Opinion
DOCKET NO. A-1043-11T2
11-21-2013
N.L., Plaintiff-Appellant, v. V.M., Defendant-Respondent.
Herbert & Weiss, attorneys for appellant (Jacob V. Hudnut, of counsel; Helen C. Herbert and Helayne M. Weiss, on the brief). DeFuccio Clancy & Esposito, LLC, attorneys for respondent (Sharon Clancy, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Sabatino and Hayden.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Bergen County, Docket No. FM-02-826-11.
Herbert & Weiss, attorneys for appellant (Jacob V. Hudnut, of counsel; Helen C. Herbert and Helayne M. Weiss, on the brief).
DeFuccio Clancy & Esposito, LLC, attorneys for respondent (Sharon Clancy, on the brief). PER CURIAM
In this highly contentious divorce case, plaintiff N.L. ("the wife") appeals the Family Part's denial of her motion to set aside a consensually-appointed arbitrator's decisions concerning alimony, equitable distribution, and other contested issues. Among other things, the wife argued that the arbitrator's decisions were tainted by alleged acts of misconduct and "evident partiality" in favor of defendant V.M. ("the husband"), and consequently should be vacated pursuant to N.J.S.A. 2A:23B-23(a)(2). The motion judge rejected the wife's claims of arbitrator bias and misconduct, and accordingly incorporated the arbitrator's decisions into the terms of a final judgment of divorce ("FJOD").
For the reasons that follow, we reverse the trial court's denial of the wife's motion. Guided by this court's recent opinion in Minkowitz v. Israeli, _ N.J. Super. _ (App. Div. 2013) (delineating the proper role of an arbitrator in divorce litigation), we vacate the arbitration awards and the portions of the final judgment incorporating their terms. We do so because the record shows that the arbitrator unfortunately strayed from his neutral fact-finding role in two significant instances. In one instance, the arbitrator suggested to the wife that she consider voluntarily dismissing her pending municipal complaints alleging criminal conduct by the husband. In the other instance, the arbitrator placed an ex parte telephone call to the wife, urging her to allow the children to be with their father on Father's Day in accordance with the terms of a pendente lite parenting agreement.
In each of the two cited instances, the arbitrator essentially attempted to act as a mediator by prompting the wife to take, or at least to consider taking, certain actions respecting her husband and their children. The parties had not, however, entered into a written agreement authorizing the arbitrator to perform the additional functions of a mediator. As Minkowitz instructs, in the absence of such express written authorization, an arbitrator should not step out of his or her fact-finding arbitral role, even if an arbitrator's reasons for doing so are well-intentioned. Consequently, the arbitrator "exceeded [his] powers," thereby providing a sufficient basis to vacate his awards under N.J.S.A. 2A:23B-23(a)(4).
Although we reject all of the wife's other claims of arbitrator error, the incidents provide sufficient grounds to set aside the arbitration awards under N.J.S.A. 2A:23B-23(a)(4) and the principles of Minkowitz. Consequently, the matter must be remanded to the Family Part for a trial on the merits or, alternatively, for a new arbitration before a substitute arbitrator who may be mutually agreed upon by the parties.
I.
Because we are remanding this matter for a trial or a new arbitration, we need not recite the facts comprehensively or conclusively. The following relevant background can be gleaned from the present record.
The parties were married in 1991. Prior to the marriage, both parties had attended university and received advanced degrees in Ukraine. In 1992, the parties emigrated from Ukraine to the United States, along with the wife's parents and daughter from a previous marriage. The parties purchased a home in Demarest in October 2000. The wife gave birth to twin sons in July 2002.
The record is contradictory as to whether the marriage took place in a civil ceremony in Brooklyn, New York, or in Ukraine before the couple immigrated to the United States.
The wife filed an initial complaint for divorce in September 2007 in the Family Part. While the divorce litigation was pending, the wife filed criminal complaints against the husband in May 2008, alleging disorderly conduct, N.J.S.A. 2C:33-2(a)(2), and false imprisonment, N.J.S.A. 2C:13-3. A temporary restraining order ("TRO") was also issued against the husband pursuant to a domestic violence civil complaint based on the same set of facts. The TRO was subsequently dismissed by the trial court after a hearing on May 13, 2008. As noted, infra, the criminal complaints were eventually dismissed by the wife on October 7, 2009.
