Richard L Roetken v. Cara L Roetken ( 2017 )

STATE OF MICHIGAN
COURT OF APPEALS
RICHARD L. ROETKEN, UNPUBLISHED
December 19, 2017
Plaintiff-Appellee,
v No. 333029
Wayne Circuit Court
CARA L. ROETKEN, LC No. 14-107070-DM
Defendant-Appellant.
Before: MURRAY, P.J., and K. F. KELLY and FORT HOOD, JJ.
PER CURIAM.
Defendant appeals as of right from the parties’ judgment of divorce in this action
involving arbitration proceedings. In particular, defendant challenges the trial court’s December
22, 2015 order vacating the portion of the arbitrator’s decision addressing spousal support. For
the reasons set forth below, we reverse the trial court’s December 22, 2015 order vacating the
portion of the arbitrator’s award regarding spousal support, vacate the portion of the judgment of
divorce addressing spousal support and remand to allow the judgment of divorce to be amended
in conformance with the arbitrator’s decision.
On appeal, defendant contends that the trial court erred in entering an order vacating the
portion of the arbitrator’s award addressing spousal support and in entering the judgment of
divorce commensurate with that order. We agree.
“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, 368; 808 NW2d 230 (2010).
The statute providing the trial court with authority to vacate the arbitrator’s award is
MCL 600.5081, which provides, in pertinent part, as follows:
(1) If a party applies to the circuit court for vacation or modification of an
arbitrator’s award issued under this chapter, the court shall review the award as
provided in this section or [MCL 600.5080].
(2) If a party applies under this section, the court shall vacate an award under
any of the following circumstances:
(a) The award was procured by corruption, fraud, or other undue means.
-1-
(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 material to the controversy, or otherwise
conducted the hearing to prejudice substantially a party’s rights. [Emphasis
added.]
As this Court recognized in Washington v Washington, 283 Mich. App. 667, 671; 770 NW2d 908
(2009), “[j]udicial review of arbitration awards is usually extremely limited, and that certainly is
the case with respect to domestic relations arbitration awards.” (Citation and footnote omitted.)
Accordingly, this Court will uphold an arbitrator’s award unless an “error of law evident on the
face of the award . . . was so substantial that, but for the error, the award would have been
substantially different.” Cipriano, 289 Mich. App. at 377 (citation omitted).
We must also decide whether the trial court properly determined that the arbitrator
exceeded its powers in fashioning an award of spousal support. This is an issue also reviewed de
novo. Washington, 283 Mich. App. at 672. “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)
(citation omitted). Thus, the starting point for our analysis is the language of the arbitration
agreement itself. Specifically, the arbitration agreement provides that “[i]n deciding the issues
presented to the Arbitrator, the Arbitrator shall apply and be bound by the principles of Michigan
law applicable to such matters.” Further, § 10(C) of the arbitration agreement provides that
“[t]he [a]rbitrator shall make his decision and [a]ward on the facts presented during the hearing
and controlling principles of Michigan law.” Section 6(A)(6) of the agreement also provides that
“the Arbitrator has the power to decide each issue assigned to arbitration herein. The Court will
enforce the Arbitrator’s decisions on those issues.”
Likewise, the controlling principles of law regarding spousal support also factor into our
analysis. MCL 552.23 provides, in pertinent part, as follows:
(1) Upon entry of a judgment of divorce or separate maintenance, if the estate and
effects awarded to either party are insufficient for the suitable support and
maintenance of either party and any children of the marriage who are committed
to the care and custody of either party, the court may also award to either party
the part of the real and personal estate of either party and spousal support out of
the real and personal estate, to be paid to either party in gross or otherwise as the
court considers just and reasonable, after considering the ability of either party to
pay and the character and situation of the parties, and all the other circumstances
of the case.
