Saturday, December 18, 2010

New Published Opinion on Arbitration and Child Custody

In Brockman v Brockman, published opinion handed down on 17 December 2010, the dispositive issue before the court was whether the trial court erred in concluding that Father‟s petition to modify custody had to be submitted to arbitration, pursuant to an earlier agreement signed by the parties.

In June 2007, Father filed a petition to modify legal custody. In February 2008, the trial court entered a final decree of dissolution, in which it incorporated its earlier child custody order but made no mention of Father's pending petition to modify legal custody. The parties later agreed to arbitration for the purpose of settling an education issue.

The trial court entered an “Order Approving Family Law Arbitration.” The order stated in part, “The parties will submit issues of dispute to Family Law Arbitration in accordance with the Family Law Arbitration Statute . . . .”
The agreement also stated, “The parties acknowledge that in the absence of an agreement in writing to repudiate this Agreement, it is valid, irrevocable, and enforceable until judgment is entered in such matters in which arbitration has occurred.”

On February 23, 2010 a hearing was held where the only matter discussed was whether Father's still-unresolved petition for modification of legal custody had to be submitted to arbitration. After the hearing, the trial court entered an order finding that the August 26, 2008 arbitration agreement bound the parties to continue with arbitration throughout the pendency of this action. The trial court concluded its order by stating, “Because of the novelty of the matter presented, the Court finds this should and shall be treated as a final decision so as to allow immediate appeal should [Mother] desire to appeal this decision.”

In Mother's response to the argument that this was an interlocutory order not subject to appeal she directed the appeals court to Evansville-Vanderburgh School Corporation v. Evansville Teacher's Association, 494 N.E.2d 321 (Ind. Ct. App. 1986). In that case the Court of Appeals held, “[a]n order compelling arbitration is an appealable final order in an action solely for that purpose because such an order has fully decided the issue before the court.” That is the order compelling arbitration may be appealed, not an issue decided during arbitration.

The arbitration agreement here arose under the auspices of the Family Law Arbitration Act (“FLAA”), which was enacted in 2005. No appellate court in this state has yet had the occasion to address the FLAA which makes this case worth reading.

Under Indiana law, a party seeking to compel arbitration has the burden of demonstrating the existence of an enforceable arbitration agreement. Showboat Marina Casino Partnership v. Tonn & Blank Construction, 790 N.E.2d 595, 597-98 (Ind. Ct. App. 2003).

The FLAA permits a broad range of family law matters to be submitted to arbitration, including dissolution actions in their entirety, actions to establish child support, custody, or parenting time, or petitions to modify any decree, judgment, or order entered under Indiana Code Title 31. As for this particular agreement it did mention the issue of the child's education but did not mention father's pending motion to modify legal custody.

The agreement states that it is “valid, irrevocable, and enforceable until judgment is entered in such matters in which arbitration has occurred.” This closely parallels the language of Indiana Code Section 34-57-5-3, which provides that an arbitration agreement is valid, irrevocable, and enforceable “until the judgment is entered in the matter in which arbitration has taken place.” Although the agreement refers to “matters” in the plural, while the statute refers to “matter” in the singular, the fact remains that only one “matter” ever has been submitted to arbitration in this case and only one judgment has been entered. Since the statute's reference to “matter” in the singular, after which an arbitration agreement may be terminated, is indicative of legislative intent that such agreements in the family law realm address specific disputed issues, rather than permitting open-ended agreements to encompass any future issues that may arise between the parties, unless of course the agreement clearly states to the contrary. The agreement here, however, does not clearly indicate an intent by the parties to arbitrate all possible future issues.

Although Indiana recognizes a general policy towards favoring arbitration, the appeals court will not construe an arbitration agreement to apply to matters not clearly delineated by the agreement. See Showboat Marina Casino, 790 N.E.2d at 598. The agreement here did not clearly state that it was to apply to Father's petition to modify legal custody, or that it was to apply to any possible dispute that might arise between the parties for an indefinite period of time. The trial court erred in concluding otherwise.

When presented with an arbitration agreement it is important that you be clear and precise as to what issues it is to relate. I disfavour open-ended agreements that, although may be expedient at the time, do not allow for the court to entertain future issues related to child-custody.

It is much easier for the parties to simply change language in a previous agreement to cover a new issue than it is to try to revoke an open-ended agreement.

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©2008, 2010 Stuart Showalter, LLC. Permission is granted to all non-commercial entities to reproduce this article in it's entirety with credit given.

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