SC Lawyer, September 2012, #1. Appealable Arbitration.

• Author: By J. Mark Taylor and Kermit S. King

South Carolina BAR Journal

2012.

SC Lawyer, September 2012, #1.

Appealable Arbitration

South Carolina LawyerSeptember 2012Appealable ArbitrationBy J. Mark Taylor and Kermit S. KingFor those of us who favor arbitration as a viable alternative dispute resolution methodology, the type of arbitration employed is typically binding arbitration (i.e., without any appeal of the award). We attorneys are led to assume all arbitration precludes appeal-and are led to reject arbitration out of fear of finality. Our response is: "Assume nothing"-a wise rule for life in general and a necessary rule for the practice of law. If one simply assumes something, this assumption may lead to unwise decisions, which in turn may lead to inaccurate, inappropriate or improper results.

The authors of this article jointly have experienced more than 85 years of law practice. Yet we, as many others, have fallen into misguided assumptions about arbitration. We both have embraced mediation in the family court arena and have used mediation routinely-in part because we practice in mandatory mediation counties but in larger part because we believe in the process. Similarly, we have utilized arbitration, both as co-counsel and as opposing counsel. Generally we have favored binding arbitration, for a variety of reasons. Out of habit, we have found ourselves assuming, as many among us do, that arbitration does not allow appeal. The truth is that arbitration

can be made binding and without appeal, but, upon proper election and procedure, parties may preserve the right of appeal.

Arbitration is a favored method of settling disputes in South Carolina. When a dispute is submitted to arbitration, the arbitrator decides both questions of law and questions of fact. In binding arbitration, courts will refuse to review the merits of an award. An award will be vacated only upon narrow, limited grounds. Harris v. Bennett, 332 S.C. 238, 243-44, 503 S.E.2d 782, 785-86 (Ct. App. 1998); Pittman Mortgage Co. v. Edwards, 327 S.C. 72, 75-76, 488 S.E.2d 335, 337 (1997) (citations omitted).

Arbitration agreements in South Carolina are governed by the Uniform Arbitration Act (the Arbitration Act). S.C. Code Ann. 15-48-10 through 240 (2005); see also Swentor v. Swentor, 336 S.C. 472, 477, 520 S.E.2d 330, 333 (Ct.App. 1999).

Section 15-48-200 states with particularity:

(a) An appeal may be taken from:

(1) an order denying an application to compel arbitration made under 15-48-20;

(2) an order granting an application to stay arbitration made under 15- 48-20(b);

(3) an order confirming or denying confirmation of an award;

(4) an order modifying or correcting an award;

(5) an order vacating an award without directing a rehearing; or

(6) a judgment or decree entered pursuant to the provisions of this chapter.

(b) The appeal shall be taken in the manner and to the same extent as from orders or judgments in a civil action.

Without having to change one word of the Arbitration Act as presently written, obviously litigants are authorized (through their counsel, if they are represented, or individually, if appearing pro se,) to elect binding arbitration without right of appeal or arbitration with preservation of right of appeal.

The procedure is simple:

1. A summons and complaint will be filed in the appropriate county, with the appropriate filing fee (presently $150). An additional $25 will be required for the filing of a motion for temporary relief.

2. A written agreement to arbitrate (including election of the type of arbitration) will be entered into by the parties.

3. The parties and counsel will enter into a Consent Order Appointing Arbitrator, attaching or incorporating the written agreement to arbitrate.

4. The parties may arbitrate as to temporary relief, other motions, rules to show cause, and ultimately, the merits.

5. An arbitrator may not grant a divorce or issue a separate maintenance decree or grant termination of parental rights or grant an adoption or issue a criminal sentence or civil sanction; but the arbitrator may hear and decide a rule to show cause and award attorney's fees and costs so long as no statutory sanctions are imposed.

   The seminal case of Swentor v. Swentor, 336 S.C. 472, 520 S.E.2d 330 (Ct.App.1999), seemingly discourages arbitration of custodial matters, Id. at 486 n.6, 520 S.E.2d at 338 n.6, but does not prohibit such so long as the family court retains ultimate jurisdiction over minor children and issues related to their welfare. "Family Courts have continuing jurisdiction to do whatever is in the best interests of the child regardless of what the separation agreement specifies." Moseley v. Mosier, 279 S.C. 348, 351, 306 S.E.2d 624, 626 (1983).

6. The arbitrator conducts a merits hearing at a date, time and place (and uses methodology) fixed in cooperation with the litigants and their counsel-and may allow evidence to be taken under a number of options, ranging from traditional courtroom procedure to creative options such as summary statements, presentation by documentary evidence, or any creative format that ultimately makes a record, if there may be an appeal. If an appellate record is to be made, a certified reporter must be present for a hearing held in person or by teleconference. Motion or rule to show cause hearings can be handled in the same manner.

7. At the conclusion of the arbitration, litigants and/or their attorneys may agree for further evidence to be added to the record within a reasonable time. For example, if the litigants and their attorneys agree for the submission of additional evidence within a 10-day period, the opposing litigant and his or her attorney should be given 10 days to respond prior to the matter being decided by the arbitrator. This potential procedural exercise allows litigants and their attorneys to examine, and reexamine, the record to make sure that all requisite evidence is before the arbitrator before a decision is rendered. This creative approach and safeguard is not available in a traditional trial setting.

