Transcript

Audrey Blair: When we look at the sort of non-family law cases, it’s really important to understand how binding an arbitration award is on your case. If you decide to advise a client to enter into one, to an arbitration contract, and really how difficult they are to avoid even if the arbitrator makes a mistake.

Voiceover: You’re listening to the Texas Family Law Insiders podcast, your source for the latest news and trends in family law in the state of Texas. Now, here’s your host attorney Holly Draper.

Holly Draper: Today we’re excited to welcome Audrey Blair to the Texas Family Law Insiders podcast. Andrey is board certified in Family Law and has been practicing since 2002. Until 2014, Audrey was a family law litigator in the Austin area. She then pivoted her practice to family law appeals and a legal research and writing practice. Audrey received her undergraduate degree from College of the Holy Cross in Wooster, Massachusetts, and she obtained her JD from Baylor University School of Law. Family Lawyers hire her to write trial briefs and summary judgments. When not practicing law, she loves spending time with her husband Bill, her black lab Roscoe and digging in her garden. Thank you so much for joining us today.

Audrey: Thank you. I’m really glad to be here, Holly.

Holly: So why don’t you tell us a little bit about your background?

Audrey: Well, I’ve been licensed since 2001. And the first couple years of my practice, I worked as a nonprofit in the Austin area doing all family violence work. So protective orders, things along that along that line. And then I shifted into a private practice for the next 13 years. Worked in Austin primarily. And then I decided that I was sort of burned out on Family Law litigation, and I took a an epic road trip for a while kind of do a little reset. And then I then shifted my practice into what I do now, which is legal research and writing for family lawyers. I write summary judgments, I do trial briefs. And then I’ve also picked up some appeals and mandamus work here and there.

Holly: So when you’re doing summary judgment and brief writing and things for attorneys, are basically ghostwriting it for them, are you appearing in the case?

Audrey: Yes, yes, sort of what I envisioned was, you know, maybe I’d be good support for somebody, for example, who’s a solo board certified lawyer that may need an extra set of hands, you know, in their cases, and I work at kind of a reduced rate to save their clients money. And I’m always pretty much ghostwriting in the background, with the exception of few of the few appeals here and there.

Holly: So today, we’re here to talk about a topic that many family lawyers in my opinion are not familiar with. And that is the topic of arbitration. Can you generally describe what arbitration is?

Audrey: Sure, um, arbitration, at its most basic form is a method of resolving a legal dispute out of the courtroom. Generally, arbitration arises because two parties will contractually agree to arbitrate a matter. And once they do that, they will submit their issues to a neutral third party arbitrator who is not a sitting judge who is just usually a lawyer, that will resolve their issues for them. And it’s it’s very easy to enter into arbitration, an arbitration agreement. All you have to do is simply agree in writing to do so. And then you have a for the most part a binding arbitration agreement.

The goal of arbitration is to ultimately end up with a an arbitration award from the arbitrator. And from that point, the trial court should sign the arbitration award into a court order, unless there’s some narrow exception to avoid the arbitrator’s award. And as we’ll kind of talk about probably later today, Texas law heavily favors enforcing arbitration agreements. So our jurisprudence was certainly supportive of parties entering these kinds of agreements.

Holly: So do you have the same sort of defenses to an agreement to arbitrate as you may have to enter into a mediated settlement agreement or other types of contracts where you can try and weasel your way out of your agreements?

Audrey: Yeah, that’s a good question. Um, so I would say that the defenses to an actual contract to arbitrate, are very limited to things such as you know, unconscionability, fraud, duress, etc. It’s a very, they’re they’re very, very narrow in the sense of defenses to a formation to contract. So in that sense, I guess they would, they would mirror some of the defenses that we see to try to get out of a mediated settlement agreement.

Holly: So I know in Texas, we have the Texas Arbitration Act. Can you talk a little bit about what that act is and what it entails?

Audrey: Sure. Um, so the Texas Arbitration Act is codified in chapter 171 of the civil practice and remedies code. And I kind of double checked this morning, there are about 40 subsections in that act. There’s a lot in there. So if you’re dealing with an arbitration agreement or an issue with arbitration, it’s really important to go go look in there and see what your options may be kind of what you’re dealing with. So the Arbitration Act covers everything from provisions, compelling or staying in arbitration, the appointment of arbitrators arbitration procedures, such as your entitlement to hearing and the rights of the parties during an arbitration proceeding. It also contains provisions about how and when a trial court or an arbitrator may set aside an award or when the court must confirm an award. So it covers innumerable things, you know, that may, you may want to look at if you’re dealing with an arbitration issue.

