Janet Lashar Eppel v. Christopher James Eppel

STATE OF MICHIGAN

COURT OF APPEALS

JANET LASHAR EPPEL, aka JANET L. FOR PUBLICATION

LASHAR, January 9, 2018

9:25 a.m.

Plaintiff-Appellant,

v No. 335653

Allegan Circuit Court

CHRISTOPHER JAMES EPPEL, LC No. 11-048048-DM

Defendant-Appellee.

JANET LASHAR EPPEL, aka JANET L.

LASHAR,

Plaintiff-Appellee,

v No. 335775

Allegan Circuit Court

CHRISTOPHER JAMES EPPEL, LC No. 11-048048-DM

Defendant-Appellant.

Before: MARKEY, P.J., and HOEKSTRA and RONAYNE KRAUSE, JJ.

PER CURIAM.

In this consolidated appeal, both parties appeal by leave granted different portions of an

order entered by the trial court vacating part of an arbitration award and remanding the matter to

the arbitrator. This case arises out of a divorce proceeding commenced in early 2011 that

resulted in entry of a judgment of divorce in 2012, followed by extensive disputes over

implementation details. The parties eventually stipulated to binding arbitration, which, after

further contentiousness before the arbitrator, resulted in an award that plaintiff found acceptable

but defendant did not. The trial court vacated part of the award and remanded for the arbitrator

to consider awarding plaintiff attorney fees “based on need.” We affirm in part, reverse in part,

and remand.

The parties were married in 1992, and they had three children, the youngest of whom was

born in May of 2000. The divorce was contested, but apparently the parties were able to

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cooperate effectively regarding parenting time, custody, their children’s various issues, and

payment of expenses. The trial court ultimately entered a judgment of divorce, along with a

uniform child support order and a uniform spousal support order. Both had attachments

describing additional obligations. Relevant to the instant appeal, the spousal support order’s

attachment stated, in pertinent part:

As and for additional spousal support, the Defendant shall pay 19.5% of

Defendant’s gross bonuses and/or deferred compensation within 15 days of

payment. He shall provide proof as to the gross amounts. This provision applies

to bonuses and/or deferred compensation beginning in 2012. Additionally, the

Defendant shall pay 19.5% of any and all restricted and performance shares when

they vest based upon the market value of the gross vested shares at the vesting

date or the first available date after lock-out ends. This additional spousal support

obligation shall cease after 84 months, or shall terminate earlier upon the event of

Plaintiff’s death within 36 months of the entry of the Judgment of Divorce, or

Plaintiff’s death, remarriage or cohabitation after 36 months from the entry of the

Judgment of Divorce. Mr. Eppel is to provide proof of receipt of all bonuses,

deferred compensation, restricted and performance shares within 15 days of

receipt. The term “lock-out” referenced above refers to the blackout period in

which a shareholder is prohibited from purchase or sale of securities under SEC

regulations.

Defendant draws a distinction between the language used in the above order and the attachment

to the Uniform Child Support Order, which provides, in relevant part, that:

for additional child support, for 3 children the Defendant shall pay 16.7% of his

gross bonuses, deferred compensation, vesting restricted shares and performance

shares, the net value of vested options received after 12/31/11 as if they were

exercised on the date of vesting or the first available date after lock-out ends,

13.3% for two children of all above-stated categories, and 8.7% for one child.

As will be discussed, defendant believes that the child support attachment therefore includes a

requirement to pay support based on stock options, but the spousal support attachment does not.

The parties engaged in a significant amount of post-judgment conflict over numerous

matters, most of which are no longer at issue. Relevant to this appeal, the trial court entered a

qualified domestic relations order granting plaintiff half of defendant’s interest, as of December

31, 2011, in something called the “Perrigo Profit Sharing and Investment Plan.” Simultaneously,

the trial court entered a domestic relations order granting plaintiff half of defendant’s interest,

also as of December 31, 2011, in the “Perrigo 2005 Nonqualified Deferred Compensation Plan

(As Amended and Restated Effective January 1, 2007).” Perrigo was defendant’s employer until

some time around September of 2013, after which he eventually obtained employment with

Allied Specialty Vehicles (ASV). Defendant was terminated from ASV effective September 25,

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2015, but remained in some manner of a “consulting” role for another twelve months. Relevant

to the instant appeal, a letter1 so stating provided, inter alia, the following “consulting benefits”:

You hold 1,150 shares of common stock of the Company (the “Shares”); and

pursuant to the provisions of the Company’s 2010 Long-Term Incentive Plan, as

amended (the “Plan”) and the Nonqualified Stock Option Agreements between

you and the Company dated as of January 20, 2014 (the “Option Agreements”),

you own stock options to purchase 3,000 shares of common stock of the Company

(the “Options”) at a strike price of $354.74 which had the following vesting

schedule:

• 1,000 Optioned Shares (the “Performance Based Options”) shall vest

25% per annum over 4 years. Records indicate 500 Optioned Shares

have previously vested.