8. The arbitrator will issue a decision in the form of an award within a number of days as set in the agreement to arbitrate. Typically, a 30-day period after receipt of all oral and written evidence works well.

9. Rules 52, 59 and 60 of the S.C. Rules of Civil Procedure remain in full force and effect- and may be utilized with or without another hearing at the discretion of the arbitrator.

10. The arbitration award, whether amended, altered or in its original format, will be presented to the family court for confirmation, either at the same time as a divorce hearing and/or by consent order. We are reminded by Swentor that the family court does not take testimony nor does it "approve" an arbitration award. Deadlines for post-arbitration motions and appellate procedures are triggered upon the filing and service of the order confirming the arbitration award.

11. If the litigants have elected to participate in binding arbitration (without right of appeal), the order confirming the arbitration award becomes the law of the case, enforceable in family court or future arbitration. If the litigants agreed to conduct arbitration with preservation of right of appeal and, if the right of appeal is exercised, the appeal will be taken in the manner and to the same extent as from orders or judgments in a civil action. Once an arbitration award is confirmed by order, it shall be a final judgment or decree as contemplated in section 15-48-200(a)(6). Such award will be subject to section 15-48-200(b). All recorded testimony and documentary evidence will be maintained for the period of appeal by the court reporter retained in the matter. It will be incumbent on the party litigants or their counsel to request, in accordance with applicable rules of court, a transcription of testimony received at any proceeding where the preservation of testimony and/or documentary evidence was requested by any party. Failure to do so will be deemed a waiver.

    One of the imperatives in those cases in which litigants elect and contract to arbitration with preservation of the right of appeal will be the hiring of a certified reporter who will be retained to take testimony and receive documentary evidence at the merits hearing and at any other point where testimonial and documentary evidence needs to be preserved for appeal.

    The Swentor case is the only appellate court opinion from the family court. In a case originating in the circuit court, the Court of Appeals held that, because there was no indication of "manifest disregard of law" by the arbitrator, the order of the circuit court confirming an arbitration award was affirmed. Harris v. Bennett, 332 S.C. 238, 246, 503 S.E.2d 782, 787 (Ct. App. 1998). The Harris case is the bricks and mortar as to appealable arbitration in two respects: (1) the appeal itself was upheld under subject matter jurisdiction; and (2) a standard of review was established for arbitration awards. It should be noted that the number of appeals from a traditional trial are minimal from a percentage perspective. Between the two authors, who have actively participated in appellate practice in conjunction with our trial work, less than one percent of our cases have ended in the filing or defending of an appeal. The foregoing of appeal to get the efficiency of arbitration is actually a small price to pay.

    Prior to the institution of the uniform family court system in 1977, family law matters were routinely handled by appointment of special referees. The circuit court also appointed special referees and masters, which ultimately resulted in the creation of the office of mas-ter-in-equity, which judicial officers continue to relieve circuit court dockets of non-jury matters. If this system has worked in the circuit court, binding (or appealable) arbitration can shift a burden from the family court judiciary at no cost to the taxpayers.

    Arbitrators should be certified by the Supreme Court, American Arbitration Association, American Academy of Matrimonial Lawyers or other qualifying entity. Immunity equal to that of the family court judiciary will be provided in the agreement between the parties and granted by consent order. A list of certified arbitrators should be maintained.

    We remind the bench and bar that the positives of binding (or appealable) arbitration far outweigh the negatives. Choice of time(s), choice of date(s), choice of loca-tion(s), choice of dress code, choice of discovery, choice of formal or informal presentation, choice of strict v. relaxed adherence to rules of civil procedure, choice of strict v. relaxed adherence to evidentiary rules, choice of confrontation v. separate caucus of parties/witnesses, and choice of the neutral qualified decision maker in a confidential environment are substantial reasons to consider binding (or appealable) arbitration.

    Some may suggest arbitration will only be available to the cases of high-end economic litigants. Wrong. If mandatory mediation is required, or mediation is otherwise conducted, a mediator may not call an "impasse" until three hours have been invested. We submit that, in less than three hours, a case involving a mobile home, a vehicle, personal property and credit card debt could be fully and finally "litigated" by an arbitrator for less fees and costs than a trial- without tying up docket time for motions, pretrials, status conferences and other procedural matters. An action could be filed and completed in a matter of weeks, or a few months at worst.

    The court system, family court judiciary and courthouse personnel win because the initial filing fees for a family court action are still collected and, if arbitration is elected, the only docket time needed would be for a short divorce or separate maintenance hearing-confirmation of an arbitration award can be in the form of a consent order. As earlier stated, we predict there will be few appeals, even if the right to appeal is preserved.

    We further predict that, if qualified lawyers lead the charge, arbitration will soon be seen as the best "trial" tool in the litigation toolbox. This will be especially true where a case is submitted to a blended mediation-arbitration approach so that, if settlement cannot be reached, the neutral can decide and issue an award.

    As the old television commercial said: "Try it. You'll like it."