Court Opinion

ID: 2782854
Source: CourtListenerOpinion
Date Created: 2015-02-27 13:04:33.666889+00
Date Added: 2024-06-11T11:28:25.288223
License: Public Domain

Court of Appea ls, State of Michigan

                                             ORDER

                                                                        Douglas B. hapi ro
Linda K Heiden v Gerald L Heiden                                          Presiding Judge

Docket No.   318245                                                     Elizabeth L. Gleicher

LC No.       12-00 11 49-00                                             Amy Ronayne Krause
                                                                          Judges

              The Court orders that the february I 0, 2015 opinion 1s hereby VACATED, and
a new opinion is attached.

                       A true copy entered and certified by Jerome W. Zimmer Jr., Chief Clerk. on

                              FEB 26 2015
                                      Dare
                          STATE OF MICHIGAN

                            COURT OF APPEALS

LINDA K. HEIDEN,                                                     UNPUBLISHED
                                                                     February 26, 2015
               Plaintiff-Appellee,

v                                                                    No. 318245
                                                                     Ingham Circuit Court
GERALD L. HEIDEN,                                                    LC No. 12-001149-DO

               Defendant-Appellant.

Before: SHAPIRO, P.J., and GLEICHER and RONAYNE KRAUSE, JJ.

PER CURIAM.

        Before their marriage, Linda and Gerald Heiden executed an “antenuptial agreement”
describing Gerald’s premarital personal injury lawsuit settlement as his separate property.
Twenty-four years later, Linda filed for divorce. The circuit court incorrectly ruled that the
antenuptial agreement applied only in the event of death, not divorce. The matter then proceeded
to mediation moored to this binding, incorrect legal conclusion. As a result, the parties failed to
consider during the mediation whether the disputed property belonged to Gerald alone or became
part of the marital estate. Absent a resolution of that vital issue, the parties reached a mediation
agreement predicated on an inaccurate description of their separate and marital property.
Moreover, the property division and spousal support award disparately favored Linda. A
judgment was thereafter entered reflecting this misinformed agreement.

        We vacate the property division and spousal support award in the divorce judgment and
remand to the circuit court to set aside the mediation agreement. On remand, the circuit court
must accept that the antenuptial agreement applies to these divorce proceedings. The court must
then consider whether the parties subsequently commingled their separate property into the
marital estate. Only then can the parties fairly negotiate a settlement on equal footing.

                                       I. BACKGROUND

        On October 15, 1987, and in contemplation of marriage, the parties executed a document
entitled “Antenuptial Property Agreement.” The parties stated “their mutual desire to enter into
this agreement whereby they will regulate their relationships toward each other with respect to
the property each of them own and in which each of them has an interest.” The parties agreed, in
relevant part, that “all personal property owned respectively by them shall remain their separate
property, no spouse shall have any right in the property of the other spouse, even in the event of
the death of either party.” The description of Gerald’s separate personal property included funds
                                                -1-
held in a trust account. Although the antenuptial agreement did not describe the source of those
funds, it is undisputed that they flowed from a settlement in a personal injury lawsuit.

        Linda filed for divorce in pro per on April 2, 2012. The complaint described that the
parties maintained marital property to be divided. Gerald denied that allegation. Linda further
alleged, “Plaintiff is unable to pay the court costs and filing fees of this action. Defendant is able
to pay these costs and fees.” Gerald denied that allegation as well.

        Shortly thereafter, Linda retained counsel and filed a motion seeking to hold Gerald
responsible for her legal fees. Linda referred to Gerald’s investment accounts, history of real
property and securities transactions, and control over the couple’s finances and assets. In
response, Gerald proffered the antenuptial agreement. Gerald noted that $2,000 of his monthly
income was an IRA payout from an account funded by his personal injury settlement. Ordering
Gerald to cover Linda’s legal fees would force him to invade that separate asset, Gerald
contended. When his separate property was removed from the equation, Gerald asserted that
“there is very little difference in the party’s respective monthly incomes.”

