Zalewski v. Homant

1

KIMBERLY ZALEWSKI, Plaintiff-Appellee, v. BENJAMIN HOMANT, Defendant-Appellant.

Nos. 354218, 354561

Court of Appeals of Michigan

February 1, 2022

UNPUBLISHED

Kent Circuit Court LC No. 2018-009442-DO

Before: Cameron, P.J., and M. J. Kelly and Shapiro, JJ.

PER CURIAM.

In Docket No. 354218, defendant Benjamin Homant appeals the trial court's May 22, 2020 order confirming an arbitration award.^[1] In Docket No. 354561, defendant appeals the trial court's July 29, 2020 order granting plaintiff Kimberly Zalewski attorney fees. We affirm in part, vacate in part, and remand for further proceedings consistent with this opinion.

I. BACKGROUND

In October 2018, plaintiff filed a complaint for divorce. The parties ultimately reached a settlement agreement regarding the division of the marital estate, which included multiple parcels of real estate. The trial court entered a consent judgment of divorce in June 2019. In relevant part, the consent judgment required defendant to transfer two parcels of real estate to plaintiff within 10 days of the entry of the judgment. Defendant was awarded the former marital home but the parties agreed that plaintiff would be permitted to rent it. Specifically, the consent judgment provided as follows:

The parties agree to execute a lease . . ., which allows Plaintiff to rent from Defendant the former marital home . . . until September 30, 2019. Rent shall not exceed the cost of the monthly mortgage payment for the property and the lease may be terminated earlier by the Plaintiff in her sole discretion.

The parties were required to pay "[a]ny outstanding fees, taxes, utilities, or other assessments on any marital property awarded" to them, and the parties agreed that they would reach an agreement as to the division of personal property. Although the consent judgment operated as a release of any future claims, the parties agreed that the release would "not apply to assets" that were "concealed or the value of which ha[d] been misrepresented."

The parties did not execute a lease agreement with respect to the former marital home. Plaintiff nonetheless moved into the home in June 2019, at which point she learned that the HVAC unit was not operating properly. Plaintiff paid $1, 191 to have it repaired. Plaintiff moved out of the marital home in July 2019 after the parties had an altercation and after defendant commenced eviction proceedings.

In August 2019, defendant moved the trial court to enforce the consent judgment, arguing that plaintiff owed $1, 265.27 in unpaid rent and utilities for the month of July 2019. Defendant also alleged that plaintiff had "unilaterally removed all marital property except a couch and mattress from the former marital home to an unknown location." Defendant argued that this violated the consent judgment and requested that the trial court order plaintiff to return the property. Plaintiff filed her own motion to enforce the consent judgment and requested that she be reimbursed for certain expenses. Specifically, plaintiff alleged that defendant had failed to disclose that $2, 475.60 in outstanding debt remained on the two parcels of real property that were awarded to her in the settlement. According to plaintiff, she could not have been aware of this debt until the property was transferred to her. Plaintiff also requested that the trial court order defendant to pay her $1, 191 for the repair of the HVAC unit.

The parties agreed to "submit their post judgment of divorce issues . . . to binding arbitration." The arbitrator issued an award after holding an evidentiary hearing. In relevant part, defendant was required to pay plaintiff a "net sum of $7, 394.44[.]" This amount included $4, 000 in attorney fees, which the arbitrator ordered as a result of her finding that defendant had "unnecessarily increased the cost and duration of th[e] litigation" by making false arguments and by intentionally failing to comply with the consent judgment.

Defendant moved the trial court to vacate the arbitration award, arguing that the arbitrator had exceeded her authority and contravened controlling law. Plaintiff opposed the motion. The trial court dispensed with oral argument and denied defendant's motion.^[2] Plaintiff then moved for attorney fees in the amount of $3, 125 under MCR 1.109(E). After hearing oral argument, the trial court granted plaintiff's motion in part and awarded plaintiff $1, 000 in attorney fees under MCR 1.109(E).^[3] These appeals followed.

II. ARBITRATION

Defendant argues that the trial court erred in refusing to vacate the arbitration award. We disagree.

