intention to preclude a waiver of judicial remedies for the
statutory rights at issue. Nothing, in the meantime, prevents a party from excluding
statutory claims from the scope of an agreement to arbitrate. [Citation omitted.]
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MCR 3.602 in this case, we fail to understand how limited court review of an arbitration award
negates the applicability of an arbitration clause. Webb does not present any coherent argument
supported by authorities that indicates that MCR 3.602(J) can serve to undermine the initial
enforceability of an arbitration agreement.
Webb next argues, again without reference to supporting authority, that he did not
knowingly and understandingly waive his rights to a civil action under 29 USC 1132(a)(3) because
the brokerage contract containing the arbitration clause was not attached to the signed customer
account application and because the “print was less than 12 point.” In Mudge v Macomb Co, 458
Mich 87, 105; 580 NW2d 845 (1998), our Supreme Court explained:
It is not enough for an appellant in his brief simply to announce a position
or assert an error and then leave it up to this Court to discover and rationalize the
basis for his claims, or unravel and elaborate for him his arguments, and then search
for authority either to sustain or reject his position. The appellant himself must first
adequately prime the pump; only then does the appellate well begin to flow.
[Quotation marks and citation omitted. ]
It is also worth noting that this particular argument necessarily accepts the possibility that
substantive rights under ERISA can be waived if done so knowingly and understandingly, which
undermines Webb’s entire position. We further note that the signed customer account application
expressly states that the arbitration clause governed disputes arising under the application and the
brokerage contract, and Webb acknowledged receipt of the brokerage contract’s arbitration clause.
A party is estopped from avoiding a contract on the ground that the party was ignorant of the
provisions and language in the contract. Scholz v Montgomery Ward & Co, Inc, 437 Mich 83, 92;
468 NW2d 845 (1991).
Next, Webb focuses his attention on the language in the customer account application
which provides that the “agreement shall be construed, administered, and enforced according to
the laws of the Commonwealth of Massachusetts, except as superseded by federal law or statute,”
along with the language in the brokerage contract, which states that “[i]n some cases, a claim that
is ineligible for arbitration may be brought in court.” Webb asserts “that the relied upon agreement
and arbitration clause is, in fact, superseded by federal law and statute.” We assume, as he provides
no elaboration, that Webb is speaking of ERISA. But Webb has failed to adequately confront the
trial court’s determination that Webb’s Fidelity account was not part of an ERISA plan, and even
assuming that ERISA were implicated, we again note that Webb has failed to show that ERISA
precludes arbitration of an ERISA-based claim.
Webb also contends that this is one of those cases in which his claims were ineligible for
arbitration and could be brought in court. Again, Webb does not elaborate, and to the extent that
he relies on ERISA as the basis for the contention that his claims were ineligible for arbitration,
we reject the assertion for the reasons discussed earlier. Furthermore, the arbitration clause is all-
encompassing, providing that “[a]ll controversies that may arise between you and us concerning
any subject matter, issue, or circumstance whatsoever (including, but not limited to, controversies
concerning any account, order or transaction, or the continuation, performance, interpretation or
breach of this or any other agreement between you and us, whether entered into or arising before,
on, or after the date this account is opened) shall be determined by arbitration ....” This quoted
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provision also defeats Webb’s argument that the 2008 dates of the customer account application
and brokerage contract prevent the arbitration clause from reaching earlier-purchased GM
common stock.
Finally, Webb argues that recently cases have been filed in federal courts that alleged
Fidelity committed fraud, breach of fiduciary duty, and other ERISA. Webb maintains that these
cases demonstrate that civil actions like his can be pursued against Fidelity under the plain
language of 29 USC 1132(a)(3). Webb, however, does not indicate or suggest that these cases
involve arbitration issues and agreements. Also, we fail to see the relevance and value of mere
allegations in pending federal lawsuits. Furthermore, Webb’s argument again fails to acknowledge
that the trial court here determined that Webb’s Fidelity account was not part of an ERISA plan,
which conclusion Webb has failed to adequately assail. Additionally, we have already rejected
Webb’s arguments under 29 USC 1132(a)(3). Lastly, Webb’s argument, which references federal
cases, ultimately reveals a jurisdictional flaw in his stance and legal maneuverings. Assuming that
Webb’s lawsuit is fully supported by ERISA as urged by Webb and that our conclusions to the
contrary are in error, Webb’s action would still need to be dismissed because the trial court—a
state court—would not have jurisdiction over the ERISA-based lawsuit. 29 USC 1132(e)(1)
provides:
Except for actions under subsection (a)(1)(B) of this section, the district
courts of the United States shall have exclusive jurisdiction of civil actions under
this subchapter brought by the Secretary or by a participant, beneficiary, fiduciary,
or any person referred to in section 1021(f)(1) of this title. State courts of competent
jurisdiction and district courts of the United States shall have concurrent
jurisdiction of actions under paragraphs (1)(B) and (7) of subsection (a) of this
section.
Although Webb makes one fleeting reference to 29 USC 1132(a)(1)(B), his brief on appeal
is otherwise wholly dominated by reliance on 29 USC 1132(a)(3) in support of his lawsuit. And,
therefore, a federal district court would have exclusive jurisdiction over the civil action.
In sum, the trial court did not err by granting Fidelity’s motion for summary disposition,
and the court did not abuse its discretion by denying Webb’s motion for reconsideration.
We affirm. Having fully prevailed on appeal, Fidelity may tax costs under MCR 7.219.
/s/ Karen M. Fort Hood
/s/ Jane E. Markey
/s/ Elizabeth L. Gleicher
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