• 1,000 Optioned Shares (the “Performance Based Options) shall vest

upon the Company achieving annual earnings before interest, taxes,

depreciation and amortization (EBITDA) on a Last Twelve Months

(LTM) basis of at least $80 million. These Optioned Shares have

previously vested.

• 1,000 Optioned Shares (the “Performance Based Options”) shall vest

upon the Company achieving annual earnings before interest, taxes,

depreciation and amortization (EBITDA) on a Last Twelve Months

(LTM) basis of at least $90 million. These Optioned Shares have

previously vested.

Current fair market value of all common stock and Optioned Shares is $594.89.

Pursuant to the Shareholders Agreement, ASV may exercise its right to

repurchase your shares and vested options. Per mutual agreement, ASV will

complete this repurchase no sooner than January 1, 2016 and no later than January

31, 2016. The purchase price for all of your common stock and 2,500 vested

Optioned Shares (net of the strike price) is equal to $1,284,489.50, which ASV

will pay in cash upon your surrender of the stock and option certificates or

instruments, if any.

Broadly, the central dispute remaining in this matter is whether plaintiff is entitled to any portion

of the ASV stock repurchase pursuant to the Uniform Spousal Support Order Attachment.

Without engaging in unnecessary detail, the record discloses a relationship between the

parties post-divorce that can best be described as mutually distrustful and antagonistic, both

engaging in voluminous motion practice. Relevant to the instant appeal, the parties agreed and

entered a stipulation to arbitrate. In relevant part, the stipulation specifically enumerated six

motions that were outstanding as of the date of the stipulation, and it further provided that the

1

We could find no copy of this letter in the lower court record, but it appears that it was

introduced into evidence before the arbitrator and we perceive no dispute that the copy provided

on appeal is accurate and real. We remind the parties that it is unwise not to ensure that evidence

about which they might care on appeal is properly included in the lower court’s record.

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arbitrator “shall arbitrate all of the remaining, post judgment issues in the case, except for any

determinations of contempt and applicable sanctions, which are specifically reserved for the

Court’s consideration,” although the arbitrator was empowered to make recommendations. The

parties continued to file motions, ranging from parenting time issues to allegations of

noncompliance with interim orders from the arbitrator to efforts to disqualify the judge. One of

the motions was styled as an amended version of one of the motions that had already been

submitted to arbitration pursuant to the above stipulation. The arbitrator issued his first opinion

on May 5, 2016, almost two years after the parties stipulated to arbitrate.

The arbitrator’s opinion2 is not a model of clarity, although it is readily apparent that the

arbitrator had a great deal with which to contend. The introductory portion enumerated the

outstanding motions from the original stipulation, but noted that “the Order also required any

other issues excepting those related to contempt and sanctions to be resolved by the Arbitrator as

they are brought.” It observed that “[p]roofs had to be reopened in 2015 to access information

relative to the Defendant’s job change and new income numbers for calculation purposes.” In

relevant part, the arbitrator determined that defendant owed plaintiff a payment of $236,160.00

on the basis of the ASV stock repurchase. Both parties apparently requested that the arbitrator

correct certain alleged errors or omissions.3 The arbitrator issued a response noting that

modification of spousal support had not been made arbitrable, but what exactly should be

considered compensation to defendant for purposes of calculating that support was a subject of

arbitration. Relevant to the instant appeal, the arbitrator conceded that 500 of the ASV stocks

would never vest and should be subtracted from the above calculations. The arbitrator deemed

the only reasonable interpretation of the Uniform Spousal Support Order Attachment to be that

any subsequent compensation or stock was to be considered income for support purposes, and

that the ASV stock purchase necessarily had to be considered compensation, although limited

only to gains realized from the stock rather than the entire buy-back price.

