Title: Kathryn Jalas Franke v. Martin T. Franke

State: wisconsin

Issuer: Wisconsin Supreme Court

Document:

2004 WI 8 
 
 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
01-3316 
COMPLETE TITLE: 
 
 
In re the Marriage of: 
 
Kathryn Jalas Franke,  
 
Petitioner-Respondent-Cross-Appellant, 
 
v. 
Martin T. Franke,  
 
Respondent-Appellant-Cross-Respondent. 
 
 
 
 
ON CERTIFICATION FROM THE COURT OF APPEALS 
 
 
OPINION FILED: 
February 6, 2004   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
September 16, 2003   
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit   
 
COUNTY: 
Washington   
 
JUDGE: 
Patrick J. Faragher   
 
 
 
JUSTICES: 
 
 
CONCURRED: 
        
 
DISSENTED: 
WILCOX, J., dissents (opinion filed). 
PROSSER and SYKES, J.J., join dissent. 
PROSSER, J., dissents (opinion filed). 
WILCOX and SYKES, J.J., join dissent. 
 
NOT PARTICIPATING:         
 
 
 
ATTORNEYS: 
 
 
For the respondent-appellant-cross-respondent there were 
briefs (in the court of appeals) by David E. Jarvis and Quarles 
& Brady LLP, Milwaukee, and oral argument by David E. Jarvis. 
 
For the petitioner-respondent-cross-appellant there was a 
brief by Colleen Wentworth Smith, Rod W. Rogahn and Rogahn Law 
Offices, Delafield, and oral argument by Colleen Wentworth 
Jones. 
 
 
2004 WI 8 
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports. 
 
No.  01-3316  
(L.C. No. 
93 FA 337) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
In re the Marriage of: 
 
Kathryn Jalas Franke,  
 
          Petitioner-Respondent-Cross- 
          Appellant, 
 
     v. 
 
Martin T. Franke,  
 
          Respondent-Appellant-Cross- 
          Respondent. 
 
FILED 
 
FEB 6, 2004 
 
Cornelia G. Clark 
Clerk of Supreme Court 
 
 
 
 
 
Appeal from orders of the Circuit Court for Washington 
County, Leo F. Schlaefer and Patrick J. Faragher, Judges.  
Affirmed in part, reversed in part, and remanded.   
 
¶1 
SHIRLEY S. ABRAHAMSON, C.J.   This case comes before 
the court on certification by the court of appeals, pursuant to 
Wis. Stat. § (Rule) 809.61 (2001-2002).1  The circuit court for 
Washington County, Leo F. Schlaefer and Patrick J. Faragher, 
                                                 
1 All subsequent references to the Wisconsin Statutes are to 
the 2001-2002 version unless otherwise indicated. 
No. 
01-3316   
 
2 
 
Judges, entered orders opening the divorce judgment under Wis. 
Stat. § 806.07 and modifying provisions of the divorce judgment 
relating to property division and child support.  The circuit 
court awarded an increase in the amount Mr. Franke was to 
contribute toward Ms. Franke's attorney fees, but not as much as 
Ms. Franke wanted.  The circuit court refused to change the 
provision in the divorce judgment setting each party's share of 
the 1995 income tax liability.2   
¶2 
Four issues of law are presented:   
(1) 
May a circuit court open the property division 
provisions 
of 
a 
divorce 
judgment 
under 
Wis. Stat. § 806.07 
even 
though 
the 
divorce 
judgment incorporated an arbitral award that had 
been confirmed by the circuit court?  
(2) 
Assuming that a circuit court may relieve a party 
from property division provisions of such a 
                                                 
2 Judge Schlaefer issued orders opening the divorce judgment 
on July 27 and July 30, 2000.  Upon his retirement, the case was 
assigned to Judge Faragher.  Judge Faragher generally disagreed 
with Judge Schlaefer's conclusions of law.  The order dated 
September 11, 2001, (Judge Faragher) stated (1) that Wis. Stat. 
§ 806.07 may not be used to review a final and binding 
arbitration award; (2) that final and binding arbitration is a 
"special circumstance" exception to the general rule that 
property is valued as of the date of the divorce; (3) that the 
circuit court will not rule on prior attorney fees or award 
additional attorney fees to either party; and (4) that the 
parties must submit any other issues for consideration to the 
court.  Although Judge Faragher's conclusions of law were at 
odds with Judge Schlaefer's earlier rulings, Judge Faragher 
declined to review Judge Schlaefer's prior orders.  Mr. Franke 
appealed and Ms. Franke cross-appealed.   
No. 
01-3316   
 
3 
 
divorce judgment under Wis. Stat. § 806.07, did 
the 
circuit 
court 
erroneously 
exercise 
its 
discretion in opening this judgment?   
(3) 
When Wis. Stat. § 806.07 is used to relieve a 
party from property division provisions of such a 
divorce 
judgment, 
is 
the 
relevant 
date 
of 
valuation of assets the date of the closing of the 
arbitration record or the date of the divorce?   
(4) 
If a circuit court may relieve a party from 
property division provisions of such a judgment, 
did the circuit court erroneously exercise its 
discretion in modifying the judgment to increase 
Ms. Franke's share of the property division, to 
increase the Mr. Franke's child support payments, 
and to increase Mr. Franke's contribution toward 
his former wife's attorney fees incurred after 
the divorce judgment; in refusing to modify the 
allocation of the 1995 income tax liability; and 
in refusing to require Mr. Franke to contribute 
additional sums toward his former wife's attorney 
fees incurred after the divorce judgment? 
¶3 
We answer the questions posed as follows:  
(1) 
A circuit court may relieve a party from property 
division provisions of a divorce judgment under 
Wis. Stat. § 806.07 
even 
though 
the 
divorce 
judgment incorporates a confirmed arbitral award.  
No. 
01-3316   
 
4 
 
(2) 
The circuit court did not erroneously exercise 
its discretion under § 806.07 in opening the 
property 
division 
provisions 
of 
the 
divorce 
judgment.  
(3) 
Arbitration may constitute, but does not as a 
matter of law constitute, a special exception 
requiring property to be valued as of the date of 
the closing of the arbitration record instead of 
the date of divorce. 
(4) 
The circuit court did not erroneously exercise 
its discretion in modifying the divorce judgment 
to increase Ms. Franke's share of the property 
division and Mr. Franke's contribution toward his 
former wife's attorney fees incurred after the 
divorce judgment.  The circuit court did not 
erroneously exercise its discretion in refusing 
to modify the divorce judgment to reallocate the 
1995 income tax liability between the parties.  
The 
circuit 
court (Judge 
Faragher) did not 
erroneously exercise its discretion in refusing 
to require Mr. Franke to contribute additional 
sums 
toward 
his 
former 
wife's 
postjudgment 
attorney fees.  The circuit court erroneously 
exercised 
its 
discretion 
in 
increasing 
Mr. 
Franke's child support payments.  
¶4 
Accordingly, we affirm the orders of the circuit court 
revising the divorce judgment to increase Ms. Franke's share of 
No. 
01-3316   
 
5 
 
the property division and Mr. Franke's contribution toward his 
former wife's postjudgment attorney fees.  The orders of the 
circuit 
court 
refusing 
to 
award 
Ms. 
Franke 
additional 
postjudgment attorney fees and refusing to modify the allocation 
of the 1995 income tax liability are also affirmed.  The circuit 
court's order modifying child support is reversed and remanded 
to the circuit court for further consideration not inconsistent 
with this opinion.  
I 
¶5 
This divorce proceeding occupied the attention of the 
courts and an arbitrator for several years.  We set forth an 
abbreviated version of those facts relevant to deciding the 
issues presented.  Additional facts appear later in the opinion. 
¶6 
The Frankes married on December 29, 1989.  Less than 
four years later, on July 26, 1993, Ms. Franke filed a petition 
for divorce.  During the divorce proceedings the circuit court 
ordered the parties to mediate their disputes, but these efforts 
were unsuccessful and broke down in October of 1994.   
¶7 
From 1994 to 1996, various attempts to complete the 
proceedings were made, culminating in the parties' decision in 
April 1996 to agree to have all disputes in their divorce 
resolved by binding arbitration.   
¶8 
Between 
July 
and 
October 
of 
1996, 
the 
parties 
participated in several arbitration hearings.  After the last 
hearing in October 1996, the arbitrator requested additional 
documents, 
the 
homestead 
was 
being 
sold, 
and 
various 
"housekeeping details" needed attention.  In the summer of 1997 
No. 
01-3316   
 
6 
 
Mr. Franke filed an updated financial disclosure statement with 
the arbitrator that ostensibly reflected the value of his assets 
as of October 1996.  Mr. Franke's work involved the buying, 
selling, and consolidation of communication assets, making 
financial calculations particularly complex.   
¶9 
The arbitrator issued a final award on April 16, 1998.  
On June 9, 1998, on Ms. Franke's motion, the circuit court 
confirmed the arbitrator's award and ordered that a divorce 
judgment be entered in conformity with the award.  In accordance 
with the confirmation order, the arbitral award was incorporated 
by reference into the final judgment of divorce filed and dated 
July 13, 1998 and made the judgment of the court.  The arbitral 
award determined property division, child support, each party's 
liability for 1995 income taxes, and the sum Mr. Franke was to 
contribute toward Ms. Franke's attorney fees incurred during the 
divorce proceedings. 
¶10 Just over nine months later, on April 15, 1999, Mr. 
Franke filed a motion seeking to hold Ms. Franke in contempt for 
failing to sign and return the parties' joint income tax return 
as required by the arbitral award and judgment.  On May 26, 
1999, Ms. Franke responded with a motion to open the June 9, 
1998 divorce judgment pursuant to Wis. Stat. §§ 806.07(1)(a), 
(b), (c), and (h), and 767.32 (relating to modification of child 
support), alleging, in part, that Mr. Franke had failed to 
disclose certain assets and provided erroneous valuations of 
other assets.  Ms. Franke requested that the circuit court 
revise portions of the divorce judgment relating to property 
No. 
01-3316   
 
7 
 
division and child support to reflect what she asserted was the 
true value of the assets.  She also requested that the circuit 
court reconsider her share of income tax liability for 1995 and 
award her additional attorney fees.  
¶11 The circuit court opened the divorce judgment and, 
after hearings, entered a decision and order dated July 27, 
2000.  The order increased Mr. Franke's child support payments 
from $2,300 to $3,000 per month and increased by $5,000 Mr. 
Franke's payment toward his former wife's attorney fees incurred 
after the divorce judgment.   
¶12 The order refused to modify each party's share of the 
1995 income tax liability.  
¶13 The 
order 
increased 
Ms. 
Franke's 
share 
of 
the 
property, requiring Mr. Franke to pay Ms. Franke $25,000 as a 
one-half share of a $50,000 loan Mr. Franke made to All City 
Communication Company, Inc., and an additional $28,457.22 as her 
share of Mr. Franke's revalued interest in the stock of All 
City. 
¶14 Further, 
on 
the 
basis 
of 
the 
circuit 
court's 
conclusion that Mr. Franke had not been forthcoming about his 
various assets, the circuit court ordered additional discovery 
of Mr. Franke's financial records covering the period of time 
between the close of the arbitration record and the entry of the 
divorce judgment. 
¶15 After Judge Schlaefer's retirement, the circuit court 
issued an order stating that the relevant valuation date of the 
Frankes' property was the close of the arbitration record, that 
No. 
01-3316   
 
8 
 
it would not award Ms. Franke additional attorney fees for 
postjudgment proceedings, and that it would not revisit any of 
the earlier orders of the circuit court. 
¶16 The parties appealed and cross-appealed, and the court 
of appeals certified the case to this court.  
II 
¶17 The first question presented is whether a circuit 
court may open the property division provisions of a divorce 
judgment under Wis. Stat. § 806.07 when the divorce judgment 
incorporated a confirmed arbitral award.3   
¶18 To answer this question, we must examine the interplay  
among the following: 
A. 
Wis. Stat. § 806.07, governing opening judgments;  
B. 
Wis. Stat. § (Rule) 
802.12(3)(c), 
governing 
binding arbitration in certain family law actions, 
along with chapter 788 governing arbitration; and  
C. 
Wis. Stat. § 767.255(3)(L), 
imposing 
responsibilities on a circuit court in determining 
property division in a divorce judgment.    
A 
¶19 Wisconsin Stat. § 806.07 allows a circuit court, on 
motion, to relieve 
a 
party 
from 
a 
judgment, 
order, or 
stipulation upon such terms as are just and for one of the eight 
reasons enumerated in § 806.07.4 
                                                 
3 Interpretation of rules and statutes presents questions of 
law that we determine independently of the circuit court but 
benefiting from its analysis.  
4 Wisconsin Stat. § 806.07(1) was adopted by court rule and 
provides as follows: 
No. 
01-3316   
 
9 
 
¶20 The purpose of Wis. Stat. § 806.07 is to "achieve a 
balance between fairness in the resolution of disputes and the 
policy favoring the finality of judgments.  The statute enhances 
fairness in the administration of justice by authorizing a 
circuit court to vacate judgments on various equitable grounds."5   
¶21 Section 806.07 applies to all civil actions and 
special proceedings, including family actions, unless contrary 
rules are to be found.6  Section 806.07 has often been applied in 
                                                                                                                                                             
806.07 Relief from judgment or order. (1) On motion 
and upon such terms as are just, the court . . . may 
relieve a 
party . . . from a 
judgment, 
order or 
stipulation for the following reasons: 
(a) Mistake, inadvertence, surprise, or excusable 
neglect; 
(b) Newly-discovered evidence which entitles a party 
to a new trial under s. 805.15(3); 
(c) Fraud, misrepresentation, or other misconduct of 
an adverse party; 
(d) The judgment is void; 
(e) The judgment has been satisfied, released or 
discharged; 
(f) A prior judgment upon which the judgment is based 
has been reversed or otherwise vacated; 
(g) It is no longer equitable that the judgment 
should have prospective application; or 
(h) Any other reasons justifying relief from the 
operation of the judgment. 
5 Edland 
v. 
Wis. 
Physicians 
Serv. 
Ins. 
Corp., 
210 
Wis. 2d 638, 644, 563 N.W.2d 519 (1997) (citation omitted). 
6 Wis. Stat. § 801.01(2). 
No. 
01-3316   
 
10 
 
family actions, and the courts have upheld the authority of 
circuit courts to use § 806.07 to open a divorce judgment upon 
such terms as are just.  The court has stated that "a family 
court has authority to modify a property division under sec. 
806.07, Stats.  Although a property division in a divorce is not 
subject to the court's continuing jurisdiction and may not be 
modified 
based 
on 
a 
change 
of 
circumstances 
under 
sec. 
767.32(1), Stats., sec. 806.07 gives the court discretionary 
authority to grant relief from the judgment."7 
¶22 The court has not, however, been faced with the issue 
of 
using 
Wis. Stat. § 806.07 
to 
open 
a 
divorce 
judgment 
incorporating a confirmed arbitral award.   
¶23 Mr. Franke argues, in effect, that our cases applying 
Wis. Stat. § 806.07 to divorce judgments are not applicable here 
to open a property division of a divorce judgment incorporating 
a confirmed arbitral award.  He correctly contends that the 
general rule is that courts are more limited in the scope of 
review of the substance of arbitral awards than in the scope of 
                                                 
7 Spankowski v. Spankowski, 172 Wis. 2d 285, 290, 493 
N.W.2d 737 (1992) (citing Thorpe v. Thorpe, 123 Wis. 2d 424, 
426, 367 N.W.2d 233 (1985)). 
See also Tozer v. Tozer, 121 Wis. 2d 187, 189, 358 
N.W.2d 537, 539 (1984) (recognizing the power of a court to use 
§ 806.07 to open a divorce judgment as to property division 
while noting that a reviewing court will reverse a circuit 
court's refusal to do so only for abuse of discretion); Conrad 
v. Conrad, 92 Wis. 2d 407, 413, 284 N.W.2d 674 (1979) (noting 
that when a stipulation failed to address certain property in 
wife's name, circuit court's refusal to open judgment under 
§ 806.07 constituted erroneous exercise of discretion). 
No. 
01-3316   
 
11 
 
review of the substance of judgments not based on arbitral 
awards.   
¶24 A court will, with some exceptions, confirm an 
arbitral award regardless of whether the award is correct or 
incorrect as a matter of fact or law because public policy 
favors arbitration as promoting the efficient resolution of 
disputes, and as giving the parties what they bargained for, 
that is, an arbitrator's, not a court's decision.  Our cases and 
secondary authority support the principle that judicial review 
of an arbitral award is narrow.8   
¶25 Mr. 
Franke 
asserts 
that 
these 
policies 
girding 
arbitration would be ill-served by allowing an attack under 
                                                 
8 As this court expounded in Joint School District No. 10 v. 
Jefferson Educational Association, 78 Wis. 2d 94, 116-18, 253 
N.W.2d 536 (1977): 
The court will not relitigate issues submitted to 
arbitration. 
The 
parties 
contracted 
for 
the 
arbitrator's decision, not the court's. 
 
