Karen M. Jones v. Perry Jay Jones, Iii ( 2014 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
In the Matter of the Marriage of
No. 70729-9-I
KAREN M. JONES,
DIVISION ONE
Respondent,
UNPUBLISHED OPINION
and
PERRY J. JONES III,
Appellant. ) FILED: June 9,2014
Appelwick, J. — A court may vacate an arbitrator's award in only very limited
circumstances, such as when an arbitrator has exceeded his or her legal authority. In
this case, Perry fails to meet his burden to show from the face of the arbitrator's award
that the arbitrator exceeded his authority. We affirm the trial court's orders confirming
the arbitrator's award and denying Perry's motions to vacate the award and its entry of
final dissolution orders incorporating the award.
FACTS
Karen Jones and Dr. Perry Jones were married for more than 37 years. Perry is
a dentist and during the marriage, both parties worked in his dental practice. They
amassed several valuable properties, assets, and collections. Karen filed for dissolution
in 2012.
In January 2013, the parties participated in mediation and entered into a CR 2A
agreement. They agreed to make certain payments from the proceeds of the sale of the
marital home that had already occurred and agreed to jointly obtain appraisals of certain
assets. The parties also agreed that "resolution of the allocation of the parties'
remaining assets and liabilities and the determination of spousal maintenance, will be
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mediated and, if not settled at mediation, arbitrated by Judge Steve Scott, Ret." They
further agreed that the arbitrator would "determine the manner in which the arbitration
shall be conducted."
During the second mediation in February 2013, the parties again agreed upon
some issues, but failed to resolve the major outstanding financial issues. The parties
agreed to make additional payments from the proceeds of the home sale, to an "overall
50/50 division of assets and liabilities," and that each party would retain his or her own
individual retirement account. They also stipulated that Perry should be awarded
certain collections and assets with a total value of approximately $40,000.
The parties then entered into an agreed order to strike the trial date and submit
the remaining issues to arbitration. Specifically, the parties determined that "[a]ll
financial issues shall be determined in binding arbitration." The arbitrator set a briefing
schedule and conducted the arbitration based on the parties' briefs and submissions of
evidence. The arbitrator issued an arbitration award on March 18, 2013.
At the time of the arbitration, the parties owned two remaining pieces of real
property, one in France and the other in Montana. The arbitrator did not assign a value
to either property, but awarded the property in France to Karen and the property in
Montana to Perry.1 The spreadsheet attached to the arbitrator's award otherwise
assigned value to assets and awarded each asset to Karen or Perry.2
1The parties agreed to jointly obtain real estate appraisals, but apparently failed
to do so.
2As with the real estate, the arbitrator did not assign value to the vehicles
awarded to the parties nor to air miles, which were divided equally.
No. 70729-9-1/3
The primary asset that the arbitrator awarded to Perry was the parties' interest in
his dental practice and their interest in the commercial building where the practice is
located. The arbitrator awarded the entire value of the parties' retirement investment
account associated with the business to Karen. The arbitrator awarded to Perry most of
the furniture, rugs, art collection, stamp collection, and most of the precious metals.
Karen received the wine collection, jewelry, and specific pieces of furniture, some
designated as community property and some as separate property. The arbitrator
awarded each party a portion of the remaining proceeds from the sale of the marital
home. According to the arbitrator's spreadsheet, excluding the real estate, each party
received assets of equal value in the amount of $1,059,884. The arbitrator also
determined that Karen should receive monthly maintenance payments of $8,000 for five
years. The arbitrator submitted an explanatory letter together with the award "solely for
the benefit of the parties" and explicitly not to be construed as findings or a part of the
award itself.
Perry filed a motion in the arbitration proceedings challenging the award and the
arbitrator denied the motion. In the superior court, Perry filed a motion to vacate the
award on numerous bases, asking the court to reevaluate the evidence before the
arbitrator. Karen sought confirmation of the award and entry of final dissolution orders
incorporating the award.
