Opinion ID: 2634808
Heading Depth: 2
Heading Rank: 2

Heading: Mistakes of Fact and Law

Text: [¶ 20] The Weltys claim the arbitrators made five manifest mistakes of fact and/or law, requiring vacation of the arbitration award. They maintain the panel improperly: 1) assumed Welty's Inc. was liable for the award; 2) excused Johanna's failure to provide sufficient documentation of the loans; 3) excused Johanna's failure to make a timely claim on Frank Jr.'s estate; 4) created a loan agreement in absence of clear and definite terms; and 5) ignored evidence that the gift/ loan transaction was actually an ill-advised estate planning tool. [¶ 21] Several of the Weltys' claims of manifest mistake, including the lack of documentation to show the loan transaction, improper creation of a loan agreement, and ignoring evidence that the gift/loan transactions were simply estate planning devices, concern the weight and sufficiency of the evidence to support the arbitration award. In considering the Weltys' contentions, we are mindful that [t]his Court favors arbitration or other forms of alternative dispute resolution. Scherer v. Schuler Custom Homes Construction, Inc., 2004 WY 109, ¶ 16, 98 P.3d 159, 163 (Wyo.2004). See also, Stewart Title Guaranty Co. v. Tilden, 2003 WY 31, ¶ 7, 64 P.3d 739, 741-42 (Wyo.2003); Simon v. Teton Board of Realtors, 4 P.3d 197, 201-02 (Wyo.2000). As we explained many years ago in Riverton Valley Electric Assoc., 391 P.2d at 498, arbitrators have broad powers to make factual determinations, and absent a mistake upon the evidence tantamount to fraud . . . or willful and intentional failure to consider it, the weight and sufficiency of the evidence is for the arbitrators to determine. Id. In addition, [t]he reviewing court must observe the principle that arbitrators are free to fashion forms of relief which could not be ordered by a court in law or equity. W.S. 1-36-114(a)(v). . . . [W]e are reluctant to disturb an arbitrator's just solution to a controversy, even if it differs from the resolution we might have chosen, had we been in the arbitrator's place. See Matter of Town of Greybull, 560 P.2d 1172, 1175 (Wyo.1977). As a voluntary method for resolution of disputes, arbitration is embedded in the public policy of Wyoming and is favored by this court. T & M Properties v. ZVFK Architects and Planners, 661 P.2d 1040, 1043 (Wyo.1983). JBC of Wyoming Corp., 843 P.2d at 1194. See also, Pecha v. Smith, Keller & Assoc., 942 P.2d 387, 390-91 (Wyo.1997). [¶ 22] In accordance with the parties' arbitration agreement, the arbitration panel considered the elements of promissory estoppel in its decision. The general theory of the doctrine of promissory estoppel is: `If an unambiguous promise is made in circumstances calculated to induce reliance, and it does so, the promisee if hurt as a result can recover damages.' B & W Glass, Inc. v. Weather Shield Mfg., Inc., 829 P.2d 809, 813 (Wyo.1992), quoting Goldstick v. ICM Realty, 788 F.2d 456, 462 (7th Cir.1986). Thus, the elements of a promissory estoppel claim are: (1) the existence of a clear and definite promise which the promisor should reasonably expect to induce action by the promisee; (2) proof that the promisee acted to its detriment in reasonable reliance on the promise; and (3) a finding that injustice can be avoided only if the court enforces the promise. City of Powell v. Busboom, 2002 WY 58, ¶ 8, 44 P.3d 63, 66 (Wyo.2002), quoting Roussalis v. Wyoming Medical Center, Inc., 4 P.3d 209, 253 (Wyo.2000). See also, Parkhurst v. Boykin, 2004 WY 90, ¶ 21, 94 P.3d 450, 460 (Wyo.2004). `The party who is asserting promissory estoppel is assigned the burden of establishing all of the elements of the doctrine with a standard of strict proof.' Roussalis, 4 P.3d at 253 quoting B & W Glass, 829 P.2d at 819. [¶ 23] The panel concluded Johanna had satisfied the elements of promissory estoppel. In particular, the panel found:    7. The credible testimony of the witnesses and the available documentary evidence compel a finding of loans in the form of bank checks from Plaintiff Johanna P. Welty to Welty's General Store in the amount of $20,000.00 per year for twelve years, beginning on or about January 1, 1974 and concluding on or about January 1, 1985, with notations that the payment was a loan to bear interest at ten percent per annum. The agreement to repay such loans at said rate was clear and definite. 8. Plaintiff Johanna P. Welty relied on the agreement to her detriment by forbearing to make demand for payment when more documents evidencing the agreement would have been discoverable, as well as uncompensated work over the years. 9. The equities support the enforcement of the agreement between the parties to the extent provided herein. It would be unjust for Alta Welty to, retrospectively, deprive Plaintiff Johanna P. Welty of the benefit of the loans under the circumstances where Alta Welty received forbearance on the repayment due to the acts and conduct which gave Johanna P. Welty reason to believe that she was building equity and would ultimately become an owner of the business.    [¶ 24] We discern no manifest mistake of fact or law on the face of the arbitrators' decision. As explained fully in the fraud discussion, supra, there was evidence to support Johanna's claim that Alta and Frank Jr. had promised to repay the loans when Johanna and Frank III took over the general store business. Furthermore, there was evidence that Johanna relied upon that promise to her detriment by not insisting upon repayment of the loans in the ordinary course of business and making considerable efforts throughout the years to assist with the business. The Weltys' appellate claims do not reach the level required to overturn an arbitration award and we, therefore, defer to the arbitrators' findings on the weight and sufficiency of the evidence. We also defer to the arbitrators' right to consider the relative equities of the parties and fashion an award. The arbitrators did not commit a manifest mistake of fact or law on the face of the award and, consequently, there is no legal basis to overturn their decision. [¶ 25] The Weltys also claim the panel committed a manifest mistake of law and fact when it assumed liability on the part of the corporation, Welty's Inc. They claim, since the corporation did not exist when the loans were made, the panel erred by making it jointly and severally liable for the award. The particular findings disputed by the Weltys stated: 4. At the time the loans were made, Welty's General Store and Welty's General Merchants were dba[]s for Defendant Alta Welty and her now-deceased husband, Frank Welty, Jr. The business was incorporated in 1992, and Welty's Inc. took over operation of the store, including its assets and liabilities.    