. . . .  
. . . The decision of an arbitrator cannot be 
interfered with for mere errors of judgment as to law 
or fact.  Courts will overturn an arbitrator's award 
if there is a perverse misconstruction or if there is 
positive misconduct plainly established, or if there 
is a manifest disregard of the law, or if the award 
itself is illegal or violates strong public policy. 
See also Lutkowski v. Dankert, 178 Wis. 2d 110, 113, 503 
N.W.2d 15 (Ct. App. 1993).  Secondary authority supports the 
proposition that the scope of judicial review of an arbitration 
award "is among the narrowest known to the law."  Laird E. 
Lawrence & Christopher R. Ward, The Availability and Scope of 
Arbitration Awards under the Federal, Uniform, and State Acts, 
29 The Brief 32, 32 (2000). 
No. 
01-3316   
 
12 
 
§ 806.07 on a judgment of divorce incorporating a confirmed 
arbitral award.  In other words, his argument is that § 806.07 
conflicts with and must give way to ch. 788 and § (Rule) 
802.12(3)(c).  We note, however, that to some extent, Wis. Stat. 
§§ 806.07, 788.10, and 788.11 respectively set forth similar 
criteria for opening a judgment and vacating or modifying an 
arbitral award. 
¶26 In contrast, Ms. Franke relies on Wis. Stat. § 788.14, 
which provides that a judgment incorporating an arbitral award 
has "the same force and effect, in all respects, as, and [is] 
subject to all provisions of law relating to, a judgment in an 
No. 
01-3316   
 
13 
 
action" and argues that a judgment confirming an arbitral award 
is subject to § 806.07.9     
¶27 We need not address the broader issue that the parties 
dispute, namely whether Wis. Stat. § 806.07 applies to all 
judgments incorporating a confirmed arbitral award.10  We need 
                                                 
9 While the parties rely on the statutes, not on the terms 
of the arbitration agreement, to buttress their arguments, the 
arbitration agreement could arguably be interpreted to allow the 
parties to seek relief from a judgment confirming the arbitral 
award under Wis. Stat. § 806.07.  The arbitration agreement 
states that an arbitration award "shall not be modified or re-
litigated in the circuit court except as provided in Secs. 
788.10 and 788.12 [sic], or as required by Rule 802.12(3)(e) 
Stats."  This provision does not come into play in the present 
case because we are dealing with the judgment, not the award.  
The arbitration agreement goes on to address a circuit court's 
power over the judgment confirming an award, stating: "However, 
after an order confirming the award is entered in the circuit 
court as a judgment pursuant to Sec. 788.09, and 802.12 Stats., 
the 
parties 
expressly 
agree 
that 
the 
circuit 
court 
has 
continuing jurisdiction of the matter, and either party may 
bring a motion to modify the judgment in the circuit court 
pursuant to Sec. 767.32 [relating to support] and Sec. 767.325 
[relating to legal custody and physical placement]." (emphasis 
added).  The words emphasized are superfluous unless they mean 
something other than that the circuit court may modify the 
judgment relating to support, legal custody, and physical 
placement.  The dissent relies heavily on the very existence of 
the terms of the arbitration agreement but reads the emphasized 
words out of the agreement.  See Justice Prosser's dissent, 
¶100. 
10 Our 
research 
indicates 
that 
very 
few 
courts 
have 
addressed the question of under what conditions may a judgment 
confirming an arbitral award may be opened.   
No. 
01-3316   
 
14 
 
address only whether § 806.07 applies to the property division 
provisions of a divorce judgment incorporating a confirmed 
arbitral award.  We are guided in this task by examining first 
Wis. Stat. § (Rule) 
802.12(3)(c) 
and 
then 
Wis. 
Stat. 
§ 767.255(3)(L). 
                                                                                                                                                             
Courts have concluded that Federal Rule of Civil Procedure 
60(b), the analogue of Wis. Stat. § 806.07, can be used to open 
a judgment that confirms an arbitral award.  In Baltia Air 
Lines, Inc. v. Transaction Management, Inc., 98 F.3d 640, 642 
(D.C. Cir. 1996), the court concluded that "[a]lthough Rule 
60(b) is an appropriate vehicle by which to challenge a judgment 
confirming an arbitration award, Baltia has not met the 
standards for relief under the rule."  The Seventh Circuit has 
implicitly authorized the use of Rule 60(b) to modify judgments 
confirming arbitral awards.  See Merit Ins. Co. v. Leatherby 
Ins. Co., 714 F.2d 673, 682-83 (7th Cir. 1983) (failing to 
provide relief from the judgment without suggesting that Rule 
60(b) was not available).  In Clarendon Nat'l Ins. Co. v. TIG 
Reinsurance Co., 183 F.R.D. 112, 117-18 (S.D.N.Y. 1998), Judge 
Robert Sweet concluded that Rule 60(b) may be used to modify the 
judgment of a circuit court's confirmation of an arbitral award, 
relying on the federal analogue to Wis. Stat. § 788.14(3), which 
provides that a judgment entered in conformity with an arbitral 
award has the "same force and effect, in all respects, as and be 
subject to all the provisions of law relating to, a judgment in 
an action."   
In contrast, Federal Rule of Civil Procedure 60(b) has been 
viewed as not being available to modify an arbitral award, as 
distinguished from a judgment confirming an arbitral award.  
See, e.g., Washington-Baltimore Newspaper Guild v. Washington 
Post Co., 442 F.2d 1234, 1238-39 (D.C. Cir. 1971) (neither Rule 
60(b) nor any of the other Federal Rules of Civil Procedure was 
designed to apply to arbitration awards); Hough v. Merrill 
Lynch, Pierce, Fenner & Smith, Inc., 757 F. Supp. 283, 289-90 
(S.D.N.Y. 1991) (courts may not use Rule 60(b) to overturn an 
arbitration award); Cook Chocolate Co. v. Salomon Inc., 748 F. 
Supp. 122, 125 (S.D.N.Y. 1990) (Judge Robert Sweet held that 
Rule 60(b) is unavailable to use to contest an arbitrator's 
decision).   
 
No. 
01-3316   
 
15 
 
B 
¶28 This court adopted Wis. Stat. § (Rule) 802.12(3) in 
1993.11  Prior to the adoption of this Rule, no express 
provisions existed relating to arbitration in actions affecting 
the family.  Rule 802.12(3) provides for binding arbitration as 
a mechanism to resolve certain familial disputes between a 
husband and wife.12  Rule 802.12(3)(c) governs a circuit court's 
confirmation of an arbitral award addressing adult financial 
issues and incorporating an award into a divorce judgment.  The 
Rule limits a court's powers to confirm an arbitral award and 
incorporate it into a divorce judgment.  A court's powers are 
subject to Wis. Stat. §§ 788.10 and 788.11.  Rule 802.12(3)(c) 
reads as follows:  
                                                 
11 Prior to the adoption of this rule, parties had the 
option of using arbitration in family disputes as a means of 
arriving at an agreement.  See Record of Supreme Court Public 
Hearing 93-13, Letter from Attorney Leonard Loeb to the Supreme 
Court (Oct. 28, 1993): 
Arbitration may well already be available in Wisconsin 
under the existing common law, but the Bar and the 
litigants 
in 
the 
family 
law 
area 
are 
simply 
unaccustomed to considering it.  A statute/judicial 
determination that clearly identifies arbitration as 
an available alternative, and describes the process 
for its use, would be of great help to the public and 
the Bar. 
Id. at 1-2. 
12 In 
this 
section, 
we 
address 
only 
that 
part 
of 
Wis. Stat. § (Rule) 802.12(3)(c) governing property division.  
We discuss the application of § (Rule) 802.13(3)(c) to attorney 
fees and allocation of income tax liability and the application 
of § (Rule) 802.12(3)(d) and (e) to arbitration of children's 
issues later in the opinion.  
No. 
01-3316   
 
16 
 
802.12(3)(c).  If the parties agree to binding 
arbitration, the court shall, subject to ss. 
788.10 and 788.11, confirm the arbitrator's award 
and incorporate the award into the judgment or 
postjudgment modification order with respect to 
all of the following: 
1. 
Property division under s. 767.255. 
2. 
Maintenance under s. 767.26. 
3. 
Attorney fees under s. 767.262. 
4. 
Postjudgment orders modifying maintenance 
under  s. 767.32.  
Id. (emphasis added). 
¶29 Wisconsin Stat. § 788.10 requires a circuit court to 
vacate an award when an award was procured by corruption, fraud, 
or undue means; when there is evident partiality, corruption, 
misconduct, or misbehavior of an arbitrator; or when an 
arbitrator exceeded or imperfectly executed his or her powers.13  
                                                 
13 Wisconsin Stat. § 788.10 provides as follows: 
(1) . . . [T]he court in and for the county wherein 
the award was made must make an order vacating the 
award upon the application of any party to the 
arbitration: 
(a) Where the award was procured by corruption, fraud 
or undue means; 
(b) Where there was evident partiality or corruption 
on the part of the arbitrators, or either of 
them; 
(c) Where the arbitrators were guilty of misconduct 
in 
refusing 
to 
postpone 
the 
hearing, 
upon 
sufficient cause shown, or in refusing to hear 
evidence 
pertinent 
and 
material 
to 
the 
controversy; or of any other misbehavior by which 
the rights of any party have been prejudiced; 
No. 
01-3316   
 
17 
 
¶30 Wisconsin Stat. § 788.11 requires a circuit court to 
modify an award when, generally speaking, there was an evident 
material miscalculation or mistake or when arbitrators have 
awarded upon a matter not submitted to them.14 
¶31 Mr. Franke argues that Wis. Stat. §§ 788.10 and 788.11 
are the sole means for challenging a judgment incorporating a 
confirmed arbitral award.  The text of these provisions speaks 
to a circuit court's vacating, modifying, and confirming an 
arbitral award prior to a judgment.  In the present case, the 
circuit court has already confirmed the arbitral award and 
                                                                                                                                                             
(d) Where the arbitrators exceeded their powers, or 
so imperfectly executed them that a mutual, final 
and 
definite award 
upon 
the subject 
matter 
submitted was not made. 
14 Wisconsin Stat. § 788.11 provides: 
(1) . . . [T]he court in and for the county wherein 
the award was made must make an order modifying or 
correcting the award upon the application of any party 
to the arbitration: 
(a) Where 
there 
was 
an 
evident 
material 
miscalculation of figures or an evident material 
mistake in the description of any person, thing 
or property referred to in the award; 
(b) Where the arbitrators have awarded upon a matter 
not submitted to them unless it is a matter not 
affecting the merits of the decision upon the 
matters submitted; 
(c) Where the award is imperfect in matter of form 
not affecting the merits of the controversy. 
No. 
01-3316   
 
18 
 
incorporated it into the divorce judgment.15  The final divorce 
judgment does not incorporate the agreement to arbitrate; the 
judgment incorporates the arbitration award.  Sections 788.10 
and 788.11 are therefore not, on their face, determinative of 
this case. 
¶32 Nevertheless, 
inferences 
may 
be 
drawn 
from 
Wis. Stat. §§ 788.10 and 788.11's limitations on a circuit 
court's powers to vacate and modify an arbitral award before 
confirmation and judgment.  A reasonable inference is that a 
circuit court is not, upon entry of a divorce judgment, suddenly 
freed from the limitations of §§ 788.10 and 788.11 to change a 
divorce judgment incorporating a confirmed arbitral award on 
property division and treat such a divorce judgment just like 
any other divorce judgment.  Judge Faragher expressed this view 
as 
follows: 
"To 
permit 
one 
of 
the 
parties 
to 
binding 
arbitration, to relitigate an issue after the hearing would 
violate the arbitration agreement of the parties, but would also 
be 
inconsistent 
with 
procedures 
found 
in 
sec. 
788.10 . . . regarding vacation of an arbitration award and 
would make meaningless sec. 788.13 . . . providing that notice 
of motion to vacate, modify or correct an award must be served 
                                                 
15 The arbitration agreement provides that when an order 
confirming the award is entered the parties could seek appellate 
review and upon such an appeal the appellate court would not be 
limited to the grounds set forth in Wis. Stat. §§ 788.10 and 
788.11.  The parties did not seek appellate review of the order 
confirming the award, and this provision of the arbitration 
agreement is not relevant to this case. 
No. 
01-3316   
 
19 
 
upon the adverse party within three months after the award is 
filed or delivered." 
¶33 We 
therefore 
examine 
Wis. Stat. § 767.255(3)(L), 
governing a circuit court's responsibility in dividing property, 
for guidance in determining whether a circuit court has 
authority to open, under Wis. Stat. § 806.07, property division 
provisions in a divorce judgment incorporating a confirmed 
arbitral award regardless of the limitations expressed in 
§ 802.12(3)(c).  
C 
¶34 Wisconsin Stat. § 767.255 requires that a circuit 
court divide property16 and authorizes a circuit court to deviate 
from an equal division of property after considering the 
applicable 
statutory 
factors 
set 
forth 
in 
Wis. Stat. § 767.255(3).17 
¶35 One of the factors a circuit court considers in 
deviating from an equal division of property is the terms of an 
agreement between the parties.  Wisconsin Stat. § 767.255(3)(L)18 
                                                 
16 See Wis. Stat. § 767.255(1). 
17 LeMere v. LeMere, 2003 WI 67, ¶25, 262 Wis. 2d 426, 663 
N.W.2d 789.   
The arbitrator in the present case divided all known 
property and explicitly stated that he considered the applicable 
factors set forth in Wis. Stat. § 767.255 to determine whether 
any division other than an equal division should apply. 
18 Section 767.255(3)(L) states in relevant part that: 
(3)(L) . . . [a court may alter an equal division of 
property after considering] [a]ny written agreement 
made by the parties before or during the marriage 
No. 
01-3316   
 
20 
 
provides that an agreement between the parties is binding and 
creates a presumption that the agreement is equitable as to both 
parties.  The provision contains a critical caveat, however, in 
that no agreement between the parties regarding a property 
division shall be binding upon the court when the terms of the 
agreement are inequitable as to either party.19  
¶36 The legislature intended a circuit court to give 
effect 
to 
the 
parties' 
agreement, 
thus 
safeguarding 
the 
important public policy of freedom to contract.  The legislature 
also expressed, however, a competing public policy found in the 
common law and then codified in the family law code that 
promises relating to marriage cannot contravene public policy.20   
¶37 The agreement to marry and the agreement to dissolve a 
marriage are by their nature private decisions between the 
                                                                                                                                                             
concerning any arrangement for property distribution; 
such agreements shall be binding upon the court except 
that no such agreement shall be binding where the 
terms of the agreement are inequitable as to either 
party.  The court shall presume any such agreement to 
be equitable as to both parties. 
Id. (emphasis added). 
19 See also Wis. Stat. § 767.10 (authorizing parties to an 
annulment, divorce, or legal separation to stipulate to a 
division of property subject to the approval of the court).  In 
Van Boxtel v. Van Boxtel, 2001 WI 40, ¶21-28, 242 Wis. 2d 474, 
625 N.W.2d 284, the court ruled that separation agreements that 
are made after separation or in contemplation of separation are 
governed by § 767.10, not § 767.255(3)(L), and constitute a 
recommendation jointly made by the parties to the court 
regarding what the judgment should provide. 
20 6A Corbin on Contracts § 1474 at 610 (1951). 
No. 
01-3316   
 
21 
 
parties, but the institution of marriage, as well as the 
authority to dissolve that institution, are extensively governed 
by the laws of the state.  In contrast with most commercial 
contracts, society has retained an interest in the substantive 
terms of contracts relating to marriage and divorce. 
If the marriage contract were no different from a 
contract to sell an automobile, the parties thereto 
might well be permitted to bargain away all interests 
involved, in or out of court.  But the State has an 
interest in the family relations of its citizens 
vastly different from the interest it has in an 
ordinary commercial transaction. . . .  
 
