Helen Yu-Wen Chang v. Siu , 234 Ariz. 442 ( 2014 )

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
In re the Marriage of:
HELEN YU-WEN CHANG, Petitioner/Appellee,
v.
WILLIAM MOLIM SIU, Respondent/Appellant.
No. 1 CA-CV 12-0798
FILED 4-22-2014
Appeal from the Superior Court in Maricopa County
No. FC2009-005645
The Honorable Teresa A. Sanders, Judge
AFFIRMED
COUNSEL
Jensen and Gordon, PLLC, Phoenix
By Robert A. Jensen, Tracy Gordon
Co-Counsel for Petitioner/Appellee
Law Office of Scott E. Boehm, PC, Phoenix
By Scott E. Boehm
Co-Counsel for Petitioner/Appellee
The Cavanagh Law Firm, PA, Phoenix
By Philip C. Gerard, William F. Begley
Co-Counsel for Respondent/Appellant
Law Offices of Annette T. Burns, Phoenix
By Annette T. Burns
Co-Counsel for Respondent/Appellant
Law Offices of Robert E. Siesco, Jr., Phoenix
By Robert E. Siesco, Jr.
Co-Counsel for Respondent/Appellant
OPINION
Chief Judge Diane M. Johnsen authored the opinion of the Court, in which
Presiding Judge Patricia A. Orozco and Judge Lawrence F. Winthrop
joined.
J O H N S E N, Judge:
¶1 After a nine-day hearing, an arbitrator concluded the assets
in a series of brokerage accounts were community property, and the
superior court adopted that conclusion in a decree of dissolution. On
appeal, Husband argues the parties’ arbitration agreement requires this
court to review the legal and factual merits of the arbitrator's decision.
Without deciding whether Arizona law permits such review, we affirm
the judgment.
FACTS AND PROCEDURAL HISTORY
¶2 William Molim Siu ("Husband") and Helen Yu-Wen Chang
("Wife") married in June 1998. Before the marriage, Husband owned
various securities. He eventually closed his sole-and-separate securities
accounts and deposited the securities into a new brokerage account
containing community funds. That brokerage account eventually
generated ten subaccounts with assets of considerable worth.
¶3 Wife filed a petition for dissolution in 2009. In the
proceedings that followed, Husband and Wife agreed to resolve their
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CHANG v. SIU
Opinion of the Court
property issues by a binding arbitration conducted pursuant to Arizona
Revised Statutes ("A.R.S.") sections 12-3001 to -3029 (2014). 1 They
presented to the superior court a stipulation, which the court approved,
appointing a retired Maricopa County superior court judge to arbitrate the
property issues and other matters. In relevant part, the stipulation and
order provided as follows:
2. The parties stipulate, AND IT IS SO
ORDERED, that [the Arbitrator] is authorized to proceed as
an Arbitrator, to hold hearings and issue binding Arbitration
Award(s) orders on all issues raised in the parties'
dissolution action and heard by him . . . . [The Arbitrator] is
authorized, pursuant to ARS 12-3001 et seq., to make an
Arbitration Award on all issues submitted to him pursuant
to Title 25, Arizona Revised Statutes, and said Arbitration
Award(s) will include requested findings of fact and
conclusions of law concerning the disputed issues.
* * *
4. Each party expressly waives his or her right to
a trial before a judge in the Maricopa County Superior Court
based upon the appointment of the Arbitrator. The parties
are aware this stipulation is made pursuant to ARS § 12-3001
et seq.
The stipulated order established the arbitrator's hourly billing rate at $350
and granted him the power "to do all acts and to take all measures
necessary or proper for the efficient performance of his duties," including
the power to require production of evidence, to resolve discovery disputes
and the admissibility of evidence and the power to place witnesses under
oath and examine them. The parties agreed, and the court ordered, that
the Arizona Rules of Evidence would apply to the arbitration proceedings.