Plaintiff moved in the trial court to confirm the ultimate award, and defendant moved to

vacate or modify portions of it. In relevant part, defendant argued that 2,500 shares’ worth of

repurchased ASV stock options were properly used to calculate additional child support because

the Uniform Child Support Order explicitly included a percentage “of the net value of vested

options,” whereas the Uniform Spousal Support Order did not include stock options for purposes

of calculating support payment. Consequently, including 19.5% of the ASV stock repurchase

was an impermissible modification of the Uniform Spousal Support Order; furthermore, the

arbitrator exceeded his authority by doing so because that was not part of any of the outstanding

motions submitted to arbitration. Defendant also argued that the other 1,150 shares of ASV

stock were personal purchases, not even arguably compensation, and the arbitrator erred by

requiring him to pay 19.5% of the capital gains from his sale thereof. It appears that the

arbitrator’s opinion did not clearly distinguish between the two categories of ASV stock.

For the most part, the trial court did confirm the arbitration award, and to the extent it did

so, those matters are not before this Court on appeal. The trial court also concluded, after

holding a hearing, that:

2

We again cannot find an original copy of the Arbitrator’s Opinion in the lower court record.

3

Neither request is found in the lower court record.

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the Arbitrator exceeded his authority by improperly modifying the Uniform

Spousal Support Orders by granting Plaintiff 19.5% of the net profits from the

sale of the ASV stock options and, therefore, the Arbitrator’s opinion granting

plaintiff $117,073.20 is vacated. Further, and for the same reasons, the

Arbitrator’s Opinion that Defendant should pay Plaintiff as additional spousal

support 19.5% of the capital gains from the sale of the ASV common stock in the

amount of $35,971.94 should be vacated.

The trial court denied the remainder of defendant’s request. However, it also remanded to the

arbitrator “the issue of attorney fees requested by Plaintiff” limited “to the need of Plaintiff to be

reimbursed for attorney fees pursuant to MCR 3.206(C)(2) related to the enforcement

proceedings initiated by Plaintiff.” Both parties attempted to claim an appeal by right, and we

subsequently granted their applications for leave.

“This Court reviews de novo a circuit court’s decision to enforce, vacate, or modify an

arbitration award.” Cipriano v Cipriano, 289 Mich App 361, 375; 808 NW2d 230 (2010), lv den

489 Mich 869 (2011). Under the Domestic Relations Arbitration Act (DRAAA), MCL 600.5070

et seq., “parties to a domestic-relations proceeding may stipulate to submit their disputed issues

to binding arbitration” pursuant to a written contract that defines, dictates, and limits the powers

of the arbitrator. Id. at 367, 376. By default, the trial court is required to enforce the arbitrator’s

award. MCL 600.5079(1). However, the trial court is required to vacate the award under MCL

600.5080(1) if the trial court finds the award adverse to the best interests of the child, or relevant

to the instant matter, under MCL 600.5081(2)(c) if “the arbitrator exceeded his powers.” “An

arbitrator exceeds his or her powers if the arbitrator acts in contravention of controlling law” or

“exceed[s] the powers that the parties’ agreement granted to him.” Cipriano, 289 Mich App at

373, 377. To “exceed his powers” is essentially a longstanding shorthand for deviating from the

contract or controlling law. Washington v Washington, 283 Mich App 667, 672; 770 NW2d 908

(2009). “In order for a court to vacate an arbitration award because of an error of law, the error

must have been so substantial that, but for the error, the award would have been substantially

different.” Cipriano, 289 Mich App at 368. Any such error must be readily apparent on the face

of the award without second-guessing the arbitrator’s thought processes, and the arbitrator’s

findings of fact are immune to review altogether. Washington, 283 Mich App at 672.

The gravamen of the parties’ dispute appears to be whether the arbitrator effectively

modified the parties’ Uniform Spousal Support Order by awarding plaintiff 19.5% of the profits

from the sale of defendant’s ASV stock, although defendant presumably also would argue4 that

the arbitrator exceeded his authority by addressing a matter not strictly contained within the six

motions pending when the parties agreed to arbitrate. The latter is obviously meritless.

“Arbitrators exceed their powers whenever they act beyond the material terms of the contract

from which they draw their authority or in contravention of controlling law.” Miller v Miller,

474 Mich 27, 30; 707 NW2d 341 (2005). The arbitration stipulation states that the parties agreed

to arbitrate the outstanding motions, and in a separate section, directed the arbitrator to “arbitrate

all of the remaining, post judgment issues in the case, except for any determinations of contempt

and applicable sanctions.” Clearly, this was intended to be relatively open-ended and to bring

4

Defendant’s counsel apparently encountered technical difficulties in submitting a brief to this

Court.

