Minkowitz v. Israeli, A-2335-11T2; Appellate Division; opinion by Lihotz, J.A.D.; decided and approved for publication September 25, 2013. Before Judges Messano, Lihotz and Ostrer. On appeal from the Chancery Division, Family Part, Essex County, FM-07-2087-08. [Sat below: Judge Casale.] DDS No. 20-2-xxxx [55 pp.]
Following the commencement of divorce proceedings, plaintiff Barbara Minkowitz and defendant Ron Israeli agreed to forgo judicial determination of all financial issues in favor of binding arbitration and that all custody and parenting-time issues would be reviewed in nonbinding arbitration. They agreed to engage a single arbitrator and a jointly chosen forensic accounting expert.
After the arbitrator met with them, but before arbitration proceedings, the parties opted to engage in settlement talks and mediation to narrow the issues for final determination. As matters were resolved, written documents incorporating the parties’ understanding were prepared.
Four agreements were signed in 2009. In the first, reached in February and later incorporated into a Family Part order, the parties agreed to retain their respective medical practices and to waive any interest in the other’s practice. In the July agreement, they agreed to waive alimony, fixed child support, and determined equitable distribution. A September amendment fixed the value of the marital home and an October amendment settled 2008 tax issues.
After a majority of their disagreements were settled without arbitration, plaintiff retained new counsel, who sought the underlying documentation supporting the financial agreements. When the request was declined, plaintiff moved before the arbitrator for release of the documents. He barred release. Counsel then filed the requests before the Family Part. The judge generally denied the motions and confirmed the “arbitration awards” as final judgments.
On appeal, plaintiff maintains that the orders confirming the arbitration awards had to be set aside or, alternatively, the final judgment of divorce had to be vacated because the 2009 agreements were not the result of arbitration and the arbitrator exceeded his powers by acting as both mediator and arbitrator, and exercised undue means in denying her access to financial documents.
Held: Even though the process the parties used was not an arbitration hearing as agreed to initially, the procedures were not fundamentally unfair, the process was not infirm, and the 2009 agreements need not be vacated. However, the differences in the roles of mediators and arbitrators dictate that, absent the parties’ agreement, an arbitrator may not assume the role of mediator and thereafter resume the role of arbitrator.
The panel notes New Jersey’s strong public policy favoring settlement of disputes through arbitration and says the opportunity for resolution of sensitive matters in a private and informal forum is of particular benefit in the family law setting.
It then says that once parties agree to arbitration, the court’s role in determining substantive matters subject to arbitration ends. Its role is limited to confirming a final award, correcting obvious errors, and vacating awards as prescribed by N.J.S.A. 2A:23B-23.
The panel says that although parties contract to arbitrate, settlement negotiations are not foreclosed by the act. So long as the parties acknowledge that the agreement was reached voluntarily and is for them fair and equitable, it should be enforced.
The arbitrator did not participate in the settlement discussions regarding the February 2009 agreement; the jointly selected accountant had the lead role. The parties funneled information to him, he made recommendations, the parties’ attorneys and experts asked questions, and a decision to accept, modify or reject the recommendations was individually made. The panel finds the process did not violate the act and plaintiff’s challenges are insufficient to vacate the agreement. It holds that the record supports a finding that her decision was reasoned, voluntary and deliberate, making it a binding contract between the parties.
The panel says there is no reason to set aside the July agreement or the September and October amendments. Although they were the product of mediation, not arbitration, the parties’ decision to change course and use mediation will not invalidate these agreements.
Also, the July memorandum expressly states that it was being entered into freely and voluntarily after appropriate consultation and that it was a fair compromise of the parties’ interests. Plaintiff offers no evidence to repudiate these pronouncements.
Thus, the panel declines to vacate the 2009 agreements.
The panel then considers plaintiff’s argument that the arbitrator’s change of role to a facilitator of a mediated agreement obviated his ability to thereafter proceed as an arbitrator, an issue of first impression.
It notes that mediation encourages confidential disclosures to the mediator, whose training is designed to use these confidential positions to aid the parties to evaluate their positions, promote understanding of the other side’s position, and reach a consensus. An arbitrator’s role is evaluative, requiring the parties to present their evidence for a final determination. Arbitrators essentially weigh evidence, assess credibility, and apply the law when determining whether a party has proved his request for relief.
Based on the distinctly different proceedings of arbitration and mediation, the panel concludes the positions of arbitrator and mediator are in conflict. An arbitrator must maintain broad public confidence in the integrity and fairness of the arbitration process. If the same person acts as a mediator, obtains party confidences or offers opinions on the issues, a conflict arises were he switched roles to act as an arbitrator, making the final call.
The panel says that although parties may agree to allow one person to perform these roles regarding separate issues in the family law context, this should be the parties’ choice. Absent a specific written agreement clearly defining and accepting the complementary dispute resolution professional’s roles, dual roles are to be avoided.
Thus, the panel holds that any “arbitration awards” based on the arbitrator’s findings, entered after the 2009 mediated agreements, must be set aside.
As to plaintiff’s request for financial disclosure following the execution of the 2009 agreements, the panel holds that the documents governing arbitration gave plaintiff the absolute right to copy all relevant information and nothing reflects that she waived this right.
Finally, the panel observes that the parties’ contract concisely defined matters to be addressed in arbitration, yet the Family Part maintained involvement such as scheduling case management and entertaining a motion for a protective order, both of which fall directly within the arbitrator’s responsibilities. Moreover, the parties held a mistaken belief that court intervention was permitted to check the decisions of the arbitrator. The panel says this is untenable. The act’s provisions are unmistakable: once binding arbitration is chosen and the arbitrator named, the court is no longer involved in reviewing or determining the substantive issues.
The 2009 agreements are valid and enforceable. The trial court’s confirmation of the arbitration award and allocation of attorney fees and costs are vacated as they were rendered after what has been identified as the arbitrator’s unauthorized action. These and any unresolved financial matters, and consideration of release of financial documents, shall be addressed by the new arbitrator.
For appellant — Karin Duchin Haber (Haber Silver & Simpson; Jani Wase Vinick on the brief). For respondent — Nancy C. Richmond (Ceconi & Cheifetz; Cary Cheifetz of counsel).