Washington v. Washington
Washington v. Washington
Opinion of the Court
Defendant appeals as of right the trial court’s judgment of divorce entered after a partial settlement and subsequent arbitration award on the division of marital property. On appeal, defendant challenges the trial court’s denial of her motion to set aside, vacate, or modify the arbitration ruling as being inconsistent with Michigan law. For the following reasons, we affirm.
I. FACTS AND PROCEEDINGS
On August 18, 2004, and after a marriage of approximately 14 years, plaintiff filed a complaint to obtain a divorce from defendant. Less than four months later, the parties reached a partial settlement through mediation. The settlement resolved issues of custody, parenting time, spousal support, and the sale of the marital home. According to the written settlement agreement, plaintiff was ordered to pay defendant $33,500 a year,
At the same time, the parties entered into an arbitration agreement to resolve the division of property, debts, and any unresolved issues flowing from the settlement agreement.
Next, the arbitrator determined that the property on which the practice was located should also be valued using a fair market value approach, a fact agreed to by both real estate experts. After a discussion of a separate offer to purchase the building and the complicating consequences from the offer, the arbitrator valued the property at $123,000 (the fair market value offered by defendant’s expert), minus the $47,000 outstanding mortgage balance, and awarded it to plaintiff.
The arbitrator stated that the total value of assets awarded to defendant was $177,428 less than that awarded to plaintiff, but that this division of property was equitable for two reasons. First, he determined that $80,555 of the home improvement expenses made by defendant using the home equity line of credit was “less than necessary and beyond that which the parties could afford.” As such, he concluded that these expenses were defendant’s “separate responsibility” and that the remainder of the expenses were “joint in nature.” Second, he concluded that, with respect to defendant’s personal injury settlement “a portion of [defendant’s] separate property shall be taken into consideration in the overall award.” The arbitrator opined that, taking these issues into consideration, the division of property was equitable, even if it was not equal.
Defendant then filed with the trial court a motion to set aside, vacate, or modify the arbitration award. Defendant argued that the arbitrator exceeded his powers and showed partiality against her and that the award was issued beyond the time limits afforded by statute. After a hearing, the court ruled that there was
II. ANALYSIS
This Court reviews de novo a trial court’s ruling on a motion to vacate or modify an arbitration award. Tokar v Albery, 258 Mich App 350, 352; 671 NW2d 139 (2003). This means that we review the legal issues presented without extending any deference to the trial court. In re Contempt of Auto Club Ins Ass’n, 243 Mich App 697, 714 n 33; 624 NW2d 443 (2000).
Judicial review of arbitration awards is usually extremely limited, Konal v Forlini, 235 Mich App 69, 74; 596 NW2d 630 (1999),
(a) The award was procured by corruption, fraud, or other undue means.
(b) There was evident partiality by an arbitrator appointed as a neutral, corruption of an arbitrator, or misconduct prejudicing a party’s rights.
(c) The arbitrator exceeded his or her powers.
(d) The arbitrator refused to postpone the hearing on a showing of sufficient cause, refused to hear evidence ma*672 terial to the controversy, or otherwise conducted the hearing to prejudice substantially a party’s rights.
MCL 600.5081(2)(c), “the arbitrator exceeded his or her powers” provision, is the codification of a phrase used for many years in common-law and statutory arbitrations. Indeed, our Court has repeatedly stated that “arbitrators have exceeded their powers whenever they act beyond the material terms of the contract from which they primarily draw their authority, or in contravention of controlling principles of law.” Dohanyos v Detrex Corp (After Remand), 217 Mich App 171, 176; 550 NW2d 608 (1996); see also Miller v Miller, 474 Mich 27, 30; 707 NW2d 341 (2005), and Krist v Krist, 246 Mich App 59, 62; 631 NW2d 53 (2001). Pursuant to MCL 600.5081(2)(c), then, a party seeking to prove that a domestic relations arbitrator exceeded his or her authority must show that the arbitrator either (1) acted beyond the material terms of the arbitration agreement or (2) acted contrary to controlling law.
