Edward R. Weinstein, Esq.Edward R. Weinstein, Esq.

Is Alimony Decided If My Divorce Goes To Arbitration?

Yes, if you agree to allow the Arbitrator to do so beforehand. New Jersey has comprehensive case law on divorce, alimony, and arbitration. As a divorce attorney in New Jersey for over the past twenty years, I know how important it is to understand what an Arbitrator may or may not decide on behalf of my client. When alimony is at issue, the standard of living that the parties enjoyed during the marriage is to be analyzed when making a decision as to how much and how long alimony shall be paid. In doing so, a New Jersey Family Court judge will apply a Crews analysis to determine the lifestyle enjoyed during the marriage, and base the alimony award on that. According to the recent case of Sirigotis v. Sirigotis, divorce lawyers in our state were provided assurances that an arbitrator has the power to apply a Crews analysis as well.

In Sirigotis v. Sirigotis, both the ex-wife, Sue Sirigotis, and the ex-husband, George Sirigotis, appealed from an order of the Superior Court of New Jersey, Family Part of Somerset County dated May 5, 2014. This order was related to an arbitration award that resolved numerous marital issues they had. Sue argued that arbitrator was not authorized to address if she could maintain the marital standard of living according to the 2000 New Jersey Supreme court case of Crews v. Crews. Conversely, George argued that the court wrongly vacated the arbitrator’s Crews finding because the Family Part judge believed Sue did not a reasonable opportunity to present proof on the issue. A Crews issue involves a finding of a supported spouses stand of living during the time of marriage to determine alimony. If a supporting spouse starts earning more in the future, the Family Part will not increase the alimony obligation unless the current alimony obligation is not sufficient to allow the supporting spouse to maintain a lifestyle reasonably comparable to that enjoyed at the time of the marriage.

While the New Jersey Appellate Division agreed with the Family part court that the arbitrator did have the authority to deal with the Crews issue, the appellate panel found that Sue did in fact have an opportunity to submit proof on the issue. Therefore, the New Jersey Appellate Division reversed the vacating of the Crews finding, and ordered the Family Part to confirm the arbitration award.

Sue and George got married in May of 1981, and Sue filed for divorce in October 2010. Most of the marital issues were resolved by a mutually agreed to settlement agreement. The former couple agreed to submit the remaining issues to “final and binding” arbitration. They signed an Agreement to Provide Arbitration Services, and agreed on a former judge as arbitrator. According to their marital settlement agreement, George would pay Sue $ 250,000 every year in alimony. This amount was based on George’s annual income of $ 800,000, compared to Sue’s $ 40,000 a year. The marital settlement agreement listed numerous issues needing to be resolved, including: Sue’s request for more alimony for George’s income above $ 800,000, and Sue’s request for the inclusion of language pursuant to Crews v. Crews, indicating that she would not be able to maintain the marital standard of living under the current marital settlement agreement’s alimony obligation, but still accepts the marital agreement as fair and reasonable regardless.

George opposed Sue’s request in front of the arbitrator. He contended that, as per, Crews v. Crews, after a court makes a finding that one spouses lifestyle is met by an alimony obligation, that spouse’s income, and unearned income from assets, there remains no need to consider the effect of future income. He argued that the current alimony obligation of $ 250,000 a year was more than enough for her to maintain the marital lifestyle. Conversely, Sue claimed that $ 250,000 a year in alimony neither met her needs nor marital lifestyle. She wanted a provision in the arbitration agreement that gave allowed her additional alimony payments in the future if George’s income increased. On top of the base award of $ 250,000, Sue demanded: 25% of all gross income earned between the amounts of $ 800,000 and $ 1,000,000; 15% of all gross income earned between $ 1,000,000, and $ 1,500,000; and $ 10% of all gross income earned above $ 1,500,000.

