No “Do-Overs” When You Agree to Arbitrate Your Divorce

This article first appeared in the NJ Family Legal Blog, here.

As we have written before, alternate dispute resolution is a favored way to resolve divorce matters, whether it be mediation or binding arbitration.  One reason that people choose the arbitration route is that they are avoiding the courts that have mandatory reporting of tax issues (failure to report all of the income, etc.).  Another reason, particularly relevant in today’s era of long backlogs due to judicial shortages and Covid, is the ability to get a quicker trial date and resolution than if you were waiting to get on a court’s trial calendar for a divorce trial which has been the subject of a recent post on this blog.  And while I mentioned “binding” arbitration above, as I have blogged before on this site, parties can also agree to appellate arbitration so that, if they think that the arbitrator made a mistake, there would be review by an appellate arbitrator or arbitrators who would then issue a binding decision.  But what if you don’t like the appellate arbitration decision.  Do you get a do-over?  Can you then appeal to the trial court and/or the Appellate Division?  In most cases, the answer is no.

This issue was front and center in the unreported (non-precedential) case of Azzolina v. Azzolina decided on August 24, 2021.  In that case, the wife moved to appeal her unsuccessful attempt to vacate an appellate arbitration award.  Per the Appellate decision, the parties agreed to arbitrate their divorce “…in light of their concerns about potential issues under Sheridan …”   Their agreement to arbitrate gave the arbitrator the ability to hear reconsideration motions.  The parties further agreed “… to permit an appeal of the final Award to a panel of one or more private Appellate Umpires to be agreed upon by the parties …” using a standard of review used by the Appellate Division of the state of New Jersey.  In doing this, they expanded the very limited review that is found in the various arbitration acts to the type of review there would be if the matter was tried and appealed in the Court system.

The parties went through with their arbitration, after the which the husband filed a reconsideration motion and the wife filed a cross motion also seeking modifications. The husband then appealed the matter to the appellate arbitration who reversed a portion of the equitable distribution award.  As note above, the wife unsuccessfully moved to void the appellate arbitration award and Appellate Division affirmed.

As expected, the Appellate Division reiterated that the public policy of NJ favors arbitration as a means of settling disputes, including in family litigation.  The court further noted:

However, “[a]rbitration can attain its goal of providing final, speedy[,] and inexpensive settlement of disputes only if judicial
interference with the process is minimized; it is, after all, meant to be a substitute for and not a springboard for litigation.” … To that end, “[a]rbitration should spell litigation’s conclusion, rather than its beginning.” (internal citations omitted).

The court needs to analyze whether a party waived their right to contest an order compelling arbitration after the arbitration is held  In that analysis, the court must consider, “… whether the party sought to enjoin arbitration or sought interlocutory review, whether the party
challenged the jurisdiction of the arbitrator in the arbitration proceeding, and whether the party included a claim or cross-claim in the arbitration proceeding that was fully adjudicated.”  Citing prior precedent, the crux of the issue was boiled down, as follows:

it would be a great waste of judicial resources to permit defendants, after fully participating in the arbitration proceeding, to essentially have a second run of the case before a trial court. That would be contrary to a primary objective of arbitration to achieve final disposition, in a speedy, inexpensive, expeditious and perhaps less formal manner. (Emphasis added).

Here, in determining that the wife waived her right to contest the consent order compelling post-judgment arbitration, the court noted that not only did the wife file a cross motion to the initial reconsideration award, she also opposed the appeal and presented appellate argument.  The court also noted the long existing precedent that consent orders are not appealable.

The takeaway here is that is you agree to arbitration and appellate arbitration, and there is no provable reason to set aside the decision like bias, conflict, etc., you don’t get a third and fourth bite of the apple just because you don’t like the decision.

Eric Solotoff

Eric is Co-Chair of the Fox Rothschild's Family Law Practice and is a member of the firm's Litigation Department. He is Certified by the Supreme Court of New Jersey as a Matrimonial Law Attorney and is a Fellow in the American Academy of Matrimonial Attorneys.