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DIVORCE 48: The trial court may only determine whether the parties’ agreement to arbitrate is ambiguous, not whether the arbitrator’s interpretation of the contract was correct.

FACTUAL BACKGROUND

Plaintiff filed for divorce in 2013, and following mediation, the parties reached a transcribed mediation agreement in June 2014. The mediator read an outline of a property settlement agreement, the terms of which were to be incorporated into a written settlement agreement. If the parties could not agree on a contractual issue, it would be submitted to binding arbitration. Following hearings and witness testimony, the arbitrator issued an award.  Plaintiff moved to vacate the arbitration award, arguing that the arbitrator issued an award that was inconsistent with the agreements. The trial court ruled that the settlement agreement “speaks for itself” and that the four corners of the settlement agreement did not provide an accounting method for the property settlement payments. It opined that the arbitrator had exceeded the scope of her authority and granted Plaintiff’s motion to vacate the arbitration award.

STANDARDS OF REVIEW

We review de novo the trial court’s decision whether to enforce an arbitration award. We also review de novo whether an arbitrator exceeded his or her powers.  Areviewing court must accept the arbitrator’s factual findings and decisions on the merits, and it cannot engage in contractual interpretation because that is an issue reserved for the arbitrator.

ANALYSIS

Defendant argues that the trial court erred by vacating the arbitration award on the basis that the arbitrator exceeded her powers by looking outside the four corners of the settlement agreement, as the arbitration agreement expressly provided that the arbitrator would draft a separate contract to detail the settlement agreement’s terms. Defendant is correct that the parties granted the arbitrator authority to fashion a separate contract. We conclude that the trial court erred by engaging in contractual interpretation of the parties’ settlement agreement. The trial court is not permitted to interpret the underlying contract when reviewing an arbitration award. The reviewing court may only determine whether the parties’ agreement to arbitrate is ambiguous, not whether the arbitrator’s interpretation of the contract was correct. When the trial court reviewed whether the parties’ contract was ambiguous, it again erroneously considered the merits of the arbitrator’s decision.

CONCLUSION

The trial court erred by determining that the arbitrator exceeded the scope of her authority by looking beyond the four corners of the parties’ settlement agreement. Because the arbitrator did not exceed the scope of her authority, the trial court’s review should have ended and the court should have confirmed the arbitration award.

ADVICE TO CLIENTS HAVING PROPERTY DIVISION ISSUES IN DIVORCE SETTLEMENTS

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