Opinion
02-19-2016
G.D., Plaintiff, v. D.D., Defendant.
Howard P. Roy, Esq., Cohen Clair Lans Greifer & Thorpe LLP, New York, Attorney for Defendant. Brett Kimmel, Esq., Brett Kimmel, P.C., New York, Attorney for Plaintiff.
Howard P. Roy, Esq., Cohen Clair Lans Greifer & Thorpe LLP, New York, Attorney for Defendant.
Brett Kimmel, Esq., Brett Kimmel, P.C., New York, Attorney for Plaintiff.
LINDA CHRISTOPHER, J.
The following papers numbered 1–30 were considered in connection with defendant's motion brought by Order to Show Cause:
| PAPERS | NUMBERED |
|---|---|
| Order to Show Cause/Affidavit of Defendant/Exhibits/Memorandum of Law | 1–19 |
| Plaintiff's Affidavit in Opposition/Exhibits/Memorandum of Law | 20–28 |
| Defendant's Reply Affidavit/Memorandum of Law | 29–30 |
In this matrimonial action the defendant moves for an order for the following relief pursuant to CPLR § 7511:
1. Modifying point 1 of the Arbitration Award of David H. Pfeffer dated June 10, 2015 and delivered to the parties June 11, 2015 (which granted plaintiff the right to buy-out defendant's interest in the marital residence) and instead providing, in accordance with the parties' Prenuptial Agreement dated August 28, 2005, that the issue of which party may buy out the other's interest in the marital residence be determined by coin toss; and
2. Modifying point 3 of the Arbitration Award (which improperly reduced the amount owed to defendant by plaintiff $15,840 for a purported "delay" in changing ownership of the marital residence) and instead directing that defendant is due a credit from plaintiff in the amount of $35,409.17; and
3. Modifying point 4 of the Arbitration Award (which improperly awarded plaintiff the entirety of the parties' Merrill Lynch Stock Portfolio) and instead directing, in accordance with the express terms of the Prenuptial Agreement, that defendant be entitled to receive an award of one-half of said portfolio as of the date of division, plus any withdrawals made therefrom by plaintiff since the date of commencement of this action; and
4. Modifying point 7 of the Arbitration Award (which ordered the joint Citibank account to be divided equally with a $461.24 credit to defendant) and instead directing, in accordance with paragraph 4.3 of the Prenuptial Agreement, that each party be refunded the amounts contributed to the joint bank account in excess of $1,000, resulting in an award to defendant of $15,756; and
5. Modifying point 8 of the Arbitration Award (which improperly held that defendant was not entitled to a reimbursement out of marital property for the cost of liquidating personal assets to purchase the R. Boulevard apartment) and instead directing that defendant be entitled to an award of $31,227 out of marital property; and
6. Modifying point 12 of the Arbitration Award (concerning disposition of personal property) and instead directing that the parties' division of the personal property located at the marital residence as of the date of commencement be done pursuant to the provisions of paragraph 12 of the Prenuptial Agreement; or alternatively
7. Vacating points 1, 3, 4, 7, 8, and 12 of the Arbitration Award.
Procedural History
This action for divorce was commenced on—–––, 2013. The parties were married on –––, –––– 2006 and there are 2 children of the marriage, T. (DOB –––/––––/ 2008), 7 years old and E. (DOB –––/–––/2011), 4½ years old. Prior to the marriage, on –––, –––– 2005 the parties entered into a Prenuptial Agreement.Pursuant to paragraph 15.7 of the Prenuptial Agreement, "[a]ny disputes relating to the terms or enforcement of [the] Agreement shall be decided by binding arbitration through the American Arbitration Association." A Demand for Arbitration dated May 28, 2014 was made by defendant in connection with certain disputes with regard to enforcement of the terms of the parties' Prenuptial Agreement. The Hon. David H. Pfeffer, a retired judge according to plaintiff, was appointed the arbitrator. Subsequent to the receipt of the parties' Position Statements, Arbitrator Pfeffer determined that there were 10 issues for resolution, as set forth in Preliminary Hearing Order No. 2 dated January 22, 2015. Subsequent to a 2 day hearing conducted on March 11 and March 12, 2015, and upon the submission by the parties of extensive exhibits, Pre–Hearing Briefs, Post–Hearing Briefs and defendant's Post–Hearing Reply Brief, Arbitrator Pfeffer rendered a Final Arbitration Award dated June 10, 2015. Defendant's instant motion to modify or vacate certain rulings of the arbitrator ensued.
