Marriage of MacKenzie

20CA1246 Marriage of MacKenzie 10-21-2021 COLORADO COURT OF APPEALS Court of Appeals No. 20CA1246 City and County of Denver District Court No. 19DR30646 Honorable Ericka F.H. Englert, Judge In re the Marriage of John Jason MacKenzie, Appellee, and Kelie Gwen Plank-MacKenzie, Appellant. JUDGMENT AFFIRMED AND CASE REMANDED WITH DIRECTIONS Division II Opinion by JUDGE BERGER Román and Yun, JJ., concur NOT PUBLISHED PURSUANT TO C.A.R. 35(e) Announced October 21, 2021 Colorado Family Law Project, Maha Kamal, Denver, Colorado, for Appellee Gill & Ledbetter, LLP, Anne Whalen Gill, Castle Rock, Colorado, for Appellant 1 ¶ 1 In this dissolution of marriage cas e between Kelie Gwen Plank- MacKenzie (wife) and John Jason MacKenzie (husband), wife appeals the district court’s confirm ation of an arbitration award concerning the division of their ma rital estate, entered after the court denied her motion to vacate, modify, or correct the award. W e affirm the judgment and remand th e case for further proceedings on appellate attorney fees. I. Background ¶ 2 After approximately two years of marriage, husband initiated the dissolution proceeding. The parties attended mediation, which resulted in a partial property settlem ent agreement. As well, they agreed to participate in another m ediation session and to submit any issues unresolved after the s econd mediation to binding arbitration. The partial property s ettlement agreement provided that the “[a]rbitrator shall follow t he Colorado substantive law.” The parties later executed a media tion and arbitration services agreement, which reiterated that the arbitrator had the power to make a summary decision on all is sues unresolved through mediation. 2 ¶ 3 The second mediation session was unsuccessful, and the matter proceeded to arbitration. The arbitrator (who also acted as the mediator) issued three partial arbitration awards that, collectively, resolved the division o f property and debt. In the end, the arbitrator divided the marital estate relatively equally, with each party receiving approximately $60, 000 in assets and $40,000 in debts. As relevant, the arbitrator found the following:  The arbitrator recognized that t he parties received rental properties in the partial property s ettlement agreement, and he directed that each party w as responsible for returning the rental security depos it to their respective tenants, even though both securi ty deposits had been placed into a bank account allocat ed to husband. The arbitrator accounted for the resp ective security deposits ($2,000 for each property) as a ma rital debt.  The arbitrator found that husband and wife paid for their attorney fees on their marital credi t cards — approximately $6,600 for wife and ap proximately $27,000 for husband. He divided t he credit card debt between the parties, declining to m ake any adjustment to 3 the property division for husband’s greater expenditure of marital funds for attorney fees.  The arbitrator found that husband would incur costs for moving and storing his furnishin gs because he was unable to move into the real proper ty he received in the partial property settlement agreem ent. The arbitrator estimated these costs ($1,500 for a storage unit and $2,000 to move) and included th em as marital debts allocated to husband.  The arbitrator rejected wife’s argu ment that husband had separate premarital credit card d ebt, finding that, while the premarital credit card was in hus band’s name, wife also contributed to the debt incurr ed on that credit card.  The arbitrator found that, befor e the marriage, wife earned substantially more incom e than husband but, during the marriage, she was volun tarily unemployed. The arbitrator further found that wife had recently obtained a job and her current earni ngs were expected to surpass husband’s earnings. 4  The arbitrator found that wife had separate property and debt worth $622,606 and that hus band had separate property and debt worth $314,47 4, which he set aside before dividing the marital estat e. ¶ 4 Husband then asked the district court to confirm the collective arbitration award. Wife objected and filed a motion to vacate, modify, or correct the arbitration a ward. As relevant, she argued that the court must vacate th e award because the arbitrator exceeded his powers and demonst rated evident partiality. ¶ 5 The district court denied wife’s m otion and confirmed the arbitration award. It rejected her a rguments that the arbitrator exceeded his powers, finding that her complaints were merely an improper attempt to challenge th e merits of the arbitrator’s award. And it concluded that wife failed t o demonstrate any evident partiality by the arbitrator. ¶ 6 The court also determined that wif e’s motion lacked substantial justification, and it awa rded husband the attorney fees he incurred responding to the moti on. 5 ¶ 7 The court later entered a decree that dissolved the marriage and adopted the arbitration award as its permanent orders. 