Mandl v. Bailey

• Decision Date: 30 September 2004
• Docket Number: No. 1055 Sept. Term, 2003.,1055 Sept. Term, 2003.
• Citation: 858 A.2d 508,159 Md.App. 64
• Parties: Alexander J. MANDL v. Sue BAILEY.
• Court: Court of Special Appeals of Maryland

858 A.2d 508

159 Md.App. 64

Alexander J. MANDL v. Sue BAILEY.

No. .

Court of Special Appeals of Maryland.

September 30, 2004.

C. Allen Foster (Joe R. Reeder, David Panzer, Geoffrey J. Greeves, Greenberg Traurig, LLP on the brief), Washington, DC, for appellant.

Stanley J. Reed (J. Bradford McCullough, Deborah E. Reiser, Lerch, Early & Brewer, Chartered on the brief), Bethesda, for appellee.

Argued before SALMON, DEBORAH S. EYLER, SHARER, JJ.

DEBORAH S. EYLER, Judge.

In the Circuit Court for Montgomery County, Sue Bailey, M.D., the appellee, filed a three-count petition to vacate an original arbitration award and a modified arbitration award issued in her contractual dispute with her ex-husband Alexander J. Mandl, the appellant. She alleged that the awards were procured by fraud (count I); that the Arbitrator had refused to hear evidence material to the parties' controversy (count II); and that the Arbitrator had exceeded his authority in modifying a part of the original award (count III).

Mandl moved to dismiss the petition on several grounds, including that it was not timely filed. Bailey moved for partial summary judgment on count II. After a hearing, the court granted Bailey's motion, denied Mandl's motion to dismiss, and dismissed counts I and III for mootness. In a written order memorializing that ruling, the court vacated the Arbitrator's award and remanded the matter to the Arbitrator for further proceedings.

On appeal, Mandl raises several questions for review, which we have combined and restated as follows:

I. Was the circuit court's decision to grant summary judgment in favor of Bailey on count II of the petition to vacate arbitration award legally incorrect?

II. Was the circuit court's decision to deny Mandl's motion to dismiss legally incorrect?

III. If the circuit court did not err in granting summary judgment on count II of the petition to vacate arbitration award, and in denying the motion to dismiss, was its decision about the scope of the remand to the Arbitrator legally incorrect[¹]?

On Question I, we conclude that the circuit court's decision that the Arbitrator refused to hear evidence pertinent to the parties' dispute was legally incorrect. On Question II, we conclude that the circuit court correctly denied Mandl's motion to dismiss in part. We shall vacate the circuit court's dismissal order as to count I and remand for further proceedings on that count; vacate the court's summary judgment order as to count II and remand with instructions to the court to enter summary judgment in favor of Mandl on that count; and affirm its dismissal order as to count III. Our disposition of Question I resolves Question III without the need for further discussion.

FACTS AND PROCEEDINGS

Background

The parties were married on April 21, 1991, when they both were 48 years old. Each had been married previously and had children from those marriages.² The parties' marriage did not produce any children. They separated on September 15, 1996.

The parties are highly accomplished in their respective fields. Bailey is a medical doctor. During some of the marriage, she held high-ranking positions with the federal government; otherwise, she maintained a successful private practice. She is a sought-after motivational speaker. Mandl is a top-rung corporate executive in the telecommunications sector. For most of the marriage, he was President and Chief Executive Officer of AT & T. Around the time the parties separated, Mandl left AT & T to start Associated Communications LLC, later renamed Teligent, Inc. ("Teligent"), a telecommunications company based in Vienna, Virginia. At Teligent, Mandl was Chairman and Chief Executive Officer.

During their marriage, the parties lived an exceptionally affluent life. They owned several houses, including one in Montgomery County.

On January 17, 1997, the parties executed a Separation and Property Settlement Agreement ("Agreement") that comprehensively resolved the financial issues arising out of the demise of their marriage. They were divorced sometime later in 1997.³

In Paragraph 2 of the Agreement, Mandl promised to pay certain sums as modifiable alimony.⁴ The Paragraph 2 payments are in escalating amounts, beginning at $220,000 per year, in equal quarterly payments of $55,000, for one year after execution of the Agreement, and eventually reaching $250,000 per year, in equal quarterly payments of $62,500, for the fourth year after execution of the Agreement. The payments are to continue in that amount until Bailey's death, Mandl's death, or Bailey's receipt of a total sum of $5,000,000 (including payments that might be made pursuant to another provision of the Agreement, or payments made by Mandl voluntarily, outside the requirements of the Agreement).

