Arbitration and mediation are both classified as forms of alternative dispute resolution in the divorce process. Couples can resolve pending divorce terms via mediation, which sometimes leads to arbitration. The results of both arbitration and mediation are generally binding for both parties, and a recent Texas case illustrates this point.
If you are facing a divorce, reaching out for the skilled legal guidance of an experienced Killeen divorce attorney early in the process is the surest means of protecting your parental and financial rights.
Alternative Dispute Resolution
Divorcing couples often turn to either mediation or arbitration to keep their cases out of court. When the terms of divorce are resolved in court, the divorcing couple forfeits their decision-making power and turns to the court to make decisions on their behalf.
Even in highly contentious divorces, both parties generally agree that keeping the unresolved terms out of court is preferable, which is why many turn to ADR options.
Mediation
At mediation, both spouses and their respective divorce attorneys come together to hash out terms under the skilled guidance of a professional mediator.
The mediator is a neutral third party who considers the facts of the case, lets the couple know how the terms in question would likely be resolved in court, and helps them explore middle ground – while their respective attorneys help them safeguard their rights. When both parties are willing to sign off on the terms agreed to during mediation, the agreement becomes binding.
Arbitration
At arbitration, both spouses agree to abide by the arbitrator’s decisions, which are based on the facts of the case. Instead of helping both spouses find common ground, the professional arbitrator serves in a role that is much like a judge’s at trial. The spouses agree ahead of time whether the arbitrator’s decisions will be binding.
Arbitration generally allows couples whose divorces are likely headed to court to finalize their cases more quickly and less expensively. If you think arbitration could be a good option for your case, contact a skilled Killeen divorce lawyer.
The Appeal
In the case at hand, the wife appealed the trial court’s final divorce decree, finding that it abused its discretion by ordering terms that didn’t comply with those reached during mediated settlement and that the trial court’s ruling should be overturned based on mediated settlement. Let’s take a closer look.
The Backstory
The wife in this case filed a petition for divorce in late 2020, and in early 2021, her husband filed a counterpetition. In June of that year, the couple entered into a mediated settlement agreement (MSA).
One of the primary factors addressed in the MSA was that the couple agreed to use a specific realtor to sell their marital properties and split the proceeds between them equally.
Soon after, the wife informed her husband that the named realtor declined to sell the properties, and the husband found a realtor who would. This realtor found errors in some of the associated deeds and recommended that the documents be corrected via a real estate attorney.
The Dispute
At this point, a dispute broke out regarding which realtor should sell the home and whether a real estate attorney was needed to correct the associated documents. Arbitration on the matter was scheduled for August 2021 with the prior mediator.
In the meantime, the wife hired a new divorce attorney who – in turn – informed the husband that they couldn’t comply with the scheduled arbitration due to concerns about the impartiality of the arbitrator.
Impartiality
The wife’s attorney also informed the husband that they were filing a motion to set aside the original MSA based on standards related to partiality. According to the attorney, the basis of the argument was that the husband’s attorney had a working relationship with the mediator/arbitrator that she failed to disclose.
The husband’s attorney countered with copies of emails she’d sent to the wife’s prior attorney, reporting that she had been the proposed mediator’s intern in the past. The wife’s original counsel had not objected to him becoming the mediator in their case.
Further, the husband’s attorney relayed that the matter had been discussed via Zoom before both parties and their counsel, including the wife’s current counsel, and no objections were raised at the time.
The Husband Files to Compel Arbitration
At this point, the husband filed a motion with the court to compel arbitration on the following grounds:
The MSA included language that all disputes stemming from it be submitted to arbitration.
The MSA's arbitration agreement was made in consideration of final divorce orders.
The husband fully performed all the duties assigned to him in the MSA.
A dispute related to the MSA arose after the realtor they had mutually agreed upon declined to sell the parties’ assets.
The wife refused to allow the husband’s replacement realtor to handle the sales and refused to settle on a real estate attorney to make corrections to the necessary documents, which – the husband claimed – was in direct violation of the MSA.
The Wife Responds
The wife filed a response to her husband’s motion in which she alleged that the husband’s attorney had not disclosed her working relationship with the mediator. Ultimately, this led her side to question the mediator’s impartiality. From here, all of the following events transpired:
The husband filed a reply and a motion for sanctions against his wife’s current counsel – arguing that the attorney was factually incorrect and that he had wrongfully accused his attorney of "not disclosing her previous working relationship" with the mediator.
The wife responded by requesting that the trial court invalidate the MSA and require the parties to engage a neutral mediator – imposing sanctions against the husband and his attorney in the process.
This case is a great example of the whirlwind path your divorce case can take. Since the divorce process can be so unpredictable, it is always wise to have an experienced Killeen divorce attorney by your side.