 . . . . 
As a contract, the marriage contract is unique in 
the law. . . . The parties to a marriage do not 
comprehend between them all the interests that the 
relation contains.  Society sanctions the institution 
and creates and enforces its benefits and duties.21 
¶38 As 
regards 
property 
division 
in 
a 
divorce, 
an 
agreement between the parties must be equitable to protect the 
parties' partnership status during marriage,22 as well as their 
economic welfare after divorce.23  A court protects the parties' 
                                                 
21 Sherrer 
v. 
Sherrer, 
334 
U.S. 
343, 
358-60 
(1948) 
(Frankfurter, J., dissenting).  See also Shiffman v. Askew, 359 
F. Supp. 1225, 1229-31 (M.D. Fla. 1973); American Law Institute, 
Principles of the Law of Family Dissolution § 7.02, Comment c 
(2002) ( "Enforcement of agreements about the consequences of 
family dissolution therefore present a different policy question 
than enforcement of commercial agreements between persons who 
otherwise have no claims on one another's property or income.").  
22 Perrenoud v. Perrenoud, 82 Wis. 2d 36, 39, 260 N.W.2d 658 
(1978). 
23 Van Boxtel, 242 Wis. 2d 474, ¶23; Button v. Button, 131 
Wis. 2d 84, 94, 388 N.W.2d 546 (1986). 
No. 
01-3316   
 
22 
 
and public interests by reviewing the substantive provisions of 
any agreement affecting the division of property.24    
¶39 While "the parties [to a divorce] are free to 
contract, . . . they contract in the shadow of the court's 
obligation to review the agreement on divorce to protect the 
spouses' financial interests on divorce."25  Further, "[w]hen a 
court follows and adopts an agreement of the parties making it a 
part 
of 
its 
judgment, 
the 
court 
does 
so 
on 
its 
own 
responsibility, and the provisions become its own judgment."26  
It is the terms of the arbitration award, not the terms of the 
agreement to arbitrate, that a circuit court reviews and may 
incorporate within its judgment. 
¶40 Thus a court has under Wis. Stat. § 767.255(3)(L) an 
important oversight function regarding private agreements made 
between parties to ensure that the terms are equitable.  In 
                                                 
24 See, 
e.g., 
Van 
Boxtel, 
242 
Wis. 2d 474, 
¶¶20-21; 
Rintelman v. Rintelman, 118 Wis. 2d 587, 599, 348 N.W.2d 498 
(1984); Bergevin v. Bergevin, 168 Wis. 466, 470, 170 N.W. 820 
(1919); Polakowski v. Polakowski, 2003 WI App 20, ¶¶9-10, 259 
Wis. 2d 765, 657 N.W.2d 102; Patrickus v. Patrickus, 2000 WI App 
255, ¶¶10-11, 239 Wis. 2d 340, 620 N.W.2d 205; Ross v. Ross, 149 
Wis. 2d 713, 718, 439 N.W.2d 639 (Ct. App. 1989). 
25 Button, 131 Wis. 2d at 94 (concluding that a court must 
review an agreement under precursor to § 767.255(3)(L) for 
substantive fairness); Abitz v. Abitz, 155 Wis. 2d 161, 177, 455 
N.W.2d 609 (1990) (noting that the court takes an active role in 
reviewing divorce stipulations to promote the stability and best 
interests of the family). 
26 Miner v. Miner, 10 Wis. 2d 438, 443, 103 N.W.2d 4 (1960) 
(decided prior to adoption of § 767.255(3)(L)).   
No. 
01-3316   
 
23 
 
contrast, judicial review of arbitral awards and proceedings is, 
by statute, very limited.  
¶41 Our decision today merely clarifies that when a 
circuit court enters a judgment confirming an arbitration award 
in a property division, the same public policy considerations 
are implicated as would arise if the parties had stipulated to a 
particular 
division 
of 
property. 
 
The 
text 
of 
Wis. Stat. § 767.255(3)(L) does not differentiate among various 
types of agreements between the parties.  Thus it does not 
differentiate between an agreement for binding arbitration and 
any other agreement between the parties.  The apparent practice 
prior to the adoption of Rule 802.12(3)(c) was that when the 
parties voluntarily entered into arbitration and completed the 
arbitration proceedings, the parties reduced the terms of the 
award to a stipulation.  The circuit court then reviewed the 
stipulation 
as 
it 
did 
any 
other 
stipulation 
under 
§ 767.255(3)(L).27   
¶42 Implicit 
in 
Ms. 
Franke's 
argument 
that 
Wis. Stat. § 806.07 allows the circuit court to open the 
                                                 
27 In the Supreme Court hearing on the adoption of Rule 
802.12, Attorney Linda Balisle noted that the adoption of the 
rule 
would 
supplant 
the 
then-existing 
practice 
that 
the 
"divorcing parties may arbitrate any or all issues in their 
divorce.  If, upon completion of the arbitration, they reduce 
the terms to a stipulation, the trial court reviews the 
stipulation as it does any other and affirms or modifies the 
stipulation."  Record of Wisconsin Supreme Court Public Hearing 
93-13, 
Linda 
S. 
Balisle, 
Remarks 
Regarding 
Petition 
for 
Alternative Dispute Resolution in Family Law Cases at 1 (on file 
with the Clerk of the Wisconsin Supreme Court, Madison, WI). 
No. 
01-3316   
 
24 
 
property division in the present case, regardless of the 
existence of binding arbitration, is that Rule 802.12(3)(c) 
cannot limit a circuit court's power in confirming an arbitral 
award on property division to consider the equity of such 
agreements 
because 
of 
Wis. Stat. § 767.255(3)(L). 
 
Section 
767.255(3)(L) requires a circuit court to divide the property of 
the parties upon the parties' full disclosure of their finances 
and provides that no agreement between the parties about 
property division "shall be binding where the terms of the 
agreement are inequitable as to either party."   
¶43 We agree with Ms. Franke that the circuit court's 
statutory 
responsibility 
to 
review 
agreements 
under 
Wis. Stat. § 767.255(3)(L) does not comfortably mesh with our 
Rule 
802.12(3)(c), 
which 
limits 
the 
circuit 
court's 
responsibilities in reviewing, modifying, and incorporating 
arbitral awards regarding property division in a divorce 
judgment.   
¶44 One attorney raised this concern at the hearings on 
the petition to adopt Rule § 802.12.  Counsel urged that the 
then-existing law be retained, namely that a circuit court 
retain the obligation to review the fairness of any agreement or 
stipulation and that appellate courts retain their powers to 
review a circuit court's judgment on appeal.  Such review of the 
substance of an arbitral award by both a circuit court and the 
No. 
01-3316   
 
25 
 
court of appeals is, counsel asserted, necessary for the 
protection of the parties and the public.28   
¶45 The record of the rule hearing does not reflect the 
court's discussion of counsel's argument, and the court adopted 
Rule 802.12(3)(c) as proposed pursuant to its rulemaking powers 
under § 751.12.  Section 751.12 authorizes this court, in 
pertinent part, to adopt rules "regulat[ing] pleading, practice, 
and procedure in judicial proceedings in all courts," but the 
                                                 
28 In the supreme court hearing on the adoption of Rule 
802.12, Attorney Linda Balisle argued that circuit court review 
of an arbitral award would be limited by the adoption of the 
proposed rule:  
The petition that is before this court would 
require the trial court to give deference to the 
arbitrator's award and would limit the trial court's 
ability to modify or vacate the award consistent with 
the provisions of Wis. Stat. secs. 788.10 and 788.11.  
Further, it would limit the Court of Appeals and the 
Supreme Court's review of these family law cases to 
the narrow issues of whether the trial court properly 
applied Secs. 788.10 and 788.11 in affirming or 
modifying an arbitrator's award. 
. . . . 
This court's standard of review should not be 
restricted in family law cases to the application of 
the provisions of Secs. 788.10 and 788.11 when the 
arbitrator may have no special expertise in this area 
of the law, when there is no written record of the 
proceeding and when the law is still developing in all 
aspects of domestic relations. 
Record of Wisconsin Supreme Court Public Hearing 93-13, Linda S. 
Balisle, Remarks Regarding Petition for Alternative Dispute 
Resolution in Family Law Cases at 1-2 (on file with the Clerk of 
the Supreme Court, Madison, WI).  
No. 
01-3316   
 
26 
 
rules "shall not abridge, enlarge, or modify the substantive 
rights of any litigant."29    
¶46 The litigants in this dispute do not challenge Rule 
802.12(3)(c) 
on 
the 
ground 
that 
it 
broaches 
Wis. Stat. § 751.12's divide between substance and procedure.30  
We need not determine whether Rule 802.12(3)(c) merely provides 
a 
new, 
alternative 
procedure 
for 
dividing 
property 
or 
fundamentally changes substantive rights available to parties in 
a divorce.  Suffice it to say that a tension appears to exist 
between Rule 802.12(3)(c) and Wis. Stat. § 767.255(3)(L), and we 
should interpret the Rule and the statute in a way that 
harmonizes the two provisions.  
¶47 To harmonize the two and effectuate the purposes of 
both, we conclude that a circuit court must treat a divorce 
judgment incorporating a confirmed arbitral award on property 
division in a similar fashion to, but not in exactly the same 
                                                 
29 Section 751.12 provides, inter alia, as follows: 
751.12 Rules of pleading and practice. (1) The state 
supreme court shall, by rules . . . regulate pleading, 
practice, and procedure in judicial proceedings in all 
courts, for the purposes of simplifying the same and 
of promoting the speedy determination of litigation 
upon its merits.  The rules shall not abridge, 
enlarge, or modify the substantive rights of any 
litigant. 
30 In State v. Holmes, 106 Wis. 2d 31, 45 n.11, 315 
N.W.2d 703 (1982), the Court was made aware of the possibility 
that use of its rulemaking power could have produced a 
substantive change in judge substitution requests.  Because that 
question was not before the court in that case, we declined to 
consider it.  Id. 
No. 
01-3316   
 
27 
 
way 
as, 
its 
treatment 
of 
other 
divorce 
judgments 
under 
§ 767.255(3)(L) over which the circuit court may exercise its 
jurisdiction as necessary.  Circuit courts must give greater 
deference to an arbiter's award of a property division under 
Rule 802.13(3)(c) than they would to other types of agreements 
between parties. 
¶48 Several reasons support this conclusion.  The state 
has, as we have stated previously, a long-standing policy 
favoring arbitration as an alternative method of dispute 
resolution.31  The court has encouraged in Wis. Stat. § (Rule) 
802.12(3) 
court-annexed 
alternative 
dispute 
resolution, 
including binding arbitration, as a supplement to litigation.  
The arbitrator is a third-party independent decision maker who 
can decide property division considering the parties' and the 
public's interests.  In contrast, when the parties reach their 
own agreement, they tend to view property division as a matter 
of their economic bargain only and not to be motivated by a 
sense of the public policy underlying divorce law.32     
¶49 This 
harmonization 
of 
Rule 
802.12(3)(c), 
Wis. Stat. § 767.255(3)(L), and Wis. Stat. § 806.07 protects the 
public's interest in preserving the integrity of arbitration 
without sacrificing the litigants' and the public's interest in 
judicial review of property divisions in divorce.  
                                                 
31 DeBaker v. Shah, 194 Wis. 2d 104, 111, 533 N.W.2d 464 
(1995) (the policy of this state favors arbitration). 
32 Miner, 10 Wis. 2d at 442. 
No. 
01-3316   
 
28 
 
¶50 We reiterate the narrow scope of our holding today.  
We limit our holding to property divisions in divorce judgments 
incorporating a confirmed arbitral award.  We do not determine 
whether Wis. Stat. § 806.07 vests power in circuit courts to 
open all final judgments incorporating arbitral awards.  Divorce 
judgments are different.  A circuit court is statutorily 
required to perform an independent, substantive review of the 
parties' agreement before incorporating it in the divorce 
judgment.     
¶51 In 
sum, 
after 
considering 
Wis. Stat. § 806.07, 
§ 767.255(3)(L), and Rule 802.12(3)(c), we conclude that a 
circuit court may properly invoke § 806.07 to open the property 
division provisions of a divorce judgment incorporating a 
confirmed arbitral award. 
III 
¶52 Having 
resolved 
that 
a 
circuit 
court 
may 
use 
Wis. Stat. § 806.07 to open a judgment incorporating a confirmed 
arbitral award on the division of property, we turn to the 
second question, namely whether the circuit court properly 
exercised its discretion under § 806.07 in the present case to 
open the divorce judgment.   
¶53 Ms. Franke asserts that the present case falls within 
§ 806.07(1)(a), (b), (c), and (h), providing that a court may 
relieve a party from a judgment, order or stipulation for the 
following 
reasons: 
 
Mistake, 
inadvertence, 
surprise, 
or 
excusable neglect (§ 806.07(1)(a)); newly discovered evidence 
entitling 
a 
party 
to 
a 
new 
trial 
under 
§ 805.15(3) 
No. 
01-3316   
 
29 
 
(§ 806.07(1)(b)); fraud, misrepresentation, or other misconduct 
of an adverse party (§ 806.07(1)(c)); or any other reasons 
justifying 
relief 
from 
the 
operation 
of 
the 
judgment 
(§ 806.07(1)(h)).33 
¶54 Granting relief under Wis. Stat. § 806.07 is within 
the discretion of the circuit court.34  We review a circuit 
court's exercise of discretion to grant relief from a judgment 
under § 806.07 for an erroneous exercise of discretion.  "[A] 
discretionary determination must be the product of a rational 
mental process by which the facts of record and law relied upon 
are stated and are considered together for the purpose of 
achieving a reasoned and reasonable determination."35  An 
appellate court will affirm a circuit court's discretionary 
decision as long as the circuit court "examined the relevant 
facts, applied a 
proper 
standard 
of 
law, 
and, using a 
demonstrated rational process, reached a conclusion that a 
reasonable judge could reach."36  Therefore, the record on appeal 
                                                 
33 Ms. Franke properly filed her motion for relief from 
judgment 
within 
the 
one-year 
period 
prescribed 
by 
Wis. Stat. § 806.07(2). 
34 State ex rel. M.L.B. v. D.G.H., 122 Wis. 2d 536, 541, 363 
N.W.2d 419 (1985). 
35 Hartung v. Hartung, 102 Wis. 2d 58, 66, 306 N.W.2d 16 
(1981). 
36 Long v. Long, 196 Wis. 2d 691, 695, 539 N.W.2d 462 (Ct. 
App. 1995).  See also M.L.B., 122 Wis. 2d at 541; Shuput v. 
Lauer, 109 Wis. 2d 164, 177-78, 325 N.W.2d 321 (1982). 
No. 
01-3316   
 
30 
 
must "reflect the circuit court's reasoned application of the 
appropriate legal standard to the relevant facts of the case."37  
¶55 The function of this court is not to exercise 
discretion in the first instance but to review the circuit 
court's exercise of discretion.  The record is clear that the 
circuit court exercised its discretion, concluding that it 
should grant Ms. Franke's motion to open the judgment under 
Wis. Stat. § 806.07(1)(a), (b), (c), and (h), but the circuit 
court did not explicitly state the subsection upon which it 
relied or fully explain its rationale.  When a circuit court 
fails to provide an adequate reason for its discretionary 
decision, 
this 
court 
will 
uphold 
the 
circuit 
court's 
determination if upon examination of the record the facts 
support the circuit court's exercise of discretion.38 
                                                 
37 State v. Delgado, 223 Wis. 2d 270, 281, 588 N.W.2d 1 
(1999). 
38 Hedtke v. Sentry Ins. Co., 109 Wis. 2d 461, 471-72, 326 
N.W.2d  727 (1982); Christensen v. Econ. Fire & Cas. Co., 77 
Wis. 2d 50, 55-56, 252 N.W.2d 81 (1977).  
A 
circuit 
court's 
decision 
in 
the 
exercise 
of 
discretion will not be disturbed by an appellate court 
unless an abuse of discretion is shown.  If the record 
indicates that the circuit court failed to exercise 
its discretion, the circuit court has abused its 
discretion. 
 
