Texas Appeals Court Upholds Divorce Decree Following Arbitration Award

iStock-1287431987-300x200Parties to a Texas divorce may choose to pursue alternative dispute resolution to avoid litigation. They may resolve part or all of their disputes through mediation.  A mediated settlement agreement (“MSA”) is binging on both parties if it prominently states that it is not subject to revocation, is signed by both parties, and is signed by the party’s attorney, if present.  Tex. Fam. Code Ann. § 6.602.  In some cases, an MSA may include an arbitration provision, requiring the parties to arbitrate disputes arising from the MSA.  A wife recently appealed the divorce decree, arguing it did not comply with the parties’ MSA and that the judgment based on the arbitrator’s award should be overturned.

Mediation and Arbitration

The husband and wife entered into a mediated settlement agreement (“MSA”), agreeing to use a specific realtor to sell their properties. According to the appeals court’s opinion, the husband obtained a new realter after the wife informed him the chosen realtor “declined” to sell their properties.  That realtor found errors in the deed and recommended referred them to real estate attorneys.

The parties did not agree on which realtor to use or if they should have the documents corrected by an attorney.  Arbitration had been scheduled, with the arbitrator being the same person who had served as the parties’ mediator.  The wife obtained new counsel, who objected to the arbitrator due to concerns about impartiality.  He also expressed an intention to move for a new trial or set aside the MSA. He alleged the husband’s attorney failed to disclose a working relationship with the mediator before the mediation occurred.  However, there were emails showing the husband’s attorney had disclosed to the wife’s previous attorney that she previously had been an intern with the mediator and the wife’s attorney had no objection to the mediator.  Additionally, she disclosed the same information to the wife’s second counsel by phone, and the mediator stated before the mediation started that the husband’s attorney had been an intern, and there were no objections.

The husband moved to compel arbitration, arguing the MSA contained an arbitration agreement.

In her response, the wife alleged she learned of the working relationship between the mediator and the husband’s attorney that had not been disclosed before the mediation, raising questions of partiality.

The husband moved for sanctions against the wife’s current attorney, arguing the response was incorrect and wrongfully accused the husband’s attorney of not disclosing her previous professional relationship with the mediator.  The wife asked the trial court to vacate the MSA, order mediation with a neutral mediator, and impose sanctions against the husband and his attorney.

The trial court granted the husband’s motion to compel arbitration and motion for sanctions.  The trial court found that the evidence showed disclosure of the husband’s prior professional relationship with the mediator before the mediation.  The court also found the evidence showed the wife agreed to the mediator, signed the agreement, and appointed the mediator as arbitrator.  The trial court found the wife’s allegations of “impropriety and bias are without merit and sanctionable.” The court ordered the parties to schedule arbitration with the mediator.

The day after the arbitrator signed the arbitration award, the wife moved to stay the arbitration award and requested the trial court to enter a final decree pursuant to the MSA.

The trial court signed an agreed final divorce decree, and the wife ultimately appealed.

The Wife’s Appeal

The wife argued the MSA did not require the parties to use the mediator as arbitrator.  The appeals court considered the arbitration language in the MSA, which included a provision stating that if arbitration of the mediation was necessary, “THE PARTIES AGREE TO USE [THE MEDIATOR] IN AN ADDITIONAL ARBITRATION SESSION. . .” The appeals court concluded the parties agreed to arbitrate with the mediator if they had disputes regarding the interpretation or performance of the MSA.

The wife also argued the arbitrator abused his discretion and was partial toward the husband’s attorney when he allowed the husband’s witnesses to stay and watch after the parties had agreed to exclude witnesses from the proceedings.  She pointed to language in the arbitrator’s award that stated the arbitrator denied the husband’s request for a realtor and a real estate attorney to participate as witnesses, but suggested they stay and observe in case the arbitration became a mediation.  The award stated that neither party objected.

The appeals court noted the language did not show that the parties had agreed to exclude outside witnesses, but it did show the wife had not objected to the arbitrator’s suggestion the witnesses stay.  The wife did not cite any authority supporting her argument that allowing witnesses to watch the arbitration was evidence on partiality on the part of the arbitrator.  She also did not identify any harm resulting from the witnesses observing the proceedings when they were not allowed to participate.

The appeals court also rejected the wife’s argument that the trial court abused its discretion by not rendering an order complying with the MSA.

The appeals court affirmed the agreed final divorce decree.

Call an Experienced Dallas Divorce Attorney

Alternative dispute resolution can be a cost-effective means to address issues in a divorce. As this case shows, however, matters may become contentious even after mediation.  It is important to timely raise any concerns with the alternative dispute process and to fully understand and accept the terms of any agreement.  The Texas collaborative law attorneys at McClure Law Group can advise on whether alternative dispute resolution may be appropriate for your situation.  Call us at 214.692.8200 to set up a consultation.

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