Michigan Court Of Appeals Limits Efforts To Force Company Agents Into Arbitration

• Published date: 08 July 2026
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Contracts and Commercial Law, Arbitration & Dispute Resolution, Court Procedure
• Law Firm: Butzel Long
• Author: George Donnini, Sarah L. Nirenberg, Thomas Nolan and Brian K. Weber

Michigan's pro-arbitration policy has limits. In Demerse v Helen Newberry Joy Hospital, the Michigan Court of Appeals held that a business owner who signed a contract only on behalf of his LLC could not be forced to arbitrate individual claims against him based on that contract's arbitration clause. The decision matters for companies that rely on arbitration provisions to manage risk across related entities, owners, officers, and employees. It also gives individual agents a stronger answer when a contracting counterparty tries to turn a company's arbitration agreement into a personal obligation.

Key Takeaways

• A company's arbitration clause does not automatically bind its owners or officers personally. Signing for a disclosed LLC is not the same as signing individually.
• Agency principles work differently depending on who resists arbitration. A nonsignatory agent may sometimes enforce arbitration against a signatory, but that does not mean the nonsignatory agent can be forced to arbitrate personal liability.
• Veil-piercing remains possible, but it requires evidence. Allegations about asset sales or distributions will not carry the day without admissible proof satisfying Michigan's veil-piercing standards.
• Contract drafting matters. Companies that want arbitration to reach owners, officers, directors, affiliates, or guarantors should say so clearly and obtain signatures in the right capacity.
• The opinion is narrow but useful. It does not reject arbitration. It enforces the basic rule that arbitration is contractual. Contract principles still apply.

Case Summary

Helen Newberry Joy Hospital contracted with Newton Hometown Pharmacy LLC for services tied to the federal 340B drug-pricing program. The pharmacy's sole...