In January 2009, the parties entered into a stipulation of dismissal without prejudice as to the wife's initial divorce complaint. In that stipulation, the parties agreed "[t]o have all issues relating to custody, parenting time, support and equitable distribution sent to Arbitration[.]" Further, the September 6, 2007 filing date of the initial divorce complaint was preserved.
A private attorney was appointed as the first arbitrator. However, the wife subsequently filed an order to show cause in May 2009 to remove the first arbitrator, on the grounds that the arbitrator had attended a baseball game with the husband's attorney. The first arbitrator then withdrew.
Thereafter, the trial court appointed a different individual ("the arbitrator") to replace the first arbitrator. The parties entered into a written "Agreement to Provide Arbitration Services" with the arbitrator, dated September 21, 2009. Among other things, the agreement provided that the arbitration was to "proceed in accordance with N.J.S.A. 2A:23B-1 et. seq."
At our request, a copy of the agreement, which is referred to in the appellate submissions and in the arbitration transcript, was furnished to this panel.
The parties and their counsel appeared before the arbitrator thirteen times between September 2009 and March 2010. During the course of those transcribed proceedings, the arbitrator took testimony from the parties and numerous lay and expert witnesses. Although one witness required the assistance of an interpreter, the parties testified in English.
At the time of the arbitration proceedings, the wife was working as a non-salaried employee at a private elementary school in exchange for free tuition for the twins. The cost of the tuition would otherwise have been approximately $24,000 per year. She had previously earned $60,000 per year as a senior software developer analyst before being laid off in 2000. She did not seek new full-time employment in the computer programming field, but did work part-time for a holistic healing center in 2006 and 2007.
Meanwhile, the husband was employed at J.P. Morgan Chase, where he worked for the investment bank technology division. He received a base salary of $175,000 per year along with substantial bonuses in the form of cash and restricted stock units ("RSUs"). A forensic accountant jointly retained by the parties for the arbitration found that the husband's average annual pre-tax income for the years 2004, 2005, 2006, and 2008 was $366,000, although the wife contended that the annual income figure actually exceeded $500,000.
The awarded RSUs were assigned vesting dates, and could not be cashed out or sold before that time. Further, their vesting was conditioned upon the husband's continued employment with J.P. Morgan Chase on each of the assigned dates.
By letter dated June 2, 2010, the arbitrator ruled on several of the main issues involved in the arbitration. In particular, the arbitrator found that the proceeds from the sale of the marital home should be divided equally, and left to the parties the task of settling the distribution of its contents.
As to the RSUs, the arbitrator found that the units that were awarded to compensate the husband for the job he had held prior to the filing of the wife's initial divorce complaint in 2007 were subject to equitable distribution. The arbitrator further ruled that the wife was entitled to receive twenty-five percent of their gross value. However, he found that any RSUs awarded to the husband, post-complaint, were not subject to equitable distribution.
With respect to the hotly-contested and key issue of alimony, the wife had sought permanent alimony of $108,333 per year, along with an unspecified amount of rehabilitative alimony. Meanwhile, the husband contended that his alimony payments should be capped at no more than $80,000 per year, depending upon his yearly cash bonus, for a finite term of six years. After finding that the salary figures provided by the wife had not been supported by the proofs and, further, that the couple had lived beyond their available income, the arbitrator awarded the wife $60,000 in permanent alimony per year, predicated upon the husband's base salary of $175,000. In addition, the arbitrator awarded the wife rehabilitative alimony in an amount not to exceed $15,000 for one year, to be paid by the husband directly to a training program of the wife's choice. Finally, the arbitrator awarded the wife twenty-five percent of any cash bonus that the husband might receive, up to a cap of $30,000.
The issues respecting custody and parenting time were resolved through a Modified Parenting Plan, which the parties agreed to on March 12, 2010. The wife was apparently designated under that plan as the parent of primary residence, with the father having parenting time. Therapeutic counseling was also ordered.