When 
a 
circuit 
court 
exercises 
discretion, the record on appeal must reflect the 
circuit 
court's 
reasoned 
application 
of 
the 
appropriate legal standard to the relevant facts in 
the case.  If this court's review of the record 
indicates that the circuit court applied the wrong 
legal standard in the exercise of its discretion or 
that the facts of record fail to support the circuit 
court's decision, the circuit court has abused its 
discretion.  An appellate court may engage in its own 
No. 
01-3316   
 
31 
 
¶56 Ms. Franke contends, and apparently the circuit court 
agreed, that opening the judgment was appropriate because Mr. 
Franke failed to make full financial disclosures to the 
arbitrator, the court, and Ms. Franke.  Presumably the circuit 
court reasoned that this nondisclosure constituted a mistake, 
misrepresentation, or other misconduct justifying relief under 
§ 806.07. 
¶57 On this point, the parties do not disagree about the 
relevant law.  Mr. Franke's brief agrees that "if a judgment 
confirming an arbitration award has been infected by a material 
failure to disclose assets or liabilities, § 806.07 may permit 
reopening."39  His point of contention with opining the divorce 
judgment is factual.  He claims that he disclosed his financial 
interests to the arbitrator and that the arbitrator considered 
them in preparing the award.   
¶58 Mr. Franke's position is not substantiated by the 
record, which supports the circuit court's finding that a 
material change in the value of the company in issue should have 
been, but was not, disclosed to the arbitrator.  Further, the 
record suggests a lack of cooperation on Mr. Franke's part in 
                                                                                                                                                             
examination of the record to determine whether the 
facts 
provide 
support 
for 
the 
circuit 
court's 
decision. 
State v. DeSantis, 155 Wis. 2d 774, 777 n.1, 456 N.W.2d 600 
(1990). 
39 Combined Reply Brief and Response Brief of Respondent-
Appellant and Cross-Respondent Martin T. Franke at 4. 
No. 
01-3316   
 
32 
 
making his financial status known to his wife, the arbitrator, 
and the court over the years that this case has been in 
litigation.  The record is sufficient to support the circuit 
court's ruling that the alleged nondisclosure justified opening 
the divorce judgment.   
¶59 Accordingly, we conclude that the circuit court did 
not erroneously exercise its discretion in opening the divorce 
judgment under § 806.07. 
IV 
¶60 The third issue we address is whether the relevant 
date of valuation of the parties' property is the date of the 
closing of the arbitration record or the date of the divorce.  
No case that we are aware of has dealt with the date-of-
valuation issue when an arbitration award is disputed.  
¶61 Wisconsin Stat. § 767.27 governs the disclosure and 
valuation of assets in a divorce proceeding.40  Section 767.27(1) 
                                                 
40 Section 767.27(1) provides as follows: 
767.27(1) Disclosure of assets required.  In any 
action affecting the family, except an action to 
affirm marriage under s. 767.02(1)(a), the court shall 
require each party to furnish, on such standard forms 
as the court may require, full disclosure of all 
assets owned in full or in part by either party 
separately or by the parties jointly.  Such disclosure 
may be made by each party individually or by the 
parties jointly.  Assets required to be disclosed 
shall include, but shall not be limited to, real 
estate, savings accounts, stocks and bonds, mortgages 
and notes, life insurance, interest in a partnership, 
limited liability company or corporation, tangible 
personal property, income from employment, future 
interests whether vested or nonvested, and any other 
financial interest or source.  The court shall also 
No. 
01-3316   
 
33 
 
requires that parties to a divorce complete forms fully 
disclosing all assets owned in full or in part by either party.  
Wisconsin Stat. § 767.27(2) 
further 
provides 
that 
financial 
disclosure forms are to be "updated on the record to the date of 
hearing."41  The cases have interpreted this statute to mean that 
the property is usually "valued and divided as of the date of 
divorce," except where "special circumstances" exist.42   
                                                                                                                                                             
require each party to furnish, on the same standard 
form, 
information 
pertaining 
to 
all 
debts 
and 
liabilities of the parties.  The form used shall 
contain a statement in conspicuous print that complete 
disclosure of assets and debts is required by law and 
deliberate failure to provide complete disclosure 
constitutes perjury.  The court may on its own 
initiative and shall at the request of either party 
require the parties to furnish copies of all state and 
federal income tax returns filed by them for the past 
2 years, and may require copies of such returns for 
prior years. 
41 The full text of § 767.27(2) provides: 
Disclosure forms required under this section shall be 
filed within 90 days after the service of summons or 
the filing of a joint petition or at such other time 
as ordered by the court or circuit court commissioner. 
Information contained on such forms shall be updated 
on the record to the date of hearing. 
42 Schinner v. Schinner, 143 Wis. 2d 81, 98, 420 N.W.2d 381 
(Ct. App. 1988).  See also Sommerfield v. Sommerfield, 154 
Wis. 2d 840, 851, 454 N.W.2d 55 (Ct. App. 1990). 
For special circumstances, see, e.g., Long v. Long, 196 
Wis. 2d 691, 698, 539 N.W.2d 462 (Ct. App. 1995); Brandt v. 
Brandt, 145 Wis. 2d 394, 421-22, 427 N.W.2d 126 (Ct. App. 1988); 
(holding that "special circumstances" existed where a husband 
significantly depleted a checking account between the separation 
and the final divorce and that the separation date was a 
"meaningful date" for valuing the marital assets). 
No. 
01-3316   
 
34 
 
¶62 The circuit court (Judge Faragher) ruled that binding 
arbitration, 
by 
its 
very 
nature, 
constituted 
a 
special 
circumstance justifying an alternative valuation date as a 
matter of law.  The circuit court also ruled that the language 
of § 767.27(2) referring to updating the financial disclosure 
forms at the conclusion of a hearing refers to the close of the 
arbitration hearing rather than the date on which the circuit 
court confirms the arbitral award.   
¶63 We agree with the circuit court to the extent it 
concluded that an arbitral award regarding property division 
might very well be a "special circumstance" justifying deviation 
from valuation as of the date of divorce.  As we have stated 
previously, a circuit court should consider more deferentially, 
under § 767.255(3)(L), an arbitral award resulting from the 
parties' binding arbitration agreement than other types of 
agreements between the parties.  But it does not follow that a 
circuit court's heightened deference to an arbitral award 
requires, as a matter of law, that the closing of the 
arbitration record must always be the date on which the property 
is valued.   
¶64 Although the closing of the arbitration record is a 
meaningful date and could serve as the date of valuation, we 
conclude that the closing of the arbitration record does not 
create a categorical exception under § 767.27(2) to alter the 
general rule of valuing property at the date of divorce.  A 
circuit court considers what constitutes special circumstances 
No. 
01-3316   
 
35 
 
in selecting a valuation date other than the date of divorce on 
a case-by-case basis.43 
¶65 We conclude that the circuit court incorrectly stated 
the law in holding that the closing of the arbitration record 
constitutes a blanket exception to the date-of-divorce rule.  We 
are satisfied that the general rule that property is to be 
valued at the date of divorce, coupled with the requirement that 
courts deviate from the general rule when special circumstances 
so require, provides a workable and flexible standard for 
circuit courts to apply in cases involving an arbitral award. 
¶66 We 
need 
not 
determine 
the 
appropriate 
date 
of 
valuation in this case, and we need not remand the matter to the 
circuit court for such a determination because, as we explain 
below, Ms. Franke apparently is not asking this court to modify 
the circuit court's revision of the circuit court order 
increasing her share of the property.       
V 
¶67 Having resolved these questions of law, we address 
briefly the fourth issue raised on this appeal:  Did the circuit 
court erroneously exercise its discretion in (A) modifying the 
judgment to increase the wife's share of the property division; 
(B) increasing child support payments; (C) increasing Mr. 
                                                 
43 For discussions of "special circumstances," see, e.g., 
Finley v. Finley, 2002 WI App 144, ¶48, 256 Wis. 2d 508, 648 
N.W.2d 536; Preiss v. Preiss, 2000 WI App 185, ¶¶20-22, 238 
Wis. 2d 368, 617 N.W.2d 514; Long, 196 Wis. 2d at 698; Wikel v. 
Wikel, 168 Wis. 2d  278, 287, 483 N.W.2d 292 (Ct. App. 1992); 
Brandt, 145 Wis. 2d at 421-22. 
No. 
01-3316   
 
36 
 
Franke's contribution toward Ms. Franke's attorney fees during 
the divorce proceedings and not awarding Ms. Franke attorney 
fees during the postjudgment proceedings; and (D) refusing to 
modify its allocation between the parties of the 1995 income tax 
liability? 
A 
¶68 As to the revision of the property division, Mr. 
Franke argues that the circuit court erroneously exercised its 
discretion in valuing the property and in increasing the wife's 
share of the property division.  Mr. Franke's primary argument 
is that the circuit court erred in concluding that he withheld 
relevant information from the arbitrator and in assessing the 
value of certain assets.  We are not persuaded by this argument.   
¶69 We conclude that the record well supports the circuit 
court's determination that Mr. Franke attempted to shift his 
assets to evade accurate valuation and refused to provide 
appropriate documentation to both the arbitrator and the court.44 
Furthermore, the circuit court reviewed the financial documents 
provided it and rationally explained why it revised the property 
                                                 
44 Our previous decisions in Rintelman v. Rintelman, 118 
Wis. 2d 587, 596 348 N.W.2d 498 (1984), and Nichols v. Nichols, 
162 Wis. 2d 96, 100-101, 469 N.W.2d 619 (1991), support our 
conclusion that Ms. Franke is not estopped from seeking a change 
in the property division.  The third of the four conditions 
elucidated in Rintelman, namely that the overall settlement be 
fair, equitable, and not against public policy at the time of 
the divorce judgment, is not satisfied in this case.  The 
circuit court opened the property division in the divorce 
judgment, apparently concluding that the arbitration award was 
not fair and equitable.  
No. 
01-3316   
 
37 
 
division as to All City and the $50,000 loan, consistent with a 
50/50 division of the property.   
¶70 Ms. Franke cross-appealed from the circuit court's 
(Judge Faragher's) conclusion of law that the date of valuation 
was the date of the closing of the arbitration record.  She wins 
on this point, but it is not entirely clear whether Ms. Franke 
is requesting this court to remand the property division to the 
circuit court for a determination of the value of the properties 
in issue as of the date of the divorce.  From the proceedings as 
a whole, we conclude that Ms. Franke is not seeking a remand to 
the circuit court for further proceedings on the property 
division.  
¶71 Accordingly, we affirm the order of the circuit court 
awarding Ms. Franke additional property as part of the property 
division.  
B 
¶72 Both Mr. and Ms. Franke assert that the circuit court 
erred when it increased his monthly child support payments by 
$700 per month.45  We review a circuit court order regarding 
child support for an erroneous exercise of discretion.46   
                                                 
45 The parties do not dispute that the circuit court has the 
power to open a divorce judgment incorporating a confirmed 
arbitral award on child support.  See Wis. Stat. §§ 767.32, 
(Rule) 802.12(3)(d), (e) (treating awards relating to children 
differently from Rule 802.12(3)(c) regarding adult financial 
matters).  Judicial Council Note, 1993, § (Rule) 802.12, Stats., 
comments as follows: 
Subsection 
(3) 
sets 
forth 
several 
special 
considerations for family actions.  Even when the 
parties consent to binding arbitration, the court 
No. 
01-3316   
 
38 
 
¶73 Wisconsin Stat. § 767.32(1) provides that modification 
of a child support order may be made only if there has been a 
substantial change in circumstances affecting the parties.  Mr. 
Franke contends that no substantial change in circumstances 
occurred that would justify an increase in child support.  Ms. 
Franke responds that the circuit court did not sufficiently 
increase the child support payments.  
¶74 We first address Mr. Franke's claim that a substantial 
change in circumstances did not occur between the termination of 
arbitration and the circuit court's order to modify support.   
¶75 Section 767.32(1)(b) lists four circumstances that 
raise a rebuttable presumption of a substantial change in 
circumstances, one of which occurs if the moving party can 
demonstrate "[a] difference between the amount of child support 
                                                                                                                                                             
retains the responsibility of ensuring 
that the 
arbitration award in custody, placement, visitation 
and support matters conforms to the applicable law.  
The court is not bound to confirm the arbitrator's 
award.  Rather, it must review the arbitrator's 
decision in light of the best interest of the child.  
If following this review the court finds that the 
arbitration process and 
its 
outcome satisfy the 
requirements of all applicable statutes, the court may 
adopt the decision as its own.  
The arbitration agreement also provided that the parties 
may seek to modify the divorce judgment pursuant to § 767.32.  
46 "The division of marital property and the calculation of 
child support are matters generally left to the sound discretion 
of the circuit court.  That discretion, however, must be 
exercised by applying correct legal standards."  Cook v. Cook, 
208 Wis. 2d 166, 171, 560 N.W.2d 246 (1997) (citations omitted); 
see also LeMere v. LeMere, 2003 WI 67, 262 Wis. 2d 426, 663 
N.W.2d 789. 
No. 
01-3316   
 
39 
 
ordered by the court to be paid by the payer and the amount that 
the payer would have been required to pay based on the 
percentage standard established by the department . . . ."  Wis. 
Stat. § 767.32(1)(b)4.   
¶76 The circuit court found that a substantial change in 
circumstances occurred in this case because new information the 
circuit court obtained suggested Mr. Franke's income to be 
significantly higher than he originally reported and because a 
wide disparity existed between the parties' incomes.  The record 
supports the circuit court's assessment that the additional 
information, coupled with the apparent disparity between the 
income levels of the parties, constituted a substantial change 
in circumstances.47  Accordingly the circuit court did not 
erroneously exercise its discretion in modifying child support 
upward. 
¶77 We now turn to Ms. Franke's contention that the 
circuit court erred in not awarding her a larger child support 
payment.  We begin by noting that child support payments are 
determined by the circuit court in accordance with Wis. Stat. 
§ 767.25.  Subsection (1j) of § 767.25 provides that, except as 
provided in subsection (1m), the court is to use the percentage 
                                                 
47 Luciani v. Montemurro-Luciani, 199 Wis. 2d 280, 309, 544 
N.W.2d 561 (1996) (income disparity plays a role in determining 
whether a substantial change has occurred, but is not sufficient 
in itself); Raz v. Brown, 213 Wis. 2d 296, 305, 570 N.W.2d 605 
(Ct. App. 1997) (although numbers themselves are not enough, 
disparity in discretionary income speaks to unfair division of 
amounts necessary for child care).  
No. 
01-3316   
 
40 
 
of income standard established by the Department of Workforce 
Development (DWD).48  Deviation from this percentage standard is 
appropriate when a circuit court finds that the use of the 
percentage standard is unfair to the child or any of the 
parties.49 
¶78 The circuit court found that Mr. Franke earned 
$348,798.00 in 1999, although Mr. Franke disputes this figure. 
According to the DWD calculations, the percentage standard for 
two children is 25%.50  Twenty-five percent of $348,798, divided 
by 12, amounts to child support of $7,266.62 monthly.   
¶79 Ms. Franke argues that inasmuch as the circuit court 
found that Mr. Franke had income of $348,798 in 1999, the 
circuit court should have required Mr. Franke to pay $7,266.62 
each month under the percentage standard.  Instead, the circuit 
                                                 
48 Pursuant to Wis. Stat. § 49.22(9), the DWD adopted the 
percentage standard of the payor's income to be used to 
determine child support.  See Wis. Admin. Code § DWD 40.03(1) 
(Dec. 2003). 
49 Wis. Stat. § 767.25(1m).  
50 The Administrative Code provides: 
[T]he payer's base shall be determined by adding 
together the payer's gross income available for child 
support under sub. (2), if appropriate, and the 
payer's imputed income for child support and dividing 
by 12. . . . The percentage of the payer's base or 
adjusted base that constitutes the child support 
obligation shall be: (a) 17% for one child; (b) 25% 
for 2 children . . . . 
Wis. Admin. Code § DWD 40.03(1) (Jan. 2003). 
No. 
01-3316   
 
