Opinion
03-11-2014
M.J.A., Plaintiff-Appellant, v. M.S., Defendant-Respondent.
Freundlich & Reisen, L.L.P., attorneys for appellant M.J.A. in A-2897-12 (Amy R. Reisen, on the briefs). Daly & Associates, L.L.C., attorneys for respondent M.S. in A-2897-12 (Carolyn N. Daly, on the brief). Carolyn N. Daly argued the cause for appellant M.S. in A-3148-12 (Daly & Associates, L.L.C., attorneys; Ms. Daly, on the briefs). Amy R. Reisen argued the cause for respondent M.J.A. in A-3148-12 (Freundlich & Reisen, L.L.P., attorneys; Ms. Reisen, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Espinosa, Koblitz and O'Connor.
On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Morris County, Docket No. FM-14-863-06.
Freundlich & Reisen, L.L.P., attorneys for appellant M.J.A. in A-2897-12 (Amy R. Reisen, on the briefs).
Daly & Associates, L.L.C., attorneys for respondent M.S. in A-2897-12 (Carolyn N. Daly, on the brief).
Carolyn N. Daly argued the cause for appellant M.S. in A-3148-12 (Daly & Associates, L.L.C., attorneys; Ms. Daly, on the briefs).
Amy R. Reisen argued the cause for respondent M.J.A. in A-3148-12 (Freundlich & Reisen, L.L.P., attorneys; Ms. Reisen, on the brief). PER CURIAM
Plaintiff M.J.A. (wife) appeals from an October 3, 2012 change of custody order issued without a plenary hearing and a January 31, 2013 order denying reconsideration. (A-2897-12). Defendant M.S. (husband) appeals from a July 16, 2010 order of another judge confirming an arbitrated $1800 monthly child support determination and $7500 counsel fee award. (A-3148-12). After reviewing the issues raised by the parties in light of the facts, we reverse both orders.
Wife also appeals the provisions of this order awarding $5,793.72 in counsel fees to husband and transferring custody of the children's accounts to him alone.
We denied husband's motion for leave to appeal this interlocutory order on December 2, 2010, because custody was then pending before the trial court.
I
The parties were married on May 29, 1988 and have three children. Wife worked as a Vice President for JP Morgan until the youngest child was born in 1996, after which she stopped working outside the home. Wife earned approximately $15,000 during 2005, when she moved out of the marital house.
Husband worked for Hess Oil during the marriage and initially earned approximately $100,000 a year in addition to various stock options. His income increased throughout the marriage; by 2005 husband's gross income was $526,859.
On January 29, 2008, the parties entered into a Matrimonial Settlement Agreement (MSA) which was incorporated into the Judgment of Divorce (JOD) entered on that same date. The JOD set child support at $1,000 a month with each parent sharing joint custody and equal parenting time with the children.
In early 2009, husband's employment with Hess Oil ended and he temporarily moved to California to become a full-time member of the Church of Scientology. He later returned to New York City to continue his position with the Church with a nominal annual salary of approximately $2500. Because of this drastic change in husband's circumstances and wife's then sole physical custody of the children, the parties unsuccessfully attempted to work out a revised agreement regarding child support. They eventually retained an arbitrator to resolve the issue of child support.
Wife claims he left his job voluntarily to join the Church of Scientology; husband claims he was terminated.
II
The parties also had disagreements concerning custody and parenting time of their two younger children. Before husband moved to California in 2009, the parties consented to an amended custody and parenting time agreement. The amended agreement acknowledged that the oldest child was starting college and he "shall make his own arrangements regarding parenting time." As for the two younger children, the new agreement stated that husband would have parenting time with them for twelve weekends a year, three weeks of which would be uninterrupted time, as well as the prior agreed-upon holidays. The agreement also acknowledged that husband would be relocating and that the new arrangement would continue until the two younger children were out of high school.
In mid-October, 2010, it became clear to the parents that their youngest child was exhibiting serious symptoms of stress. Husband, who had returned to New York City, filed an order to show cause seeking immediate temporary full-time physical custody of the two youngest children pending a custody evaluation. The judge ordered a full custody report, but denied husband's request for an immediate change of custody.
In July 2011, the custody evaluator released a sixteen-page report. In August, the youngest child acted out in a self-destructive manner. Husband claimed that wife failed to promote his parenting time and that his time with the children decreased in the months following the evaluator's report. Wife rejected this allegation, claiming instead that she attempted to implement the recommendation in the report to facilitate contact between the children and their father, but did not want to "force" parenting time on the youngest child because of her fragile emotional state.
