Campbell v. Cambell, Ky COA, Arbitration Of Family Law Matters Prohibited

Campbell v. Campbell  2006-CA-001803-MR and 2006-CA-001827-MR

Issue:  Arbitration of family law cases

Published:   Reversing and Remanding with Directions

County: Jefferson

 

Ex-Husband and Ex-Wife appealed and cross-appealed, on substantive grounds, Findings of Fact, Conclusions of Law and Judgment prepared by Arbitrator and signed and entered by family court (FC).  CA, holding that family law disputes are not arbitratable, reversed and remanded to FC for trial. 

 

FACTS:

After the parties commenced divorce proceedings and entered a limited decree of dissolution, they entered an Arbitration Agreement vesting the arbitrator with absolute authority to resolve all remaining issues between the parties. The arbitrator held a hearing on those issues and rendered written findings of fact, conclusions of law, and judgment adjudicating same. Per the terms of the agreed order, the FC entered the arbitrator’s judgment as a judgment of the court without independent judicial review or without an opportunity of either party to submit “objections” to the court. The arbitration agreement provided for appellate review upon the same ground as if decided by the FC. 

 

ANALYSIS:

CA first found that if the arbitration statute of KRS 417.160(1) applied, CA would be required to affirm both appeals as the requirements of that statute, providing only limited grounds for appeal, none of which are substantive, had not been met.  CA disagreed with parties’ contention that the case could be reviewed as a “hybrid” proceeding in which the requirements of KRS 417.160 could be ignored. 

 

Improper Delegation of Judicial Duties and Powers to the Arbitrator

CA held that by following terms of the Arbitration Agreement, FC improperly delegated its constitutional duties, including its decision making authority to an arbitrator in contravention of Section 109 of the Kentucky Constitution and in circumvention of the legislative intent regarding the duties of family court judges.  An improper delegation of the court’s powers has occurred if the decision-making process is not under the control of the FC or if the judgment is not a product of the deliberations of the trial judge’s mind. Further, the authority to issue sanctions by awarding attorney’s fees or to sanction a party for contempt are exclusively reserved to the discretion of the FC.  Lastly, since domestic relations commissioners in counties establishing family courts have been abolished, there is no authority that allows FC judges to delegate cases to third parties, including an arbitrator.

 

Arbitration Not Within Purview of Local Rules of Court

The delegation of judicial duties to the arbitrator is in direct violation of the JFRP and JFRP 711 which requires cases not otherwise settled to be heard by trial before a judge.  Arbitration is not a viable alternative to parties with lower incomes who can not afford to pay an arbitrator a high hourly rate, effectively creating a class system within Jefferson Family Court proceedings where more affluent individuals have the opportunity to pay for a “private judge” to conduct their proceedings – while parties of lesser means and income must have their case heard by FC judges in perhaps a less expeditious time frame. Such a system that permits affluent individuals the opportunity to expedite the disposition of their domestic relations cases in FC that is cost prohibitive to persons of lesser incomes is both unconscionable and unconstitutional on its face.

 

Kentucky Uniform Arbitration Act Does Not Apply to Family Law Cases

A dissolution proceeding is not an arbitratable controversy within the meaning of KRS 417.050, which defines those cases that may be arbitrated. KRS 417.050 provides that “any existing controversy” may be subject to arbitration by written agreement of the parties. Because of the state’s compelling interests in the area of domestic relations and the court’s unique protective role in such area of the law, a domestic relations proceeding is not an arbitratable controversy within the meaning of KRS 417.050. These types of domestic disputes are not amenable to binding arbitration absent independent and meaningful judicial oversight. 

 

Furthermore, the Arbitration Act clearly requires that a party be given the opportunity to challenge the arbitration award in court and requires the court to consider such challenge before confirming the arbitration award. In this case, there was no confirmation process.  FC endorsed the arbitration award without any independent judicial review and without the opportunity of either party to challenge the award before the court. Such arbitration procedure is clearly contrary to the express provisions of the Arbitration Act, thus rendering the judgment unenforceable on this ground as well.

 

Summation: 

Under both the constitution and applicable law in Kentucky, the Findings of Fact, Conclusions of Law and Judgment entered by FC are neither enforceable nor legally valid. Under JFRP 702 and under CR 52.01, FC is required to conduct a hearing or trial upon the pending dissolution action and to make independent findings of fact and conclusions of law. This is a case of first impression in Kentucky. Accordingly, this opinion is limited to the cases now on appeal and has prospective application only as to any pending or future arbitration proceedings in the Jefferson FC or any other FC in Kentucky.

 

Digested by Michelle Eisenmenger Mapes, Diana L. Skaggs + Associates