COOK v. Richard Dennis Cook, Real Party in Interest. (2024)

OPINION

¶1 The issue in this special action is whether an oral agreement to arbitrate, entered on the record in a family division proceeding during a superior court hearing, is an enforceable agreement under Arizona Rule of Family Law Procedure (“Rule”) 67.2. Because the form and content of the oral agreement met the requirements of Rule 67.2, it is enforceable.

FACTS AND PROCEDURAL BACKGROUND

¶2 Richard Cook (“Husband”) and Linda Cook (“Wife”) were divorced in August 2015. The dissolution decree divided several business interests including the proceeds of the post-decree sale of a commercial property. After that property was sold, a dispute arose between the parties regarding the proper division of the proceeds. The parties scheduled a hearing to resolve the dispute.

¶3 Counsel for both parties met with the court in chambers the day of the hearing to discuss participating in binding arbitration instead of proceeding with the hearing. Counsel then discussed arbitration with their respective clients.

¶4 At the beginning of the hearing, Wife announced the parties agreed to binding arbitration. After the court managed the remote attendees, Wife again stated on the record that the “parties have reached an agreement to attend binding arbitration.” She then explained the “cost of arbitration will be shared equally” and suggested using the “funds in the attorneys’ accounts to pay the arbitrator.” Wife's counsel concluded “those are the only agreements we have right now.”

¶5 The court praised the parties for reaching an agreement and began to ask the parties if each agreed to arbitration, noting that it did not need to swear anybody in. Wife's counsel interjected, stating that she believed the parties needed to be sworn. Without administering an oath, the court then asked Wife, Husband, and their counsel if they agreed to binding arbitration in this case. The parties and their counsel explicitly stated they agreed to participate in binding arbitration.

¶6 Satisfied that Husband and Wife agreed, the court asked the parties if they had discussed who would be the arbitrator. Wife's counsel said they had discussed it “a little bit” and that “we'll be able to agree on someone.” She added that “in the unfortunate circumstance” they could not agree, “we could submit a blind list to [the court], but I really don't think that will be necessary.”

¶7 Given this agreement, the court ordered the parties to “participate in binding arbitration” and to “pay equally for the associated fees, pursuant to the agreement of the parties.”

¶8 Two months later, Wife withdrew her consent to arbitration. Wife claimed her decision to participate in arbitration “was partially motivated by a concern that the [family division] would not be able to adjudicate all issues” in her dispute with Husband because the dispute implicated civil claims. Because she later concluded the court could hear the related civil issues, Wife sought to withdraw from the arbitration agreement and requested a hearing.

¶9 The court denied Wife's request to withdraw because each party “agreed to participate in binding arbitration.” The court noted that the “idea for binding arbitration came not from the Court but from counsel.”

¶10 Wife moved for reconsideration, arguing the parties did not agree to arbitrate under Rule 67.2. She argued the statements made at the hearing failed to comply with the three requirements listed in Rule 67.2(d)(1). The court denied the motion to reconsider because “the Parties’ agreement, stated on the record in open court, with the assistance of their chosen counsel, complies with Rule 67.2.”

¶11 Wife petitioned for special action relief, arguing the superior court erred in finding the parties entered a valid and binding agreement under Rule 67.2. We previously accepted special action jurisdiction but denied relief by order, with a decision to follow. This is that decision.

JURISDICTION

¶12 “Accepting special action jurisdiction is discretionary and appropriate when a party lacks an equally plain, speedy, and adequate remedy by appeal.” Jennings v. Agne, 254 Ariz. 174, 176, ¶ 4, 520 P.3d 665, 667 (App. 2022) (cleaned up); Ariz. R.P. Spec. Act. 1(a). The presence of a purely legal question of first impression, as is the case here, tends to favor the exercise of our discretionary jurisdiction. See State ex rel. Pennartz v. Olcavage, 200 Ariz. 582, 585, ¶ 8, 30 P.3d 649, 652 (App. 2001). Special action review is appropriate.