In October 2010, the wife filed a new divorce complaint in the Family Part, citing irreconcilable differences, along with an order to show cause. In her supporting certification, the wife requested that the June 2010 arbitration decision be vacated, based upon various allegations that the arbitrator had engaged in misconduct and was biased against her. Further, the wife requested that the divorce action be re-listed under its new docket number for an immediate trial. In a written decision on January 3, 2011, the Family Part judge denied the wife's application to vacate the arbitration award.
On January 25, 2011, the arbitrator issued, by letter, another arbitration award, addressing the remaining contested issues in the matrimonial action. The arbitrator made rulings concerning the net proceeds from the sale of the marital residence, arbitration fees, transcript fees, appraisal fees, and other items. The arbitrator directed that the parties bear their own counsel fees. Lastly, the arbitrator issued a determination on the parenting time matters dated July 19, 2011.
The trial court confirmed the arbitration awards on October 13, 2011. Over the wife's continuing objection, the Family Part judge entered an FJOD on November 1, 2011. The FJOD incorporated the terms of the arbitration awards.
The wife now appeals from the Family Part's denial of her application to set aside the arbitration awards, and from the corresponding provisions within the FJOD. The husband has not cross-appealed.
The appeal was briefly stayed as a result of a bankruptcy petition filed by the wife.
II.
A.
Except as set forth in a written arbitration agreement entered into by the parties, the terms of the Uniform Arbitration Act, N.J.S.A. 2A:23B-1 to -32, control the conduct of civil arbitrations in this state. See Fawzy v. Fawzy, 199 N.J. 456, 469 (2009) (noting that the statute "sets forth the details of the arbitration procedure that will apply unless varied or waived by contract.") (emphasis added) (citing N.J.S.A. 2A:23B-4); see also Minkowitz, supra, slip op. at 22-23.
"It is well-settled that New Jersey's strong public policy favors settlement of disputes through arbitration." Minkowitz, supra, slip op. at 20 (citing Hojnowski v. Vans Skate Park, 187 N.J. 323, 343 (2006)). Our Supreme Court has specifically endorsed the voluntary use of arbitration in the disposition of family-related matters. See Fawzy, supra, 199 N.J. at 471 (noting that arbitration is an acceptable means of resolving claims pertaining to alimony, child support, and child custody).
"'The object of arbitration is the final disposition, in a speedy, inexpensive, expeditious, and perhaps less formal manner, of the controversial differences between the parties.'" Hojnowski, supra, 187 N.J. at 343 (quoting Carpenter v. Bloomer, 54 N.J. Super. 157, 162 (App. Div. 1959)). To accomplish these goals, "the Act vests arbitrators with broad discretion over discovery and other procedural matters to 'conduct an arbitration in such manner as the arbitrator considers appropriate for a fair and expeditious disposition of the proceeding.'" Minkowitz, supra, slip op. at 41 (quoting N.J.S.A. 2A:23B-15(a)). Because an arbitrator makes a final decision that binds the parties, see N.J.S.A. 2A:23B-1, the arbitrator "'should conduct the proceedings in an evenhanded manner and treat all parties with equality and fairness at all stages of the proceedings.'" Minkowitz, supra, slip op. at 40-41 (quoting Barcon Assocs., Inc. v. Tri-Cnty. Asphalt Corp., 86 N.J. 179, 190 (1981)).
Pursuant to the Act, an arbitrator's awards may be vacated by a court on certain limited grounds. Among other things, the awards may be vacated upon a finding of "evident partiality by an arbitrator" or "misconduct by an arbitrator prejudicing the rights of a party to the arbitration proceeding." N.J.S.A. 2A:23B-23(a)(2). In addition, an arbitration award may be set aside by the court if the arbitrator "exceeded [his or her] powers." N.J.S.A. 2A:23B-23(a)(4). See also Minkowitz, supra, slip op. at 27.
Given the strong public policy favoring consensual arbitration, courts apply a "presumption in favor of the validity of an arbitral award," and "the party seeking to vacate it bears a heavy burden." Id. at 28 (quoting Del Piano v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 372 N.J. Super. 503, 510 (App. Div. 2004), certif. granted, 183 N.J. 218 (2005), appeal dismissed, 195 N.J. 512 (2005)). "'Otherwise, the purpose of the arbitration contract, which is to provide an effective, expedient, and fair resolution of disputes, would be severely undermined.'" Ibid. (quoting Fawzy, supra, 199 N.J. at 470).
