Janet Lashar Eppel v. Christopher James Eppel ( 2018 )

STATE OF MICHIGAN
COURT OF APPEALS
JANET LASHAR EPPEL, aka JANET L. FOR PUBLICATION
LASHAR, January 9, 2018
9:25 a.m.
Plaintiff-Appellant,
v No. 335653
Allegan Circuit Court
CHRISTOPHER JAMES EPPEL, LC No. 11-048048-DM
Defendant-Appellee.
JANET LASHAR EPPEL, aka JANET L.
LASHAR,
Plaintiff-Appellee,
v No. 335775
Allegan Circuit Court
CHRISTOPHER JAMES EPPEL, LC No. 11-048048-DM
Defendant-Appellant.
Before: MARKEY, P.J., and HOEKSTRA and RONAYNE KRAUSE, JJ.
PER CURIAM.
In this consolidated appeal, both parties appeal by leave granted different portions of an
order entered by the trial court vacating part of an arbitration award and remanding the matter to
the arbitrator. This case arises out of a divorce proceeding commenced in early 2011 that
resulted in entry of a judgment of divorce in 2012, followed by extensive disputes over
implementation details. The parties eventually stipulated to binding arbitration, which, after
further contentiousness before the arbitrator, resulted in an award that plaintiff found acceptable
but defendant did not. The trial court vacated part of the award and remanded for the arbitrator
to consider awarding plaintiff attorney fees “based on need.” We affirm in part, reverse in part,
and remand.
The parties were married in 1992, and they had three children, the youngest of whom was
born in May of 2000. The divorce was contested, but apparently the parties were able to
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cooperate effectively regarding parenting time, custody, their children’s various issues, and
payment of expenses. The trial court ultimately entered a judgment of divorce, along with a
uniform child support order and a uniform spousal support order. Both had attachments
describing additional obligations. Relevant to the instant appeal, the spousal support order’s
attachment stated, in pertinent part:
As and for additional spousal support, the Defendant shall pay 19.5% of
Defendant’s gross bonuses and/or deferred compensation within 15 days of
payment. He shall provide proof as to the gross amounts. This provision applies
to bonuses and/or deferred compensation beginning in 2012. Additionally, the
Defendant shall pay 19.5% of any and all restricted and performance shares when
they vest based upon the market value of the gross vested shares at the vesting
date or the first available date after lock-out ends. This additional spousal support
obligation shall cease after 84 months, or shall terminate earlier upon the event of
Plaintiff’s death within 36 months of the entry of the Judgment of Divorce, or
Plaintiff’s death, remarriage or cohabitation after 36 months from the entry of the
Judgment of Divorce. Mr. Eppel is to provide proof of receipt of all bonuses,
deferred compensation, restricted and performance shares within 15 days of
receipt. The term “lock-out” referenced above refers to the blackout period in
which a shareholder is prohibited from purchase or sale of securities under SEC
regulations.
Defendant draws a distinction between the language used in the above order and the attachment
to the Uniform Child Support Order, which provides, in relevant part, that:
for additional child support, for 3 children the Defendant shall pay 16.7% of his
gross bonuses, deferred compensation, vesting restricted shares and performance
shares, the net value of vested options received after 12/31/11 as if they were
exercised on the date of vesting or the first available date after lock-out ends,
13.3% for two children of all above-stated categories, and 8.7% for one child.
As will be discussed, defendant believes that the child support attachment therefore includes a
requirement to pay support based on stock options, but the spousal support attachment does not.
The parties engaged in a significant amount of post-judgment conflict over numerous
matters, most of which are no longer at issue. Relevant to this appeal, the trial court entered a
qualified domestic relations order granting plaintiff half of defendant’s interest, as of December
31, 2011, in something called the “Perrigo Profit Sharing and Investment Plan.” Simultaneously,
the trial court entered a domestic relations order granting plaintiff half of defendant’s interest,
also as of December 31, 2011, in the “Perrigo 2005 Nonqualified Deferred Compensation Plan
(As Amended and Restated Effective January 1, 2007).” Perrigo was defendant’s employer until
some time around September of 2013, after which he eventually obtained employment with
Allied Specialty Vehicles (ASV). Defendant was terminated from ASV effective September 25,
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2015, but remained in some manner of a “consulting” role for another twelve months. Relevant
to the instant appeal, a letter1 so stating provided, inter alia, the following “consulting benefits”:
You hold 1,150 shares of common stock of the Company (the “Shares”); and
pursuant to the provisions of the Company’s 2010 Long-Term Incentive Plan, as
amended (the “Plan”) and the Nonqualified Stock Option Agreements between
you and the Company dated as of January 20, 2014 (the “Option Agreements”),
you own stock options to purchase 3,000 shares of common stock of the Company
(the “Options”) at a strike price of $354.74 which had the following vesting
schedule:
• 1,000 Optioned Shares (the “Performance Based Options”) shall vest
25% per annum over 4 years. Records indicate 500 Optioned Shares
have previously vested.
