Separation Agreements, Mediation, and Arbitration

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Separation Agreements, Mediation, and Arbitration
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Separation agreements

• Vast majority of divorce cases are settled
• Divorce trials are exceedingly rare
• Emphasis in divorce practice is on negotiation
  skills (sometime with your own client)
• Knowledge of facts of case
• Knowledge of law and how it applies to facts
• Knowledge of what assigned judge would do if case
  went to trial

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Client control issues become crucial

• Role of client vs role of attorney
• Client determines goals of case
• Attorney decides how to achieve those goals
• Often referred to as where to go vs how to go
• Client decides where to go
• Attorney decides how to go

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Emotional aspects of divorce complicate decision
making

• Working relationship between lawyer and client
  more important in divorce cases than in most
  other types of litigation
• Many of the personality traits that make a
  divorcing party a less than acceptable spouse
  also impair his/her ability to work effectively
  with a lawyer

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Settlement has many advantages

• Reduced cost (trials are expensive)
• Agree to terms that the court cannot order absent
  an agreement, but once agreed-upon, will be
  legally enforceable
• Post-majority child support
• Non-modifiable periodic alimony

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Settlement Agreements

• Careful drafting required
• Interpretation issues as in any other form of
  contract
• Unilateral mistakes (failure to fully examine all
  facts before agreeing) will not result in
  agreement being invalidated. See In re Marriage
  of Manzo in casebook
• Unconscionable agreements remain subject to
  invalidation

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What is unconscionable?

• An absence of meaningful choice on the part of
  one of the parties together with contract terms
  which are unreasonably favorable to the other
  party
• Will either of these alone be sufficient for a
  finding of unconscionability in the context of a
  divorce settlement/separation agreement?

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Uniform Marriage and Divorce Act (UMDA)

• Review the circumstances surrounding the
  agreement for fraud, overreaching, sharp dealing,
  or concealment of assets
• Examine the economic circumstances of the parties
  resulting from the agreement

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Merged or Not Merged?

• A separation agreement that is merged into a
  divorce judgment loses it character as a
  separately enforceable contract. Enforced as
  court judgment, which might also render some
  terms inherently modifiable, such as alimony
  (Goldman v Goldman in casebook)
• An agreement incorporated but not merged will
  retain its separate status as a legally
  enforceable contract

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Advantages of Non-Merger

• Separate basis to enforce terms using contract
  law
• Can render certain provisions, such as alimony,
  non-modifiable even if state law permits alimony
  to be modified upon changed circumstances

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Advantages of Merger

• Enforcement may have greater options, such as
  contempt of court
• May make agreement harder to challenge because
  most states provide only very narrow grounds for
  attacking the validity of a court order or
  judgment (narrower than ground allowed for
  challenging a contract see Jorgensen v
  Jorgensen in casebook)
• Extrinsic fraud required in many states
• Others allow Rule 60(b)- type relief for fraud,
  mistake, surprise, excusable neglect, inadvertence

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Attorney concerns

• Representation by counsel at the time the
  agreement was negotiated makes it harder to argue
  that the agreement be vacated
• No one attorney can represent the interests of
  both spouses, so those agreements drafted with
  the participation of only one attorney, even if
  he/she met with both spouses, are more likely to
  be successfully challenged

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Divorce Mediation

• Many states and local courts have mandatory
  mediation rules
• Going through the mediation process may be
  mandatory
• Settlement is voluntary (but may be significantly
  pressured)

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What may be mediated

• Some states prohibit mediation of child-related
  issues or in cases of domestic violence
• Others require mediation in cases involving
  contested child-related issues

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Florida law

• Fl Stat 44.102(2)(c) In circuits in which a
  family mediation program has been established and
  upon a court finding of a dispute, shall refer to
  mediation all or part of custody, visitation, or
  other parental responsibility issues as defined
  in s. 61.13. Upon motion or request of a party, a
  court shall not refer any case to mediation if it
  finds there has been a history of domestic
  violence that would compromise the mediation
  process.