41 
 
court increased the monthly payments from $2,300 per month to 
only $3,000 each month. 
¶80 As noted, § 767.25(1m) allows a court to depart from 
the percentage standard when its use would be unfair to the 
children or the parties.  When a circuit court order departs 
from the percentage standard, however, Wis. Stat. § 767.25(1n) 
requires that the circuit court "state in writing or on the 
record the amount of support that would be required by using the 
percentage standard, the amount by which the court's order 
deviates from that amount, its reasons for finding that use of 
the percentage standard is unfair to the child or the party, its 
reasons for the amount of the modification and the basis for the 
modification." 
¶81 Although the circuit court exercised its discretion in 
setting child support, the circuit court failed to articulate, 
as Wis. Stat. § 767.25(1n) requires, any reasons why it deviated 
from the 25% standard and why it increased the child support by 
only $700.  The record does not contain sufficient facts for us 
to conclude why the circuit court deviated from the percentage 
standard, and we therefore conclude that the circuit court 
erroneously exercised its discretion in setting child support.51 
                                                 
51 See Richmond v. Richmond, 2002 WI App 25, ¶12-13, 250 
Wis. 2d 647, 640 N.W.2d 220 (circuit court's decision to modify 
child support payments was reversed and remanded because the 
record did not show that the circuit court considered the 
factors set forth in § 767.25(1m), or state its basis for 
adjusting 
payments 
and 
its 
reasons 
for 
the 
amount 
of 
modification). 
No. 
01-3316   
 
42 
 
¶82 Ms. Franke requests this court to increase her child 
support award to $7,266.62 per month pursuant to the percentage 
standard.  We decline to do so.  Determining child support and 
deviation from the percentage standard is a task better handled 
by the circuit court.  We therefore reverse the circuit court's 
order increasing child support and remand the issue to the 
circuit court. 
C 
¶83 The 
parties 
disagree 
whether 
the 
circuit 
court 
erroneously exercised its discretion regarding Mr. Franke's 
contribution to payment of Ms. Franke's postjudgment attorney 
fees.52  The circuit court (Judge Schlaefer) increased Mr. 
Franke's contribution toward Ms. Franke's attorney fees incurred 
before the divorce judgment.  Mr. Franke contends that the 
circuit court 
(Judge Schlaefer) erroneously 
exercised its 
discretion in awarding attorney fees.  At a later hearing, the 
circuit court (Judge Faragher) refused to require Mr. Franke to 
contribute additional funds toward Ms. Franke's postjudgment 
attorney fees.  Ms. Franke argues that the circuit court 
erroneously exercised its discretion in not awarding her 
additional attorney fees.   
                                                 
52 Because all disputed attorney fees in this case arose 
after the divorce judgment, judicial review is governed by 
Wis. Stat. § 767.262(2) and not Rule 802.12(3)(c)(3).   
No. 
01-3316   
 
43 
 
¶84 We 
review 
a 
circuit 
court's 
decision 
regarding 
attorney fees for an erroneous exercise of discretion.53  We 
conclude that the circuit court did not erroneously exercise its 
discretion in awarding or refusing to award additional attorney 
fees.  A circuit court may consider a variety of factors, 
including the financial resources of the parties, additional 
fees incurred, and the opposing party's refusal to provide 
information promptly to avoid unnecessary delays.54  
¶85 The increase in Mr. Franke's contribution toward Ms. 
Franke's attorney fees was justified given the evidence of Mr. 
Franke's elusive behavior in disclosing financial information 
during the arbitration proceedings.  Although the circuit court 
(Judge Faragher) did not explain its refusal to award Ms. Franke 
additional attorney fees beyond that which had already been 
awarded by Judge Schlaefer, the record supports this exercise of 
discretion.  Judge Faragher apparently recognized that Judge 
Schlaefer had already taken into account Mr. Franke's dilatory 
behavior in setting attorney fees.  As such Judge Faragher did 
not erroneously exercise his discretion by refusing to increase 
further Mr. Franke's contribution toward Ms. Franke's attorney 
fees. 
D 
                                                 
53 Attorney fees rest primarily in the discretion of the 
circuit court.  Martin v. Martin, 46 Wis. 2d 218, 221, 174 
N.W.2d 468 (1970).  
54 Modrow v. Modrow, 2001 WI App 200, 247 Wis. 2d 889, 903-
04, 634 N.W.2d 852. 
No. 
01-3316   
 
44 
 
¶86 Ms. Franke's final claim is that the circuit court 
erroneously exercised its discretion in refusing to open the 
judgment requiring her to incur tax liability for the year 
1995.55  After carefully considering the arbitral award, the 
circuit court concluded that Ms. Franke was making the same 
arguments to the court that she had to the arbitrator and that 
the arbitrator's consideration of the merits of the issue did 
not warrant the circuit court's revisiting the issue.  On the 
basis of this record, we conclude that the circuit court did not 
erroneously exercise its discretion in refusing to change the 
arbiter's award regarding allocation of liability for 1995 
income taxes.   
¶87 For the reasons set forth, we affirm the orders of the 
circuit court revising the judgment to increase Ms. Franke's 
share of the property division and Mr. Franke's contribution 
toward the Ms. Franke's attorney fees incurred after the 
divorce.  The orders of the circuit court refusing to award Ms. 
Franke additional attorney fees and refusing to modify the 
allocation of the 1995 income tax liability are also affirmed.  
The circuit court's orders modifying child support are reversed 
and remanded to the circuit court for further consideration not 
inconsistent with this opinion.  
                                                 
55 We treat the income tax liability as a debt to be 
considered in the property division.  Accordingly, as we 
explained previously, the circuit court has authority to open 
the divorce judgment and determine the income tax liability. 
No. 
01-3316   
 
45 
 
By the Court.—The orders of the circuit court are affirmed 
in part and reversed and remanded in part.  
No.  01-3316.jpw 
 
1 
 
¶88 JON P. WILCOX, J.   (dissenting).  I join in the 
dissent of Justice Prosser, but write separately because of the 
majority's failure to determine the date upon which parties are 
required to update their financial information.  Majority op., 
¶¶65-66.  The majority states that the presence of an arbitral 
award may sometimes constitute a "special circumstance" such 
that the property is valued on some date other than the date of 
the divorce, but "it does not follow that a circuit court's 
heightened deference to an arbitral award requires, as a matter 
of law, that the closing of the arbitration record must always 
be the date on which the property is valued."  Majority op., 
¶63.   
¶89 Wisconsin Stat. § 767.27(2) 
requires 
that 
a 
party 
update financial information "to the date of the hearing."  The 
dispute in this case centers on what "hearing" refers to in the 
context of a divorce judgment that confirms an arbitration 
award.  As the majority notes, case law establishes that 
normally property is to be valued on the date of divorce.  
Majority op., ¶61 & n.40.  However, this rule is problematic if 
the parties enter into an agreement to arbitrate the division of 
their property.  In this scenario, the "hearing" could have four 
possible meanings:  1) the date on which the arbitrator chooses 
to close the record; 2) the date on which the arbitrator renders 
an award; 3) the date on which the parties move for the circuit 
court to confirm the arbitral award in a judgment; or 4) the 
date on which the circuit court actually confirms the arbitral 
award in a judgment.   
No.  01-3316.jpw 
 
2 
 
¶90 I agree with Justice Prosser that "[d]eference to the 
arbitrator 
requires 
that 
the 
arbitrator, 
not 
the 
court, 
determine when the record is closed.  This is a categorical 
exception to § 767.27(2)."  Justice Prosser's dissent, ¶164.  In 
all arbitration proceedings of this nature, the arbitrator will 
have to pick a date upon which the parties are required to 
update their information.  Then, the arbitrator will have to 
take this information——which, depending upon the nature and 
extent of the parties' assets, could be voluminous——and make 
calculations as to the proper division of the property.  Given 
the 
fact 
that 
the 
value 
of 
most 
property 
fluctuates, 
particularly stocks, the value of the parties' assets will 
undoubtedly change between the date the arbitrator closes the 
arbitration record and the time the arbitrator renders an award.  
Where, as here, the arbitrator did not render a decision until 
long after the record was closed, there is little surprise that 
the parties' assets changed in value.  Further, the value of 
assets will undoubtedly change between the time the arbitrator 
closes the record and the time the circuit court confirms the 
award in a judgment. 
¶91 Given the fluid nature of assets, if the valuation 
date is any other than the date on which the arbitrator decides 
to close the record, the arbitration process would be rendered 
meaningless.  If parties are required to constantly update their 
financial information after the close of the arbitration record, 
then the arbitrator will never be able to make a definitive 
calculation as to property division because the parties' assets 
No.  01-3316.jpw 
 
3 
 
will continue to fluctuate in value after the close of the 
record.  This never-ending cycle of updating and recalculation 
will likely result in the circuit court making its own 
independent valuation of assets in every case at the time the 
parties seek to have the arbitral award confirmed. 
¶92 The majority's failure to squarely address this issue 
is problematic for several reasons.  First, the majority 
concludes that the circuit court did not err in deciding to 
reopen the divorce judgment because the record establishes that 
Mr. Franke failed to make full financial disclosures to the 
arbitrator and the circuit court.  Majority op., ¶¶56, 69.  
However, this failure to disclose——or more properly, failure to 
update his financial statements——stems from Mr. Franke's failure 
to update his assets between the close of the arbitration 
hearing and the entry of divorce.  I fail to see how the 
majority can conclude that Mr. Franke can be charged with fraud 
or misrepresentation for failure to provide the appropriate 
documentation 
regarding 
his 
updated 
assets 
without 
first 
determining the last date upon which he was required to update 
this information.  If Mr. Franke's obligation to update ended on 
October 11, 1996, the date the arbitration record was closed, 
then the majority's assertion that Mr. Franke failed to disclose 
assets is tenuous and Ms. Franke's Wis. Stat. § 806.07 motion 
fails because there is little indication in the record or the 
majority's discussion that Mr. Franke failed to disclose assets 
prior to the close of the arbitration record.  If the majority 
is 
to 
allow 
litigants 
to 
be 
charged 
with 
fraud 
or 
No.  01-3316.jpw 
 
4 
 
misrepresentation 
for 
failure 
to 
update 
their 
financial 
statements, it should at least do them the courtesy of informing 
them when their obligation to update ends. 
¶93 Second, how can the majority conclude that the circuit 
court properly revalued Mr. Franke's assets without first 
determining the appropriate date upon which those assets are to 
be valued?  The majority must determine when a party's assets 
should be valued because the majority today allows a circuit 
court to independently review the parties' financial statements 
and modify the arbitral award before it is confirmed in a 
judgment.  As the majority fails to provide litigants and 
circuit courts with a clear rule as to when the parties' assets 
are to be valued, the valuation date will inevitably fluctuate 
on a case-by-case basis, depending upon the circuit court's 
independent assessment of the arbitral award. 
¶94 By failing to give guidance to parties on this issue, 
the 
majority 
opens 
the 
door 
for 
claims 
of 
fraud 
or 
misrepresentation in numerous divorce arbitration proceedings 
and destroys the finality usually accorded to the arbitration 
process.   
¶95 For the reasons discussed, I respectfully dissent.   
¶96 I am authorized to state that Justices DAVID T. 
PROSSER, JR. and DIANE S. SYKES join this opinion.  
 
No. 01-3316.dtp 
1 
 
 
 
¶97 DAVID T. PROSSER, J.   (dissenting).   
 
Disputes can arise in any area of our lives, in 
the workplace, in the neighborhood, in school, in 
business, and in families.  Some of those disputes 
escalate to the point at which one side or the other 
looks to the court system for resolution, by starting 
a lawsuit.   
In recent years, professionals from a variety of 
backgrounds have collaborated to develop processes for 
resolving disputes outside of the court system.  These 
processes 
are 
known 
collectively 
as 
"alternative 
dispute resolution," or simply "ADR." 
¶98 These words introduce the State Bar of Wisconsin's 
consumer pamphlet on alternative dispute resolution.56  The Bar 
explains that ADR may (1) save time; (2) save legal expenses; 
(3) provide the parties an opportunity for greater control over 
the dispute resolution process; (4) allow the parties to resolve 
their conflict in a more creative way than might be possible if 
the dispute were left to a decision by a judge or jury; (5) give 
parties greater privacy in resolving their disputes than is 
afforded in a public courtroom; (6) reduce "the emotional toll" 
of a lawsuit; and (7) permit valued relationships among the 
parties to be preserved.57   
¶99 Binding arbitration is one of several ADR techniques 
for resolving disputes, but its utility depends upon the 
willingness and agreement of the parties to settle disagreements 
                                                 
56 The text of the State Bar's consumer pamphlet may be 
found 
on 
the 
Bar's 
website 
at 
http://www.legalexplorer.com/legal/legal-QA.asp?PositionPoint 
(last updated Nov. 2002). 
57 Id. 
No. 01-3316.dtp 
2 
 
outside the courtroom.  Binding arbitration cannot be binding if 
the parties do not voluntarily give up the right to determine 
some or all of their dispute in court. 
¶100 In 
this 
case, 
the 
parties 
agreed 
to 
binding 
arbitration in a written Arbitration Agreement.  They agreed 
that the arbitrator "should have all the powers to . . . make 
decisions which are normally accorded to the court under the 
provisions of the Wisconsin Statutes."  They agreed that the 
"arbitration award shall not be modified or re-litigated in the 
circuit court except as provided in Secs. 788.10 and 788.12 
[sic], or as required by Rule 802.12(3) . . . ."  They further 
agreed that the circuit court would have continuing jurisdiction 
to modify the judgment under Wis. Stat. § 767.32 for family 
support and child support, not property division;58 and they 
agreed to appellate review of the award beyond the strict 
limitations of §§ 788.10 and 788.11. 
¶101 This agreement is not good enough for the majority.  
In its sweeping assertion of judicial power to review certain 
binding arbitration awards and the judgments confirming them, 
the majority opinion eviscerates binding arbitration in actions 
affecting the family and jeopardizes the finality of binding 
arbitration in other areas of law.  The opinion is thus a 
setback to ADR in Wisconsin.  Because the majority opinion's 
                                                 
58 The majority suggests that the parties themselves agreed 
in the Arbitration Agreement to give the court continuing 
jurisdiction so as to permit motions to reopen the judgment on 
all subjects.  If this novel construction were correct, it would 
render superfluous the Agreement's clarifying reference to 
Wis. Stat. §§ 767.32 and 767.325.  See Majority op., ¶26 n.9. 
No. 01-3316.dtp 
3 
 
analysis of the applicable rules and statutes is fundamentally 
at odds with my understanding of the law, I respectfully 
dissent. 
I 
¶102 Chapter 788 of the Wisconsin Statutes is referred to 
as The Wisconsin Arbitration Act.59  The chapter authorizes "2 or 
more persons to submit to arbitration any controversy existing 
between them at the time of the agreement to submit."60  The 
agreement to submit "shall be valid, irrevocable and enforceable 
except upon such grounds as exist at law or in equity for the 
revocation of any contract."61   
 
¶103 The Wisconsin Arbitration Act dates from 1931.62  Its 
purposes and provisions have been litigated many times.  This 
litigation has produced settled rules governing review of 
arbitrators' decisions.  Nicolet High Sch. Dist. v. Nicolet 
Educ. Ass'n, 118 Wis. 2d 707, 712, 348 N.W.2d 175 (1984). 
 
