Supreme Court holds that arbitrator can resolve fraud claims outside arbitration agreement

In Wireless Toyz Franchise, LLC,  v. Clear Choice Communications, et al, the Michigan Supreme Court this week overturned a decision of the Court of Appeals and reinstated an arbitrator's ruling.  The parties had executed a binding arbitration agreement, and the arbitrator had ruled that both parties engaged in innocent misrepresentation.  Sorting out the equities, the arbitrator entered an award in favor of the plaintiff. 

The Court of Appeals overturned the award, concluding that the question of fraud was an issue outside the four corners of the arbitration award and therefore beyond the arbitrator's jurisdiction.  The Supreme Court unanimously disagreed and reinstated the arbitrator's decision.