Finally, the stipulated order provided:
Appellate jurisdiction preserved to Arizona Court of
Appeals. The parties agree, AND IT IS ORDERED, that
each is preserving his and her right to appeal a final
Arbitration Award to the Arizona Court of Appeals, and
1 Absent material revision after the relevant date, we cite a statute's
current version.
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CHANG v. SIU
Opinion of the Court
that appeals shall not be taken to the Superior Court of
Arizona.
¶4 After hearing evidence and considering proposed findings
and conclusions, the arbitrator issued a 34-page ruling. He found, among
other things, that all of the assets in the brokerage accounts were
community property and ordered them to be divided equally between the
parties.
¶5 Citing A.R.S. § 12-3020, Husband filed a "Motion to Change,
Modify and Correct Arbitration Award" asking the arbitrator to "amend[]
and correct[]" his characterization of the disputed accounts. The arbitrator
denied Husband's motion, concluding his challenge to the merits of the
award was not proper under A.R.S. §§ 12-3020 or -3024. The superior
court then granted Wife's application to confirm the arbitrator's award
and entered a judgment and decree of dissolution that incorporated the
arbitrator's findings and conclusions.
¶6 Husband timely appealed. We have jurisdiction pursuant to
Article 6, Section 9 of the Arizona Constitution, and A.R.S. §§ 12-2101
(A)(1) (2014) and -2101.01(A)(6) (2014).
DISCUSSION
¶7 Husband argues the arbitrator erred in concluding the
brokerage accounts were community property and in dividing them
equally between the parties. The arbitrator's ruling, he contends,
misapplies Arizona law and "inappropriately awarded Wife millions of
dollars of Husband's separate property."
¶8 As a matter of public policy, Arizona favors arbitration as a
means of resolving controversies when parties have agreed to do so. S.
Cal. Edison Co. v. Peabody W. Coal Co., 194 Ariz. 47, 51, 977 P.2d 769, 773
(1999). Litigants who turn to private arbitration usually do so to resolve
their disputes speedily and at a minimum of expense. "The primary
attraction of arbitration is an expeditious and inexpensive method of
dispute resolution." Rancho Pescado, Inc. v. Northwestern Mut. Life Ins. Co.,
140 Ariz. 174, 182-83, 680 P.2d 1235, 1243-44 (App. 1984); see Gates v.
Arizona Brewing Co., 54 Ariz. 266, 269, 95 P.2d 49, 50 (1939) (arbitration
allows "the parties to any controversy or dispute . . . to obtain an
inexpensive and speedy final disposition of the matter involved" by
agreeing to "submit their controversy" for determination by "judges of
their own choice").
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Opinion of the Court
¶9 It does not appear that the parties here, however, were
trying to save money when they decided to hire a private arbitrator to try
their case. As noted, the hearing the arbitrator conducted spanned nine
days, and at the end of the proceeding, each party filed an attorney's fees
request seeking more than $500,000. Instead, Husband and Wife
apparently agreed to arbitration because they wanted their complicated
property issues resolved by an experienced, albeit retired, jurist who
would have the time to consider the evidence and relevant legal principles
free of the pressure of a crowded superior court calendar. 2
¶10 Litigants who have the resources to do so certainly are free
to fashion a proceeding such as that which occurred here – a full-blown
bench trial in every sense of the word, conducted in a law-firm conference
room rather than a courtroom. See Atreus Cmtys. Group of Ariz. v. Stardust
Dev., Inc., 229 Ariz. 503, 506, ¶ 13, 277 P.3d 208, 211 (App. 2012)
("boundaries of [an] arbitrator[’s] powers are defined by the agreement of
the parties") (quoting Smitty's Super-Valu, Inc. v. Pasqualetti, 22 Ariz. App.
178, 180, 525 P.2d 309, 311 (1974)). The question first presented by this
appeal, however, is whether and to what extent parties may by agreement
avoid the procedural and substantive limitations our statutes and
common law impose on the review of a private arbitration award.