• 1,000 Optioned Shares (the “Performance Based Options) shall vest
upon the Company achieving annual earnings before interest, taxes,
depreciation and amortization (EBITDA) on a Last Twelve Months
(LTM) basis of at least $80 million. These Optioned Shares have
previously vested.
• 1,000 Optioned Shares (the “Performance Based Options”) shall vest
upon the Company achieving annual earnings before interest, taxes,
depreciation and amortization (EBITDA) on a Last Twelve Months
(LTM) basis of at least $90 million. These Optioned Shares have
previously vested.
Current fair market value of all common stock and Optioned Shares is $594.89.
Pursuant to the Shareholders Agreement, ASV may exercise its right to
repurchase your shares and vested options. Per mutual agreement, ASV will
complete this repurchase no sooner than January 1, 2016 and no later than January
31, 2016. The purchase price for all of your common stock and 2,500 vested
Optioned Shares (net of the strike price) is equal to $1,284,489.50, which ASV
will pay in cash upon your surrender of the stock and option certificates or
instruments, if any.
Broadly, the central dispute remaining in this matter is whether plaintiff is entitled to any portion
of the ASV stock repurchase pursuant to the Uniform Spousal Support Order Attachment.
Without engaging in unnecessary detail, the record discloses a relationship between the
parties post-divorce that can best be described as mutually distrustful and antagonistic, both
engaging in voluminous motion practice. Relevant to the instant appeal, the parties agreed and
entered a stipulation to arbitrate. In relevant part, the stipulation specifically enumerated six
motions that were outstanding as of the date of the stipulation, and it further provided that the
1
We could find no copy of this letter in the lower court record, but it appears that it was
introduced into evidence before the arbitrator and we perceive no dispute that the copy provided
on appeal is accurate and real. We remind the parties that it is unwise not to ensure that evidence
about which they might care on appeal is properly included in the lower court’s record.
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arbitrator “shall arbitrate all of the remaining, post judgment issues in the case, except for any
determinations of contempt and applicable sanctions, which are specifically reserved for the
Court’s consideration,” although the arbitrator was empowered to make recommendations. The
parties continued to file motions, ranging from parenting time issues to allegations of
noncompliance with interim orders from the arbitrator to efforts to disqualify the judge. One of
the motions was styled as an amended version of one of the motions that had already been
submitted to arbitration pursuant to the above stipulation. The arbitrator issued his first opinion
on May 5, 2016, almost two years after the parties stipulated to arbitrate.
The arbitrator’s opinion2 is not a model of clarity, although it is readily apparent that the
arbitrator had a great deal with which to contend. The introductory portion enumerated the
outstanding motions from the original stipulation, but noted that “the Order also required any
other issues excepting those related to contempt and sanctions to be resolved by the Arbitrator as
they are brought.” It observed that “[p]roofs had to be reopened in 2015 to access information
relative to the Defendant’s job change and new income numbers for calculation purposes.” In
relevant part, the arbitrator determined that defendant owed plaintiff a payment of $236,160.00
on the basis of the ASV stock repurchase. Both parties apparently requested that the arbitrator
correct certain alleged errors or omissions.3 The arbitrator issued a response noting that
modification of spousal support had not been made arbitrable, but what exactly should be
considered compensation to defendant for purposes of calculating that support was a subject of
arbitration. Relevant to the instant appeal, the arbitrator conceded that 500 of the ASV stocks
would never vest and should be subtracted from the above calculations. The arbitrator deemed
the only reasonable interpretation of the Uniform Spousal Support Order Attachment to be that
any subsequent compensation or stock was to be considered income for support purposes, and
that the ASV stock purchase necessarily had to be considered compensation, although limited
only to gains realized from the stock rather than the entire buy-back price.