        Linda then filed a motion for a declaratory judgment that the antenuptial agreement was
invalid. She asserted that the parties had “accumulated significant joint assets,” including a
home, camper, $937 savings account, household furnishings, and “about half a million dollars in
assets held by Sigma Financial Corp.” Linda contended that the antenuptial agreement was “no
longer reflective of the parties[’] intent or financial conditions . . . due to unforeseeable change in
circumstance” and was “unenforceable” because the parties commingled their separate assets
into the marital estate. She suggested that Gerald often invested his personal injury settlement
proceeds into real estate projects that the couple tackled “hands on” together. Linda’s labor
thereby increased the wealth in the accounts Gerald declared separate. If that property were not
treated as marital, Linda claimed she would be left financially destitute, a change in
circumstances after a long marriage unforeseen when entering the antenuptial agreement.

        Gerald retorted that Linda voluntarily entered the antenuptial agreement. The long length
of their marriage and the greater accumulation of wealth by one party over the years were not
unforeseen circumstances, he averred. Gerald adamantly denied that he ever commingled his
separate personal injury settlement:

               It is both a profound and willful distortion and mischaracterization to state,
       as [Linda] does, that [Gerald’s] “profits, accounts an[d] proceeds were treated as
       fungible to the extent they were co-mingled as being joint-marital ventures[.]” . . .
       From the date of the marriage and thereafter throughout a [24] year marriage,
       [Gerald] was scrupulous in abiding by the antenuptial agreement by consistently
       maintaining the singular integrity and autonomy of the separate trust and his
       investments. The Trust principal was never invaded and its earned interest, which
       automatically transferred earning into an account held exclusively by [Gerald],
       was used as income from which to invest in separate investments held exclusively
       in his sole name.

              Throughout the course of the marriage Gerald . . . never once changed his
       pre-marital financial modus operandi. For [24] years [Linda] knew exactly what

                                                 -2-
       to expect from [Gerald’s] financial status. Nothing changed. He supported
       [Linda] and her relatives but there was absolutely no co-mingling of funds;
       [Linda] had no access to his accounts, nor was she even added as a joint owner of
       separate property. Apparently secure in this knowledge that it was money to
       which he was entitled as a victim of personal injury she never once complained
       about the benefits to herself and her family as the result of his use of his
       independent funds.

        After conducting an off-the-record, in-chambers conference, the court determined that the
antenuptial agreement “does not apply to a divorce action between the parties.” “The plain
reading” of the agreement, the court continued, “shows that [it] was entered into in the event of
the death of either party during the marriage. There is no language in the Agreement that
indicates that the property provisions would apply in the event of the divorce of the parties.”

        One month later, Gerald suddenly proffered evidence supporting that he had not
commingled his separate assets into the marital estate. Gerald’s financial advisor swore out an
affidavit, stating that Gerald had “never added outside funds to” his personal injury accounts and
continued to reinvest only “his initial deposit.” The financial advisor further avowed that Gerald
was the sole account holder and had never asked to add Linda to the account.

        On October 24, 2012, the parties attended a mediation session. At the close of the day,
they both signed a “mediation agreement.” This agreement provided for nonmodifiable spousal
support of $2,500 each month in Linda’s favor. The payments were to last 10 years and were to
cease if Linda died, but not if she remarried. Accordingly, Gerald was liable for $300,000 to
Linda in spousal support. Gerald was also required to pay Linda $40,000 “from his pre-marital
accident settlement proceeds,” increasing his liability to $340,000. Gerald was awarded the
parties’ marital home, which eventually sold at a loss of $7,400. Linda was awarded the
couple’s trailer in Florida worth $18,000 (with the exception of a love seat found inside which
belonged to Gerald). Linda also retained her pension benefits. The parties agreed to retain their
separate debts and any bank accounts held in their own names. The mediation agreement closed
by warning the parties that it was a binding contract and would be incorporated in the judgment
of divorce.