Holly: How does it apply in family law cases?

Audrey: Well, first of all, there’s a case that says we do apply the Texas Arbitration Act. And so that that’s a good place to start. And there are also some special provisions in the family code dealing with arbitration, and they’re included near the subsections that deal with other ADR, such as mediation. So section 6.601 of the family code says that the court may refer a case to arbitration if the parties agree to do so in writing, and that they’re after the court should shall render an order reflecting the arbitrators award, and that’s for divorce cases.

And section 153.0071, which is, of course, in the chapter dealing with SAPCRs, provides also that the court should refer the parties to arbitration in the SAPCR where they have agreed to arbitration. With SAPCRs however, there’s a really interesting provision that parties should be aware of which is Subsection B of 153.0071. That says that the court shall render an order reflecting the arbitrators award, unless the court determines at a non jury hearing that the award is not in the best interest of the children. So, or the child. So that’s a big out, in my opinion, you know, if you’re looking to avoid an arbitrators award, you could attempt to prove that it’s not in the child’s best interest.

Holly: So that was definitely make it less binding than an MSA where the court does not have that authority.

Audrey: Definitely, definitely. So and the, you know, the family code puts the burden on the person seeking to avoid the award. But certainly, like if you, you know, end up with an award that your client thinks is not in the best interest of the child, you can certainly try to avoid that award.

Holly: So I can tell both in 6.601 and 153.0071, it says that the parties must state that the agreement is binding or if the agreement arbitrate is binding or non binding. Why would anyone want to agree to arbitrate if it was not binding?

Audrey: I have never figured that out. You know, I mean, the only thing I can know, you know, thing I could think of is, you know, maybe you’ve got a case where both parties, you know, maybe it’s a unique issue of law, being set of facts, perhaps you just want to see what a third party might do before you enter a settlement agreement or go to a trial. That’s the only, you know, sort of strategic reason I can think of to do a non binding arbitration.

Holly: Because I’m thinking whoever somebody is not gonna be happy with that award. So if it’s not binding, why are they going to stick with it? So are there any ways that a judge can order parties to arbitrate if the parties aren’t agreeing?

Audrey: Um, so there are, and I haven’t prepared for this on the the appropriate code section, but I believe there’s in the chapter 154 of the civil practice and remedies code. I think there’s some sections in there that deal with referring parties to non binding arbitration, but I don’t know that for sure.

Holly: Have you ever seen it in family law context?

Audrey: Not, I’ve been licensed for 20 years, I’ve never seen it ordered. So it seems rare, you know.

Holly: If it happens at all, yeah. So because I don’t think there’s a ton of arbitration going on in family law. Maybe there is and I’m just blissfully ignorant to that fact. But are there cases outside of the family law context that are helpful in considering this for family law cases?

Audrey: Yeah. So I think when we look at the sort of non family law cases, it’s really important to understand how binding an arbitration award is on your case, if you decide to advise a client to enter into one to an arbitration contract, and really how difficult they are to to avoid even if the arbitrator makes a mistake. So and I’m going to kind of go through a couple of cases that kind of drive these points home. There’s a Hoskins case it’s a 2016, Texas Supreme Court case that says, unless the Texas Arbitration Act mandates otherwise, unless there is a statutory ground to set aside the arbitration award, the court must confirm the award. So and we’ll go through probably the exceptions here in a few minutes. But there’s very little discretion for a trial court to get around an arbitration award.

And as I mentioned earlier, there’s another Texas Supreme Court case, Forest Oil versus El Rucio Land and Cattle Company, that stands for the proposition that even if the arbitrator decided an issue incorrectly, like a legal substantive issue, that is not a basis to set aside and an arbitration award. So you can take out the law flat out wrong, as long as you’re within the scope of the arbitration agreement that the parties had that there’s there’s very little you can do to correct an error made by the arbitrator. And then lastly, and I think this this kind of gets to kind of think about error preservation. This is the Centex versus Friendship West Baptist Church. It’s a Dallas court of appeals case from 2010, that the party wanting to vacate an award has the burden to bring forth a complete record establishing the grounds for vacating the award.