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the entire matter to a conclusion; considering the two years the parties nevertheless contrived to

stretch the arbitration proceedings, it defies reason to conclude that the arbitrator was prohibited

from addressing later spousal support and income issues as they arose.

The former argument is apparently based on the fact that the Uniform Child Support

Order Attachment includes the word “options,” whereas the Uniform Spousal Support Order

Attachment does not. While accurate, both attachments do encompass “restricted and

performance shares” upon vesting. The letter from ASV describes 3000 (of which 500 will not

vest) shares as “Optioned Shares (the ‘Performance Based Options’).” We do not understand

why those would not be considered “performance shares,” nor can we find any coherent

argument presented anywhere in the record explaining otherwise. Furthermore, given that the

shares were apparently conferred upon defendant as part of his compensation, and he only

received liquid value for them upon his termination from ASV, they at least plausibly constitute

some form of “deferred compensation,” which is also encompassed by the Uniform Spousal

Support Attachment.

Given that the review of arbitrators’ decisions is highly deferential, determining whether

the 2,500 ASV stocks constitute either deferred compensation or performance shares is clearly

within the arbitrator’s authority, and the determination itself is at least partly factual, we find it

impossible to reasonably conclude that the arbitrator’s decision to award plaintiff 19.5% thereof

exceeded his powers.

In contrast, the other 1,150 shares were purchased by defendant. Plaintiff’s argument is

that these shares constitute “gross bonuses and/or deferred compensation” because he was only

permitted to make those purchases because of his employment. We agree with defendant’s

argument made in the trial court that it does not constitute either a bonus or compensation merely

because a condition of his employment afforded him an opportunity to make a personal

investment that would have otherwise been unavailable. Defendant bought the stock with his

own money, it was not granted to him as either part of a compensation package or as a

consequence of meeting a performance goal. In light of the poor comprehensibility of the

arbitrator’s opinion, we cannot deem the arbitrator’s inclusion of the profit from the 1,150 ASV

shares to be an unreviewable factual finding. We therefore conclude that the arbitrator

completely deviated from the plain language of the Uniform Spousal Support Attachment by

including the profit from the 1,150 ASV shares. This departure is of such magnitude to

constitute a “substantial” error that resulted in a “substantially different” outcome, Cipriano, 289

Mich App at 368, and it is readily apparent on the face of the award. Washington, 283 Mich App

at 672.

Defendant argues that the trial court also erred in remanding the matter to the arbitrator to

address plaintiff’s request for attorney fees based on her financial need. We agree. As

discussed, the arbitrator was authorized to consider all post-judgment issues. However, the

arbitrator had already done so, and had in fact expressly rejected a request for attorney fees made

by plaintiff, noting, among other things, that there was some argument that both parties’

acrimony was responsible for the accumulation of attorney fees by both parties. Plaintiff

apparently did not object to that rejection. It appears that the only arguments plaintiff made

regarding attorney fees to the arbitrator were based on MCR 3.206(C)(2)(b), that defendant’s

noncompliance entitled her to the fees. Indeed, our review of the record indicates that plaintiff

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made such a request at least a half-dozen times; it seems that plaintiff routinely added to her

numerous motions a request that defendant be required to pay attorney fees associated with the

motion, but none of them “allege[d] facts sufficient to show that [ . . . ] the party is unable to bear

the expense of the action.” MCR 3.206(2)(a).

Clearly, attorney fees were placed before the arbitrator. Equally clearly, at least based on

the available record, attorney fees based on need were not, or at least they were not specifically

argued. Plaintiff claims that she submitted an Arbitration Summary on July 31, 2015, that cited

MCR 3.206(2)(a), but that document is not actually found anywhere in the lower court record.

Defendant does provide what purports to be a copy of that document, and if accurate, it simply

recites MCR 3.206(2) in its entirety and then proceeds to argue entirely that she incurred

expenses because of defendant’s violations and misconduct and lack of good faith, clearly

constituting an argument under MCR 3.206(2)(b). As a consequence, the record establishes that

defendant is correct in asserting that attorney fees based on plaintiff’s need were only expressly

raised for the first time after the trial court read from the bench its decision to reverse part of the

arbitrator’s award.