        A little over a month later, represented by a new attorney, Gerald filed a motion to set
aside the mediation agreement pursuant to MCR 2.612(C)(1). He contended that his prior
counsel coerced him to sign. Gerald noted that he is diabetic and claimed that his blood sugar
had dropped so low he could not adequately assess the situation. He accused counsel of
badgering and yelling at him, and of not allowing him to read the agreement before signing it.
Gerald further asserted that the mediation agreement was unconscionable because the attorneys
failed to calculate the value of each party’s property after the division, leaving him to pay out
more in a month than was available to him.

       Linda retorted that the court was bound to enforce the signed mediation agreement. She
denied any fraud or mistake leading to the agreement. In relation to any alleged misconduct on

                                               -3-
counsel’s part, Linda asserted that Gerald could seek redress against him directly, but could not
use that as grounds to set aside the signed agreement. Her observations of Gerald on the day of
the mediation led her to believe that Gerald was misrepresenting his medical condition.1

        The court conducted a three-day evidentiary hearing to consider whether Gerald’s
complaints supported his requested relief. Of import, Gerald’s financial advisor Jack Mole, who
managed accounts for both parties, testified regarding the parties’ financial assets. Mole
described that Gerald’s assets had a current value of approximately $510,000, including a John
Hancock Life Insurance Annuity then valued at $370,691, which contained the proceeds of
Gerald’s personal injury settlement. “The annuities guarantee a minimum rate of return of six
percent,” Mole testified, but only if one limits his annual payouts to between 4.5 and 5%.
Gerald also maintained approximately $140,000 in IRAs with a return of around 10%. Mole
noted that Gerald had recently reduced his monthly withdrawals from $4,000 to $3,300. This
reduction was necessary or the account principals would have been depleted within two years. In
relation to the $2,500 monthly spousal support award for a 10-year period, Mole testified:

               Q. Assuming . . . that [Gerald] were required to pay $2,500 per month for
       a period of 10 years, and assuming that his only source is his Social Security and
       these investment accounts, . . . what would you anticipate would happen with
       respect to the principal balance in the annuities?

               A. It would be significantly reduced.

              Q. Okay. If [Gerald] were to also have an income to live on, do you
       believe that that account would continue for a period of 10 years?

               A. No.

               Q. Why not?

               A. Well, it would be depleted.

               Q. Okay. Can you explain?

              A. Well, if we’re going to take $30,000 a year out for the $2,500 a month,
       and then if he required $2,000 a month that’s another $24,000, that’s $54,000, the
       account would be depleted fairly rapidly.

               Q. So it would be impossible for him to pay the alimony for 10 years if
       that account is gone, is that fair to say?

1
  Strangely, Gerald’s original attorney refused to withdraw as counsel of record, but also filed a
response to Gerald’s motion. Counsel denied that Gerald’s medical condition impeded his
ability to participate in the mediation. He also accused Gerald of obstreperous and dilatory
conduct.

                                                -4-
               A. Well, yes. If . . . they’re taking principal at that amount, they’re going
       to destroy the guaranteed value because the guarantee will go away. They’ve
       taken too much money. Therefore, they would be strictly dependent on market
       performance, so it just depends on the market. But my guess is that it would be
       depleted because they’re just rapidly . . . I mean, they’re taking 10 or 12 percent
       of principal a year.

                                              ***

               Q. And have you seen any market performance that would generate [a] 10
       to 12 percent rate of return in the last 10 years?

               A. No.

               Q. And . . . as a professional investment advisor, do you see the market in
       the future being able to have that kind of rate of return?

              A. Well, I can’t predict future performance, but based on past
       performance, no.

Ultimately, Mole opined that Gerald could safely withdraw an income of $18,500 each year from
the John Hancock annuity. He did not identify a figure that could be safely withdrawn from the
IRAs.