Law
Public policy in New York State favors arbitration as an efficient and expeditious method of resolving disputes. Smith Barney Shearson v. Sacharow, 91 N.Y.2d 39 (1997); Rio Algom Inc. v.. Sammi Steel Co., Ltd., 168 A.D.2d 250 (1st Dept.1990). Review of an arbitration award by the Court extremely limited, and the grounds for vacating or modifying an award are few, and narrowly applied. See, Pearlman v. Pearlman, 169 A.D.2d 825 (2d Dept.1991); CPLR § 7511.
Pursuant to CPLR § 7511(c) [t]he Court shall modify the award if:
1. there was a miscalculation of figures or a mistake in the description of any person, thing or property referred to in the award; or 2. the arbitrators have awarded upon a matter not submitted to them and the award may be corrected without affecting the merits of the decision upon the issues submitted; or 3. the award is imperfect in a matter of form, not affecting the merits of the controversy.
Pursuant to CPLR § 7511(b)(1)on application of a party who participated in the arbitration the award shall be vacated if the court finds that the rights of the party were prejudiced by:
(i) corruption, fraud or misconduct in procuring the award;
(ii) partiality of an arbitrator appointed as a neutral, except where the award was by confession; or
(iii) an arbitrator ... exceeded his power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made; or
(iv) failure to follow the procedure of [Article 75], unless the party applying to vacate the award continued with the arbitration with notice of the defect and without objection.
While defendant asserts that he is seeking to modify six provisions of the Award, he has not made allegations, nor arguments in connection with the grounds for modification in accordance with CPLR § 7511(c). Therefore, defendant's request to modify points 1, 3, 4, 7, 8, and 12 of the Arbitration Award is denied. With regard to defendant's request in the alternative, to vacate those provisions of the Award, the only ground asserted is that the arbitrator exceeded his power pursuant to CPLR § 7511(b)(1)(iii). However,
[A]bsent provision in the arbitration clause itself, an arbitrator is not bound by principles of substantive law or by rules of evidence (citation omitted). He may do justice as he sees it, applying his own sense of law and equity to the facts as he finds them to be and making an award reflecting the spirit rather than the letter of the agreement, even though the award exceeds the remedy requested by the parties (citations omitted). His award will not be vacated even though the court concludes that his interpretation of the agreement misconstrues or disregards its plain meaning or misapplies substantive rules of law, unless it is violative of a strong public policy, or is totally irrational, or exceeds a specifically enumerated limitation on his power (citations omitted).
Silverman v. Benmor Coats, Inc., 61 N.Y.2d 299, 308 (1984). Errors of law or fact or misapplication of the substantive law are not generally a basis to set aside the arbitrator's award. Falzone v. New York Central Mutual Fire Insurance Company, 15 NY3d 530 (2010).
It is well settled that there are only three grounds for challenging an arbitration award on the basis that the arbitrator exceeded his power. New York City Transit Authority v. Transport Workers' Union of America, 6 NY3d 332, 336 (2005). These grounds are, "where the arbitrator's award violates a strong public policy, is irrational or clearly exceeds a specifically enumerated limitation on the arbitrator's power (citations omitted)." Id.
With regard to an objection that the arbitrator exceeded a specifically enumerated limitation on his power, the Court of Appeals has held that
any limitation upon the power of the arbitrator must be set forth as part of the arbitration clause itself, for to infer a limitation from the substantive provisions of an agreement containing an arbitration clause calling for arbitration of all disputes arising out of the contract, or for arbitration in some other broadly worded formulation, is to involve the courts in the merits of the dispute-interpretation of the contract's provisions-in violation of the legislative mandate (citations omitted).
Silverman, 61 N.Y.2d at 307–308. As to the ground of irrationality, an award will not be vacated based on an objection that it is irrational unless there is "no proof whatever to justify the award." Brisman v. Hebrew Academy of Five Towns & Rockaway, 70 AD3d 935, 936 (2nd Dept.2010). Lastly, an arbitration award will be vacated for violating public policy only where such "policy considerations, embodied in statute or decisional law, prohibit, in an absolute sense, particular matters being decided or certain relief being granted by an arbitrator." Sprinzen v. Nomberg, 46 N.Y.2d 623, 631 (1979).