A. STANDARDS OF REVIEW

"In general, courts have a limited role in reviewing arbitration awards. This Court reviews de novo a circuit court's decision whether to vacate an arbitration award." TSP Servs, Inc v Nat'l-Std, LLC, 329 Mich.App. 615, 619-620; 944 N.W.2d 148 (2019). "In addition, this Court also reviews de novo issues of law involving statutory construction, as well as the proper interpretation and application of a court rule[.]" Rental Props Owners Ass'n of Kent Co v Kent Co Treasurer, 308 Mich.App. 498, 532; 866 N.W.2d 817 (2014) (citations omitted).^[4]

B. GENERAL LAW

"Judicial review of an arbitrator's decision is narrowly circumscribed." Ann Arbor v AFSCME Local 369, 284 Mich.App. 126, 144; 771 N.W.2d 843 (2009). Such limited judicial review "certainly is the case with respect to domestic relations arbitration awards." Washington v Washington, 283 Mich.App. 667, 671; 770 N.W.2d 908 (2009). "[A]rbitration in domestic relations matters," like this one, is "provide[d] for and govern[ed] by" statute. MCL 600.5070(1). See also Cipriano v Cipriano, 289 Mich.App. 361, 367; 808 N.W.2d 230 (2010) (stating that "[d]omestic-relations arbitration is governed by the specific statutory scheme set forth in the domestic relations arbitration act (DRAA)"), citing MCL 600.5070 et seq. Nevertheless, "[a]rbitration proceedings . . . are also governed by court rule except to the extent those provisions are modified by the arbitration agreement or [the DRAA]." MCL 600.5070(1).

MCR 3.602(J)^[5] provides specific circumstances for when a trial court is permitted to vacate an arbitration award:

(2) On a motion of a party, the court shall vacate an award if:

(a) the award was procured by corruption, fraud, or other undue means;

(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; or

(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.

C. APPLICABLE LAW AND ANALYSIS

Defendant argues on appeal that the trial court erred in refusing to vacate the arbitration award because the arbitrator exceeded her authority and committed a clear error of law by effectively rewriting the consent judgment. MCL 600.5801(2)(c) relates to whether "[t]he arbitrator exceeded his or her powers."

[MCL 600.5801(2)(c)] is the codification of a phrase used for many years in common-law and statutory arbitrations. Indeed, our Court has repeatedly stated that arbitrators have exceeded their powers whenever they act beyond the material terms of the contract from which they primarily draw their authority, or in contravention of controlling principles of law. Pursuant to MCL 600.5081(2)(c), then, a party seeking to prove that a domestic relations arbitrator exceeded his or her authority must show that the arbitrator either (1) acted beyond the material terms of the arbitration agreement or (2) acted contrary to controlling law. [Washington, 283 Mich.App. at 672 (quotation marks and citations omitted).]

As to whether an arbitrator acts outside the terms of the agreement, "this Court has consistently held that arbitration is a matter of contract and that the arbitration agreement is the agreement that dictates the authority of the arbitrators." Cipriano, 289 Mich.App. at 376. With respect to whether an arbitrator acts contrary to controlling law, we have held that "[i]n 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." Id. at 368. Furthermore, "any error of law must be discernible on the face of the award itself[.]" Washington, 283 Mich.App. at 672 (citation omitted). "By on its face we mean that only a legal error that is evident without scrutiny of intermediate mental indicia, will suffice to overturn an arbitration award." Id. (quotation marks and citation omitted). In other words, "[c]ourts will not engage in a review of an arbitrator's mental path leading to [the] award." Id. (quotation marks and citations omitted; alteration in original).

While the caselaw above provides grounds on which a trial court can vacate an arbitration award, there are also grounds on which a trial court cannot do so. When the arbitration involves interpretation or construction of an underlying contract, "only the arbitrator can interpret the contract." Brucker v McKinlay Transp, Inc 454 Mich. 8, 15; 557 N.W.2d 536 (1997); see also Konal v Forlini, 235 Mich.App. 69, 74; 596 N.W.2d 630 (1999) ("Courts may not engage in contract interpretation, which is a question for the arbitrator."). Furthermore, a reviewing "court may not review an arbitrator's factual findings[.]" TSP Servs, 329 Mich.App. at 620 (quotation marks and citation omitted). Indeed, "even if the [arbitration] award was against the great weight of evidence or was not supported by substantial evidence, this Court would be precluded from vacating the...