So I think a lot in my experience, a lot of arbitrations and family law cases are, you know, letters to the mediator or some off the record conference or meeting where the arbitrator makes make some decision and then issues a written award, you have no record showing what happened. So, you know, even if you wanted to go to the trial court or or an appellate court, you’d have no way of showing that there was error. So I think, you know, we need to kind of look at arbitrations more in the context of litigation. You know, if you, if you anticipate that your client’s going to want to try to set it aside, you need to be thinking ahead of time, so.

Holly: So, from a logistical perspective, then if you are heading into arbitration, should you treat it the same as you would a trial?

Audrey: I would. I would consider having a court reporter, or, or I would consider some, you know, detailed written arbitration procedures that establish a record. So, let’s say we agree, we’re going to submit everything in writing to the arbitrator and the arbitrator is gonna rule within 10 days, and then, you know, just kind of create things that you can file into the court’s record in the event that you, you know, you decide your client decides to challenge the award.

Holly: So does arbitration often occur kind of on a submission basis, or are people having hearings, everybody sits down table together? How do you usually see it happening?

Audrey: I’ve seen it both ways. You know, I think if, for example, the parties in the divorce agree that the arbitrator will resolve drafting disputes, I’ve seen that happen by submission very regularly. I’ve also seen and I’ve actually been involved as a lawyer for one of the parties in a contested arbitration, where we went to the lawyer’s office who was serving as the arbitrator, and we put on witnesses and the rules of evidence applied. So, you know, I think it can come in many, many shapes and forms.

Holly: If you’re going to go that route, where it’s contested and have witnesses all that before an arbitrator, what benefit is there to doing arbitration, as opposed to just taking it to the trial court?

Audrey: I think that’s a really good question. And a really good consideration. If you’re a lawyer who’s considering or who’s advising a client about arbitration. Certainly, I think arbitration and private judge, for example, kind of have an element of privacy where you aren’t litigating your disputes in a public forum. I think that’s a really big feature and attraction to a lot of people. You know, with an arbitrator, you may have more control over who the arbitrator is, as opposed to your judge, you know, where you sort of are, you’re left with whatever court you’re filed in or whatever county you’re in whatever judge you’re assigned to.

So I think that that’s appealing to a lot of people. Certainly, if it’s a full blown arbitration, like a trial, you’re still going to have the same costs, right? You’re going to have your experts and your court reporter and your, you know, the time that you take so for your lawyer attorneys fees, so I don’t know that you necessarily save money from that perspective, unless it’s a you know, in writing kind of arbitration.

Holly: So you mentioned a private judge. For anyone who is listening that’s never heard of that before. It’s parties can agree to hire a former judge or something of that nature to hear a case privately outside of the court where it is set. We certainly looked at that. If we really didn’t like our judge, or if we weren’t gonna be able to get into court for a really long time. What would make you choose private judge versus arbitration or vice versa?

Audrey: You know, I guess it would depend on whether there was an arbitration agreement already that you have to live with. You know, for example, if you had a, let’s say your client signed a prenup years ago, and it’s got an arbitration provision in it, then I think you’re stuck and stuck with arbitration. But I don’t know that there’s a, you know, a huge difference. I guess the most important thing to me, is this binding or not, right? And how much do you just judicial experience does the private judge have, like would know about them. You know, there’s they judged before, you know, they may have a bit of a track record that you can more properly investigate before agreeing to that person.

Holly: So how does this family law case differ in arbitration from a case in traditional litigation?

Audrey: Um, well, um, we’ve kind of, you know, touched on this a little bit, but the things that I have seen the most are sort of come down to the scope of the arbitration agreement. So most cases, I have seen usually just have a small piece of the case itself that is submitted to arbitration as opposed to a full blown trial on on all issues. You know, for example, there are many cases reported cases out there that, you know, once you agree to, for example, a provision in an MSA that requires all drafting disputes to go to the arbitrator that the court is going to enforce that. So there are actually two Supreme Court cases, the Milnor case from 2012, and the case from 2017, that sort of affirm that, yes, once we, you know, enter into this agreement, then the courts going to enforce it, and the arbitrator is going to decide it, according to whatever is in the scope of the of the contract.