¶104 Arbitrators obtain their authority from the contract 
of the parties.  Joint School Dist. No. 10 v. Jefferson Educ. 
Ass'n, 78 Wis. 2d 94, 101, 253 N.W.2d 536 (1977).  Because the 
parties 
contract 
for 
arbitration, 
the 
parties 
get 
the 
arbitrator's award "whether that award is correct or incorrect 
                                                 
59 Wis. Stat. § 788.17. 
60 Wis. Stat. § 788.01. 
61 Id. 
62 Ch. 274, Laws of 1931.  "The Wisconsin Arbitration Act, 
enacted in 1931, obviously was intended to make arbitration 
agreements subject to Wisconsin law specifically enforceable."  
Madison v. Frank Lloyd Wright Foundation, 20 Wis. 2d 361, 383, 
122 N.W.2d 409 (1963). 
No. 01-3316.dtp 
4 
 
as a matter of fact or law."  City of Madison v. Madison Prof'l 
Police Officers Ass'n, 144 Wis. 2d 576, 586, 425 N.W.2d 8 (1988) 
(citing Oshkosh v. Maint. Employees Union Local 796-A, 99 
Wis. 2d 95, 103, 299 N.W.2d 210 (1980)).  While a court may 
disagree with the award, it may not substitute its judgment for 
the decision of the arbitrator, Denhart v. Waukesha Brewing Co., 
17 Wis. 2d 44, 51, 115 N.W.2d 490 (1962), because the parties 
contracted for the arbitrator's decision, not the court's.  
Jefferson Educ. Ass'n, 78 Wis. 2d at 116.  Upon review, the 
function of the court is supervisory in nature.  Milwaukee 
Prof'l Firefighters, Local 215 v. City of Milwaukee, 78 
Wis. 2d 1, 22, 253 N.W.2d 481 (1977).  It is merely to insure 
that the parties have received the arbitration that they 
bargained for.  Union Local 796-A, 99 Wis. 2d at 106. 
¶105 Chapter 
788 
establishes 
procedures 
for 
selecting 
arbitrators,63 gathering evidence,64 hearing cases,65 and issuing 
written arbitral awards.66  The chapter provides for the 
confirmation of an arbitral award in court: 
 
Court confirmation award, time limit.  At any 
time within one year after the award is made any party 
to the arbitration may apply to the court in and for 
the county within which such award was made for an 
order confirming the award, and thereupon the court 
must grant such an order unless the award is vacated, 
modified or corrected under s. 788.10 or 788.11.  
Notice in writing of the application shall be served 
                                                 
63 Wis. Stat. § 788.04. 
64 Wis. Stat. §§ 788.06(2) and 788.07. 
65 Wis. Stat. § 788.06. 
66 Wis. Stat. § 788.08. 
No. 01-3316.dtp 
5 
 
upon the adverse party or the adverse party's attorney 
5 days before the hearing thereof. 
Wis. Stat. § 788.09 (emphasis added). 
 
¶106 The pertinent language in this section is that the 
court must grant an order confirming the arbitration award 
"unless the award is vacated, modified or corrected" according 
to statute.  Significantly, a party to the arbitration may ask 
the court to vacate the award on any of four grounds, including 
fraud,67 or to modify or correct the award on any of three 
grounds, including material miscalculation of figures.68  If 
these circumstances are shown, the court is prohibited from 
confirming the award.  Instead, it must vacate, modify, or 
correct the award.  However, a motion to vacate, modify or 
correct an award must be served within 3 months after the award 
is filed or delivered.69  Appeals from such orders or from 
judgments upon awards may be filed "as from an order or judgment 
in an action."70   
 
¶107 Although there are statutory grounds and statutory 
procedures for a court to vacate or modify an arbitrator's 
award, the award is presumptively valid, and it will be 
disturbed only when its invalidity is demonstrated by clear and 
convincing evidence.  Nicolet, 118 Wis. 2d at 712 (citing 
Milwaukee Bd. of Sch. Directors v. Milwaukee Teachers' Educ. 
Ass'n, 93 Wis. 2d 415, 422, 287 N.W.2d 131 (1980)); Dane County 
                                                 
67 Wis. Stat. § 788.10. 
68 Wis. Stat. § 788.11. 
69 Wis. Stat. § 788.13.   
70 Wis. Stat. § 788.15. 
No. 01-3316.dtp 
6 
 
v. Dane County Union Local 65, 210 Wis. 2d 267, 275, 565 
N.W.2d 540 (Ct. App. 1997).  Courts have adopted a "hands off" 
approach to arbitration awards, Madison Prof’l Police Officers 
Ass’n, 144 Wis. 2d at 587 (citing WERC v. Teamsters Local No. 
563, 75 Wis. 2d 602, 611, 250 N.W.2d 696 (1977)), because there 
is a strong public policy favoring arbitration as a method for 
settling disputes.  Milwaukee Prof'l Firefighters, 78 Wis. 2d at 
21. 
 
¶108 Against this background, it is "elementary" that res 
judicata (claim preclusion) and collateral estoppel (issue 
preclusion) are applicable to arbitration awards.  Manu-Tronics 
v. Effective Mgmt. Sys., 163 Wis. 2d 304, 311, 471 N.W.2d 263 
(Ct. App. 1991) (citing Denhart, 21 Wis. 2d at 589; and 
Restatement (Second) of Judgments § 84 (1982)).  These doctrines 
underscore the finality of binding arbitration awards except in 
specific enumerated circumstances.  An arbitration award under 
the statute is "irrevocable and binding on the parties."  
Stradinger v. City of Whitewater, 89 Wis. 2d 19, 33-34, 277 
N.W.2d 827 (1979).  "Parties who contract for arbitration are 
entitled to an arbitration award without the added expense of 
having to relitigate the issue in court."  Lukowski v. Dankert, 
178 Wis. 2d 110, 113, 503 N.W.2d 15 (Ct. App. 1993), aff'd 184 
Wis. 2d 142, 515 N.W.2d 883 (1994).71 
II 
                                                 
71 "The whole purpose of arbitration is to substitute a 
less-expensive and less-formal method of settling differences 
between parties for normal court litigation."  Frank Lloyd 
Wright Foundation, 20 Wis. 2d at 383. 
No. 01-3316.dtp 
7 
 
 
¶109 The majority opinion completely abandons these well-
settled principles.  It holds, first, that a circuit court may 
modify a property division arbitral award on equitable grounds 
before it has been confirmed, and, second, a circuit court may 
modify a property division arbitral award after it has been 
confirmed and incorporated into a judgment, in a collateral 
attack under 
Wis. Stat. § 806.07.  
These two 
propositions 
contradict virtually every principle of binding arbitration 
because they eliminate the finality of the arbitral award, 
permit collateral attack on the arbitral award, and breach the 
lawful contract of the parties by empowering the court to 
second-guess the arbitrator on the merits. 
 
¶110 The majority rationalizes its decision to establish 
pre-confirmation judicial discretion on the theory that binding 
arbitration 
in 
certain 
actions 
affecting 
the 
family 
is 
authorized by Wis. Stat. § 802.12(3)(c), not Chapter 788, and 
binding arbitration in family law is different from other 
binding arbitration.  The majority sums up this view with the 
pronouncement that "Divorce judgments [based in part on arbitral 
awards] are different.  A circuit court is statutorily required 
to perform an independent, substantive review of [the] parties' 
agreement before incorporating it in the divorce judgment."  
Majority 
op., 
¶50. 
 
The 
majority 
relies 
on 
Wis. Stat. § 767.255(3)(L) to support this conclusion. 
 
¶111 In my view, binding arbitration under § 802.12(3)(c) 
is exactly the same as binding arbitration under Chapter 788.  
This is substantiated by the plain language of § 802.12. 
No. 01-3316.dtp 
8 
 
 
¶112 Wisconsin Stat. § 802.12 was created by court order in 
1993.  93-13 Amendment of Rules of Civil Procedure Chapter 802-
Settlement Alternatives, 180 Wis. 2d xv (1993).  The amendment 
"provides express statutory authority for judges to order that 
litigants attempt settlement through any of several defined 
processes."  See Judicial Council Note, 1993, to 93-13, 180 
Wis. 2d at xix. 
 
¶113 Wisconsin Stat. § 802.12 defines "binding arbitration" 
as a dispute resolution process that meets five conditions, 
including a condition that the award is subject to judicial 
review under Wis. Stat. §§ 788.10 and 788.11.72  It also defines 
"nonbinding arbitration."73  Both forms of arbitration are 
permissible settlement alternatives in actions affecting the 
family.74 
 
¶114 The parties choose the type of dispute settlement 
process they want to use.  "Subsection (2)(b) [of § 802.12] 
prohibits the judge from requiring the parties to submit to 
binding arbitration without their consent; this restriction 
preserves the right of trial by jury."  Id. (emphasis added). 
¶115 Then Wis. Stat. § 802.12(3)(c) provides: 
(c) If the parties agree to binding arbitration, 
the court shall, subject to ss. 788.10 and 788.11, 
confirm the arbitrator's award and incorporate the 
award into the judgment or postjudgment modification 
order with respect to all of the following: 
1. 
Property division under s. 767.255. 
                                                 
72 Wis. Stat. § 802.12(1)(a). 
73 Wis. Stat. § 802.12(1)(h). 
74 Wis. Stat. § 802.12(3)(a). 
No. 01-3316.dtp 
9 
 
2. 
Maintenance under s. 767.26. 
3. 
Attorney fees under s. 767.262. 
4. 
Postjudgment 
orders modifying 
maintenance 
under s. 767.32. 
Wis. Stat. § 802.12(3)(c) (emphasis added). 
¶116 Subsection (3)(c) is quite explicit.  Subject to 
§§ 788.10 and 788.11, the court shall confirm the arbitrator's 
award and incorporate it into the judgment.  It must also 
incorporate the award into a postjudgment modification order. 
¶117 Subsection (3)(c) contrasts with subsections (3)(d) 
and (e).  Paragraph (d) permits the parties to agree to binding 
arbitration for child custody, visitation, and child support, 
but paragraph (e) provides that the court "may not confirm the 
arbitrator's award under par. (d)" unless the award conforms to 
applicable law.  The applicable law requires consideration of 
the "best interest of the child."75  Hence, paragraph (e) 
authorizes 
additional 
judicial 
oversight——beyond 
Wis. Stat. §§ 788.10 and 788.11——to awards under paragraph (d).  
By 
contrast, 
paragraph 
(c) 
does 
not 
anticipate 
judicial 
oversight beyond application of §§ 788.10 and 788.11.  These two 
sections provide the only statutory criteria for judicial review 
                                                 
75 See 
Wis. Stat. §§ 767.045, 
767.11, 
767.24, 
767.245, 
767.25.   
No. 01-3316.dtp 
10 
 
under § 802.12(3)(c), so long as the prerequisite conditions of 
§ 802.12(1)(a) have been satisfied.76 
¶118 Wisconsin Stat. § 802.12(3)(c) is absolutely clear 
that except for determinations under §§ 788.10 and 788.11, the 
court shall confirm the arbitrator's award and incorporate a 
property division under § 767.255 into the judgment.  It is 
astounding 
for 
the 
majority 
to 
assert 
that 
Wis. Stat. § 767.255(3)(L) is an independent source of authority 
for judicial review of an arbitrator's award on property 
division before confirmation. 
¶119 This assertion is in direct conflict with the plain 
language of the statute.  When the majority insists that the 
circuit court may conduct its own evaluation of whether a 
property division is inequitable as to either party before 
confirming the arbitral award, it is transforming binding 
arbitration under subsection (3)(c) into a form of nonbinding 
                                                 
76The judges, professors, and attorneys responsible for 
compiling the Wisconsin Judicial Benchbook have recognized this 
commonsense reading of § 802.12(3) (c-e), subjecting child-
related matters to special judicial scrutiny not applicable to 
property division.  The Family section of the Benchbook 
differentiates 
between 
custody 
and 
physical 
placement, 
visitation, and child support on the one hand and property 
division, 
maintenance, 
and 
attorney 
fees 
on 
the 
other.  
Wisconsin Judicial Benchbook: Family, FA 3-6 to 3-7 (2d ed. 
2001).  The Benchbook notes that the latter category is exempt 
from the additional judicial oversight that must accompany 
binding arbitral awards in child-related matters.  While the 
Benchbook is not intended to stand as independent legal 
authority for any proposition of law, its clear recitation of 
Wisconsin ADR principles as understood by many of the state's 
eminent family law experts stands in stark contrast to the 
majority's discovery of "tension" between § 802.12(3)(c) and 
§ 767.255(3)(L).  Majority op., ¶46.   
 
No. 01-3316.dtp 
11 
 
arbitration.  It is saying that the parties did not really 
contract for an arbitrator's binding decision on property 
division; they contracted and paid for an arbitrator's advisory 
decision subject to judicial review of the merits.  This is 
simply rewriting the statute.  
III 
 
¶120 The history of Wis. Stat. § 802.12 supports the view 
that the Judicial Council and the supreme court intended 
traditional binding arbitration under § 802.12(3)(c). 
¶121 First, the original draft of the rule petition, filed 
in the Supreme Court Clerk of Courts office on February 11, 
1993, reads in part: 
 
(4)(c) 
If 
the 
parties 
agree 
to 
binding 
arbitration, the court shall, subject to ss. 788.10 
and 788.11, confirm the arbitrator's decision [on 
enumerated issues]. . . .  
 
(d) If the parties agree to binding arbitration, 
the court may, subject to ss. 788.10 and 788.11, 
confirm the arbitrator's award [on other enumerated 
issues]. . .  
The 
court 
may 
not 
confirm 
the 
arbitrator's 
child 
support 
award . . . unless 
the 
child support is determined in the manner required 
under s. 767.75 or s. 767.51. 
93-13 Rule Petition (Feb. 11, 1993) (emphasis added). 
 
¶122 This early draft established a different role for the 
circuit court under paragraph (c) than under paragraph (d), with 
paragraph (c) affording the court no discretion to review the 
award on the merits.  Paragraph (c) was never substantively 
revised in the rule-making process, whereas paragraph (d) was 
revised and paragraph (e) was added to ameliorate concerns that 
child custody, placement, and visitation, as well as child 
support, not be treated the same as adult-financial issues. 
No. 01-3316.dtp 
12 
 
 
¶123 Second, at the October 19, 1993, public hearing on the 
rule petition, Attorney Barbara J. Becker, then chair of the 
Board of Directors of the Family Law Section of the State Bar of 
Wisconsin, testified that the Section strongly supported binding 
arbitration for adult-financial issues.  She said: 
 
In the fall of 1992, the Family Law Section Board 
by an overwhelming majority voted to support the 
Judicial 
Council 
Alternative 
Dispute 
Resolution 
petition.  The section requested the Judicial Council 
to incorporate in the petition specific reference to 
family law actions . . .  
 
The section also requested the Judicial Council 
to separate out the money issues relating to adults in 
divorce, i.e., property division, maintenance, and 
attorney fees, from the child related issues of 
custody, placement, visitation, and child support as 
to binding arbitration.  It was the consensus of the 
Board . . . that 
binding 
arbitration 
should 
be 
available to settle divorce cases. 
 
The Board wanted to be sure that it was very 
clear in the proposed rule that the trial court shall 
approve binding arbitration on the adult related 
financial issues and that the court may approve 
binding arbitration on the child related issues.  This 
was to preserve the jurisdiction of the circuit court 
to protect the minor children from the possible 
improvidence of their parents. 
. . . .  
 
[In August 1993, the Board reconsidered its 
position.  The vote was closer than it had been the 
year before.]  The general consensus in the Board 
[after the second vote] is that binding arbitration 
should be allowed in family law cases.  There is also 
a general consensus that adult financial issues should 
be distinguished from child related issues and that 
the adult related [financial] issues should be subject 
to binding arbitration. 
Testimony of Barbara J. Becker 1-2 (Oct. 19, 1993). 
No. 01-3316.dtp 
13 
 
¶124 The themes set out by Attorney Becker in her testimony 
were echoed repeatedly by others who communicated with the 
court.  For instance, Attorney Joan F. Kessler wrote that "The 
proposed statute provides that the court must confirm an 
arbitration award involving finances, and may confirm an award 
involving custody/visitation issues, if the process has been 
properly invoked and followed."  Letter from Joan F. Kessler to 
Justices of the Wisconsin Supreme Court 5 (Oct. 18, 1993). 
¶125 Dane County Family Court Commissioner Ralph J. Guerin 
and three assistant family court commissioners wrote that they 
had "no difficulty with the submission of financial issues to 
binding arbitration" but thought it was "inappropriate for 
arbitrators to be entering binding decisions in matters relating 
to custody or placement."  Letter from Ralph J. Guerin, et al. 
to Supreme Court Justices (Oct. 19, 1993). 
¶126 Ann L. Milne, a national leader in family counseling, 
wrote: "I support allowing parties to voluntarily choose to 
arbitrate their divorce-related disputes, including financial 
and child-related issues.  The premise behind alternative 
dispute resolution is to provide a full range of dispute 
resolution alternatives. . . . The ongoing jurisdiction of the 
court, parens patriae, over all child-related matters presumes 
that the court will review all stipulations and all orders to be 
signed by the court in light of the 'best interest of the child 
doctrine.'"  Letter from Ann L. Milne to Justices of the 
Wisconsin Supreme Court (Oct. 18, 1993) (emphasis added). 
¶127 Attorney Allan R. Koritzinsky advised the court after 
the hearing that "This past Saturday, the Board of Directors of 
No. 01-3316.dtp 
14 
 
the State Bar Family Law Section reaffirmed its position, 
unanimously requesting that the Supreme Court adopt the Rule, 
including the arbitration provisions for all adult financial 
issues and child support.  Reasonable debate remains only on the 
child-related arbitration provisions, excluding child support."  
Letter from Allan R. Koritzinsky to Clerk of Wisconsin Supreme 
Court (Oct. 27, 1993). 
¶128 The gist of these communications is that binding 
arbitration for adult-financial issues such as property division 
was expected and intended to be traditional binding arbitration. 
¶129 Third, there was one conspicuous opponent to any 
binding arbitration for actions affecting the family.  Attorney 
Linda S. Balisle testified at the October 19 hearing as follows: 
 
I speak against that part of the petition which 
provides binding arbitration in family law cases 
because I think it is a grave mistake to restrict this 
court's review of family law decisions rendered by 
private attorneys . . .  
 