In Loutts v Loutts, 298 Mich. App. 21, 26; 826 NW2d 152 (2012), this Court recognized
that “[t]he object in awarding spousal support is to balance the incomes and needs of the parties
so that neither will be impoverished; spousal support is to be based on what is just and
-2-
reasonable under the circumstances of the case.” (Citation and quotation marks omitted.) MCL
552.23 further requires that spousal support be determined case by case, and a spousal support
award should “reflect ‘what is just and reasonable under the circumstances of the case.’” Loutts,
298 Mich. App. at 29, 30, quoting Myland v Myland, 290 Mich. App. 691, 695; 804 NW2d 124
(2012). In deciding whether to award spousal support, trial courts are to take into consideration
the following factors:
(1) the past relations and conduct of the parties, (2) the length of the marriage, (3)
the abilities of the parties to work, (4) the source and amount of property awarded
to the parties, (5) the parties’ ages, (6) the abilities of the parties to pay alimony,
(7) the present situation of the parties, (8) the needs of the parties, (9) the parties’
health, (10) the prior standard of living of the parties and whether either is
responsible for the support of others, (11) contributions of the parties to the joint
estate, (12) a party’s fault in causing the divorce, (13) the effect of cohabitation on
a party’s financial status, and (14) general principles of equity. [Myland, 290
Mich. App. at 695, quoting Olson v Olson, 256 Mich. App. 619, 631; 671 NW2d 64
(2003) (citations omitted).]
In Myland, the plaintiff argued that the trial court’s award of spousal support did not adequately
consider the ages of the parties, their health and ability to work, whether they had the ability to
pay spousal support, their needs and their prior standard of living. Myland, 290 Mich. App. at
694. In Myland, the trial court had used a formula to calculate spousal support, set forth in
pertinent part, as follows:
In this case, the trial court determined that defendant’s income was $62,500 a year
and imputed $7,000 in income to plaintiff. It then awarded plaintiff spousal
support of $13,875 a year ($1,156 a month) after considering only the length of
the parties’ marriage. To reach this number, the trial court applied a mechanistic
formula, stating that it had “a formula that it has utilized in the past” and it was
“using that as a guideline . . . .” Accordingly, the court multiplied the difference
between defendant’s income and plaintiff’s imputed income ($62,500–$7,000 =
$55,000) by 0.25. The trial court stated that it chose 0.25 on the basis of the
number of years the parties were married—25. [Myland, 290 Mich. App. at 695-
696 (footnote omitted).]
Rejecting this approach, this Court characterized the trial court’s formula as “limited, arbitrary,
and formulaic” and noted that it was not grounded in the principles of Michigan law. Id. at 696.1
The Myland Court went on to observe, in pertinent part, as follows:
[The trial court’s approach] totally fails to consider the unique circumstances of
the parties’ respective positions and fails to reach an outcome that balances the
parties’ needs and incomes. In short, we cannot sanction the use of such a blunt
tool in any spousal support determination, and the trial court’s use of this formula
1
Notably, Myland did not involve an arbitration proceeding.
-3-
here was an error of law. Given the trial court’s use and application of its
formula, it is not surprising that it failed to consider the factors relevant to an
award of spousal support, aside from the length of the parties’ marriage and their
relative incomes. Indeed, this formula does not adequately account for many
factors that were highly relevant to this proceeding, including the parties’ ages,
health, abilities to work, needs, previous standard of living, and whether one of
them would be supporting a dependent. The trial court considered none of these
required factors in the instant proceeding. [Id. (emphasis added).]
Subsequently in its opinion, the Myland Court emphasized, “given the statutory mandate of MCL
522.23, we must emphasize that there is no room for the application of any rigid and arbitrary
formulas when determining the appropriate amount of spousal support . . . [.]” Myland, 290
Mich. App. at 699-700.
In the instant case, the arbitrator duly and in detail considered the applicable factors in
fashioning an award of spousal support. Thus, the present facts are distinguishable from Myland,
where this Court disagreed with the trial court’s decision to use an arbitrary formula to determine
spousal support after not considering several of the factors relevant to spousal support. Id. at
696. Further, in this case, the arbitrator’s decision to use the percentage based formula it did was
grounded in his decision to not impute income to plaintiff to avoid a result that would
“impoverish plaintiff.” Recognizing that without an imputation of income a present award of
spousal support could not be made, the arbitrator then decided that 32.5% of plaintiff’s future
earnings would be awarded to defendant. The arbitrator recognized that the increased
percentage, beyond what was presumably sought by defendant, “is to account for the lost
opportunity on the severance package.” Plaintiff was terminated from his employment in
February 2015 and declined a significant severance package valued at approximately $2,500,000
where it contained a restrictive non-compete clause. The formula further provided that the
32.5% could be reduced by 50% of defendant’s income, and that after three years, $30,000 in
income would be imputed to defendant.
Contrary to the facts in Myland, the arbitrator’s percentage-based formula evolved from
the arbitrator’s due consideration of the spousal support factors as set forth in Michigan law and
its decision that such a formula was necessary under the facts of this case, where plaintiff had
declined a significant severance package and income was not being imputed to him as a result.