That said, at times a dissatisfied participant in an arbitration proceeding can raise sufficient reasons to vacate an award, under the limited grounds specified in the Act. This right was aptly illustrated in Minkowitz, in which this court set aside an arbitration award in divorce litigation because the arbitrator had "exceeded his powers" by performing mediation functions during the midst of the arbitration and thereafter resuming his decisional role as an arbitrator. Id. at 46.
The panel's opinion in Minkowitz distinguished between, on the one hand, the evaluative functions of an arbitrator and, on the other hand, the facilitative functions of a mediator. Id. at 37-41. As we noted, "[m]ediations are not conducted under oath, do not follow traditional rules of evidence, and are not limited to developing the facts." Id. at 39. In addition, "mediation encourages confidential disclosures to the mediator, whose training is designed to utilize those confidential positions to aid the parties to evaluate their positions, promote understanding of the other side's position, and reach a consensus." Ibid. As part of that role, the mediator may attempt to persuade a disputant that his or her position on an issue is not strong, and that he or she should consider undertaking a conciliatory or less adversarial posture, in the spirit of compromise and a constructive step toward potentially resolving the matter as a whole.
In recognition of the "distinctly different" functions of arbitration as opposed to mediation, the panel in Minkowitz set forth numerous guiding principles. Id. at 44. Among other things, the panel held that, unless the parties in the arbitration of a family matter have set forth in writing an agreement to the contrary, "dual roles are to be avoided." Id. at 45. Absent such written authorization, "once a neutral assumes the role of mediator, he or she may not assume the role of arbitrator." Id. at 46. Although settlement negotiations are not foreclosed by the Act, see N.J.S.A. 2A:23B-15(a), Minkowitz instructs that an arbitrator who undertakes to mediate settlement terms between the parties during the midst of the arbitration must have their mutual permission to engage in that effort. Minkowitz, supra, slip op. at 31, 41-46.
With these principles in mind, we turn to the wife's contentions that the arbitration awards in this case should have been set aside by the trial court. Although she couches her challenges to the awards by invoking the statutory standards of "evident partiality" and "misconduct," see N.J.S.A. 2A:23B-23(a)(2), for the reasons that follow, we hinge our analysis instead on the Act's authorization for setting aside awards where an arbitrator has "exceeded [his] powers." N.J.S.A. 2A:23B-23(a)(4). We undertake our review de novo, because a ruling to vacate an arbitration award is a decision of law, as to which no special deference is owed to the trial court. See, e.g., Minkowitz, supra, slip op. at 28; Manger v. Manger, 417 N.J. Super. 370, 376 (App. Div. 2010) (citation omitted); see also Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).
B.
Before undertaking our analysis of the legal issues, we begin with a general observation that the conduct of the wife during the arbitration was extremely contentious and adversarial. On several occasions, the arbitrator was forced to deal with interruptions, non-responsive witness answers, and to rule on persistent objections. The wife expressed open antipathy for the husband's attorney. She was frequently rude, sarcastic, and argumentative during her testimony. For example, on one occasion, she told her husband's attorney to "clean [his] ears" in response to a question that he posed to her on cross-examination. In another illustrative instance, the wife referred to opposing counsel on the record as "the biggest jerk in the world" because he had sought her mother's testimony. The arbitrator commendably displayed considerable restraint and patience during the proceedings. That calm exercise of control over the proceedings should not be overlooked, in spite of the arbitrator's two improvident efforts, which we discuss, infra, to resolve certain matters in a manner outside of his assigned role as arbitrator.
Although the wife raises a litany of criticisms of the arbitrator's handling of the case, most of those criticisms are unavailing. Among other things, we reject her various claims that the arbitrator was biased or unfair because, for instance, he properly characterized the husband's counsel's motion "in limine" as a motion to "strike"; or because he invited legal memoranda from the wife's counsel on issues that arose during the proceedings. Apart from the two exceptions we shall address, infra, the wife's criticisms of the arbitrator's handling of the case are patently without merit, and warrant no further discussion. R. 2:11-3(e)(1)(E).