It is with these principles of law in mind that the Court will consider defendant's request to vacate certain provisions of the Arbitration Award at issue.
Point 1 Former Marital Residence
Pursuant to paragraph 12.1 of the Prenuptial Agreement, the parties agreed to a provision concerning a buy-out of any marital real estate as follows: "If either party wishes to retain a piece of marital real estate that party shall buy the other party's fifty percent share of the property from him/her ... If both parties wish to buy a piece of marital property then the purchaser shall be determined by a coin toss by a third party."
The Arbitrator found that "[b]ased on the evidence of record, it is clear that Respondent G.D. offered to keep the residence and make the appropriate payment to Claimant D.D. The offer was duly accepted by Claimant....Respondent shall retain the Westchester County, N.Y. residence by buying out Claimant's share of the property." Exhibit A annexed to defendant's Order to Show Cause, Final Arbitration Award, p. 2.
Defendant argues that there was no evidence upon which such a finding can be justified. He asserts that there is no written agreement, and the evidence presented cannot be construed to create a binding oral agreement. Moreover, defendant claims that apart from the fact that there is not even a verbal agreement, even if there were, a written contract is required not only by the Statute of Frauds and DRL § 236B(3), but by paragraph 16 of the Prenuptial Agreement that states "no contractual obligation shall be created or binding upon either of the parties with respect to the other unless made in writing and signed by the parties hereto." Defendant contends that this part of the award cannot stand as the arbitrator exceeded his powers when he ignored the language set forth in paragraph 16. Defendant asserts that the award of the residence to plaintiff is irrational, as there is "no proof whatever to justify" same.
Plaintiff asserts that a written contract is not required, and the Prenuptial Agreement does not contemplate the creation of a real estate purchase agreement between the parties. Plaintiff notes that the language in the Prenuptial Agreement simply provides that if one party "wishes" to purchase the other's interest in the residence, they shall be permitted to do so. Plaintiff argues that as evidenced by the testimony and exhibits provided to the arbitrator, defendant gave plaintiff the option to purchase his interest in the marital residence, the option was in effect on June 10, 2014 when plaintiff articulated her election to purchase the house at the agreed upon price, plaintiff began to secure financing, defendant moved out, the bills were transferred into plaintiff's name and steps were taken by counsel to transfer the marital residence from the parties to plaintiff. She asserts that it was many weeks later that defendant changed his mind.
The Court does not find defendant's argument to be persuasive and does not find the arbitrator exceeded his power. Plaintiff demonstrated to the arbitrator's satisfaction that she "wish[ed] to retain a piece of real estate", that being the marital residence, and that defendant consented, each party having taken steps toward effectuating this agreement. It is the role of the arbitrator to interpret and apply the terms of the Agreement; the Court cannot substitute its judgment for that of the arbitrator. There was no limitation of the arbitrator's power in the broad arbitration clause of the parties' Prenuptial Agreement which reads as follows: "[a]ny disputes relating to the terms or enforcement of [the] Agreement shall be decided by binding arbitration through the American Arbitration Association." Moreover, the Court cannot say the award of the residence to plaintiff was irrational. The arbitrator made his decision based on a complete record of testimony and exhibits, including deposition transcripts and emails, that contained proof enough to justify same. See, Brisman, 70 AD3d at 936.
Point 3 Reduction of Award to Defendant for Carrying Costs
Pursuant to paragraph 12.1 of the Prenuptial Agreement "[d]uring the time period before the property is sold the party who occupies the property shall pay all carrying costs of the property."
The arbitrator found that for the time period that the parties shared the marital residence from October 10, 2013 through June 26, 2014, based on the amount of time he determined each of them had exclusive occupancy of the premises, defendant was due a credit from plaintiff in the sum of $35,409.17. The arbitrator also found that plaintiff was responsible for all of the carrying costs incurred after June 26, 2014 as subsequent to that date, defendant no longer occupied the marital residence. The arbitrator then reduced the award of $35,409.17 to defendant by $15,840 to a net sum of $19,569.17 for the extra expense defendant caused plaintiff to incur by delaying the transfer of marital residence to her.