        At the hearing, Gerald and Linda clarified that Gerald had not actually engaged in profit-
producing real estate transactions as Linda previously implied. Rather, Gerald used his
settlement proceeds to purchase a series of properties upon which he built homes. Both Gerald
and Linda participated in the construction process. The couple would then live in the home for
five to seven years before selling it and beginning the process anew. Each property had been
encumbered by a mortgage, and no sale generated significant profit. Linda also described her
monthly financial needs, which hovered around $2,000.

        The court subsequently entered a written opinion and order denying Gerald’s motion to
set aside the mediation agreement. The court rejected Gerald’s claims that his low blood sugar
on the day of mediation, as well as his attorney’s coercive conduct, caused him to sign the
agreement against his will and without understanding the terms. The court also rejected that the
mediation agreement was substantively unconscionable based on the impossibility of the
financial terms. The court ruled, in relevant part:

               [Gerald] then argues that the terms of the settlement leave him financially
       destitute because he is to pay $2,500/mo of non-modifiable spousal support for 10
       years, as well as $1,196.00/mo in mortgage payments, leaving him with $843.00 a
       month on which to live. [Gerald] currently has an annuity, IRA accounts, and
       social security which provide his income. Testimony of [Gerald’s] financial
       advisor indicated that the value of [Gerald’s] accounts would be substantially
       reduced if he paid the spousal support outlined in the settlement agreement. The
       financial chart used by [Gerald] in his closing argument fails to take into
       consideration the income that would be earned on the IRA and annuity accounts

                                               -5-
       over the next 10 years which would greatly effect [sic] the remaining principal at
       the end of the 10 year period. In fact, [Gerald’s] John Hancock annuity grew in
       value from $370,691 on March 31, 2012 to $402,741 as of February 27, 2013, per
       . . . Jack Mole. In addition, testimony indicates that [Gerald] withdrew $86,449
       from 3/31/12 to 3/31/13 from the IRA accounts, which would have a substantial
       effect on the projected growth over 10 years. [Gerald’s] total income from
       3/31/12 to 3/31/13 was $105,697 which includes his social security.

               Having reviewed the financial information and taking into consideration
       the amount of income [Gerald] would earn over 10 years on the accounts and
       considering the amount [Gerald] has withdrawn from the accounts since the
       complaint for divorce was filed, [Gerald’s] situation does not shock the
       conscience of this Court. [Gerald’s] income will undoubtedly be affected by
       spousal support, but the extent of that effect is not extreme enough and [Gerald]
       has elected to expend large sums from those accounts for his own purposes.

                                               ***

       [Gerald] argues that payment of the terms of the agreement would leave him very
       little money at the end of the 10 year period. This may or may not be the case.
       But, this doesn’t constitute original impossibility because it doesn’t make
       performance impossible; it makes performance unwanted. The Court finds this
       argument somewhat disingenuous considering that [Gerald] received $105,697
       from 3/31/12 to 3/31/13. His actions in withdrawing such large sums do not
       support his concern that he will be financially destitute. [Gerald] argues that the
       agreement may fall under the definition of supervening impossibility. Testimony
       from the parties’ financial advisor indicates that [Gerald’s] financial situation will
       largely be determined by the interest rate he receives on the accounts. However,
       regardless of the testimony, [Gerald’s] future impossibility does not represent a
       supervening impossibility because it has not yet developed. Therefore, [Gerald]
       should not be excused from performance on the basis of impossibility.

       This appeal followed.