We turn now to the two incidents that ultimately prompt us to vacate the awards: (1) the arbitrator's multiple comments on the record concerning the wife's pending criminal complaints against the husband in municipal court; and (2) the arbitrator's ex parte communication with the wife concerning a matter of parenting time.
C.
1.
As mentioned above, the wife filed criminal charges against the husband in May 2008. At the first arbitration hearing, on September 21, 2009, the arbitrator referred on the record to that pending criminal matter. He stated:
It is going to be difficult to settle this case with the criminal charges pending. The criminal charges will have no impact on my decision. But I just throw out on the table I don't see anything to be gained by pursuing the criminal charges. But, again, I have nothing to do with those criminal charges.
You might discuss with your client, Ms. Herbert [the wife's counsel], the wisdom of continuing with those charges. I know they were brought by, presumably, the prosecutor. But if your client were to advise the prosecutor that she no longer wants to pursue the charges, I'm sure the charges
would probably be dismissed. But they are not part of these proceedings and I'm not going to comment further about that.
[(Emphasis added).]
At a later arbitration session on October 5, 2009, the wife's attorney marked a letter from J.P. Morgan Chase, which concerned the husband's offer for employment. When the parties returned for the afternoon session that day, the husband's attorney addressed that exhibit, stating, "I know it's not in [e]vidence, but I feel compelled [to discuss it]." Over the wife's counsel's objection, the husband's attorney pointed the arbitrator to a "clause [in the letter] . . . which can directly affect my client's ability to continue to be employed." The lawyer stated:
Now, you [the arbitrator] had previously talked about the fact that there should be consideration given to the pending criminal complaint in the municipal court that is outstanding . . . That complaint is returnable tomorrow night, and it can't be adjourned anymore. It's been adjourned numerous times.At this point, the arbitrator requested that the parties go off the record. When the parties resumed the proceeding, the criminal complaints were not mentioned on the record again that day.
. . . .
[M]y client's continued employment is [affected by the fact], quote, that there has not been, nor is there pending any internal or external complaint or regulatory, self-regulatory administrative civil or criminal inquiry proceeding or other matter relating to your employment or other activity other than those heretofore
disclosed to J.P. Morgan Chase in writing or through any applicable regulatory filing.
I just, for record purposes, again, would state to the Court that this can't be adjourned tomorrow night. I know you had addressed it before, but I want to give my adversary and [the wife] notice that this [municipal] proceeding could have severe consequences, I think, to everybody at the table, certainly, [the wife] as well as [the husband], and I would ask, again, that [the wife] consider the consequences of going forward on this matter considering that it's already been tried to a conclusion . . . .
[(Emphasis added).]
The next day, October 6, the arbitrator and both counsel had further exchanges related to the pending criminal charges:
MS. HERBERT:
Quite frankly, I'm feeling as though there's bias here. Quite frankly, I'm feeling this between yesterday and now today . . . going off the record, asking my client to dismiss criminal charges against [the husband]. I find that there is bias.THE ARBITRATOR:
. . . .
As far as bias, I take that allegation very serious. I just thought that it
would make sense to me for so many reasons. There are so many ways to deal with allegations of the criminal complaint. It's not an issue before me.THE ARBITRATOR:
There's so many ways to deal with that issue that would benefit both sides, and I just suggested that they explore it. I know that [the wife] would like to have [the husband] out of the house. There should be discussions and negotiations about how that might be accomplished in relationship to the criminal charges. I'm not — I'm not ordering it to be done, and if it's not going to happen, it's not something I will deal with.
MS. HERBERT:
We went off the record yesterday. There was a conversation that took place in this room where my client — I believe there was an attempt to squeeze her to go to the Demarest Municipal Court and dismiss the charges against [the husband].
. . . .
Who attempted to squeeze her?MS. HERBERT:
I believe that there was a joint attempt here.MR. DEFUCCIO:
Who's the joint attempt? I'd like to know.THE ARBITRATOR:
Are you suggesting that I attempted to squeeze her?MS. HERBERT:
I think in a very polite manner, yes, your Honor. I think that, by the mere fact of discussing it, I don't think was reasonable, quite frankly. I think that asking — and, quite frankly, your Honor did say that she should go today and take care of this, and I think that, since your Honor knows that this is out there, that I think it's improper, and I think that we know the [c]ourt appearance is today, that we have an ongoing litigation here.THE ARBITRATOR:
You voiced your opinion that it was improper, that it might have an effect on this case.