The arbitrator found
[t]he evidence establishes that D.'s delay in effectuating the change in ownership of the Westchester County property caused substantial loss to G. The record shows that G. had the opportunity to reduce her mortgage expenses by $1584 per month commencing August 1, 2014 through a signed and agreed upon mortgage to be held by G.'s now deceased mother. Through the end of May 2015, D.'s failure to promptly proceed with transferring his interest in the property will have cost G. the sum of $15,840. The Prenup does not expressly provide the Arbitrator with the right to separately assess Claimant for the extra expense he caused Respondent by delaying the transfer to her of the Westchester County residence. However, it would be inequitable to require Respondent to pay Claimant an amount that was increased due to Claimant's conduct and his failure to mitigate damages. In the opinion of the Arbitrator, the Prenup does not contemplate permitting one party by his conduct to unduly increase expenses paid by the other party.
Exhibit A annexed to defendant's Order to Show Cause, Final Arbitration Award, p. 5.
Defendant argues that the arbitrator exceeded his authority by finding that the credit due defendant for payment of carrying charges on the marital residence should be reduced due to defendant delaying the change in ownership of the marital residence to plaintiff. Defendant claims that pursuant to the Arbitration Clause in the Prenuptial Agreement, the arbitrator was charged only with resolving disputes "relating to the terms or enforcement" of the Prenuptial Agreement, and the Prenuptial Agreement does not provide for consequential damages. Defendant asserts that, as set forth in the Award, the arbitrator acknowledged he exceeded his authority by writing in his own consequential damages clause to the Prenuptial Agreement. Defendant further claims that no penalty can be imposed upon defendant for delaying to transfer his interest in the marital residence to plaintiff when, in fact, there was no enforceable agreement for plaintiff to buy out defendant's interest in the marital residence.
Plaintiff asserts that an arbitrator has broad power to fashion an appropriate remedy after he concludes that a provision of a contract has been violated.
The Court does not find that the arbitrator exceeded his power and defendant's request to vacate point 3 of the Arbitration Award which reduced the amount owed to defendant by the sum of $15,840 for delay in changing ownership of the marital residence is denied. At the outset, the defendant's argument that no penalty can be imposed upon him for delaying to transfer his interest in the marital residence to plaintiff when, in fact, there was no enforceable agreement for plaintiff to buy out defendant's interest in the marital residence fails, based on this Court's finding that the Arbitrator's determination stands that defendant had accepted plaintiff's offer to keep the residence, and that plaintiff shall buy out defendant's share of the property. "Any limitation upon the remedial power of the arbitrator must be clearly contained, either explicitly or incorporated by reference, in the arbitration clause itself (citation omitted)." Board of Education of the Dover Union Free School District v. Dover–Wingdale Teachers' Association,61 N.Y.2d 913, 915 (1984). Here, the broad and general arbitration clause in the Prenuptial Agreement which states that "[a]ny disputes relating to the terms or enforcement of [the] Agreement shall be decided by binding arbitration through the American Arbitration Association," contains no such limitation. A broad arbitration clause such as the one in this case, leaves it to the discretion of the arbitrator "to decide what the agreement means and to enforce it according to the rules of law which they deem appropriate in the circumstances." Exercycle Corporation v. Maratta, 9 N.Y.2d 329, 334 (1961). Here, as set forth in the Preliminary Hearing Order No. 2, the arbitrator was charged with determining the parties' claims for reimbursement for carrying costs paid on the marital residence. As part of his determination and interpretation of the Prenuptial Agreement, the arbitrator concluded that "D.'s delay in effectuating the change in ownership of the [marital residence] caused substantial loss to G." and that "the Prenup does not contemplate permitting one party by his conduct to unduly increase expenses paid by the other party." The arbitrator then fashioned a remedy as he saw fit.The arbitrator was free to apply his own sense of law and equity to the facts as he found them to be. See, Shnitkin v. Healthplex IPA, Inc., 71 AD3d 979 (2nd Dept.2010).
Point 4 The Merrill Lynch Account
Pursuant to paragraph 4.1 and 4.2 of the Prenuptial Agreement the parties' separate property (Enumerated Property) is defined as the property set forth on their respective Schedules annexed to the Prenuptial Agreement. The Merrill Lynch brokerage account is one of the assets listed as plaintiff's Enumerated Property.