Plaintiff moved in the trial court to confirm the ultimate award, and defendant moved to
vacate or modify portions of it. In relevant part, defendant argued that 2,500 shares’ worth of
repurchased ASV stock options were properly used to calculate additional child support because
the Uniform Child Support Order explicitly included a percentage “of the net value of vested
options,” whereas the Uniform Spousal Support Order did not include stock options for purposes
of calculating support payment. Consequently, including 19.5% of the ASV stock repurchase
was an impermissible modification of the Uniform Spousal Support Order; furthermore, the
arbitrator exceeded his authority by doing so because that was not part of any of the outstanding
motions submitted to arbitration. Defendant also argued that the other 1,150 shares of ASV
stock were personal purchases, not even arguably compensation, and the arbitrator erred by
requiring him to pay 19.5% of the capital gains from his sale thereof. It appears that the
arbitrator’s opinion did not clearly distinguish between the two categories of ASV stock.
For the most part, the trial court did confirm the arbitration award, and to the extent it did
so, those matters are not before this Court on appeal. The trial court also concluded, after
holding a hearing, that:
2
We again cannot find an original copy of the Arbitrator’s Opinion in the lower court record.
3
Neither request is found in the lower court record.
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the Arbitrator exceeded his authority by improperly modifying the Uniform
Spousal Support Orders by granting Plaintiff 19.5% of the net profits from the
sale of the ASV stock options and, therefore, the Arbitrator’s opinion granting
plaintiff $117,073.20 is vacated. Further, and for the same reasons, the
Arbitrator’s Opinion that Defendant should pay Plaintiff as additional spousal
support 19.5% of the capital gains from the sale of the ASV common stock in the
amount of $35,971.94 should be vacated.
The trial court denied the remainder of defendant’s request. However, it also remanded to the
arbitrator “the issue of attorney fees requested by Plaintiff” limited “to the need of Plaintiff to be
reimbursed for attorney fees pursuant to MCR 3.206(C)(2) related to the enforcement
proceedings initiated by Plaintiff.” Both parties attempted to claim an appeal by right, and we
subsequently granted their applications for leave.
“This Court reviews de novo a circuit court’s decision to enforce, vacate, or modify an
arbitration award.” Cipriano v Cipriano, 289 Mich. App. 361, 375; 808 NW2d 230 (2010), lv den
489 Mich. 869 (2011). Under the Domestic Relations Arbitration Act (DRAAA), MCL 600.5070
et seq., “parties to a domestic-relations proceeding may stipulate to submit their disputed issues
to binding arbitration” pursuant to a written contract that defines, dictates, and limits the powers
of the arbitrator. Id. at 367, 376. By default, the trial court is required to enforce the arbitrator’s
award. MCL 600.5079(1). However, the trial court is required to vacate the award under MCL
600.5080(1) if the trial court finds the award adverse to the best interests of the child, or relevant
to the instant matter, under MCL 600.5081(2)(c) if “the arbitrator exceeded his powers.” “An
arbitrator exceeds his or her powers if the arbitrator acts in contravention of controlling law” or
“exceed[s] the powers that the parties’ agreement granted to him.” Cipriano, 289 Mich. App. at
373, 377. To “exceed his powers” is essentially a longstanding shorthand for deviating from the
contract or controlling law. Washington v Washington, 283 Mich. App. 667, 672; 770 NW2d 908
(2009). “In order for a court to vacate an arbitration award because of an error of law, the error
must have been so substantial that, but for the error, the award would have been substantially
different.” Cipriano, 289 Mich. App. at 368. Any such error must be readily apparent on the face
of the award without second-guessing the arbitrator’s thought processes, and the arbitrator’s
findings of fact are immune to review altogether. Washington, 283 Mich. App. at 672.
The gravamen of the parties’ dispute appears to be whether the arbitrator effectively
modified the parties’ Uniform Spousal Support Order by awarding plaintiff 19.5% of the profits
from the sale of defendant’s ASV stock, although defendant presumably also would argue4 that
the arbitrator exceeded his authority by addressing a matter not strictly contained within the six
motions pending when the parties agreed to arbitrate. The latter is obviously meritless.
“Arbitrators exceed their powers whenever they act beyond the material terms of the contract
from which they draw their authority or in contravention of controlling law.” Miller v Miller,
474 Mich. 27, 30; 707 NW2d 341 (2005). The arbitration stipulation states that the parties agreed
to arbitrate the outstanding motions, and in a separate section, directed the arbitrator to “arbitrate
all of the remaining, post judgment issues in the case, except for any determinations of contempt
and applicable sanctions.” Clearly, this was intended to be relatively open-ended and to bring
4
Defendant’s counsel apparently encountered technical difficulties in submitting a brief to this
Court.
