Masters v. Masters, ---N.E. 3d---,2015 WL 6107845 (Ind. Oct. 16, 2015)*

Masters v. Masters, --- N.E.3d ---, 2015 WL 6107845 (Ind. Oct. 16, 2015)[1]

In Masters, the Indiana Supreme Court vacated the decision of the Indiana Court of Appeals, Masters v. Masters, 20 N.E.3d 158 (Ind. Ct. App. 2014), trans. granted, and reinstated an award of attorney’s fees awarded to the Mother in a proceeding under the Family Law Arbitration Act (“FLAA”). The Indiana Supreme Court held that the standard of review of a decision issued under the FLAA is the same standard of appellate review applicable to trial court decisions in marriage dissolution cases. Nevertheless, the Indiana Supreme Court affirmed the award of attorney’s fees to Mother.

The parties in Masters were married in 1993 and were the parents of one child. After initiation of dissolution proceedings, the parties signed an agreement to submit to arbitration pursuant to the FLAA. The arbitrator dissolved the marriage, divided the marital assets, and ordered Father to pay $95,000 of Mother’s attorney’s fees. Father appealed the award of attorney’s fees. The Court of Appeals reversed.

The Court of Appeals held that the arbitrator’s award of attorney’s fees was clearly erroneous because the findings did not demonstrate Father’s ability to pay the attorney’s fees assessed against him. Specifically, the Court of Appeals held that the award of attorney’s fees was $1,000 more than the Father’s share of the “valued portion” of the marital estate. Mother argued that there was evidence submitted to the arbitrator regarding a valuable coin collection including its appraised value and that Father’s estimated share of the coin collection (which exceeded the fee award) demonstrated his ability to pay the assessed attorney’s fees. The Court of Appeals disagreed, holding that the arbitrator found the coins had an “unknown value”, that the arbitrator found the Father should not be compelled to auction his coins, and that the Court would not speculate on the value or hold that the arbitrator intended for the Father to use his share of the coins to satisfy the attorney’s fees award. 

The Supreme Court granted transfer and vacated the decision of the Court of Appeals. The Supreme Court first held that the standard of review applicable to an arbitrator’s findings and conclusions under the FLAA is not the highly deferential and narrow standard of review applied by the Uniform Arbitration Act (“UAA”). Rather, the standard of review of an arbitrator’s findings and conclusions under the FLAA is the same “clearly erroneous” standard applicable to a decision of the trial court under similar circumstances.

However, the Indiana Supreme Court held that it would consider the sizable coin collection in determining whether the arbitrator’s award of attorney’s fees was clearly erroneous. The Court found that, when considering the coin collection, the arbitrator’s fee award was not against the logic of the circumstances before her, that the award was supported by the findings, and that the Father “failed to show clear error that leaves [the Court] with a definite and firm conviction that a mistake has been made.” 

Masters is notable because it is the first case to specifically and definitively establish the standard of review of an arbitrator’s findings of fact and conclusions of law under the FLAA. Even though an arbitrator is often not a judge and the proceedings under the FLAA are intended to be streamlined, the same standard of review will apply to an arbitrator’s findings and conclusions as if the case had proceeded traditionally with the trial court ultimately issuing a judgment. However, even though findings and conclusions of a family law arbitrator do not enjoy the same deferential standard granted to arbitrators under the UAA, an award of attorney’s fees under the FLAA still lies within the sound discretion of the arbitrator.

- Author: Michael Michmerhuizen

[1] * In the interest of full disclosure, the author represented the Mother in the proceedings before the Indiana Court of Appeals and the Indiana Supreme Court.