The Trial Court’s Findings
The trial court granted both the husband’s motion to compel arbitration and sanctions against the wife’s attorney – denying the wife’s motion for sanctions. In support of the sanctions imposed against the wife’s current divorce attorney, the trial court wrote the following:
"The evidence presented in the motion, response, and replies make clear disclosure of the prior professional relationship between counsel for Respondent and the mediator/arbitrator prior to mediation and that Petitioner, subsequent to disclosure, agreed to the mediator and then signed off on the agreement that appointed the mediator as the arbitrator of any disputes. Therefore, the allegations of impropriety and bias are without merit and sanctionable."
The parties were ordered to immediately schedule arbitration with the original mediator – in accordance with the MSA.
Arbitration
The couple attended arbitration, and the following day, the wife filed a motion to stay the arbitration award – requesting to enter a final divorce decree that complied with the MSA.
Three days later, the husband filed a motion for the trial court to issue a judgment on the MSA, which it did less than two weeks later. At that point, the wife filed a motion for a new trial, which was denied, and she proceeded to file a notice of appeal based on two primary issues.
Issue One: The Trial Court’s Arbitration Decision Should Be Overturned
The wife argued that there was a legally binding MSA in place that the trial court erroneously ignored and that the trial court was also in error for requiring the parties to arbitrate when they had no binding agreement to do so.
The wife’s specific argument stated that "the clear language of the MSA agreement does not require the parties to return to the mediator as an arbitrator." She held that a mediated settlement agreement is legally binding to the parties involved when all the following factors apply:
The agreement includes a prominently displayed statement that it is not subject to revocation.
The agreement is signed by the involved parties.
The agreement is signed by each party’s attorney, who is present at the time of signing – as applicable.
Because each of these elements applied, the wife held that the MSA was legally binding.
For his part, the husband found that the record confirmed that both parties agreed to use the original mediator. As such, his side rejected the wife’s claim that the MSA did not include an agreement to arbitrate with the mediator.
The appeals court agreed with the trial court’s ruling that the language included in the MSA upheld an agreement between the spouses to arbitrate with the original mediator.
Issue Two: The Trial Court Abused its Discretion
The wife also contended that the trial court abused its discretion in the first place by not issuing an order that complied with the MSA's terms. The specifics of the case include the following details:
The trial court was required to rule in accordance with the MSA.
The trial court’s order wasn’t in compliance with the MSA.
As a result, the trial court’s order shouldn’t be upheld.
A new order consistent with the MSA should be issued.
The appeals court found, however, that the wife failed to support her claims – especially because the arbitration award complied with the MSA, which both parties signed off on.
Mediation and Arbitration Are Generally Binding
This case sends a strong message. If you are facing a divorce, you should take mediation and arbitration especially seriously. Unless something unlawful occurs in the course of either process, there is not likely to be an opportunity to alter the outcome once it is executed.
You need to understand how the terms you’ve resolved at mediation will reverberate into your future because you are unlikely to get a do-over. When navigating mediation and arbitration, work closely with a skilled Killeen divorce lawyer dedicated to protecting your rights.
In this case, the wife agreed to use the mediator in question when the working relationship the mediator had with her husband’s attorney was known to her. Further, the language included in the MSA addressed the matter of any future need for arbitration, which specifically named the original mediator for the role of arbitrator. She and her attorney had the opportunity not to accept this term during mediation but failed to do so.
Further, her current attorney didn’t object to the original mediator filling the role of arbitrator when the matter was discussed during a Zoom meeting that all parties attended. In other words, the wife had ample opportunities before and during mediation to object to the choice of mediator/arbitrator but did not.
Mediation Is Often an Excellent Choice
Mediation can be an excellent tool for resolving divorce terms outside of court, and most couples prefer keeping these matters within the realm of their own decision-making power as well as keeping the terms private – which mediation allows.
Additionally, mediation tends to be less costly and less time-consuming. Mediators and arbitrators alike are required to serve as neutral third parties who are guided by the law. You are not, however, required to accept your divorcing spouse’s choice of mediator, and if you believe there is a conflict of interests or that the mediator may not – for any reason – be impartial, it is time to keep looking.
One of the most important points to make about mediation is that it only becomes binding once you and your divorcing spouse both sign off on the agreement reached. Don’t let yourself be rushed, and if you have questions or concerns about signing, discuss the matter carefully with your seasoned divorce attorney. The time to speak up is before you seal the deal with your signature.
Finally, it’s important to note that there are times when skipping mediation may be in your best interest. If your divorcing spouse is more interested in tormenting you than in resolving the terms of your divorce, you’re unlikely to obtain a favorable resolution at mediation. You can likely save time, money, and frustration by heading directly to court.
An Experienced Killeen Divorce Attorney Is on Your Side
Brett Pritchard at The Law Office of Brett H. Pritchard in Killeen, Texas, is a focused divorce attorney who has a wealth of experience skillfully resolving complex cases outside of court – with his clients’ financial and parental rights well protected. To learn more, contact us online or call us at (254) 781-4222 today.