Sometimes the black letter law passed by the legislature is unclear. The legislature can’t anticipate every possible fact scenario when they pass a law, so it lay to the courts to interpret the law and give guidance to what it means. This interpretation is called case law. When the court decides a certain meeting to the law it essentially answers a legal question. Lawyers and other courts then can rely on that ruling when they have a similar issue in their case. The following case answers the question above.
In re Marriage of Shults, Unpublished Disposition, 2015 WL 9459743
This case addresses the following issue:
Are arbitration rulings binding?
This case explored the issue of whether arbitration rulings are binding. In exploring this issue, the court concluded that absent any corruption or partiality, an arbitration ruling on property division is binding.
The respondent (Chris) and the petitioner (Lana) were married for approximately 7 years before Lana filed for a divorce. Later that year, Lana’s mom passed away, and Lana inherited 520 acres of land. The trial court granted Chris and Lana a divorce and the parties agreed to leave the division of property issues up to an arbitrator. The arbitrator represented Lana’s attorney 17 years back in a previous divorce action. Chris’ complaint involves the inherited property from Lana’s mother and the valuation of stock in his computer company. The arbitrator found that Lana inherited the property on December 3, 2011 and the divorce was filed on February 3. As a result, the arbitrator used the date of inheritance as the entry value date of Lana’s interest in the property. The court reasoned that Chris did not contribute to the property. Regarding the company stock, the arbitrator used the date of filing of the divorce as the date for valuation. Chris disagreed with this ruling and filed a motion to modify because the arbitrator included the increase in value of stock but not the increase in value of inherited property as marital assets of the estate. The trial court ruled that Chris acknowledged the award and accepted the award. The only possible reason for voiding the arbitration agreement is if there was evidence of partiality by arbitrator. The court found no evidence of corruption or misconduct. Chris’s argument was based on the arbitrator knowing Lana’s attorney, not Lana.
On appeal, Chris argued that the trial court erred in denying his motion to vacate the arbitration award because the arbitrator’s failure to disclose his prior attorney-client relationship with Lana’s attorney had created a reasonable impression of partiality. An appellate court’s standard of review of an arbitration award is highly deferential. The court must affirm an award if the arbitrator acted within the scope of his or her authority. Chris argued that the arbitrator’s representation of Lana’s attorney is the kind of relationship that is held in high regard. Chris argued that most reasonable people would have a hard time believing that an arbitrator could simply disregard that relationship and be equitable. This court held that only relationships from which one could reasonably infer bias, not those which are “peripheral, superficial, or insignificant”, will require vacating the award. There was no evidence that the arbitrator acted outside of his scope of authority.
In sum, to vacate arbitration award there must be evidence of corruption, partiality, or exceeded powers. None of which were present in this case. The Kansas Court of Appeals confirmed that property division decisions issued in arbitration are binding and should not be vacated by courts absent extreme circumstances.