Currently, divorcing parties may arbitrate any or 
all issues in their divorce. . . . The trial court may 
consider the arbitrator's award in reaching its own 
decision, but is not bound by it. 
 
The petition that is before this court would 
require the trial court to give deference to the 
arbitrator's award and would limit the trial court's 
ability to modify or vacate the award consistent with 
the provisions of Wis. Stat. secs. 788.10 and 788.11.  
Further, it would limit the Court of Appeals and the 
Supreme Court's review of these family law cases to 
the narrow issues of whether the trial court properly 
applied Secs. 788.10 and 788.11 in affirming or 
modifying an arbitrator's award. 
. . . .  
 
This court has reversed experienced trial court 
judges and the Court of Appeals in family law cases 
No. 01-3316.dtp 
15 
 
involving issues of maintenance and property division.  
A review of those cases shows that if an arbitrator 
had made the decision the trial courts made in those 
cases, this court would have been unable to reverse 
those decisions. 
. . . .  
 
Why should this court give greater deference to a 
private attorney [than] it would to a trial court or 
the Court of Appeals? 
Testimony of Linda S. Balisle 1, 5 (Oct. 19, 1993). 
¶130 The majority opinion makes reference to Attorney 
Balisle's dramatic appeal, but it fails to acknowledge that the 
court rejected her request to remove binding arbitration on 
family issues from the rule.  The court did not revise 
subsection (3)(c).  Rather, it adopted a rule with traditional 
binding arbitration for adult-financial issues in family law 
cases. 
IV 
¶131 The majority attempts to overcome the plain language 
and history of Wis. Stat. § 802.12(3)(c) by asserting that they 
are subsidiary to Wis. Stat. § 767.255(3)(L).  This analysis 
misses the mark. 
¶132 Section 767.255(3) begins with the directive that the 
court "shall presume that all property not described in sub. 
(2)(a) is to be divided equally."  The subsection then 
authorizes the court to alter this presumption after considering 
certain factors, including the length of the marriage and the 
age and health of the parties.  One of the other enumerated 
factors to consider in dividing property is: 
(L) Any written agreement made by the parties 
before 
or 
during 
the 
marriage 
concerning 
any 
arrangement for property distribution; such agreements 
No. 01-3316.dtp 
16 
 
shall be binding upon the court except that no such 
agreement shall be binding where the terms of the 
agreement are inequitable as to either party.  The 
court shall presume any such agreement to be equitable 
as to both parties. 
Wis. Stat. § 767.255(3)(L) (emphasis added). 
 
¶133 In the typical case where the court is called upon to 
divide property, the "written agreement made by the parties" is 
an agreement dividing and distributing marital assets, both 
tangible and intangible.  The "agreement" may divide assets 
equally in terms of value, or it may divide them unequally.  It 
may distribute a specific asset to a particular party.  In this 
sort 
of 
private 
written 
agreement, 
one 
spouse 
may 
have 
tremendous influence or leverage over the other, producing an 
unfair property division.  In such a situation, the court is not 
bound by the parties' agreement. 
 
¶134 The only "agreement" at issue in a binding arbitration 
case, however, is the "agreement to submit" property division to 
binding arbitration.  The parties do not agree to divide the 
property in a certain way——they agree to submit the issue to 
binding arbitration.  How can it be said that the "terms" of 
such an agreement "are inequitable as to either party"? 
 
¶135 The majority relies on "public policy" derived from 
several sources, including Wisconsin cases that did not involve 
binding arbitration under Wis. Stat. § 802.12(3)(c), to conclude 
that marriage contracts are different from other contracts and 
that a "court protects the parties' and public interests by 
reviewing the substantive provisions of any agreement affecting 
the division of property."  Majority op., ¶38.  There is no 
disagreement with this policy in a case that does not involve 
No. 01-3316.dtp 
17 
 
binding arbitration.  The issue in this case, however, is 
whether a court is entitled to act as a "free safety"77 in equity 
when the parties, in complete conformity to law, have contracted 
for someone other than the court to arbitrate a property 
division and bind the parties.   
 
¶136 In 
my 
view, 
the 
court 
has 
no 
authority 
under 
Wis. Stat. § 767.255(3)(L) 
to 
second-guess 
the 
arbitrator's 
decision on property division.  There is no need to harmonize 
§ 767.255(3)(L) 
with § 802.12(3)(c) 
when the 
parties 
have 
voluntarily contracted to give the arbitrator responsibility to 
balance the equities between them.  It is the arbitrator who 
considers paragraph (L). 
V 
¶137 There is no dispute that the circuit court must vacate 
an arbitrator's award before it is confirmed, under the terms of 
Wis. Stat. § 788.10, when a contesting party satisfies the 
burden of proof.  There is no dispute that the circuit court 
must modify or correct an arbitrator's award before it is 
confirmed, under the terms of Wis. Stat. § 788.11, when such a 
party shows error.  There is also no dispute that a party may 
appeal a circuit court order or judgment on these matters "as 
                                                 
77 In football, a "free safety" is a defensive player who 
has "no specific assignment at the snap of the ball."  Random 
House Unabridged Dictionary 764 (2d ed. 1993).  Although the 
free safety frequently "lines up the deepest in the secondary 
and defends the deep middle of the field against the pass," the 
player may change position unpredictably to provide double 
coverage against a pass receiver or blitz the passer.  See 
http://football.about.com/cs/football101/g/gl_freesafety.htm 
(last visited January 26, 2004).  In binding arbitration, the 
parties contract to exclude the court from acting unpredictably 
or providing double coverage. 
No. 01-3316.dtp 
18 
 
from 
an 
order 
or 
judgment 
in 
an 
action," 
under 
Wis. Stat. § 788.15.  But this case does not involve any of 
these options.   
¶138 This case involves a motion under Wis. Stat. § 806.07 
to reopen a divorce judgment after the circuit court confirmed 
the adult-financial components of the arbitral award and 
incorporated them into the judgment.  The motion under § 806.07 
was a collateral attack on the judgment, coming more than 11 
months after the judgment was entered, and long after the time 
to appeal the judgment had expired. 
¶139 Section 806.07 reads in part: 
 
Relief from judgment or order.  (1) On motion and 
upon such terms as are just, the court . . . may 
relieve a 
party . . . from a 
judgment, 
order or 
stipulation for the following reasons: 
 
(a) Mistake, 
inadvertence, 
surprise, 
or 
excusable neglect; 
 
. . . .  
 
(c) Fraud, 
misrepresentation, 
or 
other 
misconduct of an adverse party; 
 
. . . .  
 
(g) It is no longer equitable that the judgment 
should have prospective application; or 
 
(h) Any other reasons justifying relief from the 
operation of the judgment.  
¶140 Wisconsin 
courts 
have 
asserted 
authority 
under 
§ 806.07 to modify the property divisions in judgments, Conrad 
v. Conrad, 92 Wis. 2d 407, 413-14, 284 N.W.2d 674 (1979); 
Spankowski v. Spankowski, 172 Wis. 2d 285, 290, 493 N.W.2d 737 
(Ct. App. 1992); Thorpe v. Thorpe, 123 Wis. 2d 424, 426, 367 
No. 01-3316.dtp 
19 
 
N.W.2d 233 (Ct. App. 1985), even though Wis. Stat. § 767.32(1), 
which permits revision of certain judgments, does not permit 
revision or modification of "the provisions of a judgment or 
order with respect to final division of property."  The 
Spankowski decision stressed the family court's "discretionary 
authority to grant relief from the judgment."  172 Wis. 2d at 
290.   
¶141 None 
of 
the 
cases 
cited 
dealt 
with 
a 
binding 
arbitration award.  Until today, circuit courts have not had 
"discretion" to review arbitration awards on an equitable basis.  
Logically, a circuit court should not have more "discretion" to 
revise a binding arbitration award under § 806.07 than it has 
under § 802.12(3)(c).  That is why the majority devotes such 
effort to establishing that binding arbitration in actions 
affecting 
the 
family 
is 
different 
from 
other 
binding 
arbitration——that is, it does not "bind" the court. 
¶142 Wisconsin Stat. § 806.07 is based upon Rule 60(b) of 
the Federal Rules of Civil Procedure.  Patricia Graczyk, The New 
Wisconsin Rules of Civil Procedure, chapters 805-807, 59 Marq. 
L. Rev. 671, 726 (1976).  Hence, federal rules decisions 
interpreting Federal Rule 60(b) may be helpful in interpreting 
the Wisconsin rule.  See Split Rock v. Lumber Liquidators, 2002 
WI 66, ¶14, 253 Wis. 2d 238, 646 N.W.2d 19.  Traditionally, 
federal courts interpret Rule 60(b) in tandem with Title 9 of 
the United States Code (the Federal Arbitration Act). 
¶143 The principles embedded in the federal cases are 
clear.  "Judicial review of arbitration awards is narrow because 
arbitration is intended to be the final resolution of disputes."  
No. 01-3316.dtp 
20 
 
Nat'l Wrecking Co. v. Int'l Bhd. of Teamsters, Local 731, 990 
F.2d 957, 960 (7th Cir. 1993).  "Where parties have selected 
arbitration as a means of dispute resolution, they presumably 
have done so in recognition of the speed and inexpensiveness of 
the 
arbitral 
process; 
federal 
courts 
ill 
serve 
these 
aims . . . by engaging in any more rigorous review than is 
necessary to ensure compliance with statutory standards."  Davis 
v. Chevy Chase Fin. Ltd., 667 F.2d 160, 164-65 (D.C. Cir. 1981).  
The Federal Arbitration Act "does not, it must be stressed, 
confer on courts a general equitable power to substitute a 
judicial 
resolution 
of 
a 
dispute 
for 
an 
arbitral 
one; 
rather . . . '[i]t 
is the 
arbitrator's 
construction 
[of a 
contract] which was bargained for,' and not that of the courts."  
Id. at 165 (quoting United Steelworkers of Am. v. Enter. Wheel & 
Car Corp., 363 U.S. 593, 599 (1960)). 
¶144 Federal 
courts 
have 
consistently 
applied 
these 
principles.  For example, in Washington-Baltimore Newspaper 
Guild, Local 35 v. Washington Post Co., 442 F.2d 1234 (D.C. Cir. 
1971), the district court granted summary judgment to sustain an 
arbitrator's award.  The Guild then filed a motion to reopen the 
judgment under Federal Rule 60(b) on grounds of newly available 
evidence.  The court of appeals said: 
[I]t was the Guild's bargain with the Post to have 
disputes over the discharge of employees settled by 
arbitration, with all of its well known advantages and 
drawbacks.  To give appellant a rematch before the 
arbitrator, merely because a witness who refused to 
enter 
the 
original 
contest 
has 
now 
decided 
to 
participate, would be not only to give the Guild more 
than the benefit of its bargain in this case, but 
would undercut the finality and therefore the entire 
usefulness 
of 
arbitration 
as an 
expeditious and 
No. 01-3316.dtp 
21 
 
generally fair method of settling disputes.  As 
District Judge Aubrey Robinson put it in this case: 
 
 
Unless parties are bound by the records 
made before the arbitrators, the piecemeal 
or staggered submission of evidence would be 
likely 
to 
erode 
the 
effectiveness 
of 
arbitration as a speedy and efficient forum 
for resolving labor disputes. 
 
. . . .  
These 
considerations 
demonstrate 
substantial 
cause for not applying Rule 60(b) remedies to final 
arbitration awards.  Of course, neither Rule 60(b) per 
se nor, for that matter, any other of the Federal 
Rules of Civil Procedure was ever designed to apply to 
proceedings in other than the United States District 
Courts. 
 
. . . .  
 
In sum, we think that neither Rule 60(b) nor any 
judicially constructed parallel thereto was meant to 
be applied to final arbitration awards, and that the 
District Court was correct in denying appellant's 
motion. 
Id. at 1238-39 (emphasis added).78 
                                                 
78 In Bledsoe v. Dalkon Shield Claimants Trust (In re A.H. 
Robins Company), 112 F.3d 160 (4th Cir. 1997), one of the 
parties 
attempted 
to 
use 
Rule 
60(b) 
to 
challenge 
the 
arbitrator's award directly.  The court said: 
Neither the Agreement nor the ADR Rules contain a 
provision permitting either party to seek a new 
hearing after the referee issues a decision.  The 
absence of any provision providing for post-decision 
review is not unintentional.  We believe that it 
constitutes a deliberate omission, because any rule 
permitting such immediate review would contravene the 
very goal of the ADR process——the efficient, fair, and 
final 
resolution 
of 
claims 
against 
the 
Trust.  
Consequently, we hold that the district court did not 
abuse its discretion in finding that Rule 60(b) relief 
from this particular ADR procedure was not available 
to those claimants who elected to have their claims 
resolved in ADR. 
Id. at 163. 
No. 01-3316.dtp 
22 
 
 
¶145 The majority seeks to distinguish cases following the 
seminal Washington Post decision.  It points to three cases in 
which federal courts have said that Rule 60(b) may be used "to 
open a judgment that confirms an arbitration award."  Majority 
op., ¶27 n.10.  These three cases require individual analysis. 
 
¶146 In 1983 the Seventh Circuit reversed a district court 
decision reopening an arbitration award under Rule 60(b).  Merit 
Ins. Co. v. Leatherby Ins. Co., 714 F.2d 673 (7th Cir. 1983).  
Writing for the court, Judge Richard Posner declared: 
 
If Leatherby had wanted its dispute with Merit 
resolved by an Article III judge . . . it would not 
have inserted an arbitration clause in the contract, 
or having done so move for arbitration against Merit's 
wishes.  Leatherby wanted something different from 
judicial 
dispute resolution.  It 
wanted 
dispute 
resolution by experts in the insurance industry, who 
were bound to have greater knowledge of the parties, 
based on previous professional experience, than an 
Article III judge, or a jury.  The parties to an 
arbitration choose their method of dispute resolution, 
and can ask no more impartiality than inheres in the 
method they have chosen. 
Id. at 679. 
 
¶147 Judge Posner explained that Rule 60(b) places a high 
value on the social interest in finality of litigation.  Id. at 
682.  Then he went on: "To make out a case for relief from 
judgment under Rule 60(b)(6) Leatherby had to show not only that 
an arbitrator had violated the ethical and legal standards for 
arbitrators but that the violation created a substantial danger 
of an unjust result."  Id. at 682-83.   
¶148 This latter statement implied that Rule 60(b) could be 
used to reopen a judgment based on an arbitrator's award.  
However, the court cited no authority for its statement and did 
No. 01-3316.dtp 
23 
 
not apply it to the facts.  As noted, the district court's grant 
of the motion was reversed. 
 