                   II. ANTENUPTIAL AGREEMENT WAS APPLICABLE

        The string of errors in these proceedings began when the circuit court misinterpreted the
antenuptial agreement, determining that it did not apply in the event of divorce. An antenuptial
agreement is a contract and must be interpreted using basic contract principles. See Reed v Reed,
265 Mich. App. 131, 141; 693 NW2d 825 (2005). Of note, the parties entered their agreement in
1984. At that time, prenuptial agreements governing the division of property upon divorce were
not recognized in this state. See id. at 141-142. Accordingly, the parties could not specifically
identify in their antenuptial agreement that they intended for it to apply in the event of divorce.
The circuit court used the absence of this language to determine that the contract only applied in

                                                -6-
the event one spouse predeceased the other. The circuit court’s interpretation does not give
effect to the parties’ intentions.2

               Antenuptial agreements are subject to the rules of construction applicable
       to contracts in general. Antenuptial agreements, like other written contracts, are
       matters of agreement by the parties, and the function of the court is to determine
       what the agreement is and enforce it. . . . [C]ontract terms must be strictly
       enforced as written, and unambiguous terms must be construed according to their
       plain and ordinary meaning. . . . [Id. at 144-145 (citations omitted).]

       Paragraph (1) of the antenuptial agreement states that “[a]ny and all real property owned
by either party shall remain the separate property of that party, said real property shall not be
subject to dower, homestead, or surviving spouse allowance in the event of the death of either
party.” (Emphasis added.) Reference to the death of a party makes sense in that paragraph.
Dower, homestead, and surviving spouse allowances only arise when one party in a marriage
dies.

        Paragraph (2) states that “[t]he parties further agree that all personal property owned
respectively by them shall remain their separate property, no spouse shall have any right in the
property of the other spouse, even in the event of the death of either party.” (Emphasis added.)
Contrary to the circuit court’s conclusion, this language clearly does not indicate that the
separate personal property provision only takes effect in the event of death. In this context, the
word “even” is “used as an intensive or emphatic particle . . . emphasizing the limit of what is
possible or probable.” Webster’s New Universal Unabridged Dictionary (1983). It suggests that
the parties intended to retain as separate their personal property in all events, including death.
Divorce was clearly included in the penumbra of events under which the parties would retain
their separate personal property. And the court committed clear legal error in ruling to the
contrary.

        III. FAILURE TO CHARACTERIZE ASSETS AS MARITAL OR SEPARATE

        As a result of the circuit court’s erroneous interpretation of the antenuptial agreement, the
parties entered mediation negotiations based on a fundamental error. The court’s legal error
apparently caused the attorneys to forget that an antenuptial agreement is not the only method by
which a party’s separate property can remain separate. The attorneys thereby compounded the
errors by failing to address during mediation whether Gerald’s premarital property remained
separate or became part of the marital estate.

       The income-bearing accounts from which Gerald was required to pay Linda $40,000 and
into which Gerald would need to dip to meet his spousal support obligations contained funds that
may be treated as separate property even absent an antenuptial agreement. Gerald’s accounts

2
  In Reed, 265 Mich. App. at 142, this Court upheld a prenuptial agreement upon the divorce of
the parties despite that it was executed at a time when “prenuptial agreements in contemplation
of divorce were against public policy.

                                                -7-
were funded by his personal injury settlement and a lump-sum payout from his pension. It is
well established under Michigan law that one spouse’s personal injury settlement, meant to
recompense that spouse for pain and suffering, is that spouse’s separate property. Washington v
Washington, 283 Mich. App. 667, 674; 770 NW2d 908 (2009); Pickering v Pickering, 268 Mich
App 1, 10-11; 706 NW2d 835 (2005); Bywater v Bywater, 128 Mich. App. 396, 398; 340 NW2d
102 (1983). And courts commonly divide pension accounts so that only that portion accrued
during the marriage is treated as divisible marital property. See MCL 552.18(1); Pickering, 268
Mich. App. at 8-9; VanderVeen v VanderVeen, 229 Mich. App. 108, 112; 580 NW2d 924 (1998).

        Here, the record is clear that Gerald did not personally abandon his struggle to maintain
the integrity of his separate property during the long day of mediation negotiations. Perhaps
because of Gerald’s lack of interpersonal skills,3 his attorney did. “Generally, the marital estate
is divided between the parties, and each party takes away from the marriage that party’s own
separate estate with no invasion by the other party.” Reeves v Reeves, 226 Mich. App. 490, 494;
575 NW2d 1 (1997). Gerald’s attorney did not conduct negotiations with this precept in mind.
As a result, the parties never resolved whether Gerald’s separate property remained separate
during the marriage.

