Scott A. McKEOWN, Petitioner-Respondent, υ. Laurie G. McKEOWN, Respondent-Appellant, and Rosalyn McKEOWN-ICE et al., Respondents below.
18CV13348; A168800
Multnomah County Circuit Court
February 16, 2022
317 Or App 616 (2022) | 505 P3d 455
Gregory F. Silver, Judge.
Argued and submitted April 20, 2021
Laurie McKeown appeals from a general judgment for Scott McKeown confirming an arbitration award that, in part, determined that Laurie is no longer a general partner in the McKeown Family Limited Partnership. Laurie assigns error to the trial court‘s order denying her motion to vacate the arbitration award. She contends that the arbitrator exceeded her powers, within the meaning of
Affirmed.
Julie A. Smith argued the cause for appellant. On the briefs were Wendy M. Margolis and Cosgrave Vergeer Kester LLP.
Robert J. McGaughey argued the cause for respondent. Also on the brief was McGaughey & Erickson.
Before Mooney, Presiding Judge, and Lagesen, Chief Judge, and DeVore, Senior Judge.*
* Lagesen, C. J., vice DeHoog, J. pro tempore.
DeVORE, S. J.
Affirmed.
DeVORE, S.
Laurie McKeown appeals from a general judgment for petitioner Scott McKeown confirming an arbitration award that, in part, determined that Laurie is no longer a general partner in the McKeown Family Limited Partnership.1 Laurie assigns error to the trial court‘s order denying her motion to vacate the arbitration award. She contends that the arbitrator exceeded her powers when granting Scott‘s cross-motion for summary determination.2 She argues that the arbitrator lacked authority because the arbitrator purportedly failed to comply with arbitration rules that required the arbitrator to have conferred by telephone with the parties on the suitability of Scott‘s cross-motion for summary determination before going on to receive arguments, hold a hearing, and decide the issues presented. Rejecting the same argument and others, the trial court concluded that the arbitrator had not exceeded her powers. We agree with the trial court‘s conclusion, and we affirm.
The dispositive facts are procedural and undisputed. In 1994, the parties’ mother created the McKeown Family Limited Partnership to manage real estate investments. Scott McKeown, Laurie McKeown, and Rosalyn McKeown-Ice are siblings and were general partners in the partnership. Scott undertook the primary responsibility of managing partnership assets. In 2016, Scott filed a complaint in circuit court against Laurie, Rosalyn, and the McKeown Family Limited Partnership, alleging that the partnership agreement had been modified by conduct,
The partnership agreement contained a general arbitration clause, providing:
“Unless otherwise provided herein, any dispute, claim or controversy arising out of or relating to this agreement shall, upon the request of any party involved, be submitted to and settled by arbitration in accordance with the commercial rules of the American Arbitration Association ***. The decision made pursuant to such arbitration shall be binding and conclusive on all parties involved[.]”
Based on that clause, the court ordered that the matter be arbitrated.
In arbitration, Scott filed a claim for dissolution of the partnership or, in the alternative, a declaration that Laurie was no longer a general partner by reason of waiver, abandonment, or estoppel. Laurie filed a motion for summary disposition under
“An arbitrator may decide a request for summary disposition of a claim or particular issue:
“(a) If all interested parties agree; or
“(b) Upon request of one party to the arbitration proceeding, if that party gives notice to all other parties to the proceeding and the other parties have a reasonable opportunity to respond.”
ASP Rule 16, which incorporates
“An arbitrator, or panel of arbitrators, may allow a request for the summary disposition of a claim or a particular issue:
“a. If all interested parties agree; or
“b. Upon a ruling by the arbitrator(s) to decide the claim or issue in a summary manner.
“If all interested parties have not agreed to a summary disposition, the requesting party shall file the request with the arbitrator(s) and serve it upon all interested parties. The request shall state whether the entire claim should be decided in a summary manner or set forth one or more specific issues that should be so decided. The request shall also explain why the matter should be decided in a summary manner and the request shall include a summary of the dispositive facts and the controlling law.
“*****
“The requesting party shall arrange a telephone conference among the affected parties (or their attorneys) and the arbitrator(s) during which the parties can argue their position on whether or not the matter should be decided in a summary fashion. Prior to the telephone conference, a party opposing the request may file with the arbitrator(s) an opposition statement (with or without supporting documents) and serve it on the requesting party and all other interested parties or their attorneys.