10. Equity requires all Defendants, including Welty's Inc., to be jointly and severally liable for the damages awarded to Plaintiff Johanna P. Welty. The award against Welty's Inc. is justified by the fact that the checks written by Plaintiff Johanna P. Welty were actually written to the store, although it was at the time a proprietorship, and the testimony establishes that the business was incorporated and would have succeeded to all assets and assumed all liabilities of the former proprietorship, including any accounts in favor of Plaintiff Johanna P. Welty that were or should have been carried on the books of the prior business. The Weltys assert there was no evidence to support the arbitrators' determination the corporation assumed responsibility for the general store's debts. [¶ 26] However, the Weltys did not object to the panel's consideration of Welty's Inc.'s responsibility to Johanna and, in fact, specifically submitted the issue of the corporation's responsibility to the arbitration panel, when Frank III and Alta signed the arbitration agreement on behalf of Welty's Inc. The charge of the arbitrators was set forth in the arbitrator's agreement, as follows: 5. Jurisdiction of Arbitrators. The parties agree to submit to binding arbitration, under the terms and conditions of this Agreement, the following questions: a. Whether a clear and definite agreement existed between Johanna Welty and [the] Welty[]s that loans of her gift money and/or the value of her various efforts on behalf of Welty's General Store would be credited to her account and repaid when she became a co-owner of the store with Frank A. Welty, III. b. Whether Johanna P. Welty relied on her agreement with [the] Welty[]s to her detriment. c. Whether the equities support the enforcement of the agreement between the parties. d. If the questions above are answered in the affirmative, the amount which will compensate Johanna P. Welty. [¶ 27] Although not expressed in so many words, the Weltys suggest the arbitrators exceeded their authority by finding Welty's Inc. was liable for the award. As we have stated in other cases, the parties' agreement defines the arbitrators' authority. See e.g., Wild West Trading Co. v. gbs & h Architects, Landscape Architects, Planners, Inc., 881 P.2d 1070, 1074 (Wyo.1994); Matter of Town of Greybull, 560 P.2d at 1178. The broad freedom an arbitrator has to resolve disputes and fashion remedies is limited by the contractual nature of the arbitration agreement from which he draws his powers. Wild West Trading Co., 881 P.2d at 1074. See also, Fox v. Tanner, 2004 WY 157, ¶ 14, 101 P.3d 939, 943 (Wyo.2004). Of course, if an arbitration panel considers a claim not identified for resolution in the arbitration agreement, then it exceeds its authority and the award must be vacated. JBC of Wyoming Corp., 843 P.2d at 1196. Nevertheless, when an issue appears to be submitted to arbitration by the parties and there is no objection to the arbitrator's consideration of a particular issue, a later claim the arbitrator exceeded its authority by considering that claim is waived. See Riverton Valley Electric Assoc., 391 P.2d at 493-94. [¶ 28] The federal district court complaint included claims against Welty's Inc., a Wyoming corporation. The parties entered into the arbitration agreement to finally resolve the federal court litigation. The arbitration agreement specifically stated the [arbitration] decision shall, when rendered, be fully binding upon the parties as if it were a judgment rendered in the United States District Court for the District of Wyoming in the underlying action . . .. Alta and Frank III signed the arbitration agreement on behalf of Welty's Inc. The questions submitted to the arbitration panel do not, in any way, indicate the Weltys were arguing Welty's Inc. was less responsible for the loan repayments than any of the other defendants. Moreover, the Weltys did not object to the arbitrators' consideration of Welty's Inc.'s responsibility to Johanna until the matter was submitted to the district court for confirmation of the arbitration award. Under these circumstances we conclude the arbitration panel was within its authority when it considered the corporation's responsibility for the loan and, in any event, the Weltys waived that argument by failing to submit it to the arbitration panel. [¶ 29] Finally, the Weltys argue the arbitrators committed a manifest mistake of fact and law when they excused Johanna's failure to file a timely claim upon Frank Jr.'s estate when he died in 1994. They claim, since Johanna argued that one-half of the gifts were from Frank Jr., she was required to file a claim against his estate. This argument is somewhat perplexing. It is irrelevant that the source of the funds for the loans was the gifts from Alta and Frank Jr. Johanna's claim was based upon the failure of Welty's General Store to repay the loans when they were due. At the time of Frank Jr.'s death in 1994, no disagreement had arisen regarding repayment of the loans. Johanna did not know that her loans to the general store would not be repaid until Frank III served her with divorce papers in 2000. Thus, Johanna did not have a claim against Frank Jr. when he passed away in 1994 and, consequently, she was not required to submit a claim against his estate. [¶ 30] Affirmed.