And I think another, you know, big difference in family law cases, sort of where we find agreements to arbitrate. You know, they can be in mediated settlement agreements. They can be in, as I mentioned before, like a premarital or post marital contract. They can be, let’s say that perhaps one of the parties owns a, an LLC, and the spouse has signed on to the, to the member agreement that has an arbitration provision. That’s another way that, you know, these things are sort of, I think a practitioner kind of needs to be on the lookout for these things. If the parties have independently signed any form of contract before they you know, before they come into your office, so.

Holly: So if you find yourself in a situation where parties have agreed to arbitrate for one reason or another, or they signed something forever ago, and now someone’s gonna hold them to it, how do you go about picking an arbitrator?

Audrey: That’s a good question. You know, a lot of times the, the contracts I have seen will have, either they will have an arbitrator named in it, oftentimes, it’s a mediator who has been assigned to arbitrate any drafting disputes. So that’s obviously, you know, pretty simple, simple resolution. You know, other arbitration agreements will have a, you know, a provision that the arbitrator has, you know, certain qualifications or must be, you know, a member of certain organizations in order to arbitrate the disputes. The kind of kind of where I always start is talking to colleagues. You know, say, hey, I’ve got this case involving characterization of a company or I’ve got, you know, challenging a prenup agreement or something. And I that I really, I really like to talk to other lawyers who have, you know, who may know, an arbitrator that would be at least at least attuned to the issues that we’re going to go into.

Holly: So, arbitration agreements, as we mentioned before, we often see them in MSAs. A lot of mediators include those and standard language, that if you have any disputes, you’re going to arbitrate with the mediator. Do you think that’s a good idea?

Audrey: You know, I always advise clients to take those out. Because I, you know, when you go to mediation sort of sacrosanct, you know, the mediator often sort of will say, I’m a neutral person, I don’t know, either. I mean, I’m not here to favor one side or the other, I’m here to have you reach an agreement. And when we put, you know, a lot of clients get pushed at the end of mediation, right to sign the agreement and leave a lot on the table, and many of them do not feel good about it. And I think when you put the mediator in the role of arbitrator, even if at some point in the future, I think that really, I think they’re gonna have a really negative impact on the client sort of investment in their their settlement agreement.

And also, I think there’s kind of this, like, false idea that a mediator is going to remember your case or the facts of your case. I’ve mediated probably 60 cases, and I can’t remember any of them. I mean, you know, this kind of idea that the mediator likes me or is gonna rule favorably to me. I think that’s, I think that’s, I think that I’m a little weary of trusting that theory. So I’m, on the other hand, I think that sometimes especially when you get to It’s eight o’clock at night, you’ve been mediating all day and you’re stuck on one issue. I think it’s a good I think it’s a good idea, in some instances to say, you know what, let’s arbitrate this, we’ll do it by submission. Just as long as everyone’s clear on what the parameters are. I think it can be a good way to avoid the courtroom for people.

Holly: And so in that scenario, that’s something you’re agreeing where your MSA is not resolving all the issues. Your whether it’s outstanding property or whatever the issue is, agreeing to meet to arbitrate that.

Audrey: And it’s, and I don’t, you know, I don’t, I think if you have a client that is very concerned about public litigation of their private matters, they’ve got some who knows, maybe they’re a politician or somebody famous, or whatever else. I you know, I think that that can really provide a benefit to clients who have those issues.

Holly: So you go to arbitration, the arbitrator makes a decision, and you don’t like it. Are there any, or he got wrong? You know, you talked earlier about, even if they get the law wrong. Are there any options for appealing an arbitration decision?

Audrey: There are, there are. So I’ll kind of address three different things. So you can go to the arbitrator, and try to get the arbitrator to correct or change the award. You can go to the trial court, you can go to an appellate court. Of course, Texas Supreme Court sort of incorporated in there if you’re inclined to go there. So first, you can go to the arbitrator and ask the arbitrator to clarify, modify or correct an award. And you have to do that within 20 days of receiving the award. So there’s kind of a short timeline in there. And then you can also go to the trial court, and you have to do that within 90 days of receiving the arbitrator’s award. So there, I think practitioner needs to be very aware of these short, especially going back to the arbitrator of these really, really short deadlines.