Plaintiff argues that attorney fees are only permitted in a divorce action where necessary

to permit a party to pursue or defend the action, thus placing attorney fees based on need before

the arbitrator by necessary implication. The case cited by plaintiff does say as much.

Stoudemire v Stoudemire, 248 Mich App 325, 344; 639 NW2d 274 (2001). However, at the time

Stoudemire was decided, MCR 3.206(C) only provided for attorney fees based on need. The

Court Rule was amended in 2003 specifically to add a provision for attorney fees to be granted

based solely on a litigant’s improper behavior. See Amendments of Michigan Court Rules of

1985, 468 Mich LXXXV.5 The statement in Stoudemire and any cases it cites or that cite it are no

longer based on an accurate understanding of the relevant Court Rule. Furthermore, presuming

the Arbitration Summary supposedly filed by plaintiff is accurate, plaintiff was actually aware of

the current provisions of the Court Rule and cannot claim surprise. Because plaintiff only argued

that attorney fees were appropriate based on defendant’s allegedly improper behavior, attorney

fees based on need were, by necessary implication, not argued.

Plaintiff also accurately notes that under MCL 552.12, “In every action brought . . . the

court may require either party to . . . pay any sums necessary to enable the adverse party to carry

on or defend the action, during its pendency.” Nevertheless, as discussed, there is no indication

in the record that we can find indicating that at the time the parties agreed to arbitrate, or

5

Prior to the amendment, MCR 3.206(C) provided as follows:

(C) Attorney Fees and Expenses

(1) A party may, at any time, request that the court order the other

party to pay all or part of the attorney fees and expenses related to the

action.

(2) A party who requests attorney fees and expenses must allege

facts sufficient to show that the party is unable to bear the expense of

the action, and that the other party is able to pay.

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thereafter, any outstanding request existed from plaintiff for “sums necessary to enable her to

carry on the action.”

Although the arbitrator’s opinion was rambling, the arbitrator did explicitly consider

attorney fees, and he decided against awarding them. There is no indication that the arbitrator

considered plaintiff’s need in doing so, but there is also no indication in the arbitrator’s response

to both parties’ requests to correct errors and omissions that plaintiff’s need was ever placed at

issue. Consequently, need was raised for the first time after the trial court read its decision to

vacate part of the award. The trial court’s remand to the arbitrator was apparently based on the

logic that the arbitrator might have reached a different conclusion about attorney fees if the “big

picture” of the award as a whole was altered by the reduction of $153,045.14. While

understandable, this decision suffers from the fatal flaw that attorney fees based on need were

never before the arbitrator in the first place, so no decision thereon existed to be reconsidered.

The trial court’s remand was therefore an improper ad hoc submission of an entirely new issue

that the parties had not agreed to arbitrate.

Consequently, the trial court’s order vacating the arbitrator’s award granting plaintiff

19.5% of the 1,150 shares of ASV stock is affirmed; the trial court’s decision to vacate the

portion of the arbitrator’s award granting plaintiff 19.5% of the 2,500 shares of ASV stock is

reversed; and the trial court’s remand to the arbitrator of the issue of attorney fees based on need

is reversed. The matter is remanded to the trial court for entry of an order consistent with this

opinion. We retain jurisdiction. In Docket No. 335653, the parties shall bear their own costs,

neither having prevailed in full; in Docket No. 335775, defendant, being the prevailing party,

may tax costs. MCR 7.217(A).

/s/ Jane E. Markey

/s/ Joel P. Hoekstra

/s/ Amy Ronayne Krause

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Court of Appeals, State of Michigan

ORDER

Jane E. Markey

Janet Lashar Eppel v Christopher James Eppel Presiding Judge

Docket No. 335653 Joel P. Hoekstra

LC No. 11-048048-DM Amy Ronayne Krause

Judges

Pursuant to the opinion issued concurrently with this order, this case is REMANDED for

further proceedings consistent with the opinion of this Court. We retain jurisdiction.

Proceedings on remand in this matter shall commence within 28 days of the Clerk’s

certification of this order, and they shall be given priority on remand until they are concluded. The

proceedings on remand are limited to these issues.

The parties shall promptly file with this Court a copy of all papers filed on remand.

Within seven days after entry, appellant shall file with this Court copies of all orders entered on remand.

The transcript of all proceedings on remand shall be prepared and filed within 21 days

after completion of the proceedings.

/s/ Jane E. Markey

January 9, 2018