1 II. Arbitration Award ¶ 8 Wife contends that the district cou rt erred by confirming the arbitration award. She argues that the partial property settlement agreement required the arbitrator t o follow “Colorado substantive law,” and the arbitrator exceeded h is powers by not applying that law when dividing the marital estate. We discern no error. A. Applicable Law ¶ 9 A district court may vacate an arbit ration award only under limited statutory circumstances. See § 13-22-223(1), C.R.S. 2020; Treadwell v. Vill. Homes of Colo., I nc. , 222 P.3d 398, 401 (Colo. App. 2009). Absent a valid statutory gr ound, the court must confirm the arbitration award. § 13-22-222(1), C.R.S. 2020; see also § 13-22- 223(4). 1 After wife filed this appeal, the ar bitrator issued an award to clarify the prior arbitration award and to resolve the parties’ disput e over wife’s obligation under the pro perty settlement agreement — an issue unrelated to the contentio ns presented on appeal. The district court vacated this later ar bitration award. This later entered order has no bearing on th e resolution of the issues on appeal. 6 ¶ 10 The court will vacate an arbitration award if it finds that the arbitrator exceeded his or her pow ers. § 13-22-223(1)(d). An arbitrator’s powers are strictly defi ned by the terms of the parties’ arbitration agreement, and the ar bitrator exceeds his or her powers when the agreement’s terms ar e not followed. See Coors Brewi ng Co. v. Cabo , 114 P.3d 60, 64 (Col o. App. 2004); see also In re Marriage of Dorsey , 2014 COA 19, ¶ 11 (“An arbitrator lacks jurisdiction to decide an issue o utside the scope of an arbitration agreement . . . .”). ¶ 11 An arbitrator therefore may not ign ore or refuse to apply the legal standard agreed to by the par ties. Giraldi v. Morrell , 892 P.2d 422, 424 (Colo. App. 1994). How ever, the arbitrator does not exceed his or her powers “merely” b ecause “the arbitrator committed an error of law.” I d.; see also State Farm Mut. Auto. Ins. Co. v. Broadnax , 827 P.2d 531 , 5 45 (Colo. 1992) (“[I]n the absence of specific contractual directions [t he reviewing court] may not vacate an arbitration award even if the arbitrator misapplied applicable rules of law.”). This is so because “[t]he arbitrator is the final judge of questions of law and f act, and the award is not subject to review merely because of a claimed mistake on the 7 merits.” In re Marriage of Ga vend , 781 P.2d 161, 162 (Colo. App. 1989); see also Coors Brewi ng , 114 P.3d at 64 . ¶ 12 Our ability to review an arbitration award therefore is narrowly defined. See Barnett v. Elit e Props. of Am., Inc. , 252 P.3d 14, 18 (Colo. App. 2010) (recognizing that “the standard of review of arbitral awards is among the narr owest known to law”). We may not review the arbitrator’s decision s but, instead, limit our review to the district court’s order concernin g the arbitration award. See S. Washington Assocs. v. Flana gan , 859 P.2d 217, 220 (Colo. App. 1992) (“[T]his court may not r eview the substance or the procedure underlying the arbitration panel’s award, except insofar as the same was reviewed by the trial court.”). We review the district court’s factual findings for clear error and its legal conclusions de novo. 1745 Wazee LLC v. Castle Buil ders Inc. , 89 P.3d 422, 425 (Colo. App. 2003). B. Nonmarital Property ¶ 13 Wife first contends that the arbitrat or exceeded his powers because he did not apply Colorad o substantive law when he included nonmarital assets and debts in the division of the marital estate. Specifically, she argues tha t the arbitrator improperly 8 included (1) the security deposits f or her and husband’s rental properties, which were the prop erty of their tenants; and (2) husband’s separate, premarital credit card debt, which collectively distorted the arbitrator’s near-eq ual division of the marital estate. ¶ 14 Under Colorado law, the division o f the marital estate requires the determination of whether an as set or debt is marital and subject to division or nonmarital and shield ed from division. In re Marria ge of Williamson , 205 P.3d 538, 540 ( Colo. App. 2009); see § 14-10- 113(1), C.R.S. 2020. The classific ation of property as marital or nonmarital is a legal determinati on based on the resolution of factual disputes. Williamson , 205 P.3d at 540 . ¶ 15 Nothing in the record shows that t he arbitrator refused to apply or ignored Colorado law con cerning the parties’ nonmarital property. To the contrary, the arbi trator specifically found that certain assets, including real estate and retirement accounts, and certain debts, including