I voiced that what was improper? That what was improper?MS. HERBERT:
That there was still charges pending.THE ARBITRATOR:
I don't consider that improper. What I said was I think it would be to the benefit of both parties if they were to discuss some way of discussing those charges. I don't see how anybody —MS. HERBERT:
Your Honor, you did say that it should be dismissed. You did say it should be dismissed.THE ARBITRATOR:
I think, for the benefit of both parties, it should be dismissed, and the way it could be dismissed is to accomplish the objective that your client wants, which is to have [the husband] agree to leave the house, and I thought it could be part of some negotiation along those lines which [have] been previously discussed in this case, but we're taking too much time. Your objection —MS. HERBERT:
Your Honor, I disagree, and I feel it's a very serious bias, and I feel you will hold it against [the wife] if she does not go in and dismiss the charges.THE ARBITRATOR:
I'm not holding anything against [the wife] or [the husband]. My mind is completely open on all issues.[(Emphasis added).]
Ask your question, and then we're going to adjourn for the day.
After leaving the arbitration hearing that same day, the wife requested that the municipal prosecutor dismiss the pending criminal charges against the husband. The prosecutor thereafter dismissed the complaints, as she had requested. The wife's attorney subsequently sent a letter to the arbitrator stating that, "once the [wife] learned the [municipal] court would not consider an administrative hold, and fearful of the repercussions, [the wife] requested the charges be dismissed."
The husband's counsel raised the municipal dismissal issue again at the October 19, 2009 arbitration session, in which the following exchange occurred:
MR. DEFUCCIO:
Excuse me, your Honor . . . if we can, I received a copy of the letter that was sent to you dated October 7, 2009MS. HERBERT:
. . . .
Judge, I would like the adversary to address that because I'm not sure what that means. I know the last time we were here, my adversary accused the [c]ourt of bias, and on top of that then, this letter is sent concerning "fearful of repercussions." I have no idea what it means.
It is pretty straightforward itself what it means and what it doesn't mean.THE ARBITRATOR:
What repercussions was your client concerned about?MS. HERBERT:
If the [c]ourt wishes for us to reexamine and relook at this, we're prepared to do so. Quite frankly, the conversation that took place off the record made my client uncomfortable regarding dismissal of charges for [the husband].
. . . .THE ARBITRATOR:
The second thing is that she's very fearful of the repercussions, being in court, being alone, although she had a prosecution there —
You're talking about repercussions in the municipal court?MS. HERBERT:
Repercussions in municipal court, repercussions with [the husband], as well as the chilling effect that it may have here. If she had moved forward, she was concerned about what would have happened here.THE ARBITRATOR:
I'm not sure what you mean by that last comment. What repercussions would there have been here if she had not dismissed the charges?MS. HERBERT:
As I just said, it would have had a chilling effect on this arbitration. She was concerned that there was bias.THE ARBITRATOR:
She was concerned if she had not dismissed the charges, it would somehow impact my decision? Is that what you're saying?MS. HERBERT:
Possibility, your Honor, yes.THE ARBITRATOR:
I'm very disappointed to hear you say that. It would have no impact whatsoever. It was her call. I said I thought that it made no sense to continue, but it would not have had any impact on my decision. It is not an issue before me whether she dismissed it or didn't dismiss it. . . .MS. HERBERT:
Your Honor, it was an issue. It was an issue brought up off the record, it was an issue brought up because there was a concern that Mr. DeFuccio raised, that if he lost his job, it seemed very clear. Perhaps your Honor would like to ask [the wife] the question, instead of me. I think [the wife] can speak very well.MR. DEFUCCIO:
Judge, she wrote the letter.THE ARBITRATOR:
I'm not going to get bogged down with the side issues.MS. HERBERT:
This is not a side issue. As Mr. DeFuccio decided and intentionally raised this issue, I do believe that [the wife] should be given an opportunity to be heard on this issue. Instead of having me speak on the record, [the wife] should speak.[(Emphasis added).]