The arbitrator found that defendant was not entitled to any portion of the Merrill Lynch account. With regard to defendant's position that he was entitled to a share of this account the Arbitrator wrote
Notwithstanding its initial status as G.'s enumerated property, D. claims a share of the entire account based on the fact that his name was added to the account in 2007 at his request because he was paying taxes from the parties' joint account on distributions from the Merrill Lynch account and his insistence that his name had to be added because it was purportedly required by the Prenup. At best that information was misleading from her lawyer husband that G. relied on to her detriment. The fact that taxes were paid with marital funds on dividends and the like stemming from the Merrill Lynch account is precisely as required by Prenup Paragraph 4.2 and was no basis for the misleading and self-serving advice that led to D.'s name being added to the account.
Exhibit A annexed to defendant's Order to Show Cause, Final Arbitration Award, p. 6.
Defendant argues that the fact that plaintiff claimed, and the arbitrator found that she had been "misled" by defendant to place the Merrill Lynch account into joint names cannot stand, as plaintiff did not provide proper notice of this claim. He asserts that she made no counterclaim, made no such claim in her deposition, nor did she make such a claim in her pre-hearing submissions. Plaintiff asserts that she is not required to interpose a counterclaim or "blurt out" defenses at her deposition. Moreover, she asserts that she did address defendant's misrepresentations in her pre-hearing brief.
The Court finds that defendant provided sufficient notice of her claim with regard to the Merrill Lynch account. Plaintiff consistently maintained the position that the Merrill Lynch account was her separate property. In her Pre–Hearing Brief she claimed she added defendant's name to her account because he requested that she do so and she understood that she was required to do so under the Prenuptial Agreement.
Defendant also argues that the Prenuptial Agreement mandates that when plaintiff placed the Merrill Lynch account into joint names, she effectively made a gift of one half of the account to defendant. In support of his position he cites to paragraph 4.4 of the Prenuptial Agreement that states "[a]ny gift or other gratuitous transfer by either party to the other shall be treated and deemed the Enumerated Property of the donee, as shall any property into which same is converted ..." Defendant also argues that where assets in an investment account are held in joint names, "there [is] a rebuttable presumption during their joint lives that a gift of onehalf the deposit was made to the other (citation omitted)." Silbert v. Silbert, 22 A.D.2d 893, 894 (2nd Dept.1964).
Plaintiff contends that pursuant to paragraph 7.1 of the Prenuptial Agreement, "[e]xcept as provided in [the] Antenuptial Agreement, D. and G. hereby UNCONDITIONALLY RELEASE, SURRENDER AND WAIVE any and all claims which each may acquire by reason of marriage to the other, to or upon all of the other's Enumerated Property ...". She asserts that at the hearing it was determined that plaintiff added the defendant's name to her Merrill Lynch brokerage account in 2006 because he demanded that she do so and because she understood she was required to do so under Paragraph 4.3 of the Prenuptial Agreement that sets forth that
Marital Property shall further include all cash up to a total of $1000 in bank accounts in either party's name on the date of the parties' wedding. After the date of the parties' wedding, all cash shall be transferred into a joint bank account in both parties' names the Marital Bank Account' (any amount in excess of $1000 that either party contributes to the joint bank account will be refunded to that party in the event of a divorce).
The fact that defendant disagrees with the arbitrator's analysis of the testimony and exhibits considered by him is not a basis to vacate the award of the Merrill Lynch account to plaintiff; there is no basis for the Court to substitute its judgment for that of the arbitrator. Even if the arbitrator made an error of law or fact or misapplied the substantive law, that is not a a basis to set aside the arbitrator's award. See, Falzone, 15 NY3d 530. Moreover, the Court cannot say the award of the Merrill Lynch account to plaintiff was irrational. The arbitrator made his decision based upon a complete record of testimony and exhibits that contained proof enough to justify same. See, Brisman, 70 AD3d at 936.