premarital and family loans, were the parties’ separate property and excl uded them from the division of the marital estate. ¶ 16 Rather, as the district court found, wife’s contentions improperly attempt to review the merits of the arbitrator’s ruling, 9 arguing that the arbitrator misappl ied the law when he included the security deposits and husband’s pr emarital credit card debt in the division of the marital estate. But even if we were to agree that the arbitrator’s legal rulings were inco rrect (an issue we do not decide), an arbitrator does not “exceed his power when he does not prop erly apply the law.” Coors Brewi ng , 114 P.3d at 64 ; see also Giraldi , 892 P.2d at 424. We therefore may not review the merits and propriety of the arbitrator’s legal rulings. ¶ 17 Still, wife contends that the parti es’ “agreement to apply substantive Colorado law did not leave room to allow mistakes of law.” But the agreement merely provi ded the applicable legal standard, and an agreement to ap ply a specific legal standard does not, without more, permit a court to vacate an award based on th e misapplication of that standard. See Coors Brewing , 114 P.3d at 66 (holding that the merits of an arbit ration award could not be attacked where the parties’ agree ment designated “Colorado law” as the governing legal standard). The arbitrator applied Colorado law, and the court properly declined t o vacate the arbitration award based on an alleged mistake in a pplying it. 10 ¶ 18 In addition to the classification of property, wife argues that the arbitrator exceeded his powers when he included husband’s moving and storage expenses as mar ital debts and made findings on her past and future earnings. But again, these arguments merely challenge the merits of th e arbitrator’s decisions and findings, matters beyond the court’ s review. See Gavend , 781 P.2d at 162; see also Barnett , 252 P.3d a t 18. ¶ 19 She also suggests that the arbit rator refused to consider material evidence concerning husb and’s premarital debt and her nonfinancial contributions to the marriage. However, to vacate an award based on an arbitrator’s ref usal to consider evidence, the party must demonstrate that he or she was substantially prejudiced. See § 13-22-223(1)(c); Carson v. PaineWebber, Inc. , 62 P.3d 996, 998 (Colo. App. 2002). Wife develops no argument in support of the alleged exclusion of her evidence, nor does she establish that she was substantiall y prejudiced by it. See Biel v. Alcott , 876 P.2d 60, 64 (Colo. App. 1993) (“An appealing party bears the burden to provide supporting authority for contentions of error asserted on appeal, and a failur e to do so will result in an affirmation of the judgment.”). 11 ¶ 20 We therefore discern no error by th e district court in rejecting these arguments. C. Attorney Fees as Marital Debt ¶ 21 Wife next argues that the arbitrat or exceeded his powers because he “placed all attorney f ees in the marital debt,” which was contrary to Colorado law. She c ontends that attorney fees may only be allocated under section 14-10-1 19, C.R.S. 2020, and that such a determination must be based on the parties’ relative economic circumstances. ¶ 22 True, litigation costs associated w ith a dissolution proceeding may be allocated under section 14 -10-119 to ensure that neither party suffers undue economic har dship as a result of that proceeding. In re Marriage o f Aldrich , 945 P.2d 1370, 1377 (Colo. 1997); In re Marriage of Burford , 26 P.3d 550, 559 (Colo. App. 2001). But when those litigation costs “have already been paid, they may be allocated in the prop erty division.” Burford , 26 P.3d at 559. ¶ 23 The arbitrator found that the part ies’ credit card debt included payments of husband’s and wife’s attorney fees. The arbitrator thus determined that both parti es had used marital money to pay 12 their attorney fees and included th e credit card debt in its allocation of the marital debts. In doing so, t he arbitrator applied Colorado substantive law, and we discern n o indication that the arbitrator exceeded his powers. See id. ¶ 24 To be sure, wife disagrees with the arbitrator’s decision and argues that the arbitrator failed to ap ply and follow section 14-10- 119. But again, a misapplication of the law does not amount to an excess of the arbitrator’s power or warrant the vacation of an arbitration award. See Coors B rewing , 114 P.3d at 64 ; see also Giraldi , 892 P.2d at 424 . ¶ 25 The district court therefore did not err by declining to vacate the arbitration award. III. Attorney Fees in the District Court ¶ 26 Wife contends that the district cou rt abused its discretion by awarding attorney fees to husban d for having to respond to her motion to vacate, modify, or corr ect the arbitration award, arguing that she presented meritorious arg uments in support