       There are two statutory exceptions to the rule that a party’s separate estate may not be
invaded to provide support for the other spouse. Id. MCL 552.23(1) permits such invasion
based on financial need:

       [I]f the estate and effects awarded to either party are insufficient for the suitable
       support and maintenance of either party . . ., the court may also award to either
       party the part of the real and personal estate of either party and spousal support
       out of the real and personal estate, to be paid to either party in gross or otherwise
       as the court considers just and reasonable, after considering the ability of either
       party to pay and the character and situation of the parties, and all the other
       circumstances of the case.

And MCL 552.401 permits invasion of one party’s separate assets when the spouse “contributed
to the acquisition, improvement, or accumulation of the property.” “Moreover, separate assets
may lose their character as separate property and transform into marital property if they are
commingled with marital assets and ‘treated by the parties as marital property.’ ” Cunningham v
Cunningham, 289 Mich. App. 195, 201; 795 NW2d 826 (2010), quoting Pickering, 268 Mich. App.
at 10-12.

       From the record, it appears that these exceptions were not considered during mediation.
Accordingly, the division of property was not based on a correct understanding of the value of
the marital estate.

3
 Both Gerald’s doctor and Linda described Gerald as an “angry” person. His testimony at the
evidentiary hearing tends to support that assessment.

                                                -8-
             IV. MEDIATION AGREEMENT IS FINANCIALLY INEQUITABLE

        Even if the entirety of the disputed assets were marital property, the property division and
spousal support award were financially unfeasible. “The goal in distributing marital assets in a
divorce proceeding is to reach an equitable distribution of property in light of all the
circumstances.” Berger v Berger, 277 Mich. App. 700, 716-717; 747 NW2d 336 (2008). The
award need not be mathematically equal, but it must be equitable. Sparks v Sparks, 440 Mich.
141, 159; 485 NW2d 893 (1992). “The primary purpose of spousal support is to balance the
parties’ incomes and needs so that neither party will be impoverished, and spousal support must
be based on what is just and reasonable considering the circumstances of the case.” Loutts v
Loutts, 298 Mich. App. 21, 32; 826 NW2d 152 (2012).

       Gerald presented unrebutted evidence from his financial advisor both during mediation
and at the circuit court hearing. According to the evidence, Linda received monthly Social
Security payments of $1,072 and pension payouts of $895. Adding to her monthly income,
Linda was awarded $2,500 in spousal support, for a 10-year total of $300,000 in support. She
was awarded $40,000 from Gerald’s personal injury settlement, as well as an $18,000 property in
Florida. Linda testified, however, that her monthly expenses were only $2,000.

       Gerald, on the other hand, receives $1,616 monthly in Social Security benefits. He
previously took his pension as a lump sum payment and incorporated those proceeds into his
investment portfolio. His annuity and IRA accounts had a combined value at mediation of
approximately $510,000. Each account has income-earning capacity, but only if Gerald limits
his withdrawals to a certain percentage. At the time of the court’s evidentiary hearing, Gerald
claimed that he withdrew $2,000 monthly from his various accounts.

        The evidence clearly reveals that Gerald’s accounts would be depleted long before the
10-year alimony period expired if he were required to withdrawal the amounts necessary to
satisfy his debt to Linda as well as to support himself. The $40,000 lump sum award to Linda
would reduce his accounts’ value to approximately $470,000. As asserted by Mole, Gerald had
to limit his monthly withdrawals to between 4.5 and 5% to ensure that the account continued to
earn income and maintain a stable balance. According to our calculations, Gerald therefore had
to limit his annual withdrawals to $23,500, or just under $2,000 each month. Gerald complied
with that calculation by reducing his payouts. This left Gerald with $3,616 in monthly income,
or $1,116 to cover his monthly living expenses after paying Linda’s spousal support. Linda’s
monthly income after spousal support would be $4,467, more than four times Gerald’s available
income. This result clearly was not equal, nor equitable, and was not necessary to meet Linda’s
$2,000 monthly expenses.