Point 7 Disposition of the Joint Citibank Account
Pursuant to paragraph 4.3 of the Prenuptial Agreement
[m]arital property shall mean any property whether real or personal acquired during the marriage by either party or by the parties jointly, which is not Enumerated Property ... Marital property shall further include all cash up to a total of $1000 in bank accounts in either party's name on the date of the parties' wedding. After the date of the parties' wedding, all cash shall be transferred into a joint bank account in both parties' names the "Marital Bank Account" (any amount in excess of $1000 that either party contributes to the joint bank account will be refunded to that party in the event of a divorce).
Pursuant to paragraph 12.2 of the Prenuptial Agreement "any assets defined as marital under the provisions of paragraph 4.3 ... held in any accounts in either or both parties names, will be divided equally."
With regard to the Citibank account the arbitrator directed that the proceeds of the joint Citibank accounts were to be divided equally after deducting and providing to defendant $461.24, the net credit due to him under this provision of the Award. The arbitrator noted that "[a]s of April 9, 2014, seemingly the last information provided to [him], the total in the joint Citibank accounts aggregated to $10,419.47." In making the award the arbitrator considered the parties' withdrawals from the Citibank account subsequent to the commencement of the action, as well $3500 defendant had removed from the home safe and coins defendant had removed from the marital residence.
According to defendant the current amount in the joint Citibank account does not control the distribution. He asserts that the arbitrator's findings with regard to each party's spending from the joint account have nothing to do with the credit that defendant is entitled to receive for his contribution to the joint account.
Defendant argues that the arbitrator improperly rewrote the Prenuptial Agreement in that he ignored paragraph 4.3 and disposed of the Citibank account in his own manner. Defendant asserts that the arbitrator failed to award defendant the appropriate credit due to him under paragraph 4.3 of the Prenuptial Agreement. He contends that pursuant to this paragraph he contributed $38,017.45 and plaintiff contributed $22,260.53 in cash that was in each of their names prior to the marriage (and listed on Schedule A of the Prenuptial Agreement) to the joint Citibank account, and that each party is entitled to reimbursement of the funds contributed by therm. Therefore, it is defendant's position that he is entitled to an award of $15,756, the difference between the amount of cash he contributed to the joint Citibank account and the amount plaintiff contributed in excess of $1000.
Plaintiff asserts that on the date of commencement of the matrimonial action there was $76,661 in the parties' Citibank accounts [Exhibit J (Transcript of Proceedings at p. 334) annexed to defendant's Order to Show Cause]. She further claims that defendant spent down marital assets to pay his own personal expenses and routine expenses for which he was historically responsible. Plaintiff claims that in making his Award, the arbitrator calculated the parties' respective post-commencement transactions and relative responsibility (as determined by the arbitrator) for the carrying costs of the marital residence, along with the fact that defendant admitted to removing cash from the home safe.
In his Reply defendant asserts that plaintiff does not deny that each party contributed the cash that was in his/her name prior to the marriage to the joint Citibank account, and is entitled to reimbursement of those funds, but rather she attempts to cloud the issue with "rhetoric" concerning the spending from the joint account during the pendency of the litigation. The Court notes that in plaintiff's PostHearing Brief on the issue of separate property claims, referring to pages 330–336 of the Transcript of the hearing, plaintiff asserts that "[t]he parties created their joint checking account at Citibank. Pursuant to the [Prenuptial Agreement], it is from this account that the Wife is entitled to receive her refund of $21,260 and the Husband is entitled to receive his refund of $37,017 ." Exhibit G annexed to plaintiff's Affidavit in Opposition, Respondent's Post–Hearing Brief, p. 16.
The Court finds that paragraphs (a), (b) and (c) of Point 7 of the Arbitration Award, entitled Disposition of the Joint Citibank Accounts and the Cash Removed by Claimant from the Westchester County Residence must be vacated. Pursuant to the Preliminary Hearing Order No. 2 the amount of the parties' separate property, as well the disposition of the Citibank account were issues to be determined by the arbitrator. In making his determination that the Citibank accounts should be divided equally after deducting and providing defendant a net credit of $461.24, the arbitrator considered the parties' withdrawals from the Citibank account subsequent to the commencement of the action, as well $3500 defendant had removed from the home safe and coins defendant had removed from the marital residence. However, it is not clear that in making his determination, that the arbitrator also considered the separate property issue regarding the pre-marriage funds that had been contributed to the Citibank account by the parties ($38,017.45 from defendant and $22,260.53 from plaintiff).