On May 1, 2013, the superior court entered final orders, including a decree of
dissolution and findings of fact and conclusions of law. In a separate order, the court
denied the motion to vacate, granted the motion to confirm, and struck Perry's
No. 70729-9-1/4
submission of the evidentiary record before the arbitrator. In this order, the court also
granted Karen's motion for fees incurred after the conclusion of the arbitration.
Perry filed a motion for reconsideration following the entry of final orders and an
amended motion to vacate. On July 9, 2013, the trial court entered an order denying
the amended motion to vacate, awarding approximately $17,000 in postarbitration fees
and costs to Karen, and resolving all pending motions. Perry appeals.
DISCUSSION
I. Motion To Vacate
Perry challenges several aspects of the arbitrator's award. His primary
complaints are (1) the arbitrator failed to distribute assets equally in accordance with the
parties' agreement and (2) the arbitrator made a determination of marital misconduct
and relied on that finding as a basis to distribute assets unequally. Perry also claims
that the arbitrator awarded maintenance without making required findings or considering
his actual income and the disparity in the parties' ages and health condition.
Washington courts accord substantial finality to the decision of an arbitrator
rendered in accordance with the parties' contractual agreement and Washington's
uniform arbitration act, chapter 7.04A RCW. Davidson v. Hensen. 135 Wn.2d 112, 118,
954 P.2d 1327 (1998). Accordingly, judicial review of an arbitration award is
exceedingly limited, id at 118-19. A court may disturb an award only on the narrow
grounds listed in RCW 7.04A.230 and only when those grounds appear on the face of
the award. Westmark Props., Inc. v. McGuire, 53 Wn. App. 400, 402, 766 P.2d 1146(1989). This court's review of an arbitrator's award is limited to review of the decision
No. 70729-9-1/5
by the court that confirmed, vacated, modified, or corrected that award. Expert Drvwall,
Inc. v. Ellis-Don Constr., Inc.. 86 Wn. App. 884, 888, 939 P.2d 1258 (1997).
Perry identifies several statutory grounds for vacating the award. Specifically, he
claims there are grounds to vacate based on "evident partiality" of the arbitrator,
"corruption" of the arbitrator, and the failure to properly conduct the arbitration in
accordance with the statute. RCW 7.04.230(1 )(b)(i), (ii), and (c).
While Perry alleges both "evident partiality" and "corruption," he does not attempt
to explain or substantiate the allegation of corruption. As to his claim of evident
partiality, he contends that the arbitrator's award is evidence of the arbitrator's partiality
toward Karen, because she received assets of greater value than the assets awarded to
him and more of the liquid assets. He also claims that the arbitrator relied on evidence
of valuation that was favorable to Karen and unreasonably disregarded evidence he
submitted. But, Perry provides no authority suggesting that an unfavorable decision
alone can support a claim of evident partiality. Rather, caselaw suggests that evident
partiality is based on a relationship or circumstance that raises an inference of bias that
the arbitrator has a duty to disclose. See Schreifels v. Safeco Ins. Co., 45 Wn. App.
442, 445-46, 725 P.2d 1022 (1986) (recognizing split as to whether the "evident
partiality" standard should constitute an appearance of bias, actual bias, or the
reasonable person standard falling somewhere in the middle). Perry does not allege
any such relationship or circumstance.
Perry also cites RCW 7.04A.230(c) which provides grounds for vacation if the
arbitrator "refused to postpone the hearing upon showing of sufficient cause for
postponement, refused to consider evidence material to the controversy, or otherwise
No. 70729-9-1/6
conducted the hearing contrary to RCW 7.04A.150, so as to prejudice substantially the
rights of a party to the arbitration proceeding." He claims that the arbitration was
conducted contrary to the process set forth in RCW 7.04A.150, because the arbitrator
issued the award based on the parties' written submissions without conducting an
arbitration hearing. But, Perry did not assert this statutory ground for vacation below
and generally, we will not consider a theory not presented to the trial court. See RAP
2.5(a). Nevertheless, the statute outlining the process for contractual arbitration
authorizes "summary disposition" and also states that the arbitrator may "conduct the
arbitration in such manner as the arbitrator considers appropriate so as to aid in the fair
and expeditious disposition of the proceeding." RCW 7.04A.150(1), (2). Perry does not
indicate, nor is there any information in the record to suggest, that Perry requested an
arbitration hearing or objected to the summary disposition process here.