DISCUSSION

¶13 Wife challenges the superior court's order compelling the parties to participate in binding arbitration. She argues the arbitration agreement did not comply with Rule 67.2 and was therefore unenforceable. In reviewing an order that compels arbitration, “we must defer to the trial court's factual findings unless clearly erroneous.” Austin v. Austin, 237 Ariz. 201, 204, ¶ 2, 348 P.3d 897, 900 (App. 2015). We interpret procedural rules de novo, Chartone, Inc. v. Bernini, 207 Ariz. 162, 167, ¶ 14, 83 P.3d 1103, 1108 (App. 2004), using principles of statutory interpretation, State v. Hansen, 215 Ariz. 287, 289, ¶ 7, 160 P.3d 166, 168 (2007). “Statutory interpretation requires us to determine the meaning of the words [used.] We do so ․ according to the plain meaning of the words in their broader statutory context, unless [directed] to do otherwise.” S. Ariz. Home Builders Ass'n v. Town of Marana, 254 Ariz. 281, 286, ¶ 31, 522 P.3d 671, 676 (2023).

¶14 Arizona's Revised Uniform Arbitration Act, A.R.S. §§ 12-3001 through 12-3029, governs all arbitration agreements in the state. A.R.S. § 12-3003(A). Arbitration agreements are matters of contract law. Chang v. Siu, 234 Ariz. 442, 445, ¶ 19, 323 P.3d 725, 728 (App. 2014); see also AT & T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 648, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986). And the validity and enforceability of an arbitration agreement is determined by contract law principles. See A.R.S. § 12-3006(A). “[A]n agreement in a record to arbitrate a family law dispute ․ is valid and enforceable as any other contract and irrevocable except on a ground that exists at law or in equity for the revocation of a contract.” Ariz. R. Fam. Law P. 67.2(d)(2); A.R.S. § 12-3006(A) (same standard for general arbitration agreements).

¶15 Rule 67.2 supplements the statutory arbitration framework and provides procedural guidance for family law disputes. For an arbitration agreement to be valid and enforceable under Rule 67.2, it “must (A) be in a record signed by the parties; (B) identify the arbitrator, an arbitration organization, or a method of selecting an arbitrator; and (C) identify the family law dispute the parties intend to arbitrate.” Ariz. R. Fam. Law P. 67.2(d)(1). A record is “information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.” Id. at (a)(9); A.R.S. § 12-3001(6) (same). And sign means “to execute or adopt a tangible symbol” or “logically associate with the record an electronic symbol, sound, or process” with a “present intent to authenticate or adopt a record.” Ariz. R. Fam. Law P. 67.2(a)(10).

¶16 Turning here, the parties captured an enforceable agreement to arbitrate under Rule 67.2(d). The hearing transcript is an electronic medium that is retrievable and perceivable, making it a record under Rule 67.2(a)(9). Rule 18 also provides that an “official verbatim recording of any court proceeding is an official record of the court.” Wife described the essential terms of the arbitration agreement to the court so that her statements appear in that record. Thus, the parties’ agreement to arbitrate is in a record.

¶17 Moreover, the parties discussed the agreement with the court before the hearing. Wife twice informed the court that the parties agreed to arbitrate, and the parties and counsel each explicitly affirmed his or her agreement before the court. The parties’ and counsels’ individual oral acceptance of the arbitration agreement on the record reflected a “sound” or “process” for the parties to “adopt” the record, which satisfies the signed requirement. Cook cannot escape her outward manifestations of intent and mutual assent. Contrary to Wife's argument, nothing in the rule required the parties be sworn in to create a signed record.

¶18 This reading of Rule 67.2 is consistent with Rule 69, which allows parties to enter into agreements to resolve a variety of family law issues (1) in a signed writing, (2) by stating the terms of the agreement on the record before a judge, or (3) in an audio recording before a court appointed officer. See Ariz. R. Fam. Law P. 69(a). Such agreements are binding and enforceable even when the parties have not “worked out all the basic terms.” Ertl v. Ertl, 252 Ariz. 308, 312, ¶ 12, 502 P.3d 466, 470 (App. 2021). The breadth of Rule 67.2 thus encompasses agreements formed under each subsection of Rule 69(a). An agreement to submit to binding arbitration, made on the record during a court proceeding, is sufficiently in a record and signed by the parties for purposes of Rule 67.2(d)(1)(A).