The Court recognizes that it cannot substitute its judgment for that of the arbitrator. However, the arbitrator exceeded his power to the extent that the decision is irrational in that there is no proof whatever that the arbitrator considered the parties' separate property contributions in making his determination. CPLR § 7511(b)(1)(iii); see, Matter of Heifitz; 227 A.D.2d 623 (2nd Dept .1996).
Paragraphs (a), (b) and (c) of Point 7 of the Arbitration Award, entitled Disposition of the Joint Citibank Accounts and the Cash Removed by Claimant from the Westchester County Residence, are vacated. The issue of the disposition of the Citibank account is remanded to the arbitrator for clarification with regard to whether he considered the parties' separate property contributions in making his determination.
Point 8 Assets Liquidated to Purchase the R. Boulevard Apartment
Pursuant to paragraph 12.5 of the Prenuptial Agreement "[b]efore any marital property is distributed to the parties each party will be reimbursed out the marital property for the costs incurred in liquidating his/her personal assets in order to make his/her contribution to the purchase of apartment ––– at ––––R. Blvd."
With regard to this provision the arbitrator found that defendant's reimbursement would be $61,774 and plaintiff's reimbursement would be $30,547. However, he then determined that no reimbursements can or would be ordered in connection with this paragraph. The arbitrator wrote
[a]s I interpret it, Prenup Paragraph 12.5 is not a provision under which one party must pay the other the difference in reimbursement amounts. Both parties are to receive their respective reimbursements out of the marital assets. However, given the facts at hand, including the unilateral withdrawals by each of the parties from the marital bank accounts as discussed above, the specific disposition provided for in Prenup Paragraphs 12.1 and the disposition agreed to by the parties in connection with Paragraph 12 .3 (alternate selections), there are essentially no joint liquid assets remaining to accommodate Paragraph 12.5 reimbursements.
Exhibit A annexed to defendant's Order to Show Cause, Final Arbitration Award, p. 10.
Defendant asserts that the arbitrator rewrote the parties' agreement concerning reimbursements in connection with the R. Boulevard apartment. He contends that notwithstanding that plaintiff acknowledged in her post-hearing brief that her reimbursement claim is limited to $30,547, resulting in a net credit to defendant in the amount of $31,197, the arbitrator wrongfully awarded zero dollars to him, based on his finding that there are "essentially no joint liquid assets remaining to accommodate" reimbursements in connection with paragraph 12.5 of the Prenuptial Agreement. Defendant asserts that the plain language of paragraph 12 .5 makes no mention of "liquid" marital property, just that each party will be reimbursed out of marital property, which encompasses all marital property, including the marital residence. Therefore, defendant submits that if plaintiff ultimately buys out his interest in the marital residence, he can receive his credit by an addition to the payment to be made by plaintiff to him. It is defendant's position that in this instance the arbitrator clearly exceeded his powers.
Plaintiff asserts that defendant's demand that the Court interpret the Prenuptial Agreement differently than the arbitrator did, is requesting the Court to do something that is outside its scope of authority under CPLR § 7511.
In reply, defendant argues that he is not asking the Court to interpret the Prenuptial Agreement differently than the Arbitrator, but rather he is requesting that the Court compare the contractual language to what the Arbitrator wrote, and recognize the irrationality of this aspect of the Award.
The Court disagrees with defendant. As previously set forth, this Court cannot substitute its judgment for that of the arbitrator. An arbitration award will not be vacated even if the Court concludes "that [the Arbitrator's] interpretation of the agreement misconstrues or disregards its plain meaning or misapplies substantive rules of law, unless it is violative of a strong public policy, or is totally irrational, or exceeds a specifically enumerated limitation on his power (citations omitted).". Silverman, 61 N.Y.2d at 308. In this case, even if the Court were to conclude that the Arbitrator disregarded the plain meaning of the agreement, the Award was not totally irrational. The Arbitrator specifically set forth his reasoning in that he had given consideration to the unilateral withdrawals by each of the parties from the marital bank accounts, the specific disposition provided for in Prenup Paragraph 12.1 and the disposition agreed to by the parties in connection with Paragraph 12.3 (alternate selections). The arbitrator made his decision based on a complete record of testimony and exhibits, that contained proof enough to justify his award. See, Brisman, 70 AD3d at 936.