Perry also claims that statutory grounds to vacate exist because the arbitrator
"exceeded" his powers. RCW 7.04A.230(1)(d); Federated Servs. Ins. Co. v. Pers.
Representative of Estate of Norberq, 101 Wn. App. 119, 123, 4 P.3d 844 (2000).
In particular, Perry contends that the arbitrator exceeded his powers by issuing an
award that contravenes the parties' agreement to equally divide the martial assets. He
claims the arbitrator also exceeded his powers by assessing a predistribution amount of
$168,500, which had the effect of reducing his award based on community expenses
incurred in connection with his extramarital affair.
The facial legal error standard is a "very narrow ground for vacating an arbitral
award" that furthers the "purposes of arbitration" while preventing "obvious legal error."
Broom v. Morgan Stanley DW, Inc., 169 Wn.2d 231, 239, 236 P.3d 182 (2010). Our
No. 70729-9-1/7
courts have applied facial legal error as a basis to vacate only sparingly. ]d at 239. An
arbitrator exceeds his or her powers within the meaning of RCW 7.04A.230(1)(d) when
the arbitration award exhibits an error of law. id at 240. The error, if any, must be
recognizable from the language of the award. Federated Servs. Ins. Co., 101 Wn. App.
at 124. In considering such a challenge, we review only the face of the award to
determine whether it manifests an erroneous rule of law or a mistaken application of
law. Boyd, 127 Wn.2d at 263. We do not review the merits of the case or the evidence
before the arbitrator. Davidson, 135 Wn.2d at 119. Nor may we extend our review to
discern the parties' intent or interpret agreements underlying the merits of the dispute,
because such an act is essentially a trial de novo. Boyd, 127 Wn.2d at 261-62.
Perry contends that although the award purports to assign equal value to the
assets awarded to each party, the awards are not actually equivalent. Perry claims this
is so because the real estate in France is worth more than the Montana real estate. He
also claims that the arbitrator failed to properly assign value to separate property
awarded to Karen while also failing to properly characterize and allocate his separate
property. Perry also claims that the court awarded a nonexistent asset to him by
awarding to him community funds the parties already spent.
Perry asserts that the unequal distribution of assets provides grounds to vacate
the award because the parties' expressly agreed to a "50/50 division of assets and
liabilities." According to Perry, the arbitrator lacked authority to do anything other than
divide the assets in a strictly equal fashion.
But, even assuming for the sake of argument that the award distributes a greater
share of the combined assets to Karen, there is no error of law or misapplication of law
No. 70729-9-1/8
evident on the face of the award.3 Resolving Perry's claim that the arbitrator's award
conflicts with the parties' agreement would require that we look behind the award and
examine the parties' agreement to determine whether they intended a precisely equal or
approximately equivalent overall division. We would also have to determine whether
the parties intended that community assets depleted as a result of Perry's extramarital
affair would be taken into account. As explained, it is beyond the scope of our review to
evaluate an arbitrator's interpretation of contracts. Boyd, 127 Wn.2d at 261-62.
Perry also claims that the award manifests an error of law, because it allocates
assets based upon a determination of misconduct during the marriage, in violation of
RCW 26.09.080. The award, however, states only that $168,500 was already
distributed to Perry as "Predistribution/Lisa expenses" and does not include any finding
of misconduct.
Perry's argument is based on the arbitrator's letter which explains that assets
were predistributed to Perry, because it was "fair and just that [he] bear the cost of his
marital misconduct." But, the arbitration award itself does not include the arbitrator's
reasons for the award, and for that reason, we do consider the arbitrator's explanatory
letter. Barnett v. Hicks, 119 Wn.2d 151, 156, 829 P.2d 1087 (1992). Even if we were to
do so, it does not demonstrate that the arbitrator erroneously applied the law by treating
$168,500 as a predistributed community asset. RCW 26.09.080 requires a trial court to
distribute the marital assets "without regard to misconduct" and thus prohibits
consideration of immoral or physically abusive conduct. It does not, however, prevent a
3 Of course, determining the truth of this premise would require us to evaluate the
underlying evidentiary record. Such an inquiry is prohibited. See Davidson, 135 Wn.2d
at 119.