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Mediation models

• Attorney mediation
• Mediation by neutral attorney without presence of
  independent counsel for each party
• Mediation by neutral attorney with full
  participation by counsel for each party
  (facilitated negotiation)
• Non-attorney (private) mediation
• Done my mental health professionals, social
  scientists, clergy, trained volunteers

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Florida Family Mediation

• 44.1011(2)(d) "Family mediation" which means
  mediation of family matters, including married
  and unmarried persons, before and after judgments
  involving dissolution of marriage property
  division shared or sole parental responsibility
  or child support, custody, and visitation
  involving emotional or financial considerations
  not usually present in other circuit civil cases.
  Negotiations in family mediation are primarily
  conducted by the parties. Counsel for each party
  may attend the mediation conference and privately
  communicate with their clients. However, presence
  of counsel is not required, and, in the
  discretion of the mediator, and with the
  agreement of the parties, mediation may proceed
  in the absence of counsel unless otherwise
  ordered by the court.Emphasis added.

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Divorce Arbitration

• Latest trend in Alternative Dispute Resolution
  (ADR) in divorce cases
• Not common yet in FL
• Very common in MI (in part due to long waits for
  divorce trials before the family division was
  created in 1997)

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What can be arbitrated?

• Property issues Most states that permit divorce
  arbitration allow binding arbitration of property
  division issues with very limited judicial review
  (for fraud, bias, arbitrator exceeding his/her
  authority in the arbitration agreement, etc.)
• Alimony issues Permitted by most states

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What about the children?

• Trend it toward permitting arbitration of child
  support issues
• A few states permit arbitration of custody and
  visitation issues, but build-in enhanced judicial
  review of arbitrators custody/visitation award to
  assure that childs best interests are met
  (consistent with courts role as parens patriae,
  see Faherty v Faherty in casebook)

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Florida Law

• Fl. Stat. 44.104(14) prohibits arbitration on
  issues of child custody, visitation, or child
  support

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Arbitration Rules

• AAA (American Arbitration Association) rules
  often agreed upon in the absence of specific
  state rules or statutes
• Some states have adopted special family law
  arbitration statutes or rules
• Those that have not use the Uniform Arbitration
  Act (which does not exclude family law matters,
  including custody)

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Sample Family Law Arbitration Statute (MI)

• Parties may stipulate to binding arbitration by a
  signed agreement that specifically provides for
  an award with respect to 1 or more of the
  following issues   (a) Real and personal
  property.   (b) Child custody.   (c) Child
  support, subject to the restrictions and
  requirements in other law and court rule as
  provided in this act.   (d) Parenting
  time.   (e) Spousal support.   (f) Costs,
  expenses, and attorney fees.   (g)
  Enforceability of prenuptial and postnuptial
  agreements.   (h) Allocation of the parties'
  responsibility for debt as between the
  parties.   (i) Other contested domestic
  relations matters.

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Qualifications of Arbitrators

• Anyone agreed upon by the parties
• If court appointed must meet all of the following
  qualifications   (a) Is an attorney in good
  standing with the state bar of Michigan.   (b)
  Has practiced as an attorney for not less than 5
  years before the appointment and has demonstrated
  an expertise in the area of domestic relations
  law.   (c) Has received training in the dynamics
  of domestic violence and in handling domestic
  relations matters that have a history of domestic
  violence.

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Record (Transcript) of Arbitration

• A record shall not be made of an arbitration
  hearing under this chapter. If a record is not
  required, an arbitrator may make a record to be
  used only by the arbitrator to aid in reaching
  the decision. The parties may provide in the
  arbitration agreement that a record be made of
  those portions of a hearing related to 1 or more
  issues subject to arbitration.
• A record shall be made of that portion of a
  hearing that concerns child support, custody, or
  parenting time in the same manner required by the
  Michigan court rules for the record of a
  witness's testimony in a deposition.

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Enhanced Review on Child-Related Issues

• The court shall not vacate or modify an award
  concerning child support, custody, or parenting
  time unless the court finds that the award is
  adverse to the best interests of the child who is
  the subject of the award
• A review or modification of a child support
  amount, child custody, or parenting time shall be
  conducted and is subject to the standards and
  procedures provided in other statutes, in other
  applicable law, and by court rule that are
  applicable to child support amounts, child
  custody, or parenting time.

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Trends

• Will see more states expressly authorize
  arbitration of family law disputes
• Enhanced review of child-related issues will be a
  feature of all or nearly all new statutes (Why?
  Courts responsibility for the welfare of
  children of divorce. Private arbitrators not
  generally held to same standard as a trial court)