Opinions, April 13, 2017: Binding Post-Divorce Arbitration

Last Thursday, the Fourteenth Court of Appeals released two published opinions and the latest installment of the Reynolds Saga.

In re S.M.H. and W.H.H., No. 14-16-00566-CV, concerned the trial court’s vacatur of a binding arbitration award. When the parties divorced, father agreed to pay contractual alimony and the children’s private school tuition and other costs for extracurricular activities. The parties had executed an agreement incident to divorce, which was incorporated into the final decree.

Disputes arose over the interpretation of the AID. The mother filed a petition with the trial court to clarify the terms of the AID and to enforce obligations the father had allegedly failed to honor. The father filed a counter-petition, seeking a modification of his possession.

The parties attended mediation, which led to a partial settlement. They also signed a Rule 11 agreement to submit to arbitration. Under this Rule 11, the mediator would serve as arbitrator; the parents would both make a proposal and the arbitrator would pick one which would be the award, without changes (i.e. “baseball style”); the issues submitted to the arbitrator would be support and possession; the arbitrator’s ruling on support would be binding, but not her ruling on possession. Specifically, the arbitrator would meet with the children privately and then propose a “mediator’s proposal” on the terms of holiday schedules and long-distance visitation. These Rule 11 terms were incorporated into an Arbitration Agreement signed by the parties.

At the conclusion of arbitration, the arbitrator accepted mother’s proposal and drafted an award. The award contained two paragraphs which addressed the issue of possession in order language, not in the form of a mediator’s proposal. These paragraphs evidently ordered holidays to be split between the parents, that terms should be added to the decree for long distance visitation as father was planning to move to a different city, and father should participate in therapy as a condition of his possession.

The mother moved in the trial court to confirm the award and the father moved to vacate it. The trial court found the arbitrator had exceeded her authority and vacated the award in full. The mother objected to the vacatur, arguing the trial court should at least have confirmed the support provisions and severed the possession portion, but the trial court overruled her.

The case proceeded to trial on the merits, but the only matter heard was the father’s counter-petition to modify the terms of his possession. The parties abandoned all other pending claims. At the close of the evidence, the trial court found there was a change in circumstances and granted the father long-distance visitation. A final judgment modifying the decree was signed.

The mother appealed, asserting two issues: she argued the trial court erred in not confirming the support portion of the arbitration award and erred by proceeding to trial on the father’s counter-petition for modification.

To succeed on her first issue, under CPRC 171.091, the mother had to show that the parties submitted the support issue to arbitration but not the possession issue and that the removal of the possession portion of the award could be accomplished without affecting the support portion. The Court of Appeals found the mother established both.

The father made many arguments on appeal in an apparent effort to throw everything at the wall to see what stuck (e.g., that the arbitration award was excessive; the award was properly vacated because of the arbitrator’s partiality; the award would violate Texas law; and there was no meeting of the minds on the Arbitration Agreement). The Court of Appeals overruled each of these arguments and remanded to the trial court for a hearing on whether confirmation of the modified award is in the best interest of the children.

The mother’s second issue–that the trial court erred by proceeding to trial on the merits on the father’s counter-petition for modification of possession–was overruled by the Court of Appeals as well. First the mother argued that once an arbitration award is vacated, the trial court has no discretion but to order the parties back to arbitration. The COA disagreed, finding the trial court was not precluded from proceeding to trial. Secondly, the mother argued she was never served with citation of the father’s counter-petition for modification, but the COA found she waived the objection by not objecting when she made her appearance. Thirdly, the mother complained the trial court denied an oral motion for continuance made just before trial. As mother’s oral motion for continuance did not comply with Rule 251, the trial court did not abuse its discretion in denying it.

In summary, the COA reversed the portion of the trial court’s judgment which vacated the arbitration award and remanded the case for the trial court to determine whether confirmation of a modified award would be in the best interest of the children.

In In re McPeak, No. 14-17-00104-CV, the Court of Appeals granted a mandamus on two separate grounds. In February 2016, the mother and father separated and the mother moved with the children from the marital home in Brazoria County to Thorndale, Texas, about 40 miles northeast of Austin. Father filed for divorce in Brazoria County in October 2016. The parents signed agreed temporary orders, though mother was not represented by counsel and father was. The trial court approved the agreed temporary orders on November 22, 2016, which required the mother to move the children to Brazoria County or a contiguous county by January 1, 2017. If mother failed to do so, the children would be turned over to the father’s possession.

Mother retained counsel and filed a motion to set aside the temporary orders and, on December 8, a motion to modify the temporary orders, requesting the orders be set aside or at least that the geographic restriction be modified to include the mother’s new county of residence. On December 28 the mother also filed a motion for the court to confer with the oldest child (age 13) pursuant to TFC 153.009.

The trial court heard the motions on January 18, 2017 but stopped the hearing because the mother had not filed an affidavit under TFC 156.102 (Modification of Exclusive Right to Determine Primary Residence of Child Within One Year of Order). On January 19, the trial court signed an order denying the motion to confer and an order declining to consider further evidence and testimony. Mother filed a petition for writ of mandamus.

The Court of Appeals sustained the mother’s challenge on the affidavit issue because 156.102 applies to final orders, not temporary orders under 105.001. This imposed a higher burden of proof on the mother than the law required. The father did not deny the trial court erred in applying 156.102 instead of 105.001, but argued the court didn’t abuse its discretion because it reached the right result, if for the wrong reason. The Court of Appeals did not agree with the father and found the mother was prejudiced by the error for two reasons: the trial court stopped the hearing before she could present all her evidence and second, absent the trial court’s error, the mother might have met her lower burden of proof under 105.001.

The Court of Appeals also found that the trial court improperly denied her request under 153.009 to confer with the child because the statute is mandatory, not permissive.

Long-time readers of this blog should recognize Mr. and Ms. Reynolds from previous posts. The Court of Appeals’ latest memorandum opinion begins, “These former spouses appear regularly on our docket. In this latest chapter of their long-running dispute…” Ms. Reynolds’ issues on appeal this time are: 1) that the trial court erred in not granting a motion to compel Mr. Reynolds to provide financial documents; and 2) the trial court erred in granting Mr. Reynolds’ motion for summary judgment on his affirmative defense of collateral estoppel. On the first issue, the Court of Appeals stated Ms. Reynolds’ “subjective belief” that Mr. Reynolds was essentially hiding assets was not sufficient to demonstrate the trial court abused its discretion in denying the motion to compel. On the second issue, the Court of Appeals found Mr. Reynolds had established his affirmative defense of collateral estoppel because the issue of the division of the community estate’s interest in bonuses and other financial accounts was litigated during the original property division in 2009. Ms. Reynolds’ issues were overruled.



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