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

What Rights Do I Lose By Choosing Arbitration Over A Divorce Trial?

Yes, in an Arbitrator's decision cannot be appealed, as opposed to a trial in the Family Part of the Superior Court of New Jersey.  Arbitration is becoming a more and more common for lawyers to utilize in certain divorce cases. Couples may always agree to have their attorneys and a mediator (who many time is a retired attorney or family court judge) resolve their marital disputes through arbitration, instead of going through litigation in a New Jersey Family Court. This experienced divorce attorney advises my clients to think long and hard before signing an arbitration agreement. Many people are attracted to the concept of a quick divorce, but do not realize what rights they are giving away by agreeing to arbitrate. One husband found this out the hard way in a recent New Jersey Appellate Division case. In Little v. Little, husband Paul Little tried to appeal an arbitration decision, but learned that unlike a court order, and arbitration award is subject to a very narrow and limited review on appeal. In addition, an arbitration award does not need to specify findings of fact or conclusions of law.

Donna and Paul Little were married for twenty-five years. In her divorce complaint, Donna alleged a Tevis claim, and sought money damages for battered women syndrome, and various injuries that she allegedly sustained from spousal abuse. A Tevis claim is a tort or personal injury claim that a victim of spousal abuse can allege against their spouse in the divorce complaint when acts of domestic violence have occurred.

In a Tevis claim, a victim of domestic violence can get money for pain and suffering, compensatory damages for any monies you had to put forth as a result of the assault by your spouse, and possibly even punitive damages. To be successful in a Tevis claim, a victim must prove both physical and emotional damage. This could include medical records, or even having a doctor testify at trial.

 The judge severed the Tevis action from the divorce action, and scheduled it for trial in December 2013. To sever a claim or cause of action means a division of a trial into two or more parts. Plaintiffs in civil suits base their cases on a cause of actions that give the plaintiff the right to sue. The court may order the lawsuit divided into two or more independent causes of action. This type of severance occurs only when each cause of action could be tried as if it were the only claim in controversy. As a result of severance, the court renders a separate, final, and enforceable judgment on each cause of action. However, instead of taking the Tevis claim to trial, both Donna and Paul agreed to the submit it to arbitration.

Donna and Paul mutually agreed on a retired judge to serve as the arbitrator, and a subsequent arbitration hearing was held on May 29, 2014. At the hearing, both Donna and Paul testified, and submitted written statements and documents. Among these proofs, Donna submitted a letter she wrote to Paul after she first filed for divorce in 2010. This letter was also submitted to the Law Division in August 2013, after discovery ended. Donna’s attorney also provided a psychiatrist report that stated she was a victim of battered woman’s syndrome.

The arbitrator issued a two-page written arbitration decision on June 27, 2014. In this decision he awarded Donna $ 125,000 for mental and physical injuries she suffered during the course of her marriage to Paul. Interestingly, this decision did not state any conclusions of law or findings of fact, but did make reference to Donna’s 2010 letter. Then, Donna filed a motion to confirm the arbitration award with the Law Division. In response, Paul filed a cross-motion to set aside the award. Oral argument was heard by Judge Thomas F. Brogan, who denied Paul’s motion, and granted Donna’s motion to confirm. He reduced the arbitration award to a judgment in the amount of $ 125,000, in addition to pre-judgment interest in an amount of $ 5,691.78. Two orders entered on August 22, 2014 memorialized these rulings.

Paul appealed the two August 22, 2014 orders, and argued: (1) that the award was against public policy and should be set aside because there were no conclusions of law or findings of fact in the decision, so there was no way of knowing if the award was issued from fraud, corruption, or other undue means; and (2) the 2010 letter was submitted after the conclusion of discovery in the Law Division, and therefore the arbitrator’s reliance on the letter was undue. The New Jersey Appellate Division found both of these arguments to be without merit.

The New Jersey Appellate Division started its opinion by stating that judicial scrutiny of an arbitrator’s decision is limited and narrow. The New Jersey Arbitration Act, N.J.S.A 2A:23B-1 to -32 enumerates and limits a courts power to review and arbitration decision. This act gives arbitrators broad authority and power. The purpose of arbitration is to provide a venue for fast, effective and equitable resolution of issues, so any judicial scrutiny of arbitration decisions is very much limited.

Under the New Jersey Arbitration Act, an arbitration award can only be set aside or vacated if: obtained by fraud, corruption, or any other undue means; there is a finding of bias or misconduct by the arbitrator; the arbitrator refused to review evidence related to the issue; the arbitrator acted out of the scope of his or her power; there was no valid agreement to submit the issue to arbitration; or the arbitration hearing was held without proper notice.

Paul first argued that the award should be set aside because no conclusions of law or fact-findings were made by the arbitrator. He argued that public policy demands findings of fact and conclusions of law, and that without the same a court cannot reasonably review and determine if the award was obtained by fraud, corruption, or undue means. The New Jersey Appellate Division held that this argument was not consistent with New Jersey’s Arbitration Act.

An arbitrator’s requirements and the scope of his or her authority and power is controlled by contract. If an agreement to arbitrate does not explicitly require the arbitrator to follow specific procedures, or make specific findings of fact, the arbitrator has the discretion to fashion an award in any manner that is consistent with the Arbitration Act. According to the New Jersey Arbitration Act, an arbitrator is only required to make a record of the award. Additionally, the Arbitration Act permits an arbitrator to conduct the arbitration in any fashion he or she may deem appropriate, as long as the arbitrator sticks to the goal of resolving the issue quickly and fairly. In the 2006 case of Kimm v. Blisset, L.L.C., the New Jersey Appellate Division had already held that unless an arbitration agreement states otherwise, the role of an arbitrator is merely to determine an award that resolves an issue. Unless both parties agree beforehand, one party cannot compel an arbitrator to provide reasons for an award, or issue a written decision explaining their view of the findings of fact. Furthermore, a party may not appeal an arbitration award, like they can appeal a court order.

The New Jersey Appellate Division found that the agreement to arbitrate did not contain any substantive or procedural requirements for the arbitration process, nor did it require the arbitrator to state the decision in any specific way. Therefore, the arbitrator was not under any obligation to state any conclusions of law or findings of fact. Furthermore, New Jersey’s public policy actually supports arbitration, and it is consistent with that policy to allow the arbitrator broad discretion and authority, because if people want arbitrators to make detailed conclusions of law and findings of fact, all they have to do is include such a provision in their arbitration agreement.

Paul also argued that the arbitrator’s reliance on Donna’s 2010 letter to Paul was an undue means, because the letter was submitted after the end of discovery in the Law Division action. The New Jersey Appellate Division found that this argument was not consistent with New Jersey’s Arbitration Act. Unlike courts of law, arbitrators do not have to abide by the rules of evidence. Instead they have the authority to determine the relevance, admissibility, and materiality of any evidence. Moreover, an arbitrator can allow any discovery that he or she finds to be appropriate, as long as they keep in mind the goal of a fast, fair, and cost-effective proceeding.

To learn more about the difference between a divorce trial and arbitration, please call or email my office.