Minkowitz v. Israeli

• Decision Date: 25 September 2013
• Citation: 77 A.3d 1189,433 N.J.Super. 111
• Parties: Barbara MINKOWITZ, Plaintiff–Appellant, v. Ron S. ISRAELI, Defendant–Respondent.
• Court: New Jersey Superior Court

433 N.J.Super. 111

77 A.3d 1189

Barbara MINKOWITZ, Plaintiff–Appellant,

v.Ron S. ISRAELI, Defendant–Respondent.

Superior Court of New Jersey, Appellate Division.

Argued April 30, 2013.

Decided Sept. 25, 2013.

Karin Duchin Haber argued the cause for appellant (Haber Silver & Simpson, attorneys; Ms. Haber, of counsel; Jani Wase Vinick, Florham Park, on the brief).

Nancy C. Richmond argued the cause for respondent (Ceconi & Cheifetz, LLC, attorneys; Cary Cheifetz, Summit, of counsel, Ms. Richmond, on the brief).

Before Judges MESSANO, LIHOTZ and OSTRER.

The opinion of the court was delivered by

LIHOTZ, J.A.D.

This matter considers what role, if any, the Family Part should play after parties in a matrimonial action agree to submit their disputes to binding arbitration and whether the arbitrator, having first mediated disputes, may thereafter resume the role of arbitrator. 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 agreed all custody and parenting time issues would be reviewed in non-binding arbitration. The parties consented to engage a single arbitrator and a jointly chosen forensic accounting expert. After the arbitrator met with them, but prior to the commencement of arbitration proceedings, the parties opted to engage in settlement discussions and mediation to narrow the issues for final determination. As matters were resolved, written documents incorporating the parties' understanding were prepared. After more than one year had elapsed and a majority of their disagreements were settled without commencement of an arbitration hearing, plaintiff retained new counsel, who sought the underlying documentation supporting the financial agreements. The request was declined and, thereafter, plaintiff moved before the arbitrator for release of the documents. He barred release and counsel re-filed the requests before the Family Part. The Family Part judge generally denied the motions and ultimately confirmed the “arbitration awards” as final judgments.

On appeal, plaintiff challenges five separate orders confirming arbitration awards. She maintains each must be set aside under N.J.S.A. 2A:23B–23 or, alternatively, requests the final judgment of divorce be vacated, pursuant to Rule 4:50–1. Plaintiff argues procedural violations, the arbitrator'sbias and substantive errors caused an unconscionable result, which cannot stand.

Following our review, we affirm the orders confirming the settlement agreements reached by the parties. However, we conclude once the arbitrator functioned as a mediator, he may not then conduct arbitration hearings. Consequently, we vacate those orders confirming substantive arbitration awards issued subsequent to the parties' execution of the mediated agreements. The matter is remanded to the Family Part for the parties to select a new arbitrator, who will conduct a binding arbitration hearing on any remaining financial disagreements. We also conclude under the terms of the parties' arbitration agreement, plaintiff has an entitlement to the requested documentation, the provision of which shall be addressed by the new arbitrator, once appointed.

I.

Plaintiff filed her complaint for divorce on March 18, 2008, after fourteen years of marriage. The parties have two children who are now teenagers.

The parties executed an agreement engaging a designated arbitrator, to “arbitrate the matter” and “render a written opinion incorporating his findings and conclusions of law in support of the award[.]” The arbitration agreement provided, in pertinent part:

1. The issues to be arbitrated shall be identified by the parties and placed on the record prior to the commencement of any hearing. The record will further reflect those issues that are being submitted to nonbinding, as distinguished from binding, arbitration.

....

7. The Arbitrator shall have the power to issue subpoenas and to order depositions or other discovery in accordance with the provisions of N.J.S.A. 2A:23B–17.

8. The [A]rbitrator shall have the power to order equitable remedies, if appropriate, unless the parties agree otherwise, in writing.

....

10. Unless waived by the parties, in writing, the Arbitrator shall render a written opinion incorporating his findings and conclusions of law in support of the award.

....

13. The Agreement shall be subject to the Arbitration Act[,] ... N.J.S.A. 2A:23B–1 to –32[ ].

Attached to the three-page arbitration agreement was a two-page document, which the parties also signed, entitled “STATEMENT OF RIGHTS AND RESPONSIBILITIES OF ARBITRATING PERSONS.” Among the rights listed was “[a]rbitrating [p]ersons have the right to be provided copies of all documents presented to the [a]rbitrator by their spouse.”

The parties and their respective counsel also executed a consent order, filed with the Family Part, memorializing the agreement to arbitrate. The order reiterated those issues submitted to binding and non-binding arbitration; recited the designated arbitrator and payment of his retainer; and allocated the party's respective obligations for future payment of arbitration fees and costs. Finally, the order directed the arbitrator to schedule a “preliminary [c]ase [m]anagement [c]onference with the parties and the [c]ourt-appointed accountant” and, concurrently, set “a case management date ... with the court for ... September 3, 2008.” The parties mutually stipulated and the court subsequently appointed Seymour Rubin of Rubin–Goertz & Company as their “joint forensic accounting” expert.

Although the arbitrator had been appointed and met with the parties, they filed a joint application before the Family Part seeking a protective order, which prescribed “[c]onfidential [m]aterial” could be disclosed only to the parties, their attorneys, their attorneys' respective staff, Rubin, the arbitrator, and the court. The protective order filed on January 27, 2009, defined “confidential material” as “information pertaining to ... parties and/or all entities” listed on an attached schedule, which included the parties' business interests.

The arbitrator met with the parties and their attorneys in August 2008. Thereafter, counsel and the parties' respective accountants, but not the parties themselves, conferenced to review Rubin's financial evaluations. The parties chose to defer commencement of arbitration, pending efforts to settle some disputes. The parties, their counsel, Rubin, and at times, the arbitrator discussed their respective positions and submitted documentation. Rubin would offer a recommendation regarding resolution, and, if the parties accepted, a written agreement would be prepared. Following this process, the parties executed four agreements in 2009, which we collectively refer to as the 2009 agreements.

The first of the 2009 agreements, reached in February 2009, was presented to the Family Part via a consent order. The April [433 N.J.Super. 123]1, 2009 order simply stated: “The [a]rbitration [c]onsent [o]rder as to [e]quitable [d]istribution of [m]edical [p]ractices, attached hereto, is hereby incorporated herein and made a part hereof[,] and shall have the full force and effect of an [o]rder of this [c]ourt.” The “arbitration consent order” included the Superior Court caption, but was signed by the arbitrator, the parties and counsel, and provided:

Each party on the recommendation of the joint forensic accounting expert ... Rubin ... and after discussions with their respective counsel agree that he and she shall waive any right, title and/or interest ... in the medical practice of the other party and each party shall retain their own respective medical practice(s) free and clear of any claim by the other.

The “arbitration consent order” also stated it “shall be incorporated into any [p]roperty [s]ettlement [a]greement and/or [j]udgment of [d]ivorce entered into by the parties and the [c]ourt.”

Informal discussions continued with an eye toward resolving the parties' respective claims for equitable distribution. On July 8, 2009, the parties executed their second agreement, a “MEMORANDUM OF UNDERSTANDING,” which provided:

This memorandum ... shall describe the outline of an Agreement that was reached between the parties ... after mediation with the assistance of ... “the [a]rbitrator” and Seymour Rubin, C.P.A.

It is understood that this Memorandum shall be binding with respect to the issues recited herein, although a formal Agreement will be prepared and subsequently executed.

This Memorandum is the result of many months of negotiations and many conferences with [the arbitrator] and Mr. Rubin. The parties are entering into this Memorandum freely and voluntarily after conferring with their attorneys and anyone else with whom they wish to confer. The parties agree that this Memorandum represents a fair compromise of the issues. They acknowledge that by entering into this Memorandum, they are waiving their rights to participate in Arbitration hearings and waive the right to have the issues set forth in this Memorandum decided by the Arbitrator.In this agreement, the parties restated the confidentiality of the financial disclosures; mutually waived alimony, and fixed child support; divided household furnishings, disposed and distributed various realty, retirement assets, stock and bank accounts, divided other joint assets; agreed to “pay their own counsel fees[,]” “equally share” the fees of the arbitrator and Rubin; and waived present and future claims for “prior, present or future claims” against one another. In the event of any further disputes, the memorandum required “written presentations from each attorney” to be submitted to the arbitrator.

Defendant's counsel prepared a draft of a proposed property settlement agreement (PSA), purportedly memorializing the parties' agreements reached on the identified issues. However, a disagreement...