McKeown v. McKeown

• Decision Date: 16 February 2022
• Docket Number: A168800
• Citation: 317 Or.App. 616,505 P.3d 455
• Parties: Scott A. MCKEOWN, Petitioner-Respondent, v. Laurie G. MCKEOWN, Respondent-Appellant, and Rosalyn McKeown-Ice et al., Respondents below.
• Court: Oregon Court of Appeals

317 Or.App. 616

505 P.3d 455

Scott A. MCKEOWN, Petitioner-Respondent,

v. Laurie G. MCKEOWN, Respondent-Appellant,andRosalyn McKeown-Ice et al., Respondents below.

A168800

Court of Appeals of Oregon.

Argued and submitted April 20, 2021.

February 16, 2022

Julie A. Smith, Portland, argued the cause for appellant. On the briefs were Wendy M. Margolis and Cosgrave Vergeer Kester LLP.

Robert J. McGaughey, Portland, argued the cause for respondent. Also on the brief was McGaughey & Erickson.

Before Mooney, Presiding Judge, and Lagesen, Chief Judge, and DeVore, Senior Judge.^*

DeVORE, S. J.

Laurie McKeown appeals from a general judgment for petitioner Scott McKeown confirming an arbitration award that, in part, determined that Laurie is no longer a general partner in the McKeown Family Limited Partnership.¹ Laurie assigns error to the trial court's order denying her motion to vacate the arbitration award. She contends that the arbitrator exceeded her powers when granting Scott's cross-motion for summary determination.² She argues that the arbitrator lacked authority because the arbitrator purportedly failed to comply with arbitration rules that required the arbitrator to have conferred by telephone with the parties on the suitability of Scott's cross-motion for summary determination before going on to receive arguments, hold a hearing, and decide the issues presented. Rejecting the same argument and others, the trial court concluded that the arbitrator had not exceeded her powers. We agree with the trial court's conclusion, and we affirm.

The dispositive facts are procedural and undisputed. In 1994, the parties' mother created the McKeown Family Limited Partnership to manage real estate investments. Scott McKeown, Laurie McKeown, and Rosalyn McKeown-Ice are siblings and were general partners in the partnership. Scott undertook the primary responsibility of managing partnership assets. In 2016, Scott filed a complaint in circuit court against Laurie, Rosalyn, and the McKeown Family Limited Partnership, alleging that the partnership agreement had been modified by conduct, alleging that Laurie had failed to fulfill her duties as a general partner, and seeking declaratory relief that Laurie should no longer be a general partner in the partnership.

The partnership agreement contained a general arbitration clause, providing:

"Unless otherwise provided herein, any dispute, claim or controversy arising out of or relating to this agreement shall, upon the request of any party involved, be submitted to and settled by arbitration in accordance with the commercial rules of the American Arbitration Association * * *. The decision made pursuant to such arbitration shall be binding and conclusive on all parties involved[.]"

Based on that clause, the court ordered that the matter be arbitrated.

In arbitration, Scott filed a claim for dissolution of the partnership or, in the alternative, a declaration that Laurie was no longer a general partner by reason of waiver, abandonment, or estoppel. Laurie filed a motion for summary disposition under ORS 36.665(2) and Rule 16 of the Rules of the Arbitration Services of Portland (ASP).³ We note that ORS 36.665(2) provides:

"An arbitrator may decide a request for summary disposition of a claim or particular issue:

"(a) If all interested parties agree; or

"(b) Upon request of one party to the arbitration proceeding, if that party gives notice to all other parties to the proceeding and the other parties have a reasonable opportunity to respond."

ASP Rule 16, which incorporates ORS 36.665(2), provides, in relevant part:

"An arbitrator, or panel of arbitrators, may allow a request for the summary disposition of a claim or a particular issue:

"a. If all interested parties agree; or

"b. Upon a ruling by the arbitrator(s) to decide the claim or issue in a summary manner.

"If all interested parties have not agreed to a summary disposition, the requesting party shall file the request with the arbitrator(s) and serve it upon all interested parties. The request shall state whether the entire claim should be decided in a summary manner or set forth one or more specific issues that should be so decided. The request shall also explain why the matter should be decided in a summary manner and the request shall include a summary of the dispositive facts and the controlling law.

"* * * * *

"The requesting party shall arrange a telephone conference among the affected parties (or their attorneys) and the arbitrator(s) during which the parties can argue their position on whether or not the matter should be decided in a summary fashion. Prior to the telephone conference, a party opposing the request may file with the arbitrator(s) an opposition statement (with or without supporting documents) and serve it on the requesting party and all other interested parties or their attorneys.

"The arbitrator(s) must then rule on whether it is appropriate to hold a summary disposition hearing, and in making that decision the arbitrator(s) shall assess and balance the customary bifurcation versus single hearing factors and shall also consider the apparent merits of any party's position based upon any statement, affidavits or briefs filed by the parties or at oral argument. A ruling by the arbitrator(s) on the appropriateness of a summary resolution shall be determined after a telephone conference call involving the arbitrator(s) and all parties desiring to be heard, which conference call shall be arranged by the requesting party. The ruling shall be documented by a letter to the parties (copy to ASP)."

In her motion for summary determination, Laurie argued, first, that, even if Scott's factual allegations were taken as true, she could not lose her status as a general partner as a matter of law, and, second, that only a circuit court, and not an arbitrator, could dissolve a partnership.

Pursuant to ASP Rule 16, the parties conferred by telephone on the suitability of Laurie's motion for summary determination. All agreed. Scott indicated that his claims should also be decided by summary determination. Thereafter, Scott filed a cross-motion for summary determination. No additional telephone conference was held on the suitability of Scott's motion for summary determination. His motion urged denial of Laurie's motion and for "summary findings on undisputed issues of facts" determining that Laurie's conduct over 20 years had waived her right to participate as a general partner and that, due to "extreme partner dissention," the partnership should be dissolved. In support of his motion, he filed a declaration recounting, from his view, his struggles with Laurie's refusals to cooperate or participate in the business.

In response, Laurie, joined by Rosalyn (hereafter the sisters), filed a response memorandum opposing Scott's cross-motion. The sisters disputed, as a matter of law, any basis to dissolve the partnership, and they disputed Scott's claim of waiver, abandonment, or estoppel as to Laurie's rights as a general partner. They did not, however, proffer any specific factual evidence to contravene Scott's declaration. They did not argue that the cross-motion was not properly the subject of summary determination due to a dispute of fact. And, they did not object that Scott or the arbitrator had failed to arrange for a teleconference pursuant to ASP 16 to discuss the suitability of Scott's motion for summary determination.

The arbitrator rendered a decision on the cross-motions. She first found that the sisters had agreed that summary determination was appropriate "as there are no disputed issues of fact." See ORS 36.665(2)(a) (summary determination where parties agree); ASP 16(a) (same). Next, the arbitrator determined that the partnership's arbitration clause was broad, allowing consideration of the claim of dissolution of the partnership but concluded that Scott had not proved that it was no longer practicable to carry on the partnership and so he had not proved a sufficient basis to justify dissolution. Finally, the arbitrator determined that Laurie had failed to act in good faith and fair dealing in communicating and cooperating with other partners for 21 years despite substantial effort from Scott to persuade her to do so. Therefore, the arbitrator concluded that Laurie's conduct constituted an unequivocal waiver of the requirement for changes in the partnership agreement to be written and a waiver of her status as a general partner. The decision denied dissolution but declared Laurie to no longer be a general partner.

The sisters filed a motion asking the arbitrator to reconsider the decision. They argued that the arbitrator "exceed[ed] the requested motions ," but did not argue that the arbitrator exceeded her powers . (Emphasis added.) They argued that the parties had not briefed the concept of good faith and fair dealing, which the arbitrator had employed in construing the partnership agreement and then used to support a conclusion that Laurie had waived her role as general partner. They did not argue that Scott or the arbitrator had failed to conduct a prehearing telephone conference to determine the suitability of Scott's cross-motion for summary determination. They did argue that they were surprised at a decision on the evidence, that they would have offered evidence, and that the matter should be reopened for submission of contrary evidence.

In an order on reconsideration, the arbitrator repeated that the parties had agreed per ASP Rule 16 that all claims were appropriate for summary determination. The arbitrator recited that the filings raised the issues whether Laurie satisfied her fiduciary duties as a partner and whether she had abandoned or waived her status as a general partner. Finally, the arbitrator reiterated that the undisputed evidence that was submitted showed that Laurie's failure to participate in the partnership constituted an abandonment and waiver of her status as a general partner. The arbitrator denied reconsideration.

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