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the entire matter to a conclusion; considering the two years the parties nevertheless contrived to
stretch the arbitration proceedings, it defies reason to conclude that the arbitrator was prohibited
from addressing later spousal support and income issues as they arose.
The former argument is apparently based on the fact that the Uniform Child Support
Order Attachment includes the word “options,” whereas the Uniform Spousal Support Order
Attachment does not. While accurate, both attachments do encompass “restricted and
performance shares” upon vesting. The letter from ASV describes 3000 (of which 500 will not
vest) shares as “Optioned Shares (the ‘Performance Based Options’).” We do not understand
why those would not be considered “performance shares,” nor can we find any coherent
argument presented anywhere in the record explaining otherwise. Furthermore, given that the
shares were apparently conferred upon defendant as part of his compensation, and he only
received liquid value for them upon his termination from ASV, they at least plausibly constitute
some form of “deferred compensation,” which is also encompassed by the Uniform Spousal
Support Attachment.
Given that the review of arbitrators’ decisions is highly deferential, determining whether
the 2,500 ASV stocks constitute either deferred compensation or performance shares is clearly
within the arbitrator’s authority, and the determination itself is at least partly factual, we find it
impossible to reasonably conclude that the arbitrator’s decision to award plaintiff 19.5% thereof
exceeded his powers.
In contrast, the other 1,150 shares were purchased by defendant. Plaintiff’s argument is
that these shares constitute “gross bonuses and/or deferred compensation” because he was only
permitted to make those purchases because of his employment. We agree with defendant’s
argument made in the trial court that it does not constitute either a bonus or compensation merely
because a condition of his employment afforded him an opportunity to make a personal
investment that would have otherwise been unavailable. Defendant bought the stock with his
own money, it was not granted to him as either part of a compensation package or as a
consequence of meeting a performance goal. In light of the poor comprehensibility of the
arbitrator’s opinion, we cannot deem the arbitrator’s inclusion of the profit from the 1,150 ASV
shares to be an unreviewable factual finding. We therefore conclude that the arbitrator
completely deviated from the plain language of the Uniform Spousal Support Attachment by
including the profit from the 1,150 ASV shares. This departure is of such magnitude to
constitute a “substantial” error that resulted in a “substantially different” outcome, Cipriano, 289
Mich. App. at 368, and it is readily apparent on the face of the award. Washington, 283 Mich. App.
at 672.
Defendant argues that the trial court also erred in remanding the matter to the arbitrator to
address plaintiff’s request for attorney fees based on her financial need. We agree. As
discussed, the arbitrator was authorized to consider all post-judgment issues. However, the
arbitrator had already done so, and had in fact expressly rejected a request for attorney fees made
by plaintiff, noting, among other things, that there was some argument that both parties’
acrimony was responsible for the accumulation of attorney fees by both parties. Plaintiff
apparently did not object to that rejection. It appears that the only arguments plaintiff made
regarding attorney fees to the arbitrator were based on MCR 3.206(C)(2)(b), that defendant’s
noncompliance entitled her to the fees. Indeed, our review of the record indicates that plaintiff
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made such a request at least a half-dozen times; it seems that plaintiff routinely added to her
numerous motions a request that defendant be required to pay attorney fees associated with the
motion, but none of them “allege[d] facts sufficient to show that [ . . . ] the party is unable to bear
the expense of the action.” MCR 3.206(2)(a).
Clearly, attorney fees were placed before the arbitrator. Equally clearly, at least based on
the available record, attorney fees based on need were not, or at least they were not specifically
argued. Plaintiff claims that she submitted an Arbitration Summary on July 31, 2015, that cited
MCR 3.206(2)(a), but that document is not actually found anywhere in the lower court record.
Defendant does provide what purports to be a copy of that document, and if accurate, it simply
recites MCR 3.206(2) in its entirety and then proceeds to argue entirely that she incurred
expenses because of defendant’s violations and misconduct and lack of good faith, clearly
constituting an argument under MCR 3.206(2)(b). As a consequence, the record establishes that
defendant is correct in asserting that attorney fees based on plaintiff’s need were only expressly
raised for the first time after the trial court read from the bench its decision to reverse part of the
arbitrator’s award.
