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Is A Divorce Arbitration Award Appealable In New Jersey?

No. Although there are some very restricted exceptions, a judge of the Superior Court of New Jersey may not disturb an arbitration award when the lawyers and their respective clients agreed to have their divorce resolved in this manner.

In DiMaggio v. DiMaggio, Diane DiMaggio appealed from an order of the Superior Court of New Jersey, Family Part of Monmouth County that confirmed an arbitration award according to New Jersey Statute 2A:23A-1 to -30, or the Alternative Procedure for Dispute Resolution Act. This law states that once order is granted that confirms, modifies, or corrects an arbitration award the trial court shall enter a decree or judgment in conformity which shall be enforced just like any other decree or judgment. Moreover, there can be no further appeal or review of the that decree or judgment. The New Jersey Appellate Division reviewed Diane’s arguments in relation with the factual record, and did not find any reason to depart from the statutory prohibition against appeals of arbitration awards after being confirmed by a trial court, as enumerated in the Alternative Procedure for Dispute Resolution Act. As such, the appeal was dismissed.

John and Diane DiMaggio got divorced in 2007 after being married for twenty-four years. According to the judgment of divorce, John was required to pay Diane equitable distribution in the amount of $ 1.4 million in $ 200,000 installments over the next five years at an interest rate of six percent per year. Additionally, both parties agreed that they would resolve all post-judgment financial disputes through arbitration under the Alternative Procedure for Dispute Resolution Act.

John moved for modification of the equitable distribution award two years later as a result of his alleged poor financial situation. The arbitrator initially entered an order that reduced and extended the regular payments. Then Diane filed a motion for reconsideration in 2011. Because of the motion, the length of the reduced payment plan was limited to two years, after which John would be obligated to prove that further extending the payment plan would still be appropriate. During this time, Diane moved to vacate the reduced payment award granted by the arbitrator, and to enforce the original agreement, which was denied.

When the two year period ended, hearings were conducted by the arbitrator to reevaluate the payment plan. John made an appearance over the phone even though Diane objected. After a comprehensive discovery period, the arbitrator decided that the extended payment plan should replace the original judgment permanently. This modified plan obligated John to still pay the same total amount to Diane, but in $ 40,000 installment payments every year compared to the original $ 200,000, over the course of twenty five years instead of five, at a reduced interest rate of one percent a year. Once again, Diane filed a motion to vacate the award and have the original payment plan reinstated.

On July 25, 2014, the judge heard oral arguments. Diane’s counsel argued that the arbitrator’s findings of fact and conclusions of law were not proper because he ignored evidence that suggested John had actually hidden his assets in several shell corporations, and impermissibly shifted the burden of proof on Diane to show that John was capable of meeting the financial requirements of the original payment plan. Diane further argued that the judge was biased in her ex-husband’s favor, and illegally allowed John to testify over the phone. The motion was denied by the court, and the arbitration award was confirmed. Diane appealed to the New Jersey Appellate Division.

Diane argued on appeal that the Family Part of Monmouth County failed to correctly apply the standard of review enumerated in New Jersey Statute 2A:23A-13(e). Additionally, she argued that the Family Part did not “make an independent determination of any facts relevant thereto de novo” as per the same law. She claimed that the trial court adopted the factual findings and conclusions of law from the court that decided Diane’s previous motions. She also argued that the public policy of this state demanded a reversal of the order on appeal.

The New Jersey Appellate Division explained that New Jersey Statute 2A:23A-13 provides the statutory basis for modifying an arbitration award. Even though the majority of issues that Diane raised in the appeal stemmed from the provisions in this law, first the appellate panel had to consider the scope of their jurisdiction under New Jersey Statute 2A:23A-18(b). In general, N.J.S.A. 2A:23A-18(b) prohibits the appeal of a Family Part’s, or any trial court’s, confirmation of an arbitration award. The intent of the New Jersey Legislature is explicitly clear in the text of the statute which provides that when a trial court grants an order that confirms, corrects, or modifies an arbitration award there can be no further review or appeal of the decree or judgment.

With that said, there are limited circumstances where the appeal or review of a judgment or decree that grants the confirmation, correction or modification of an arbitration award may be appropriate. In the 1998 case of Mt. Hope Dev. Assocs. V. Mt. Hope Waterpower Project L.P. , the Supreme Court of New Jersey recognized that the Alternative Procedure for Dispute Resolution Act’s limit on appellate review does not apply to child support issues. Furthermore, the New Jersey Appellate Division has held in the 2005 case of Allstate Ins. Co. v. Sabato, that an arbitration award for attorney’s fees is governed by the Rules of Professional Conduct and, as such, is within the exclusive supervisory authority of the Court.

There is the possibility for broader exceptions as well. The Supreme Court of New Jersey has acknowledged that there may be other limited situations where public policy might require the New Jersey Appellate Division to review an arbitration award. For instance, any judgment or decree granting a confirmation, modification or termination of an arbitration award that clearly shows bias on the part of the trial court may be subject to judicial review beyond what is provided for in New Jersey Statute 2A:23A-18. In the same vein, the New Jersey Appellate Division has determined that if a trial judge ignores or misapplies the standard of review enumerated in New Jersey Statute 2A:23A-13, and does not rule on a moving party’s specific claims, judicial review by an appellate court may be warranted.

The New Jersey Appellate Division has found that when the requested relief in an arbitration is not within the power of the arbitrator to actually award, then the trial court action is essentially a de novo proceeding in which there exists a right to review, so that the New Jersey Appellate panel can carry out their supervisory duties.

However, as long as a Family Part court provides a rational explanation for its decision about reviewing an arbitration award, and acts within the bounds of the Alternative Procedure for Dispute Resolution Act, then the New Jersey Appellate Division has no choice but to dismiss the appeal. Anything else would conflict with the Legislature’s expressed intent to eliminate appellate review in these matters.

The New Jersey Appellate held that the specific circumstances in this case did not trigger any of the exceptions to New Jersey Statute 2A:23A-18(b) that might allow them to exercise jurisdiction over this case. There was nothing in the trial opinion that suggested that the judge did not conduct a thorough and reasoned analysis of the issues. Moreover, there was nothing that indicated that the Family Part judge was biased in John’s favor. Allowing him to attend the arbitration hearing over the phone did not indicate bias, nor did it raise any public policy concerns. Furthermore, the total amount Diane was to receive under the revised plan was the same as she was entitled to receive under the original order. Therefore, the appellate panel had no choice but to dismiss the appeal.