Point 12 Personal Property
Pursuant to paragraph 12.3 of the Prenuptial Agreement
the parties shall list all personal property acquired during the marriage which they consider to be of value (i.e.artwork, electronics, antiques) and shall assign a value to each item. This property shall then be divided by the parties alternating picking one item at a time (the party who picks first shall be determined by a coin toss as set out above) until all items are assigned. The values of the items picked by each party shall than [sic] be tallied and any disparity in values shall be equalized by a cash payment from the party who received the items of greater value.
The Arbitrator found that
[t]he parties have agreed to a method of disposition of the contents of the Westchester County residence, i.e., alternate selection without regard to valuation of the items selected. At my request, Claimant has provided a letter dated March 26, 2015 purporting to list all of the items of marital property that he has unilaterally removed from the Westchester County residence subsequent to institution of the divorce action. In the absence of objection from Respondent, I accept Claimant's list as essentially accurate. Claimant's list includes numerous items, some of minimal value, and some of significant value. I have divided those items into 12 separate "selections." In so dividing, I did not include suitcases (as personal items) or the computer and Ipad (because of Respondent's laptop and Ipad which now become exempt from selection). Rather than ordering Claimant to return what he has already taken in violation of both the Prenup procedure and the agreed procedure, it appears more equitable under the spirit of the Prenup to simply give Respondent several extra selections to compensate for the "12 selections" already made by Claimant. Consequently, Respondent shall be entitled to proceed initially with two separate selections, after which Claimant shall have one selection. The two and one selection procedure will be followed until Respondent has made a total of six selections, i.e. three rounds of two selections. Thereafter the parties will alternate their selections one by one.
Exhibit A annexed to defendant's Order to Show Cause, Final Arbitration Award, pp. 11–12.Defendant argues that the arbitrator basically ignored that the parties were in agreement on how the issue of personal property was to be dealt with, that is, "alternate selection without regard to valuation of the items selected." He claims the arbitrator's award in this instance was irrational and in excess of his authority. Defendant asserts that the purported "violations" referred to by the arbitrator were defendant's removal of basic household items from the marital residence upon the parties' separation, which were set forth on a list that was not objected to by plaintiff. Furthermore, defendant claims no provision of the Prenuptial Agreement was violated. He contends that the Prenuptial Agreement provides a mechanism for division, but makes no reference to interim possession or where each piece of property is to be held prior to division. It is defendant's position that the items on his list remain available for distribution, and that the personal property must be divided by alternate selection following an initial coin toss.
In opposition plaintiff asserts that the fact that defendant unilaterally and improperly removed property from the marital residence is a fact requiring redress. Plaintiff also points out that the list provided by defendant to the arbitrator was forwarded approximately 2 weeks after the conclusion of testimony. Plaintiff submits that defendant is asking the Court to take him at his word that he fully accounted for the property he removed or that it is presently in good condition and available for distribution. It plaintiff's position that the arbitrator reviewed the evidence and fashioned an appropriate remedy.
The Court finds that the arbitrator was acting within the scope of his authority in fashioning a remedy under the circumstances as he found them with regard to the issue of personal property, ie., that prior to the selection process, defendant had removed some items of personal property. As set forth in Silverman, 61 N.Y.2d at 308,
[the Arbitrator] may do justice as he sees it, applying his own sense of law and equity to the facts as he finds them to be and making an award reflecting the spirit rather than the letter of the agreement, even though the award exceeds the remedy requested by the parties (citations omitted). His award will not be vacated even though the court concludes that his interpretation of the agreement misconstrues or disregards its plain meaning or misapplies substantive rules of law, unless it is violative of a strong public policy, or is totally irrational, or exceeds a specifically enumerated limitation on his power (citations omitted).
The Court does not find this provision of the Award to be irrational, as there is ample proof to justify the award. See, Brisman, 70 AD3d 935.
Conclusion
Based on the foregoing, except to the extent that defendant's request to vacate point 7 of the Arbitration was granted herein, defendant's motion is denied.
To the extent any relief requested in Motion Sequence number 7 was not addressed by the Court it is hereby denied.
This decision shall constitute the order of the Court.