                     V. MOTION TO SET ASIDE MEDIATION AWARD

        Once Gerald secured new counsel who recognized the errors committed by the circuit
court and his prior attorney, Gerald sought to set aside the mediation agreement. The circuit
court abused its discretion, see Rose v Rose, 289 Mich. App. 45, 49; 795 NW2d 611 (2010), in
denying Gerald’s motion for relief. The court’s legal error was “so substantial that, but for the
error, the award would have been substantially different.” Cipriano v Cipriano, 289 Mich. App.
361, 368; 808 NW2d 230 (2010).

                                                -9-
        Gerald signed a settlement following mediation. The settlement provided that it “is a
final and binding contract” and would be reduced to a court judgment. It is well settled under
Michigan law that a party is bound by the terms of a settlement agreement to which he affixes his
signature. However, it is equally well established that a party may avoid a settlement contract
when agreement was secured by fraud, duress, or mutual mistake. Vittiglio v Vittiglio, 297 Mich
App 391, 400; 824 NW2d 591 (2012); Keyser v Keyser, 182 Mich. App. 268, 269-270; 451 NW2d
587 (1990); Kline v Kline, 92 Mich. App. 62, 71; 284 NW2d 488 (1979). We discern such
grounds for relief in this case.

        The circuit court committed clear legal error by misinterpreting the antenuptial
agreement. The parties’ premarital contract applies in their divorce proceedings. It clearly
reflects the parties’ intention to maintain as separate their personal property. The court’s error
affects the sum and substance of the mediation agreement—the property division and spousal
support award.

        In granting appellate relief, we find instructive the law governing binding domestic-
relations alternative dispute resolution (ADR) in Michigan. Just as provided in the current
mediation agreement, resolutions following ADR are binding and can even “defeat an otherwise
valid claim” on the part of a challenging party. Cipriano, 289 Mich. App. at 367. Even under the
ADR statutory strictures, a court must grant relief in certain circumstances, such as where the
agreement was procured by “ ‘corruption, fraud, or other undue means.’ ” Id., quoting MCL
600.5081. As noted in Cipriano, 289 Mich. App. at 368: “In order for a court to vacate an
arbitration award because of an error of law, the error must have been so substantial that, but for
the error, the award would have been substantially different.” See also Washington, 283 Mich
App at 672 (holding that arbitrators exceed their powers when they enter an award “in
contravention of controlling principles of law”).

        Had this case proceeded to statutory ADR, relief would certainly be warranted based on
the circuit court’s preceding legal error. Common-law mediation proceedings are generally more
lenient that legislatively created ADR. Accordingly, relief must be equally available in this case.
The circuit court’s clear legal error affected the description of the marital estate. The error
affected the integrity and fairness of the mediation negotiations. Over Gerald’s objections, the
parties proceeded without dividing their property into separate and marital assets. The attorneys
then essentially ignored the advice of the parties’ financial advisor and reached a disparate
award.

        We therefore vacate the mediation agreement and the property division and spousal
support provisions of the divorce judgment entered therefrom. This does not end the parties’
disputes, however. On remand, the court will be required to categorize the parties’ various assets
as marital or separate as described in Section III. The court then must divine an equitable
distribution of the assets as outlined in Section IV. Only then may a valid judgment of divorce
be entered.

                                               -10-
        We vacate the mediation agreement and, in part, the judgment of divorce and remand for
further proceedings consistent with this opinion. We do not retain jurisdiction.

                                                         /s/ Douglas B. Shapiro
                                                         /s/ Elizabeth L. Gleicher
                                                         /s/ Amy Ronayne Krause

                                            -11-