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court from considering the unwarranted dissipation of marital assets.4 In re Marriage of
Steadman, 63 Wn. App. 523, 528, 821 P.2d 59 (1991).
II. Maintenance
Perry alleges error on the face of the award with respect to maintenance. Perry
claims that in awarding maintenance, the arbitrator failed to (1) make statutorily-required
findings, (2) base the payment amount on his actual income, and (3) consider the
disparity in the parties' ages, ability to work, and health condition. But, the arbitration
statute does not require findings of fact and conclusions of law in support of an award.
Barnett, 119 Wn.2d at 156. A court reviewing an award "does not insist upon or even
look for a comprehensive explanation of the arbitrator's reasoning. Findings of fact and
conclusions of law need not be stated." Cummings v. Budget Tank Removal & Envtl.
Servs., LLC, 163 Wn. App. 379, 391, 260 P.3d 220 (2011). Moreover, when a trial court
awards maintenance under RCW 26.09.090, the court must consider the statutory
factors, but nothing in the statute requires specific factual findings on the factors. See
In re Marriage of Mansour, 126 Wn. App. 1, 16, 106 P.3d 768 (2004).
Nothing in the award indicates that the arbitrator did not properly consider all the
relevant factors, including the parties' ages and health condition. To the contrary, the
award indicates that the arbitrator took health and age into consideration, because it
provides that Perry may move to modify if he becomes unable to work during the period
of maintenance. And, the award does not reveal what income level the arbitrator
4We also reject the claim of error on the face of the award because the arbitrator
improperly awarded property to third parties. The arbitrator awarded a "few pieces of
Chinese porcelain" to Karen, who apparently intends to give the pieces to the parties'
adult children.
No. 70729-9-1/10
attributed to Perry to calculate the maintenance. In his explanatory letter, the arbitrator
stated that he disregarded the portion of Perry's income that was related to his
ownership of the business. But, again, the letter is not part of the award and Perry does
not explain why it amounts to an error of law.
III. Decree of Dissolution
Perry alleges trial court error with respect to entry of the decree of dissolution.
He appears to argue that some provisions of the decree are improper, for instance,
provisions for future bankruptcy and tax reporting, because the issues were not
addressed in arbitration. But, the arbitrator was charged only with dividing the assets
and liabilities. Perry cites no authority suggesting that all issues included in the decree
had to be addressed in the arbitration. Perry had the opportunity to propose his own
final orders and to object to all provisions included in final orders proposed by Karen.
Perry also claims that there are discrepancies between the award and some
provisions of the decree and argues that the trial court improperly modified the terms of
the award. For instance, the arbitrator awarded real property to each party, but did not
specifically mention the personal property located at the properties, such as furnishings
and a car. The decree, on the other hand, specifies that the award of real property
encompasses the personal property located on the real estate. In addition, Perry points
out that the spreadsheet awards Karen $150,000 for "[tjotal Reserve Value" based on
one appraisal of the parties' wine collection, whereas the decree awards her the actual
wine "wherever stored." Finally, the arbitrator awarded each party a portion of the
remaining proceeds from the sale of the parties' marital home in Seattle. The decree
converts those specific dollar amounts to percentages of the remaining proceeds.
10
No. 70729-9-1/11
Although Perry argued that the award should be interpreted differently, the
decree reflects a reasonable interpretation of the award and does not modify the terms
of the award. Perry has not demonstrated that the final orders conflict with the
arbitration award nor has he articulated any valid basis to reverse the final dissolution
orders.
IV. Attorney Fees
Karen requests attorney fees on appeal, citing RCW 7.04A.250(3) which
provides fees to the prevailing party in postarbitration proceedings. The trial court
awarded Karen fees incurred postarbitration. We award her fees under RCW
7.04A.250(3) as well, subject to her compliance with RAP 18.1.
WE CONCUR:
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