George countered and again stated that Sue would meet and exceed the marital lifestyle with the current alimony award and therefore was not entitled to his possible future good future, as enumerated in Crews. He wanted specific language included in the arbitration order that both spouses agree that in consideration of distribution of property, the alimony obligation, and both parties’ ability to provide for themselves, both spouses could maintain a lifestyle comparable to the one they enjoyed while married. The arbitrator denied Sue’s request for more alimony if George’s alimony increased in the future, because it was not appropriate for him to consider events that may or may not happen in the future. The arbitrator also granted George’s requested language. Sue objected to this, and argued that she had never explicitly agreed that she could maintain the marital lifestyle. George, in turn, requested the arbitrator to find that Sue could maintain the marital standard with $ 250,000 a year, the $ 40,000 of income imputed on her, and the property she got after the assets were divided. The arbitrator agreed that George’s requested language was incorrect as both parties had not agreed on it, but that it was still well within his power to determine if Sue could maintain the marital lifestyle with the current alimony award.

The arbitrator explained that Sue’s own objection to George’s language raised the issue of maintaining the marital standard, and therefore it required a ruling. Moreover, if the parties were at trial the court would most definitely making a finding on it, and both Sue and George had granted the arbitrator the full powers of a Family Part judge when they signed the arbitration agreement. Furthermore, he need to rule on the Crews issue in order to avoid further litigation in the future. Finally, if there was any ambiguity in the marital settlement agreement, he had the power to resolve it. The arbitrator found that Sue could very well maintain the marital lifestyle with an alimony award of $ 250,000, her portion of the marital assets after distribution, and her imputed income of $ 40,000.

In response to the arbitrator’s decision, Sue filed a motion in the Family Part to vacate his Crews finding. The Family Part court denied Sue’s contention that the arbitrator did not have the authority to decide the Crews issue. Still, the Family Part vacated the arbitrator’s Crews finding anyway, and ordered the issue be heard again.

The New Jersey Appellate Division stated that New Jersey public policy favors the use of arbitration in family law matters, and so arbitration awards are given broad deference on appeal. Arbitration is a matter of contract, and only the issues that both parties agree upon can be decided by arbitration. However, in Sirigotis, the appellate panel found that there was evidence that the parties did agree to arbitrate the Crews issue. The arbitration agreement stated that both parties agreed to submit all open issues not resolved by the marital settlement agreement to arbitration. Of those issues, two involved a Crews analysis. Sue requested herself to include Crews language, and she requested additional alimony if George’s income increased, thereby requiring the arbitrator to conclude if she had the ability to maintain the marital standard of living with the current alimony award.

In Crews v. Crews, the New Jersey Supreme Court stated that it is vital to determine the marital standard of living at the time of the divorce, not in the future. A dependent spouse, generally, does not have a right to any increase of the supporting spouse’s fortune that happens after the divorce. That said, modification of an alimony award still maybe warranted if the supported spouse cannot maintain a lifestyle comparable to that when the parties were married. In that case, if the supporting spouse’s finances increase, a modification of the support award may be warranted. The Family Part had also found that the arbitrator had the power to decide the Crews issue, but still vacated the finding, because the judge thought Sue was not afforded a fair opportunity to present evidence at the arbitration hearing. However, the New Jersey Appellate Division explained that an arbitration award can only be vacated if the provisions of the Uniform Arbitration Act allow for it.

The Family Part court used a provision of the Uniform Arbitration Act that Sue did not raise in her motion to vacate. Even though the court cited Section 23(a)(3) of New Jersey Statute 2A:23B, Sue could not prove that the arbitrator refused “to postpone the hearing,” or “consider evidence material to the controversy.” Furthermore, while the court also cited Section 15(d) of the same act, the arbitrator never denied Sue her “right to be heard,” or “present evidence.” The New Jersey Appellate Division found that in actuality, Sue submitted evidence and argument freely during the many meetings, written submissions, and conference calls.

The Uniform Arbitration Act allows Family Part judges to interfere with an arbitration award only in extremely limited situations. The New Jersey Appellate Division found that none of the limited circumstances for vacating an arbitration award were present in Sirigotis. Therefore, the appellate panel held that the Family Part committed error when it vacated the arbitration award, and reversed that part of the court order with instructions for the Family Part to confirm the award.

If you have any questions about divorce, alimony or the arbitration process, please give my law firm a call today.