¶149 Leatherby's 
Rule 
60(b)(6) 
motion 
to 
reopen 
the 
judgment was filed 18 months after the award had been issued by 
the arbitrators.  Consequently, the motion was at odds with the 
language in 9 U.S.C. § 12, that "[n]otice of a motion to vacate, 
modify, or correct an award must be served upon the adverse 
party . . . within three months after the award is filed or 
delivered."   
¶150 The purpose of Title 9 was to make arbitration 
agreements as enforceable as other contracts.  Pritzker v. 
Merrill Lynch, Pierce, Fenner & Smith, Inc., 7 F.3d 1110, 1113 
(3rd Cir. 1993); Supak & Sons Mfg. Co. v. Pervel Indus., Inc., 
593 F.2d 135, 137 (4th Cir. 1979).  Permitting Rule 60(b) to be 
used to reopen a judgment incorporating an arbitration award is 
really nothing more than permitting the court to reopen the 
arbitration award itself.  This is highly problematic, because 
literal application of Rule 60(b) would permit a party to move 
to reopen the judgment for, say, misrepresentation, up to four 
times longer after judgment is entered than before judgment is 
entered.79  This makes no sense because it undermines the purpose 
of alternative dispute resolution.  It severs the arteries of 
binding arbitration under Title 9 by disregarding the time 
                                                 
79 Federal Rule 60(b) requires that a motion to relieve a 
judgment "shall be made within a reasonable time, and for 
reasons (1) [mistake, inadvertence, surprise, or excusable 
neglect], (2) [newly discovered evidence], and (3) [fraud, 
misrepresentation, or other misconduct of an adverse party] not 
more than one year after the judgment . . . was entered or 
taken." 
No. 01-3316.dtp 
24 
 
limits in Title 9.  Because the Leatherby court provided no 
authority or rationale for its observation and did not apply it, 
the observation should be regarded as dictum. 
¶151 In 
a 
second 
case, 
Baltia 
Air 
Lines, 
Inc. 
v. 
Transaction Management, Inc., 98 F.3d 640 (D.C. Cir. 1996), the 
court stated that "Rule 60(b) is an appropriate vehicle by which 
to challenge a judgment confirming an arbitration award."  Id. 
at 642.  Here, too, the court cited no authority for its 
statement and did not apply it because the motion under Rule 
60(b), which suggested newly discovered evidence and fraud, was 
filed more than a year after the judgment on the award was 
entered.  Hence, the court relied upon the time limit in the 
rule as the basis for denying relief. 
¶152 In the third case, 
Clarendon 
National 
Insurance 
Company v. TIG Reinsurance Company, 183 F.R.D. 112 (S.D.N.Y. 
1998), Federal District Judge Robert Sweet did apply Rule 60(b) 
to reopen a judgment, and he did pen language that substantiates 
the majority's position.  He noted that: 
Clarendon does not suggest the use of Rule 60(b) to 
modify the arbitration award itself.  It is well-
established that Rule 60(b) does not apply to such 
awards.  See Cook Chocolate Co. v. Salomon, Inc., 748 
F. Supp. 122, 125 (S.D.N.Y. 1990) (holding that Rule 
60(b) cannot be utilized to vacate an arbitration 
award), aff'd 932 F.2d 955 (2nd Cir. 1991).  Rather, 
Clarendon invokes the Rule to modify the Judgment 
entered by this Court. 
Clarendon, 183 F.R.D. at 117. 
¶153 However, the Clarendon case presented unusual facts: 
Clarendon moved, under authorized Title 9 procedures, to vacate 
the arbitration award issued in the arbitration proceeding 
No. 01-3316.dtp 
25 
 
between it and TIG Reinsurance Company.  TIG cross-moved to 
confirm the award in part and to remand one issue for further 
determination by the arbitrators.  The district court granted 
the cross-motion, confirming the award as to certain issues and 
remanding other issues to the arbitrators.  See Clarendon 
National Insurance Company v. TIG Reinsurance Company, 990 F. 
Supp. 304 (S.D.N.Y. 1998).  The court subsequently entered 
judgment on the parts of the award it had confirmed. 
¶154 On remand, the arbitrators themselves reopened issues 
that they had previously decided, to correct an arithmetic error 
in their original award.  Then they issued a revised award, 
including new issues, which Clarendon sought to confirm.  At the 
same time, Clarendon moved under Rule 60(b) for relief from the 
previous judgment to correct the acknowledged error. 
¶155 The 
court 
described 
the 
case 
as 
presenting 
"extraordinary circumstances."  Clarendon, 183 F.R.D. at 118.  
The case was not closed because the court had remanded certain 
issues to the arbitrators, and the arbitrators issued a revised 
award in which they explicitly acknowledged a mathematical 
error.  The principal issue in the case the second time it went 
to court was whether the arbitrators could correct their 
mathematical error.  The court ruled that they could, and it 
then confirmed the modified award.  Having done that, the court 
modified its previous, inconsistent judgment. 
¶156 The Clarendon case is thus very different factually 
from the case at hand.  In the present case, the court reopened 
a judgment without remanding any issues to the arbitrator.  In a 
collateral proceeding, it took new evidence and revised the 
No. 01-3316.dtp 
26 
 
arbitration award based, in part, on evidence not available to 
the arbitrator at the close of the arbitration proceeding.  The 
Franke case cannot be compared to Clarendon because it sweeps 
past Clarendon and every other state and federal case that has 
been brought to the attention of the court. 
VI 
 
¶157 The majority's use of § 806.07 to reopen the merits of 
a binding arbitration award is ominous and raises questions 
about all binding arbitration awards.  After all, Ms. Franke 
relies on Wis. Stat. § 788.14(3),80 which unambiguously applies 
to all arbitration under Chapter 788, as her basis for invoking 
§ 806.07.  The majority opinion fails to repudiate this premise.  
Indeed, it cites the Clarendon case in which the federal court 
regrettably relied on Section 13 of the Federal Arbitration Act, 
which parallels § 788.14(3),81 to support the view that the basic 
arbitration 
statute 
permits 
courts 
to 
reopen 
judgments 
confirming arbitration awards.  The majority attempts to 
downplay the potential scope of its ruling by assuring us that 
                                                 
80 Wis. Stat. § 788.14(3) reads as follows:  
The judgment so entered shall have the same force and 
effect, in all respects, as, and be subject to all the 
provisions of law relating to, a judgment in an action; and it 
may be enforced as if it had been rendered in an action in the 
court in which it is entered. 
81 Section 13 of Title 9 provides in part: "The judgment so 
entered shall have the same force and effect, in all respects, 
as, and be subject to all the provisions of law relating to, a 
judgment in an action; and it may be enforced as if it had been 
rendered in an action in the court in which it is entered."  9 
U.S.C.A. § 13 (emphasis added).  The Clarendon case appears to 
be the only case directly linking 9 U.S.C. § 13 to Federal Rule 
60(b). 
No. 01-3316.dtp 
27 
 
it determines only the applicability of § 806.07 to family law 
arbitration cases.  However, once the § 806.07 door is opened, 
it will be hard to close.  The majority's application of 
§ 806.07 to a judgment incorporating a binding arbitration award 
implies that all subsections of § 806.07 may be utilized to 
attack arbitral awards incorporated into judgments.  This is 
bound to spawn future litigation and undermine the finality of 
arbitration awards. 
 
¶158 As a general rule, § 806.07(1) does not apply to 
judgments based on arbitration awards.  Any other conclusion is 
inconceivable because it would authorize judicial tampering with 
all binding arbitration awards after judgment, thereby making 
them nonbinding, and trivialize the protections of arbitration 
awards found elsewhere in the statute.  As a last resort, a 
party 
may 
file 
an 
independent 
action 
under 
Wis. Stat. § 806.07(2) to relieve it from a judgment based upon 
a direct fraud on the court. 
VII 
 
¶159 The 
majority opinion 
subverts 
the 
principles of 
binding arbitration in at least two additional ways.  First, the 
majority concludes that the closing of the arbitration record 
does 
not 
create 
a 
categorical 
exception 
to 
Wis. Stat. § 767.27(2). 
 
¶160 Second, the majority concludes that an appellate court 
should review a circuit court's decision to grant relief from an 
arbitration award under Wis. Stat. § 806.07 using an erroneous 
exercise of discretion standard. 
No. 01-3316.dtp 
28 
 
 
¶161 The implications of these determinations will be 
discussed in turn.  Wisconsin Stat. § 767.27(1) provides that in 
any action affecting the family "the court shall require each 
party to furnish, on such standard forms as the court may 
require, full disclosure of all assets owned in full or in part 
by 
either 
party 
separately 
or 
by 
the 
parties 
jointly."  
Wisconsin Stat. § 767.27(2) then provides:  
Disclosure forms required under this section 
shall be filed within 90 days after the service of 
summons or the filing of a joint petition or at such 
other time as ordered by the court or circuit court 
commissioner.  Information contained on such forms 
shall be updated on the record to the date of hearing. 
Wis. Stat. § 767.27(2) (emphasis added). 
 
¶162 These 
provisions 
apply 
indisputably 
when 
the 
responsibility for making decisions on such issues as property 
division and maintenance is assigned to the court.  In the 
normal situation, the court should set the rules for securing 
information and the court will value and divide the property as 
of the date of the divorce. 
 
¶163 Of 
course, 
binding 
arbitration 
under 
Wis. Stat. § 802.12(3)(c) is not the normal situation.  The 
parties have contracted for a determination by the arbitrator, 
not the court, and the arbitrator should set the ground rules 
for securing evidence, including the deadline for submitting 
evidence. 
 
¶164 The 
majority 
proceeds 
as 
though 
there 
were 
no 
agreement for binding arbitration——as though information not 
available and circumstances not present at the time the 
arbitration record is closed may be used by a court to 
No. 01-3316.dtp 
29 
 
reevaluate the award on property division in a judicial decision 
on the merits.  By outlining the possibility that issues will be 
determined on information not available to the arbitrator, the 
majority effectively erases any deference to the arbitrator and 
invites 
circuit 
court 
intervention 
on 
equitable 
grounds.  
Deference to the arbitrator requires that the arbitrator, not 
the court, determine when the record is closed.  This is a 
categorical exception to § 767.27(2). 
 
¶165 As for the standard of review, an appellate court is 
inclined to show deference to a discretionary decision by the 
circuit 
court. 
 
However, 
in 
a 
case 
involving 
binding 
arbitration, an appellate court ought to be showing deference to 
the arbitrator's award, because it is presumed to be correct. 
 
¶166 In Lane v. Williams, 2000 WI App 263, ¶6, 240 
Wis. 2d 255, 621 N.W.2d 922, the court stated: 
 
We review an arbitration award without deference 
to the trial court.  Our function is to insure that 
the parties received the arbitration they bargained 
for.  See City of Madison v. Local 311, International 
Ass'n of Firefighters, 133 Wis. 2d 186, 190, 394 
N.W.2d 766 (Ct. App. 1986).  The circuit court may 
modify an award only on the grounds specified by 
statute.  See McKenzie v. Warmka, 81 Wis. 2d 591, 603, 
260 N.W.2d 752 (1978). 
¶167 The majority seeks to get around this black letter law 
by shifting the focus from the arbitration award to the 
"discretionary" decision to reopen the judgment.  No doubt, a 
court does exercise discretion when it reopens a judgment under 
Wis. Stat. § 806.07.  But to exercise that discretion here——that 
is, to reopen an arbitration award by reopening the judgment——is 
incompatible with binding arbitration and should make it obvious 
No. 01-3316.dtp 
30 
 
why § 806.07 may not be used in a case like this.82  Once again, 
to 
reach 
its 
conclusion, 
the 
majority 
redefines 
binding 
arbitration. 
VIII 
 
¶168 Thirteen years ago this court decided that the parties 
to a divorce may, under certain circumstances, stipulate that 
their property division and agreed-upon maintenance payments are 
permanent and may not be modified in the future by a court.  
Nichols v. Nichols, 162 Wis. 2d 96, 469 N.W.2d 619 (1991).  In 
Nichols, a former spouse moved for an increase in maintenance 
nine years after the divorce.  The circuit court denied the 
motion on grounds that the divorce judgment had incorporated the 
parties' 
stipulation 
that 
"Said 
property 
division 
and 
maintenance payments of petitioner, Mitzi Nichols, to be 
considered as permanent and in lieu of any further or additional 
maintenance payments, except said maintenance payments shall 
terminate upon remarriage of [Mitzi Nichols]."  Id. at 101. 
 
¶169 The 
court 
of 
appeals 
reversed, 
citing 
Wis. Stat. §§ 767.32(1) and 767.08(2)(b) and reasoning that the 
provision of the judgment that maintenance is not subject to 
modification violated public policy.  Id. at 102-03.  This court 
reversed the court of appeals, saying: 
 
As a general rule, maintenance is always subject 
to modification upon a showing of the requisite change 
                                                 
82 In McDaniels v. Brown, 740 A.2d 551, 555 (D.C. 1999), the 
District of Columbia court said: "A judgment entered upon an 
arbitration award may not be made the subject of a motion under 
Rule 59 or Rule 60(b) of the Superior Court's Rules of Civil 
Procedure, see, e.g., Siddig v. Ostheimer, 572 A.2d 447, 450 
(D.C. 1990)." 
No. 01-3316.dtp 
31 
 
in 
circumstances. 
 
However, 
in 
[Rintelman 
v. 
Rintelman, 118 Wis. 2d 587, 348 N.W.2d 498 (1984)], we 
recognized an exception to the general rule that 
maintenance is always subject to modification when we 
held 
that 
a 
party 
is 
estopped 
from 
seeking 
modification 
of 
the 
terms 
of 
a 
stipulation 
incorporated into a divorce judgment . . .  
Id. at 103-04 (citations omitted).  We held that the party to a 
divorce judgment is estopped from seeking an increase in 
maintenance if four conditions are met: 
[F]irst, the parties freely and knowingly stipulated 
to fixed, permanent, and nonmodifiable maintenance 
payments and said stipulation was incorporated into 
the divorce judgment; second, the stipulation was part 
of a comprehensive settlement of all property and 
maintenance issues which was approved by the circuit 
court; third, the overall settlement, at the time it 
was incorporated into the divorce judgment, was fair, 
equitable, not illegal, and not against public policy; 
and, fourth, the party seeking release from the terms 
of the divorce judgment is seeking release on the 
grounds that the court did not have the power to enter 
the judgment without the parties' agreement. 
Id. at 100-101.  One of the reasons the court gave for its 
decision was that: 
[A]llowing the decision of the court of appeals to 
stand will discourage the settlement of divorce cases.  
The advantage of agreements providing that maintenance 
is not subject to modification is certainty and 
finality.  If nonmodifiable maintenance is not really 
nonmodifiable, there will be no motivation for a payor 
spouse 
to 
enter 
into 
stipulations 
such 
as 
the 
agreements in Rintelman, Ross,83 and the one in the 
case at bar.  Therefore, the decision of the court of 
appeals will discourage settlements, contrary to the 
public policy of this state. 
Id. at 115. 
                                                 
83 Ross v. Ross, 149 Wis. 2d 713, 439 N.W.2d 639 (Ct. App. 
1989). 
No. 01-3316.dtp 
32 
 
 
¶170 The court's decision was not unanimous.  The dissent 
argued that "the public policy of this state, as reflected in 
the divorce statutes over the years, is to allow the courts to 
modify maintenance to protect both spouses should circumstances 
change after the judgment is entered."  Id. at 117 (Abrahamson, 
J., dissenting). 
 
¶171 Although 
the 
present 
case 
deals 
with 
property 
division, not maintenance, the views of the dissent in Nichols 
are now enshrined in the majority opinion.  The result is to 
obliterate binding arbitration in actions affecting the family.  
To paraphrase the Nichols majority, if binding arbitration is 
not really binding, there will be no motivation for the parties 
to agree to it, contrary to the public policy of this state. 
 
¶172 It should be evident that time-tested principles of 
binding arbitration have been overwhelmed in this case by a 
belief that Martin T. Franke deceived the arbitrator and 
defrauded his wife. 
 
¶173 But did he? 
 
¶174 The majority's conspicuous failure to discuss the 
facts of this case is a telling acknowledgement that the record 
may not support the misconduct the majority implies.84 
                                                 
84 In Judge Sweet's first opinion in the Clarendon case, he 
wrote: 
Courts have held that, "[o]nly the most egregious 
error which adversely affects the rights of a party" 
constitutes misconduct and "[e]rroneous exclusion of 
evidence does not in itself provide a basis for 
vacating an award absent substantial harm to the 
moving party."  In Matter of Consolidated Arbitrations 
Between A.S. Seateam v. Texaco Panama, Inc., No. 97 
Civ. 0214, 1997 WL 256949, *7 (S.D.N.Y. May 16, 1997).  
Further, such misconduct "must amount to a denial of 
No. 01-3316.dtp 
33 
 
 
¶175 I am authorized to state that Justices JON P. WILCOX 
and DIANE S. SYKES join this opinion. 
 
                                                                                                                                                             
fundamental fairness of the arbitration proceeding."  
Areca, Inc. v. Oppenheimer & Co., 960 F. Supp. 52, 54-
55 (S.D.N.Y. 1997). 
Clarendon Nat'l Ins. Co. v. TIG Reinsurance Co., 990 F. 
Supp. 304, 310 (S.D.N.Y. 1998). 
No. 01-3316.dtp 
1