Whether an arbitrator exceeded his or her authority is also reviewed de novo. Miller, supra at 30. A reviewing court may not review the arbitrator’s findings of fact, Detroit Automobile Inter-Ins Exch v Gavin, 416 Mich 407, 429; 331 NW2d 418 (1982); Krist, supra at 67, and any error of law must be discernible on the face of the award itself, Gavin, supra at 428-429. By “on its face” we mean that only a legal error “that is evident without scrutiny of intermediate mental indicia,” id. at 429, will suffice to overturn an arbitration award. Courts will not engage in a review of an “arbitrator’s ‘mental path leading to [the] award.’ ” Krist, supra at 67, quoting Gavin, supra at 429. Finally, in order to vacate an arbitration award, any error of law must be “so substantial that, but for the error, the award would have been substantially different.” Collins v Blue Cross
Defendant’s primary argument is that the arbitration award was facially inequitable — and therefore contrary to Michigan law and the arbitration agreement
Assuming defendant’s arithmetic is correct, there is no basis on the face of the award to conclude that the
Thus, although defendant argues that the arbitrator erred by considering in the division of marital property part of the noneconomic damages obtained from her personal injury settlement received during the pendency of the divorce, we are only concerned with whether the arbitrator recognized the controlling law. Here, while noneconomic damages are ordinarily considered separate property, they are available for distribution as a marital asset in order to ensure an equitable distribution of property. Stoudemire v Stoudemire, 248 Mich App 325, 339; 639 NW2d 274 (2001).
Defendant also argues that the arbitrator erred in his valuations of most of the parties’ assets. While defendant argues that the arbitrator’s mistakes render the award facially inequitable, we are mindful that
an allegation that the arbitrators have exceeded their powers must be carefully evaluated in order to assure that this claim is not used as a ruse to induce the court to review the merits of the arbitrator’s decision. Stated otherwise, courts may not substitute their judgment for that of the arbitrators and hence are reluctant to vacate or modify an award .... [Gordon Sel-Way, supra at 497.]
The trial court was not required or authorized to review the arbitrator’s findings of fact, and neither is this Court. It is simply outside the province of the courts to engage in a fact-intensive review of how an arbitrator calculated values, and whether the evidence he relied on was the most reliable or credible evidence presented. Krist, supra at 67-68.
In the same vein, defendant argues that the arbitrator misapplied the factor of fault in the property award. For example, defendant argues that the arbitrator put too much weight on her own conduct and not enough on plaintiffs conduct. Although the arbitrator concluded that defendant’s reckless spending justified in part an unequal property division, fault is clearly a proper
Plaintiff may tax costs as prevailing party. MCR 7.219(A).
Affirmed.
Our recitation of the facts is more detailed than necessary to resolve the issues presented. Nonetheless, we have provided this detail to give context to the case and our decision.
The parties also simultaneously signed an “Acknowledgment of Domestic Relations Arbitration Information,” seeking to comply with MCL 600.5072(1).
The arbitrator had previously submitted a ruling on personal property issues, and that ruling is not a subject of this appeal.
Indeed, as the United States Court of Appeals for the Sixth Circuit declared, “[a] court’s review of an arbitration award ‘is one of the narrowest standards of judicial review in all of American jurisprudence.’ ” Way Bakery v Truck Drivers Local No 164, 363 F3d 590, 593 (CA 6, 2004), quoting Tennessee Valley Auth v Tennessee Valley Trades & Labor Council, 184 F3d 510, 514 (CA 6, 1999).
The arbitration agreement states that the “parties agree to be guided by the laws of the state of Michigan during the arbitration process and also agree that the Rules of Evidence may be applied or relaxed at the discretion of the Arbitrator.”
Defendant also argues that the arbitrator violated MCL 600.5078(1) by not issuing his ruling within 60 days after the arbitration hearing. Defendant has not, however, alleged on appeal what substantial difference would have resulted from a timely arbitration ruling. Collins, supra at 567. Further, there is nothing in the record to indicate that the arbitrator’s delay had any effect on the property division in the arbitration ruling. Thus, the trial court did not err by denying defendant’s motion on this ground.
Reference
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- WASHINGTON v. WASHINGTON
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