So we kind of talked in terms of correcting, modifying or vacating an award. Those are kind of three different things. The grounds to correct or modify an award are very narrow. There, they are an evident miscalculation as one basis. And that is literally like a mathematical error or a improper description of property, something sort of sort of like if you will, you know, sort of just basic math error. You can correct or modify an award that where the arbitrator issues an award on a, an issue that was not submitted to him or her. And then lastly, you can correct or modify an award if there’s an error of inform, but that doesn’t actually affect the award itself. So I consider these extremely narrow bases to correct or modify an award that no one should count on being able to utilize in most arbitration awards.

Holly: So is there a requirement that you ask the arbitrator to clarify or modify or correct an award before you can ask the trial court to do it?

Audrey: I do not believe you have to do that. So there are also some grounds to vacate the award. So these are, again, very narrow. Corruption, fraud, undo means kind of the, you know, same things we might see, to set aside a mediated settlement agreement or contract. You can attempt to vacate it based on the evident partiality of the arbitrator. And this ground is kind of interesting, I think, especially in the family law context, because if you’re asking, for example, another family lawyer to arbitrate your case. Yeah, we all we see each other at advanced family law, we are social with each other from time to time.

And, you know, does that that create a partiality question? You know, I think that erring on the side of, of full disclosure of your relationships with with the parties is really, really important if you’re going to step into these arbitration arbitration rules. So, again, you can seek to vacate it if arbitrator exceeded his or her powers. I will say there’s a lot of case law out there that called on the trial court to broadly construe arbitration agreements. So I think you’d have I think the arbitrator would have to go way off into left field to exceed his or her powers under the agreement.

And then lastly, you can attempt to vacate the award if there’s any procedural misconduct, such as, you know, failure to allow the parties to have a record if that’s what the parties have agreed to do in their procedures. So but again, just want to kind of emphasize this point, got to make a record of all this stuff. If there’s, you know, procedural misconduct, how are you going to prove that to the trial court and then ultimately be. So these you know, these methods of trying to vacate or correct an award. Got to take it to the trial court first. Right before you can go to the appellate court. And so, you know, again, thinking about preserving preserving errors is really important when you’re when you’re dealing with these things.

Holly: So it’s scary to think that an arbitrator can make a grossly wrong decision. And you have no remedy really.

Audrey: Really. Effectively, that’s correct.

Holly: Now, and I mean, most people don’t appeal a trial court judgment, either, but at least you have the option. But if the judge really gets it wrong, then there’s hope. But here, that’s pretty scary to me. You have to have a lot of faith in your arbitrator that that’s not going to happen.

Audrey: You do. And and I think that it’s I think that sort of endorses arbitration for issues that, you know, may not be earth shattering in the sense that, like, if you’re, if it’s a characterization issue, you know, and the trial court judge misapplies the law, abuses his or her discretion, you’ve got an appellate remedy available to you. In arbitration, maybe not, you know, I think that there’s there there’s definitely a little more risk. And that’s why arbitration is a little bit controversial, right? In Texas, for these reasons. So.

Holly: All right, well, we’re almost out of time. But one of the questions I like to ask everybody on the podcast, is if you could give one piece of advice to young family lawyers, what would it be?

Audrey: Well, when I when I originally saw this question, I was thinking in terms of arbitration. So my one bit of advice about arbitration is understand what you’re signing and advise your clients accordingly. A lot of times, it’s just one sentence in an MSA that agrees to arbitration. But that that really leaves a lot of things unsaid. And I think you should think about the statutory implications before agreeing to sign an arbitration award. But generally, as a lawyer, I would say I would say, place emphasis on your your own mental and physical health. Being a lawyer is super stressful. It is it’s a very demanding profession. And whatever, you know, being healthy means to you, whether it’s your family relationships, relying on family or exercising, or you know what, travel, whatever, whatever makes you happy. You’ve got to put that ahead of ahead of your practice at times to to be successful with this kind of practice.

Holly: I agree with 100%. So where can our listeners go if they want to learn more about you?

Audrey: Well, I have a website that is, it’s audreyblairlegal.com. And emailing me is a great way to get in touch with me my email address is on my website, but my email address is [email protected].

Holly: Excellent. Excellent. Well, thank you so much for joining us today. And for our listeners. If you enjoyed this podcast, please take a second to leave us a review and subscribe so you can enjoy future episodes.

Voiceover: That Texas Family Law Insiders podcast is sponsored by the Draper Law firm. We help people navigate divorce and child custody cases and handle family law appellate matters. For more information, visit our website at www.Draperfirm.com