“The arbitrator(s) must then rule on whether it is appropriate to hold a summary disposition hearing, and in making that decision the arbitrator(s) shall assess and balance the customary bifurcation versus single hearing factors and shall also consider the apparent merits of any party‘s position based upon any statement, affidavits or briefs filed by the parties or at oral argument. A ruling by the arbitrator(s) on the appropriateness of a summary resolution shall be determined after a telephone conference call involving the arbitrator(s) and all parties desiring to be heard, which conference call shall be arranged by the requesting party. The ruling shall be documented by a letter to the parties (copy to ASP).”
In her motion for summary determination, Laurie argued, first, that, even if Scott‘s factual allegations were taken as true, she could not lose her status as a general partner as a matter of law, and, second, that only a circuit court, and not an arbitrator, could dissolve a partnership.
Pursuant to ASP Rule 16, the parties conferred by telephone on the suitability of Laurie‘s
In response, Laurie, joined by Rosalyn (hereafter the sisters), filed a response memorandum opposing Scott‘s cross-motion. The sisters disputed, as a matter of law, any basis to dissolve the partnership, and they disputed Scott‘s claim of waiver, abandonment, or estoppel as to Laurie‘s rights as a general partner. They did not, however, proffer any specific factual evidence to contravene Scott‘s declaration. They did not argue that the cross-motion was not properly the subject of summary determination due to a dispute of fact. And, they did not object that Scott or the arbitrator had failed to arrange for a teleconference pursuant to ASP Rule 16 to discuss the suitability of Scott‘s motion for summary determination.
The arbitrator rendered a decision on the cross-motions. She first found that the sisters had agreed that summary determination was appropriate “as there are no disputed issues of fact.” See
The sisters filed a motion asking the arbitrator to reconsider the decision. They argued that the arbitrator “exceed[ed] the requested motions,” but did not argue that the arbitrator exceeded her powers. (Emphasis added.) They argued that the parties had not briefed the concept of good faith and fair dealing, which the arbitrator had employed in construing the partnership agreement and then used to support a conclusion that Laurie had waived her role as general partner. They did not argue that Scott or the arbitrator had failed to conduct a prehearing telephone conference to determine the suitability of Scott‘s cross-motion for summary determination. They did argue that they were surprised at a decision on the evidence, that they would have offered evidence, and that the matter should be reopened for submission of contrary evidence.
In an order on reconsideration, the arbitrator repeated that the parties had agreed per ASP Rule 16 that all claims were appropriate for summary determination. The arbitrator recited that the filings raised the issues whether Laurie satisfied her fiduciary duties as a partner and whether she had abandoned or waived her status as a general partner. Finally, the arbitrator reiterated that the undisputed evidence that was submitted showed that Laurie‘s failure to participate in the partnership constituted an abandonment and waiver of her status as a general partner. The arbitrator denied reconsideration.
Scott filed a motion in circuit court to confirm the arbitration award. The sisters filed a motion to vacate the award. They first argued that the arbitrator exceeded her “powers” based on the parties’ submissions for summary determination. That is, they argued that “Laurie specifically reserved the right to challenge any and all factual allegations
In apparent reliance on that declaration, the sisters argued that the award should be vacated pursuant to
The circuit court observed that the question—whether the sisters were truly deprived of an opportunity to give evidence—was “one issue.” The “other issue” was the arbitrator‘s alleged failure to comply with ASP Rule 16 with regard to a prehearing telephone conference. As to that issue, the circuit court prompted the sisters to concede that they had failed to raise compliance with ASP Rule 16 before the arbitrator—both in their motion to reconsider and earlier when responding to Scott‘s cross-motion. The court considered the sister‘s failure, when seeking the court‘s review on a motion to vacate, to be “similar” to a party‘s failure to preserve an issue by raising it in a trial court then seeking appellate review.
After further colloquy, the circuit court determined that the arbitrator did not exceed her powers in this case. The court noted that, at best, Laurie‘s opening motion for summary determination had a footnote indicating that she did not concede the factual allegations of Scott‘s arbitration claim and asserted that she “reserved the right” to challenge them. But, the court noted that, when Scott filed his cross-motion based on his view of the facts, Laurie had an opportunity to respond and did respond “in a fair amount of detail,” albeit with legal arguments. The court observed that it was “logical for the arbitrator to believe that she knew and was proceeding on what the parties had agreed on for her to decide in a summary fashion.” The court rejected the sisters’ claim that they had been denied the opportunity to respond to Scott‘s cross-motion with contrary facts. The court concluded that there was no legal basis to vacate the award.
On appeal as noted, Laurie assigns error to the denial of the sisters’ motion to vacate the award. She argues that the arbitrator exceeded her powers, within the meaning of
Scott responds that, given the broad arbitration clause of the partnership agreement and the parties’ submissions, the arbitrator had authority to resolve the parties’ claims. We agree.
offer contrary evidence because the arbitrator surprised the sisters by rendering a decision that the arbitrator was not authorized to have done.