At this point, the wife was questioned by her counsel on the record about her decision to dismiss the criminal complaints. The wife cited several reasons for her decision to request dismissal, including concern about the husband's alleged anger issues. However, she also contended that she had requested the municipal charges to be dismissed because:
. . . I just realized, and I could close my eyes and hear our friend Mr. DeFuccio's voice, if I would not dismiss it, and he would scream here last time, and very loud, okay, she didn't dismiss it, he's losing all the way with his job, we have no money to divide, we will not have anything, so why are we here, and it would be like this, and you know that it would be like this.
The wife is clearly referring facetiously to opposing counsel as a "friend."
When asked directly by her attorney if the wife believed that her choice to proceed with the criminal complaints would have affected the outcome of the arbitration, the wife responded "[y]es, for sure." She further noted that the exchange that had taken place off the record between the arbitrator and the attorneys made her "uncomfortable." At the end of the wife's testimony on this subject, the arbitrator reminded the parties that "[t]he cause of action [the criminal complaints] is not before me."
2.
The second significant incident involves the arbitrator's ex parte telephone conversation with the wife on June 18, 2010, the Friday immediately preceding Father's Day, June 20, 2010. The relevant chronology is as follows.
According to an explanatory letter written by the arbitrator, he was contacted by the husband's counsel on the afternoon of June 18 to discuss parenting issues concerning the upcoming Father's Day holiday. The attorney reported to the arbitrator that the wife was refusing to allow the husband to spend the holiday with his sons. The arbitrator then requested his secretary to set up a conference call with both counsel to discuss the matter. Apparently, the wife's counsel could not be reached at that time on her mobile phone. The arbitrator then called the wife directly and spoke to her "on her cell phone for approximately 20 minutes." During the course of their ex parte conversation, the arbitrator indicated that the wife:
told me emphatically that [the husband] would not see the children on Father's Day . . . I told her that the children should be with their father on Father's Day and that she should tell them to go with their father. I also told her that if they did not go with their father I would deal with the consequences on Monday.
According to the arbitrator, approximately one hour after his telephone conversation with the wife, he received a call from the Demarest Police Department, informing him that the wife had reported that she had been threatened. However, the arbitrator maintained that "[a]t no time did I threaten [the wife]. This was the second time within 30 days that she involved the Demarest Police in this litigation[.]" The arbitrator closed his letter by requesting that the wife provide her own certifications as to these events if she disputed his account of the events.
In her ensuing certification on this subject, the wife stated that the arbitrator had told her on June 18 that he was calling her "as a friend" to discuss the children's plans for Father's Day. She asserted that he told her to "force" her children to go with their father for Father's Day. Further, she alleged that the arbitrator told her that if she did not force the children to go with the husband, he would "deal with that later," and that there would be "horrible consequences" for her. She claimed that she asked the arbitrator if he was calling her personal phone to frighten her, and that he subsequently hung up. The wife stated that the phone call left her feeling "ambushed," and that she felt that she had no other choice but to take her children to the local police station.
Four days after the phone call between the wife and the arbitrator, the wife's counsel submitted a letter to the arbitrator, noting that the "Agreement to Provide Arbitration Services" "did not [contain] language providing for direct contact with litigants." As a result, the wife's counsel announced that:
[b]ased on these recent facts, as well as the history and ongoing concerns of partiality, as well as [the wife's] belief of misconduct by her arbitrator which prejudiced her rights to the arbitration proceeding, [the wife] will be filing a summary action to vacate your entire decision.
D.
Although the trial court did not conduct a plenary hearing about these two incidents, and there are some persisting disagreements between the parties about what actually transpired off the record, we conclude that the arbitrator diverted from his proper scope of functions as an arbitrator in both situations. In essence, the arbitrator was attempting to act as a mediator of certain issues, seeking to prompt the wife to undertake, or to at least consider undertaking, particular actions, i.e., to dismiss her criminal complaints, and to allow the father to see the twins on Father's Day.
We note in this regard the arbitrator's above-quoted statement at the September 21, 2009 hearing that "[i]t is going to be difficult to settle this case with the criminal charges pending." (Emphasis added). We further note the arbitrator's comment on the record on October 6, 2009, stating "I thought it could be part of some negotiation along the lines which have been previously discussed in this case." (Emphasis added).