of her contentions in the motion. W e disagree. ¶ 27 The district court has broad discr etion when determining whether to award attorney fees, an d absent a showing that the 13 court abused its discretion, we will not disturb its decision. In re Marriage of Tognoni , 313 P.3d 655, 660-61 (Colo. App. 2011). A court abuses its discretion wh en its decision is manifestly arbitrary, unfair, or unreasonable, or a misa pplication of the law. In re Marriage of Herold , 2021 COA 16, ¶ 5 . Under this standard, we consider whether the decision fell w ithin the range of reasonable options, not whether we would hav e reached a different result. I n re Estate of Shimizu , 2016 COA 163 , ¶ 30. ¶ 28 A court may award attorney fees ag ainst a party that has brought a claim that lacked substa ntial justification. § 13-17- 102(4), C.R.S. 2020. A claim lac ks substantial justification when, as relevant here, it is substantially frivolous. Id. A party’s contention is frivolous when th e party presents no rational argument based on the evidence or law to support it. W. Unit ed Realty, Inc. v. Isaacs , 679 P.2d 1063, 1069 (Colo. 1984). ¶ 29 The district court found that each of wife’s alleged contentions presented no grounds under whic h it could vacate, modify, or correct the arbitration award. Th e court explained that many of wife’s contentions were merely “a t hinly-veiled request for a review of the Arbitrator’s Awards on the m erits.” And the court found that 14 for other contentions (not reassert ed on appeal), wife did not provide the court with supporting leg al authority or sufficient allegations to warrant relief. ¶ 30 The record supports the district court’s conclusion that wife failed to present rational argum ents in support of her motion. See Nienke v. Naiman Grp., Ltd. , 857 P.2d 446, 449 (Colo. App. 1992) (A “court’s award of attorney fees is not to be disturbed on appeal if there is support in the record for the conclusion that the claim or defense advanced was frivolous . . . .”). We agree with the court that wife’s contentions concerning the arbitrator’s powers were, in fact, attempts to challenge the m erits of the arbitration award, and it has been well-established that the district court does not review the propriety of the arbitrator’s leg al ruling absent specific authority to do so, which did not exist here. See Coors Brewing , 114 P.3d at 64; Giraldi , 892 P.2d at 424 . The r ecord further reveals that the remaining allegations in wife’s m otion lacked legal and factual support, and wife presents no argu ment to the contrary on appeal. ¶ 31 Under these circumstances, we c annot conclude that the district court abused its discretion by ordering wife to pay husband’s attorney fees. 15 IV. Attorney Fees on Appeal ¶ 32 Wife and husband request an awa rd of appellate attorney fees under section 14-10-119, both arg uing that the other party has greater financial resources. See Aldrich , 945 P.2d at 1377 . The district court is better equipped to determine the factual issues regarding the parties’ current fin ancial resources. See In re Marriage of Alvis , 2019 COA 97 , ¶ 3 0. We therefore remand this issue to the district court. See C.A .R. 39.1. ¶ 33 Husband also seeks appellate attor ney fees under section 13- 17-102, arguing that wife’s appeal was substantially frivolous and groundless, and as a sanction und er the mediation and arbitration services agreement for “not act ing in good faith or taking an unreasonable position.” We declin e to award fees under either basis. ¶ 34 First, an award of attorney fees on appeal under section 13- 17-102 “is appropriate only in cl ear and unequivocal cases” when the appeal itself lacked substantial justification. Shimizu , ¶ 34; see also Front Range Home Enhancem ents, Inc. v. Stowell , 172 P.3d 973, 977 (Colo. App. 2007). Although t he district court awarded attorney fees and we determined t hat it did not abuse its discretion 16 in doing so, we exercise our discr etion to decline an award of such fees on appeal. See Shimizu , ¶ 34. ¶ 35 Second, we do not agree that the m ediation and arbitration services agreement permits an aw ard of appellate attorney fees. The provision relied on by husban d states, “The parties agree that each party shall pay one-half of the [m ediation/arbitration] fees, subject to reallocation if [the] medi ator/arbitrator finds that one of the parties is not acting in good fait h or taking an unreasonable position.” This provision plainly ap plies to the mediation and arbitration proceeding and the f ees associated with it, not to any proceeding before this or any oth er court. V. Conclusion ¶ 36 The judgment is affirmed. We r emand the case to the district court to consider the parties’ requ ests for appellate attorney fees under section 14-10-119. JUDGE ROMÁN and JUDGE YUN con cur.