Laurie‘s appeal, asserting that the arbitrator exceeded her powers, turns upon the proper construction of
“Upon petition to the court by a party to an arbitration proceeding, the court shall vacate an award made in the arbitration proceeding if:
“*****
“(d) An arbitrator exceeded the arbitrator‘s powers[.]”
Contrary to Laurie‘s assumption, a question of the “arbitrator‘s powers” is not a question like appellate review of a trial court ruling involving rule of trial court procedure. Instead, “[t]he starting point in considering the extent of an arbitrator‘s powers is whether the parties agreed to arbitrate and, if so, the contours of the dispute that they agreed to arbitrate.” Couch Investments, LLC v. Peverieri, 359 Or 125, 130, 371 P3d 1202 (2016).
In this case, there is no dispute that the partnership agreement contains an arbitration clause providing that “any dispute, claim, or controversy arising out of or relating to the agreement shall, upon the request of any party involved, be submitted to and settled by arbitration[.]” That clause is not the sort of arbitration clause that is restricted to specific matters. As the circuit court observed, that is a “broad” arbitration clause. Unless the parties otherwise acted to narrow the scope of arbitration, that clause gave the arbitrator authority to resolve the parties’ controversy. There is no dispute that Scott‘s initial complaint in circuit court involved claims that arose out of the partnership and were properly ordered to be arbitrated. And, finally, there is no dispute that, once in arbitration, the sisters initiated summary determination to reject Scott‘s claims as a matter of law and Scott responded with a cross-motion to accept those claims as valid, based, among other things, on his view of the facts. As the trial court found, those circumstances gave the arbitrator the power to make the arbitration award.
Laurie‘s argument that the arbitrator exceeded her power by making a summary determination without holding a second prehearing telephone conference under a rule of arbitration procedure is fundamentally mistaken. Her argument presupposes a misunderstanding of an arbitrator‘s powers as that term is used in
In Brewer v. Allstate Insurance. Co., 248 Or 558, 561, 436 P2d 547 (1968), the Oregon Supreme Court addressed review of an arbitrator‘s authority under a former statute, former
“The arbitrator acts within the bounds of his authority not only when he decides a question of law correctly according to judicial standards, but also when he applies the law in a manner which a court would regard as erroneous. *** Neither a mistake of fact or law vitiates an award.”
Id. at 561-62 (internal quotation marks omitted). The Brewer court recognized that an arbitrator may erroneously impose the burden of proof upon the wrong party, but errors of that kind are a part of the cost of employing the arbitration method of decision-making. Id. at 562. The court explained, “The principal purpose of arbitration is to avoid litigation. If the arbitrator‘s award is subject to extensive judicial control, this purpose is largely frustrated.” Id. The court concluded that, although it might seem preferable to impose the burden of proof on the insurer, the arbitrator‘s determination was “not so grossly erroneous as to strike at the heart of the decision-making process.” Id. at 563. Thus, the trial court had erred in vacating the arbitration award. Id.; see also 3000 Investment Corp. v. Teed, 313 Or App 619, 620, 494 P3d 378 (2021) (following Brewer standard).
In Nieto v. City of Talent, 295 Or App 625, 629, 436 P3d 82 (2019), we repeated the explanation that “‘the grounds for obtaining the vacation of an [arbitration] award are extremely narrow in comparison with the scope of review available to litigants in court.‘” (quoting Vasquez-Lopez v. Beneficial Oregon, Inc., 210 Or App 553, 568, 152 P3d 940 (2007) (brackets in Nieto)). In Nieto, involving review of a referee‘s decision under the standard of
In this case, Laurie‘s objection that Scott or the arbitrator had failed to initiate a prehearing teleconference on the suitability of Scott‘s motion for summary determination is, at worst, merely an alleged error of procedure under Laurie‘s view of ASP Rule 16.6 That objection is not more than the ordinary, alleged error of fact or law that is not cognizable as a matter of review of the “arbitrator‘s powers” under
Finally, we return to the preliminary observation that Laurie does not challenge on appeal the trial court‘s
finding that the sisters had an opportunity to respond with facts contrary to Scott‘s cross-motion. Laurie does not assert that the arbitrator refused to consider evidence material to the determination, which had been offered, so as to prejudice substantially her rights. See
For those reasons, we conclude that the trial court did not err in denying the sisters’ motion to vacate or granting Scott‘s motion to confirm the award.
Affirmed.