Both of these actions may have been well-intentioned, in terms of concerns about the wife's municipal complaints potentially being used to gain leverage in the matrimonial case, and in terms of assuring the wife's compliance with the parenting time holiday schedule. Even so, they were also beyond the arbitrator's decision-making role, as defined most recently in Minkowitz.
We make no findings or assumptions, of course, about the merits of the criminal complaints.
The parties' written agreement did not authorize the arbitrator to perform mediation functions. In addition, the arbitration agreement does not contain any language authorizing the arbitrator to have direct contact with the litigants off the record. Hence, the arbitrator should not have contacted the wife, a represented party, directly without her counsel's consent.
As Minkowitz instructs, an arbitrator who has begun to hear the case should not exercise such functions as a mediator, absent written authorization of the parties. We therefore conclude that the arbitrator consequently "exceeded [his] powers" under N.J.S.A. 2A:23B-23(a)(4), and that the awards should be vacated.
See also Canon IV.H of the Code of Ethics for Arbitration in Commercial Disputes, quoted in Minkowitz, supra, slip op. at 43, which advises that arbitrators "should not be present or otherwise participate in . . . settlement discussions unless requested to do so by all parties." The Code further admonishes that "[a]n arbitrator should not exert pressure on any party to settle." Ibid. We accept the arbitrator's statements in the transcript that he was not ruling on the merits of the municipal complaints, and was leaving the wife's decision to pursue them up to her. Even so, given the lack of clear authorization for the arbitrator to perform mediation functions, there was, at the very least, an apparent misunderstanding here about the arbitrator's boundaries. That misunderstanding was sufficient to lend reasonable support to the wife's perception that she was being inappropriately pressured to have the complaint dismissed.
We are unable to conclude that the two episodes were inconsequential. Although the wife's behavior during the arbitration proceedings appears to have been frequently unreasonable, she nonetheless has an objective basis, under the circumstances, to perceive that the arbitrator had acted outside of his decision-making role on at least two occasions, and in a manner that endeavored to persuade her to relinquish her position. The fact that the arbitrator's substantive rulings granted the wife considerable relief on the contested divorce issues does not eliminate the statutory deficiency where an arbitrator has exceeded his powers.
In fairness to the arbitrator, we recognize that our September 2013 precedential decision in Minkowitz had not been issued when this case was arbitrated in 2009 and 2010. Nevertheless, there is nothing in Minkowitz indicating that its holdings would have only prospective effect. The general rule is that precedential decisions are presumed to apply to all ongoing litigation. See Selective Ins. Co. of Am. v. Rothman, 208 N.J. 580, 587 (2012) ("Decisions arising in the context of civil litigation are ordinarily given retroactive application") (citations omitted). At a minimum, the present appeal was in the appellate "pipeline" when Minkowitz was decided. See N.H. v. H.H., 418 N.J. Super. 262, 285 (App. Div. 2011) ("In the civil context, pipeline retroactivity of a new rule of law contemplates that three classes of litigants will be beneficiaries: those in all future cases, those in matters that are still pending, and the particular successful litigant in the decided case.") (citations omitted). We discern no fair reason why the appellant in this case, like the appellant in Minkowitz, should not receive the benefit of the same legal principles that are set forth in Minkowitz, particularly since the two cases coincidentally involved the same arbitrator.
We do not order a remand in this matter lightly. We recognize that considerable time and cost has been expended in the numerous days of arbitration proceedings. We also recognize that the arbitrator's ultimate rulings on the merits of the divorce issues do not appear to have been manifestly lopsided, at least in terms of the parties' respective litigation positions. That said, we nevertheless lack sufficient confidence in the process that occurred here to sustain the awards and the corresponding elements of the FJOD.
Because we vacate the arbitration award on other grounds, we need not address the wife's argument that the arbitrator's comments suggesting the wife consider dismissing her municipal complaints, which involved alleged domestic violence incidents, transgress the public policies underlying N.J.S.A. 2C:25-29(a) (declaring that "[t]he issue of whether or not a violation of [the Prevention of Domestic Violence Act] occurred . . . shall not be subject to mediation or negotiation in any form.").
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Vacated and remanded. We do not retain jurisdiction.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION