Many couples facing a Texas divorce seek alternative dispute resolutions, such as arbitration or mediation. Parties to an arbitration are entitled to an impartial arbitrator. The Texas Arbitration Act requires a court to vacate an arbitration award on the application of a party if that party’s rights were prejudiced by “evident partiality” of an arbitrator. The award should be vacated if the arbitrator does not disclose information that might give an objective observer a reasonable impression that the arbitrator is partial. The requirement to disclose applies whether the conflict arises before or during the proceedings. The nondisclosure itself establishes evident partiality, regardless of whether there is actual partiality or bias. Texas courts have acknowledged that extensive experience in the area of law related to the dispute will result in a need for the arbitrator to disclose prior dealings with parties or attorneys. However, the parties should be informed and have the opportunity to evaluate the potential bias ahead of time.
In a recent case, a wife challenged an arbitration award based on the arbitrator’s failure to disclose his connection to the husband’s attorney. The parties agreed to arbitration pursuant to their pre-marital agreement. In the initial status conference, the arbitrator said he did not have a material relationship with either party or their attorneys beyond normal professional relationships. He did not supplement his disclosures after a new attorney filed a notice of appearance on behalf of the husband as co-counsel.
When the arbitrator failed to issue an award within the time frame set by the court, the husband’s attorney requested a ruling. In her email, she stated, “You know how much I think of you as a friend and a lawyer . . .” The arbitrator issued the award several days after the email, ruling in favor of the husband and against most of the wife’s claims.
The wife moved for a continuance, stating she had evidence of an undisclosed social relationship between the arbitrator and the husband’s attorney. She asked to conduct further discovery and moved to vacate the arbitration award on the grounds she was prejudiced by the arbitrator’s partiality.
The husband filed an affidavit signed by his attorney. The attorney stated she had known the arbitrator for more than 30 years. She stated they both practiced in the same area of law and were both active in state bar activities and CLE programs. She stated she and other family law attorneys had attended three or four cookouts associated with the state bar at the arbitrator’s home. They had each spent the weekend at a mutual friend’s ranch, along with their respective significant others and other Houston attorneys.
The trial court found the motion for continuance was not filed timely and signed a final decree pursuant to the arbitration award. The wife moved for a new trial, or, in the alternative, to vacate, modify, correct or reform the decree.
The husband’s attorney testified the arbitrator had mediated her cases five or six times and arbitrated an issue in one case several years ago. She also testified she had arbitrated a case he was involved in but did not remember the details. She said she had gone to the ranch as the guest of her significant other.
The arbitrator testified he had known the attorney for about 30 years. He said he had been mediator in her cases “maybe five” times and had been “clean up arbitrator” in a telephone arbitration. He said he only remembered one cookout. He also testified there were six to eight couples at the ranch that weekend.
The trial court denied both motions. The wife appealed, arguing the failure to disclose the personal and professional relationship with the husband’s attorney showed partiality that warranted vacating the award. She pointed to the attorney’s presence as a guest at cookouts at his home, the weekend both spent at the ranch, and the previous arbitration and mediations.
An arbitrator does not have to disclose trivial relationships. The appeals court found, however, these were not trivial interactions and the two did in fact have a social relationship. Furthermore, the arbitrator had previously been mediator and arbitrator for the attorney in multiple cases. The husband argued the interactions were limited and they had merely a trivial social relationship. The appeals court it must review the facts from the perspective of an objective but found these connections could give an objective observer the reasonable impression that the arbitrator was partial.
The husband argued the trial court had resolved any questions of fact regarding evident partiality in his favor. The appeals court noted the issue was a matter of law, not fact. A trial court can resolve conflicts in the evidence, but there were no material conflicts requiring a factual finding. There were some differences in the recollections of the attorney and arbitrator, but the appeals court ultimately found the differences were not material.
The appeals court also rejected the husband’s argument the wife waived the partiality complaint by not raising it earlier. The appeals court found the email from the husband’s attorney did not constitute a full disclosure of the relationship.
The appeals court found the arbitrator’s failure to disclose the relationship constituted evident partiality. The court affirmed the portion of the decree granting the divorce, but reversed the rest of the decree and remanded.
If you are facing a divorce, a skilled Texas divorce attorney can assist you. The attorneys at McClure Law Group are experienced in both arbitration and litigation. Call us today at 214.692.8200 to discuss your case.