¶11 Under the Arizona Revised Arbitration Act, §§ 12-3001 et
seq., upon completion of an arbitration, a party may move the superior
court to confirm the arbitrator's award. A.R.S. § 12-3022. Pursuant to
A.R.S. § 12-3023, a party aggrieved by the award may move the court to
vacate it. Under the statute, the grounds for such a motion are limited:
The superior court "shall vacate" an award procured by fraud or on a
showing of "evident partiality," corruption or misconduct by the
arbitrator, or that the arbitrator exceeded his powers, conducted the
arbitration without notice or refused to postpone the hearing despite
sufficient cause; or that "[t]here was no agreement to arbitrate." A.R.S. §
12-3023(A).
¶12 When Wife asked the superior court to confirm the
arbitrator's award, Husband objected but, pursuant to their agreement not
2 We take judicial notice that a nine-day trial is an extremely rare
event in the family court division of Maricopa County Superior Court.
According to that court's annual report, the 26 or so judges assigned to the
family court, along with associated commissioners, handled 33,882 new
cases and 21,820 post-decree filings during 2013.
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Opinion of the Court
to "appeal" the award to the superior court, did not move to vacate the
award pursuant to § 12-3023(A) or object on any of the grounds in the
statute. In fact, he did not ask the superior court to rule on any of the legal
and factual issues he raises on appeal. An appellate court normally will
not address arguments not raised in the superior court prior to the appeal.
See McDowell Mountain Ranch Land Coalition v. Vizcaino, 190 Ariz. 1, 5, 945
P.2d 312, 316 (1997). This rule is one of procedure, however, which the
court has discretion to overlook. See Dombey v. Phoenix Newspapers, Inc.,
150 Ariz. 476, 482, 724 P.2d 562, 568 (1986). We may review an issue first
raised on appeal when, as here, there is no question of notice and the issue
is a matter of law. Id,
¶13 Waiver is one thing; jurisdiction is another. Although this
court may consider an issue a party arguably waived by failing to raise it
in the superior court, parties may not by agreement create appellate
jurisdiction where it otherwise would not exist. Thomas v. Thomas, 203
Ariz. 34, 36, ¶ 9, 49 P.3d 306, 308 (App. 2002). Husband argues that in the
agreement they submitted to the court authorizing the arbitration, he and
Wife agreed that any substantive review of the arbitrator's award would
be by this court rather than by the superior court. He cites the provision
in the stipulation, quoted ¶ 3 supra, that each party "is preserving his and
her right to appeal a final Arbitration Award to the Arizona Court of
Appeals, and that appeals shall not be taken to the Superior Court of
Arizona." Our jurisdiction, however, arises not from the parties'
agreement but from the superior court's final order and judgment
granting Wife's motion to confirm the award, which we have jurisdiction
to review pursuant to A.R.S. §§ 12-2101(A)(1) and -2101.01(A)(6). See
Atreus Cmtys. Group, 229 Ariz. at 506, ¶ 13, 277 P.3d at 211.
¶14 We turn finally to the scope of our review. Although we
review a judgment by the superior court confirming an arbitrator's award
pursuant to A.R.S. §§ 12-2101(A)(1) and -2101.01(A)(6), the cases are clear
that as long as the award is within the scope of the parties’ agreement,
"the arbitrators' decision is final both as to questions of fact and law."
Smitty's Super-Valu, 22 Ariz. App. at 180, 525 P.2d at 311. That is, "even
though a court reviewing an arbitration award might consider erroneous
some rulings on questions of law, the rulings made by the arbitrators are
binding unless they result in extending the arbitration beyond the scope of
the submission." Id. at 181, 525 P.2d at 311. See Fisher v. Nat'l Gen. Ins. Co.,
192 Ariz. 366, 369, ¶ 11, 965 P.2d 100, 103 (App. 1998) ("An arbitrator's
decision generally is final and conclusive; the act provides very limited
grounds for the trial court to deny confirmation of an arbitration award . .
. ."); Valler v. Lee, 190 Ariz. 391, 393 n.4, 949 P.2d 51, 53 n.4 (App. 1997)
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Opinion of the Court
("judicial review of consensual arbitration awards . . . is limited to
specified, statutory grounds for modifying, correcting, or refusing to
confirm an arbitration award").
¶15 Husband argues parties to a private arbitration may, by
contract, agree to judicial review broader than otherwise afforded under
the law, and contends he and Wife entered such an agreement here. In
Hall Street Assoc., L.L.C. v. Mattel, Inc., 552 U.S. 576 (2008), the Supreme
Court held parties to an arbitration under the Federal Arbitration Act, 9
U.S.C. § 1 et seq., may not by contract expand the scope of judicial review
of the award beyond that provided by the statute. 552 U.S. at 588 (limited
review afforded by federal act "substantiat[es] a national policy favoring
arbitration with just the limited review needed to maintain arbitration's
essential virtue of resolving disputes straightaway"). The Court, however,
expressly left open whether parties to arbitrations governed by state law
may agree to more expansive judicial review. Id. at 590.
¶16 Even before Hall Street, the drafters of the 2000 revision to
the Uniform Arbitration Act, which Arizona adopted in 2010, debated but
ultimately rejected a provision allowing parties to agree on "judicial
review of arbitration awards for errors of law or fact." Unif. Arbitration
Act § 23 cmt. B (2000). The drafters observed that the absence of such a
provision "effectively leaves the issue of the legal propriety of this means
for securing review of awards to the developing case law under the
[Federal Arbitration Act] and state arbitration statutes." Id. cmt. B(5). 3
¶17 Citing cases from California and Texas, Husband argues we
should construe the Arizona Revised Arbitration Act to allow parties to
agree to broader, more substantive appellate review than otherwise
allowed in the statute and under the cases. See Cable Connection, Inc. v.
DirecTV, Inc., 190 P.3d 586, 589 (Cal. 2008) ("California rule is that the
parties may obtain judicial review of the merits by express agreement");
Nafta Traders, Inc. v. Quinn, 339 S.W.3d 84, 102 (Tex. 2011) (agreement that
arbitrator lacked authority to issue decision containing "reversible error of
state or federal law" rendered merits of award subject to substantive
3 Section 4(c) of the revised Uniform Arbitration Act, A.R.S. § 12-
3004(C), provides that parties "may not waive[] or . . . vary the effect of"
section 23 of the uniform act, A.R.S. § 12-3023, which in turn provides that
"the court shall vacate" an arbitration award "procured by corruption,
fraud or other undue means," and in other specified circumstances. See ¶
11 supra.
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Opinion of the Court
review on ground that arbitrator exceeded authority). Accord Raymond
James Fin. Servs., Inc. v. Honea, 55 So. 3d 1161, 1170 (Ala. 2010); Tretina
Printing, Inc. v. Fitzpatrick & Assocs., Inc., 640 A.2d 788, 793 (N.J. 1994); see
also HH East Parcel, LLC v. Handy & Harman, Inc., 947 A.2d 916, 926 n.16
(Conn. 2008); but see Brookfield Country Club, Inc. v. St. James–Brookfield,
LLC, 696 S.E.2d 663, 667 (Ga. 2010); HL 1, LLC v. Riverwalk, LLC, 15 A.3d
725, 736 (Me. 2011); John T. Jones Constr. Co. v. City of Grand Forks, 665
N.W.2d 698, 704 (N.D. 2003); Pugh’s Lawn Landscape Co. v. Jaycon Dev.
Corp., 320 S.W.3d 252, 261 (Tenn. 2010); Barnett v. Hicks, 829 P.2d 1087,
1095 (Wash. 1992); see also Dick v. Dick, 534 N.W.2d 185, 190–91 (Mich.
App. 1995).
¶18 Husband argues that because under Arizona law, "[t]he
boundaries of the arbitrators’ powers are defined by the agreement of the
parties," Smitty's Super-Valu, 22 Ariz. App. at 180, 525 P.2d at 311, the
court should give effect to an agreement to allow substantive judicial
review of an arbitrator's award. Wife contends that because the parties
agreed to "binding arbitration," the arbitrator's award should be subject
only to limited judicial review as provided by statute. See ¶ 14 supra. We
need not decide whether Arizona law allows parties to contract for
expanded appellate review of the merits of an arbitrator's award,
however, because Husband and Wife did not make such an agreement
here.
¶19 "Arbitration is a creature of contract law." Schoneberger v.
Oelze, 208 Ariz. 591, 595, ¶ 17, 96 P.3d 1078, 1082 (App. 2004). The
interpretation of an arbitration agreement, therefore, is determined
according to principles of general contract law. See Broemmer v. Abortion
Servs. of Phoenix, Ltd., 173 Ariz. 148, 150, 840 P.2d 1013, 1015 (1992). The
purpose of contract interpretation is to determine the parties' intent,
which is best ascertained by examining the language of the contract.
Grosvenor Holdings, L.C. v. Figueroa, 222 Ariz. 588, 593, ¶ 9, 218 P.3d 1045,
1050 (App. 2009).
¶20 Husband argues the parties intended the "right to appeal"
provision of the arbitration agreement, quoted in ¶ 3 supra, to subject the
arbitrator's award to judicial review on the merits. But as we have said, a
superior court judgment confirming or vacating an arbitration award
customarily is subject to some (albeit very limited) review by this court,
see A.R.S. §§ 12-2101(A)(1), -2101.01(A). The arbitration agreement's mere
reference to "right to appeal" in the court of appeals therefore does not
prove Husband's contention that the parties intended to grant this court
the power to review the merits of the arbitrator's award.
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Opinion of the Court
¶21 Further, the agreement here mandated "binding" arbitration
conducted "pursuant to A.R.S. § 12-3001 et seq." An agreement for
"binding" arbitration does not imply substantive judicial review. And we
cannot disregard the parties' express reference to the Arizona Revised
Arbitration Act, which as noted above provides for narrow judicial
review. See Atreus Comtys. Group, 229 Ariz. at 506, ¶ 13, 277 P.3d at 211
("severely limited" review); Smitty's Super-Valu, 22 Ariz. App. at 181, 525
P.2d at 312. Husband argues the parties' intention to allow substantive
judicial review is proven by the fact that they arranged for a court reporter
to transcribe all of the hearing proceedings, and argues the only purpose
of that expense would have been to support an appeal of the merits of the
award. But the agreement also allowed the arbitrator to require the
parties to file detailed findings of fact and conclusions of law, the
preparation of which would have required trial transcripts.
¶22 Having rejected Husband's argument that we should review
the merits of the arbitrator's award, we will affirm the award as long as
the arbitrator did not exceed the bounds of his authority. Atreus Comtys.
Group, 229 Ariz. at 506, ¶ 13, 277 P.3d at 211.
¶23 By their agreement, Husband and Wife authorized the
arbitrator to "hold hearings and issue binding Arbitration Award(s) orders
on all issues raised in the parties' dissolution action and heard by him." In
their joint pre-arbitration statement, the parties asked the arbitrator to
determine whether "the primary [brokerage] account and the related sub-
accounts [have] been commingled to an extent that transmutes Husband's
sole and separate funds into community property" and, if so, to divide the
accounts. Because the rulings Husband contests were squarely within the
arbitrator's authority, the superior court did not abuse its discretion by
confirming the award. See id. (court of appeals reviews for abuse of
discretion a superior court order confirming arbitration award).
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Opinion of the Court
CONCLUSION
¶24 We affirm the superior court's order confirming the
arbitration award and its decree of dissolution incorporating the award. 4
:MJT
4 We decline Wife's request for her attorney's fees incurred on appeal
pursuant to A.R.S. § 25-324(A) (2014). She may recover her costs of appeal
upon compliance with Arizona Rule of Civil Appellate Procedure 21.
10