Additionally, the arbitrator’s formula conforms with the statutory dictates of MCL 552.23(1),
which requires that an award of spousal support be “just and reasonable” and be fashioned after
“considering the ability of either party to pay and the character and the situation of the parties,
and all the other circumstances of the case.” Additionally, our research did not yield any
Michigan statute or caselaw that precluded the arbitrator from fashioning a percentage-based
spousal support award. See e.g., Washington, 283 Mich. App. at 673 (recognizing that the
arbitrator’s decision did not circumvent controlling state law where Michigan statutes and case
law did not prohibit the arbitrator’s marital property distribution award). In fact, in Hempton v
Hempton, 122 Mich. App. 4, 5, 10; 329 NW2d 514 (1982), this Court concluded that an escalator
clause allowing for the payment of alimony to be tied to the rise of inflation was permissible,
observing that “[t]he paying party may still petition for a modification [of spousal support] if
circumstances have changed or his personal income has not increased sufficiently to enable him
to meet the adjusted support obligation.” Consequently, where the arbitrator’s decision
-4-
regarding spousal support was well within its authority pursuant to the terms of the arbitration
agreement and did not contravene Michigan law, the trial court erred in vacating that portion of
the arbitration award.
On appeal, plaintiff cites several cases in support of his argument that the arbitrator’s
spousal support award was not in compliance with Michigan law, none of which involved
arbitration proceedings and all of which are factually and legally distinguishable from the present
case. For example, in Anneberg v Anneberg, 367 Mich. 458, 459, 461; 116 NW2d 794 (1962),
the trial court ordered the defendant to pay a percentage of his income for child support, not to
exceed $500 a month, and the Michigan Supreme Court concluded that the trial court’s order did
not amount to an abuse of discretion. In Stanaway v Stanaway, 70 Mich. App. 294, 295-296; 245
NW2d 723 (1976), this Court determined that the trial court erred in imposing an unlimited
escalator clause with regard to child support where it did not contain a fixed amount, and it
“violate[d] both the spirit and the letter” of MCL 552.17. Specifically, this Court recognized that
the child support award focused on the circumstances of the parent required to pay child support,
as opposed to “the complex of factors” regarding the children and their “changing or unchanging
needs.” Id. at 296 (citations omitted.) In Hagbloom v Hagbloom, 71 Mich. App. 257, 259, 260-
261; 247 NW2d 373 (1976), this Court concluded that an order of child support of 30% of the
defendant’s income was erroneous where it did not contain a specific upper limit, and where it
was “geared to only one variable, the father’s income[,]” and did not factor in the needs of the
minor children. In Hakken v Hakken, 100 Mich. App. 460, 468; 298 NW2d 907 (1980), this Court
recognized that percentage based escalator clauses, in the factual context of child support
awards, are of assistance to trial courts in awarding child support where the supporting parent
“has a variable income or has been the recipient of rapid promotions.” This Court rejected the
assertion that such a clause must have a ceiling, instead ruling that any award “must accord with
the welfare of the child within the means and ability of the father (or supporting parent)[.]” Id.
Finally, in Herman v Herman, 109 Mich. App. 107, 109; 310 NW2d 911 (1981), this Court
concluded that the trial court’s award of child support on the basis of a percentage of the
plaintiff’s income was permissible, and this Court’s holding in Stanaway did not preclude the
award where “the amount of support is not variable and either party can petition for modification
if and when circumstances change.” Notably, all of the Court of Appeals cases plaintiff cites
were decided before November 1, 1990, MCR 7.215(J)(1), and are therefore not binding
precedent. Moreover, none of the cases plaintiff cites above support his assertion that the
arbitrator’s percentage based award of spousal support under the circumstances of this case
contravened Michigan law, where the arbitrator duly considered the spousal support factors set
forth in case law in fashioning its award.
We reverse the trial court’s December 22, 2015 order vacating the portion of the
arbitration award addressing spousal support, vacate the portion of the judgment of divorce
regarding spousal support and remand to allow the judgment of divorce to be amended to
-5-
conform with the arbitration award. Defendant, as the prevailing party, may tax costs pursuant to
MCR 7.219. We do not retain jurisdiction. 2
/s/ Christopher M. Murray
/s/ Kirsten Frank Kelly
/s/ Karen M. Fort Hood
2
Given our disposition of this appeal, we need not address defendant’s additional argument that
the trial court erred in requiring the parties to submit proposed judgments of divorce to the trial
court, rather than the arbitrator, for approval.
-6-