Plaintiff argues that attorney fees are only permitted in a divorce action where necessary
to permit a party to pursue or defend the action, thus placing attorney fees based on need before
the arbitrator by necessary implication. The case cited by plaintiff does say as much.
Stoudemire v Stoudemire, 248 Mich. App. 325, 344; 639 NW2d 274 (2001). However, at the time
Stoudemire was decided, MCR 3.206(C) only provided for attorney fees based on need. The
Court Rule was amended in 2003 specifically to add a provision for attorney fees to be granted
based solely on a litigant’s improper behavior. See Amendments of Michigan Court Rules of
1985, 468 Mich LXXXV.5 The statement in Stoudemire and any cases it cites or that cite it are no
longer based on an accurate understanding of the relevant Court Rule. Furthermore, presuming
the Arbitration Summary supposedly filed by plaintiff is accurate, plaintiff was actually aware of
the current provisions of the Court Rule and cannot claim surprise. Because plaintiff only argued
that attorney fees were appropriate based on defendant’s allegedly improper behavior, attorney
fees based on need were, by necessary implication, not argued.
Plaintiff also accurately notes that under MCL 552.12, “In every action brought . . . the
court may require either party to . . . pay any sums necessary to enable the adverse party to carry
on or defend the action, during its pendency.” Nevertheless, as discussed, there is no indication
in the record that we can find indicating that at the time the parties agreed to arbitrate, or
5
Prior to the amendment, MCR 3.206(C) provided as follows:
(C) Attorney Fees and Expenses
(1) A party may, at any time, request that the court order the other
party to pay all or part of the attorney fees and expenses related to the
action.
(2) A party who requests attorney fees and expenses must allege
facts sufficient to show that the party is unable to bear the expense of
the action, and that the other party is able to pay.
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thereafter, any outstanding request existed from plaintiff for “sums necessary to enable her to
carry on the action.”
Although the arbitrator’s opinion was rambling, the arbitrator did explicitly consider
attorney fees, and he decided against awarding them. There is no indication that the arbitrator
considered plaintiff’s need in doing so, but there is also no indication in the arbitrator’s response
to both parties’ requests to correct errors and omissions that plaintiff’s need was ever placed at
issue. Consequently, need was raised for the first time after the trial court read its decision to
vacate part of the award. The trial court’s remand to the arbitrator was apparently based on the
logic that the arbitrator might have reached a different conclusion about attorney fees if the “big
picture” of the award as a whole was altered by the reduction of $153,045.14. While
understandable, this decision suffers from the fatal flaw that attorney fees based on need were
never before the arbitrator in the first place, so no decision thereon existed to be reconsidered.
The trial court’s remand was therefore an improper ad hoc submission of an entirely new issue
that the parties had not agreed to arbitrate.
Consequently, the trial court’s order vacating the arbitrator’s award granting plaintiff
19.5% of the 1,150 shares of ASV stock is affirmed; the trial court’s decision to vacate the
portion of the arbitrator’s award granting plaintiff 19.5% of the 2,500 shares of ASV stock is
reversed; and the trial court’s remand to the arbitrator of the issue of attorney fees based on need
is reversed. The matter is remanded to the trial court for entry of an order consistent with this
opinion. We retain jurisdiction. In Docket No. 335653, the parties shall bear their own costs,
neither having prevailed in full; in Docket No. 335775, defendant, being the prevailing party,
may tax costs. MCR 7.217(A).
/s/ Jane E. Markey
/s/ Joel P. Hoekstra
/s/ Amy Ronayne Krause
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Court of Appeals, State of Michigan
ORDER
Jane E. Markey
Janet Lashar Eppel v Christopher James Eppel Presiding Judge
Docket No. 335653 Joel P. Hoekstra
LC No. 11-048048-DM Amy Ronayne Krause
Judges
Pursuant to the opinion issued concurrently with this order, this case is REMANDED for
further proceedings consistent with the opinion of this Court. We retain jurisdiction.
Proceedings on remand in this matter shall commence within 28 days of the Clerk’s
certification of this order, and they shall be given priority on remand until they are concluded. The
proceedings on remand are limited to these issues.
The parties shall promptly file with this Court a copy of all papers filed on remand.
Within seven days after entry, appellant shall file with this Court copies of all orders entered on remand.
The transcript of all proceedings on remand shall be prepared and filed within 21 days
after completion of the proceedings.
/s/ Jane E. Markey
January 9, 2018