¶19 While no party raised this point, the Uniform Law Commission's petition to adopt what is now Rule 67.2, suggested that under that proposed rule, “an arbitration agreement must be in writing.” Arizona Rule Petition No. R-17-0017, at 8 (emphasis added). But the text of the rule contains no explicit writing requirement, either as adopted or in its proposed form. We interpret the words of the rule itself in accordance with their plain meaning. S. Ariz. Home Builders Ass'n, 254 Ariz. at 286, ¶ 31, 522 P.3d at 676. If the Arizona Supreme Court meant to require a written agreement with a signature when adopting the rule, it could have adopted that language as it did in Rule 69(a)(1). But it did not.

¶20 The proposed rule was introduced as an adoption of the Uniform Family Law Arbitration Act (“the Act”). The Act provides identical definitions of record and sign. Unif. Fam. L. Arb. Act § 2 (Unif. L. Comm'n 2016). And the comment explains: “The terms ‘person’ ‘record,’ ‘sign,’ and ‘state’ comport with the current definitions used in other uniform laws.” Id. at § 2 cmt. The Uniform Commercial Code provides the same definition of “sign.” U.C.C. § 1-201(b)(37) (Am. L. Inst. & Unif. L. Comm'n 2022). And a comment explains the rationale for this broad definition: “The definition of ‘sign’ adopted in the 2022 Amendments is broad—it encompasses the authentication or adoption of all records, not just writings.” U.C.C. § 1-201 cmt. 37. The comment concludes by stating: “The question always is whether the symbol, sound, or process was executed or adopted by the party with present intention to authenticate or adopt the record.” Id.

¶21 Our result thus aligns with the rationale and commentary provided in the uniform laws, despite it seeming incongruent with the nonbinding commentary provided in the petition to adopt Rule 67.2.

¶22 Wife's statements also satisfy Rule 67.2(d)(1)(B) because she described the anticipated method of selecting an arbitrator. Wife explained that the parties would select an arbitrator by mutual agreement or by submitting a blind list to the court for ultimate selection. In doing so, Wife clearly presented a preferred method and an alternative method to select an arbitrator. See also A.R.S. § 12-3011 (the court shall appoint the arbitrator if the parties’ agreed upon method fails).

¶23 Finally, as required by Rule 67.2(d)(1)(C), the parties identified the family law dispute they intended to arbitrate. At the beginning of the hearing, which was set to resolve all remaining issues, Wife notified the court that “the parties have reached an agreement to attend binding arbitration.” And after the arbitration agreement was discussed, the hearing was adjourned. The limited scope of remaining issues, and immediate conclusion of the hearing set for those issues, indicated that the agreement to arbitrate applied to all the issues before the court. Absent any indication that the scope of the agreement was something less than all of the issues, we interpret the statement from Wife's counsel, “[t]he parties have reached an agreement to attend binding arbitration,” to incorporate the entire dispute.

¶24 The parties’ agreement meets the requirements in Rule 67.2(d)(1). And Wife did not present any ground in “law or in equity for the revocation of a contract” that could otherwise render the agreement invalid or unenforceable. A.R.S. § 12-3006(A). The court did not err by compelling the parties to participate in binding arbitration and denying Wife's request to withdraw her consent to the agreement.

ATTORNEY FEES

¶25 Husband requests attorney fees under both Section 12-341.01(A) and Section 25-324. This special action arises out of a matter pursued under Title 25, chapter 3, authorizing the court to award fees “after considering the financial resources of both parties and the reasonableness of the positions each party has taken throughout the proceedings.” A.R.S. § 25-324(A). After considering both factors, we decline to award fees.

CONCLUSION

¶26 We accept special action jurisdiction but deny relief.

PERKINS, Judge: