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Validity of Binding Arbitration to Resolve Issues in Divorce

By Snyder & Sarno on December 08, 2016

In Kelly v. Kelly, the husband and wife were married for 23 years and had 5 children together before the husband filed for divorce in 2010.  After some administrative delays followed by unsuccessful mediation efforts, trial was scheduled to begin on April 8, 2013.  At a pretrial conference on March 25, 2013, the husband and wife entered into an impromptu handwritten consent agreement to submit all outstanding issues to binding arbitration.  The agreement also appointed a retired judge as arbitrator and stipulated that the husband would pay the arbitrator’s retainer without prejudice.  The husband's divorce complaint was then dismissed without prejudice.

The retainer was exhausted after 3 arbitration sessions, which were held on June 22, September 3, and September 4.  The husband and wife were to split the additional costs, but it seems that arbitration was stalled after September 4, presumably due to nonpayment.  Then, in October 2013, the husband's attorney filed a motion seeking permission to be relieved as counsel.  The motion was filed under the dismissed “FM” dissolution docket number, so the judge returned it without deciding the application.  But an “FD” non-dissolution docket number was created the same month when the wife moved to enforce the husband's pendente lite support obligation because his arrears as of January 1, 2013, totaled more than $55,000.  Subsequently, at some point in December 2013, the husband, who is a practicing attorney, filed a pro se motion under the old “FM” docket number seeking to have his complaint reinstated.  This motion was also returned without decision.

Subsequently, the husband moved before the arbitrator to reinstate the divorce complaint, set a date for trial, and reduce his pendente lite obligation.  Around the same time, the husband's attorney petitioned the arbitrator for permission to withdraw.  The arbitrator denied both motions in February 2014, noting that testimony would be completed with 1 more hearing.  The arbitrator thus ordered both the husband and wife and their attorneys to appear on April 1, 2014, and agreed to consider the husband's request to adjust his support obligation at the completion of testimony.

In the meantime, on March 27, 2014, the husband filed another pro se motion with the Family Part asking that the court reinstate the complaint and set a trial date.  On March 31, 2014, the judge informed the husband and wife that this motion had likewise been returned, and that arbitration was to resume as scheduled on April 1, 2014.  After receiving the judge’s notification, the husband filed a Chapter 7 bankruptcy petition later that same day, which resulted in cancellation of the arbitration hearing.  The husband was discharged under the Bankruptcy Code in July, and sought emergent relief from the Appellate Division, which was granted on September 23, 2014.  The Appellate Division ordered the deputy court clerk to accept the husband’s motion to reinstate his complaint and directed the Family Part to decide the motion.

The husband’s motion requested the same relief as his prior motions, and additionally requested a stay of arbitration proceedings, a transfer to Warren County, and disqualification of the trial judge.  On January 2, 2015, the judge denied the husband’s application in its entirety.  The husband appealed on multiple grounds.  He claimed, among other things, that the arbitration proceeding was not compliant with statutory and case law, that he was improperly denied access to the courts, and that the trial judge should have recused herself.

Specifically, the husband claimed that there was no written arbitration agreement in violation of the Uniform Arbitration Act, and that the issue of child custody was brought up “by surprise on the first day of arbitration proceedings.”  The Appellate Division affirmed the trial court’s finding that an arbitration agreement existed, pointing out that both the husband and his lawyer signed the consent order on March 25, 2013, and that the husband executed the arbitrator’s retainer agreement and paid such retainer.  Moreover, the husband voluntarily moved forward with arbitration in the June 2013 session, and in 2 more sessions in September 2013.  By the end of the 3rd session, the husband had presented his entire case and rested, and during that time, neither he nor his attorney ever questioned the validity of the proceedings.  Accordingly, he waived any procedural challenges to the arbitration.  Moreover, because 3 of the children were unemancipated, it did not make sense for the husband to be surprised that child-related issues would be subject to arbitration along with the other unresolved issues.  The Appellate Division noted that “it would be a great waste of judicial resources to permit [the husband], after fully participating in the arbitration proceeding, to essentially have a second run of the case before a trial court.”

The Appellate Division also rejected the husband’s arguments that he was denied access to the courts.  The husband objected to the judge’s refusal to hear his motions while the arbitration was ongoing, while agreeing to hear the wife’s motion.  The Appellate Division concluded that the claims lacked sufficient merit to warrant discussion in its written opinion, but pointed to the factual underpinnings: 3 years after filing the divorce complaint and right before trial, the husband agreed to arbitration; during those 3 years, he accrued support arrears of $55,580; the wife was permitted to enforce that support obligation under the FD docket; and the husband was a full participant in those proceedings.

Finally, the Appellate Division determined that it was not necessary to consider the husband’s argument that the judge should have recused herself because it was remanding the case to the arbitrator.  However, the Appellate Division did note that the claims of bias were primarily based on the trial judge’s refusal to consider the 3 motions the husband filed while arbitration was pending—which does not support a claim of bias.

The Appellate Division accordingly affirmed the matter in its entirety, and remanded the matter to the arbitrator for continuation and completion of the arbitration process.

If you have an issue with mediation or arbitration, contact the skilled matrimonial attorneys at Snyder Sarno D’Aniello Maceri & da Costa LLC.  Call us today at (973) 274-5200.

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