The parties agreed, in Paragraph 7, that the Paragraph 2 payments are subject to modification downward if Mandl suffers a material change in circumstances, "including, but not limited to, reduced compensation, retirement or disability, which affects [Mandl's] ability to make the payments." In such a situation, "said payments shall be renegotiated and modified in the light of these changed circumstances." The parties also agreed, however, that "increases in [Mandl's] income is [sic] not the substantial change in circumstances contemplated by [Paragraph 7]."

The Agreement provided that, in the event Mandl experienced a material change in circumstances that he thought warranted a modification in the Paragraph 2 payments, he was to notify Bailey in writing; the parties would "attempt to resolve the matter through negotiation"; and, if that was not successful, would "submit the matter to binding arbitration in accordance with Paragraph 15" of the Agreement.

Under Paragraph 15, "[a]ny claim or dispute arising out of or in connection with this Agreement or the interpretation or meaning of any part hereof shall be arbitrated by the parties before an arbitrator acceptable to both parties, who shall be knowledgeable in the area of dispute." If, within a one-month period after either party requests arbitration, the parties do not select an arbitrator, "the arbitrator shall be selected, at the request of either party, by the American Arbitration Association ["AAA"], and the arbitration shall proceed in accordance with then existing rules of that Association." The award "shall be final and binding upon both parties, and judgment may be entered thereon in any court having jurisdiction."

Mandl made Paragraph 2 payments to Bailey in 1997, 1998, 1999, and 2000. His last such payment was made on December 3, 2000.

By letter of April 5, 2001, Mandl notified Bailey that he had suffered a material change in circumstances warranting a reduction in Paragraph 2 payments. Sometime that month, Mandl was terminated by Teligent, effective May 1, 2001. Teligent declared bankruptcy on May 21, 2001, seeking reorganization.

Bailey disputed Mandl's claim of a material change in circumstances and claimed she was owed an arrearage. The parties tried to resolve their disputes through negotiation, without success, and also attempted unsuccessfully to select an arbitrator, outside the AAA forum. Ultimately, on October 31, 2001, Bailey submitted a demand for arbitration to the AAA. Mandl submitted a counterclaim.

Arbitration Proceedings

Pursuant to the AAA process, the parties chose Bruce S. Lane, Esquire ("Arbitrator"), to arbitrate their dispute. Amy Henthorn Jones served as the AAA's "ADR Case Manager" for the matter. Throughout the course of the arbitration, Jones was copied on orders and awards issued by the Arbitrator and on letters between counsel and the arbitrator.

The arbitration was conducted under the AAA Commercial Arbitration Rules then in effect ("AAA Rules"). Before the hearing, the issues for decision were defined as whether Mandl had suffered a material change in circumstances affecting his ability to make the Paragraph 2 payments required by the Agreement, so as to warrant a downward modification of those payments and, if so, the amount by which the Paragraph 2 payments would be reduced; and whether Bailey was entitled to an arrearage and, if so, the amount of the arrearage. The Arbitrator determined that Mandl bore the burden of proof on the material change in circumstances claim and Bailey bore the burden of proof on the arrearage claim.

The arbitration hearing was conducted over four non-consecutive days, beginning on May 7, 2002, and ending on May 29, 2002. The parties and several expert witnesses testified. Numerous documents were introduced into evidence.

Of relevance to the issues on appeal, Mandl testified that he had been unemployed since the demise of Teligent and, though actively seeking employment through executive search firms, had not been able to land a position and was unlikely to do so. He attributed his dismal prospects to a combination of factors: the ongoing economic recession, including the financial aftermath of the September 11 attacks; the "literal [] collapse[]" of "the telecom world"; his age (58), which is beyond the desirable age range for incoming top-level executives; and his reputation for having taken a company into bankruptcy.

Mandl further testified that, despite his job search, he had not received any employment offers. When asked whether he had been interviewed for any positions, Mandl responded that he had had "a couple of conversations with some head-hunters about some possibilities," which "didn't go anywhere," and that he had had one interview with a Philadelphia company that "didn't go anywhere" because "they ended up not hiring a CEO." He still was actively seeking employment and wanted to find a position, but had "come to realize over the last six months that it is going to be a lot tougher than I thought" and that it "[m]ay not be possible at all." He characterized his employment search as an "uphill battle."

At the conclusion of the hearing, on May 29, 2002, the Arbitrator...