In July 2012, a year after the custody evaluation was submitted, husband filed a motion seeking the transfer of physical custody of the youngest child, the only child under eighteen at that time. The following month, wife's attorney wrote a letter to the evaluator stating that if the judge does not dismiss husband's custody application, the parties will seek his updated report as their "joint custody expert." Also in August 2012, the judge interviewed the youngest child. In October, without receiving an updated evaluation or holding a plenary hearing, the judge rendered a decision on husband's July motion, transferring residential custody of the youngest child to husband, relying in part on the July 2011 evaluation and the judge's interview with the child.
Although a recording of an interview with a child must be made, Rule 5:8-6, a transcript of the interview was not provided to us on appeal.
A few days later, wife filed a motion for reconsideration requesting that if the judge denied her motion for reconsideration, the evaluator be directed to complete an updated evaluation and that there be a "full custody hearing." In his written reasons for denying reconsideration, the judge stated that his decision to deny wife's request for a plenary hearing was in the "interest of justice" because "further litigation would not be in [the youngest child's] best interest[]" given the expert opinion that court proceedings would have a negative impact on her mental well-being.
We were informed at oral argument that the youngest child went to live with her father, as ordered, in November 2012, but returned to her mother's home seven months later in June 2013. Husband has not sought to enforce the judge's order awarding custody to him, as would be permitted by Rule 2:9-1(a). The parties report that the child is currently doing well in her junior year of high school. Although the parents have not entered into a formal agreement concerning the youngest child's return to her mother's home, we expect they understand that the wishes of a child who is almost eighteen years old is a strong factor when considering custody. N.J.S.A. 9:2-4(c). As husband has not consented to this arrangement, we will discuss our reasons for reversal of the custody determination.
We have stated that "changes in custody are not to be made without a plenary hearing, absent exigent circumstances." Entress v. Entress, 376 N.J. Super. 125, 133 (App. Div. 2005). Rule 5:8-6 states that where the "court finds that the custody of children is a genuine and substantial issue, the court shall set a hearing date no later than six months after the last responsive pleading." R. 5:8-6 (emphasis added). In the absence of "overwhelming admitted facts[,]" such as child abuse, a plenary hearing is "virtually a necessity in every custody case[.]" M.C. v. M.C., 215 N.J. Super. 132, 140 (Ch. Div. 1986).
In G.C. v. M.Y., 278 N.J. Super. 363 (App. Div. 1995), we reversed the Family Part's decision granting residential custody to the mother for the children during the school year without holding a plenary hearing. Id. at 368. Like the present case, the parties agreed to a parenting agreement after divorce, but later had difficulty implementing the agreement. Id. at 367. The trial court did not hold a plenary hearing and there was no evidence of imminent harm to the well-being of the children. Id. at 368. We stated that conducting a plenary hearing was "especially important" because the "very important" issue of custody should be "established on the record created at a plenary hearing with its reliance on direct testimony [and] cross-examination . . . ." Id. at 369.
The youngest child did engage in serious self-destructive behaviors that caused additional concern about the impact of a contested hearing on her well-being. Changing custody on the basis of a child interview and a stale evaluation, however, is not the solution. We therefore reverse and remand for a plenary hearing, hoping that the parents will now be able to resolve the issue in the best interest of the child, who seems to have plainly expressed her preference while this appeal was pending.
We reverse also the financial determinations regarding counsel fees and who should be the custodian of the children's accounts, as the judge made determinations regarding contested factual issues without a plenary hearing.
III
The child support issue is more complicated. After husband left his job at Hess Oil, the parties could not agree on child support and so agreed to submit the issue to binding arbitration pursuant to the pertinent provisions of the MSA. Paragraph 2.5 of the MSA provides:
It is understood and agreed that the [husband] will be leaving the workforce and retiring as he is already beyond the time he was expected to do. Therefore, any child support determination in the future will be based upon his actual income and there will be no imputation of income to either of them. This provision is integral to the [husband's] acceptance of this Agreement.Paragraph 2.6 of the MSA provides that
[(Emphasis added).]
the parties will renegotiate the appropriate amount of child support to be paid based upon the parties' actual earned income at the time. . . .
[(Emphasis added).]
"Earned income" is "[m]oney derived from one's own labor or active participation[.]" Black's Law Dictionary 767 (7th ed. 1999).
The parties could not agree whether husband's "earned income" as defined in the MSA for purposes of calculating child support included his investment earnings or whether it was limited to his wages only. The arbitrator found that there was no "meeting of the minds" on the meaning of the word "income" and applied the doctrine of parens patriae to go beyond the terms of the MSA. He "found that [husband's] obligation to pay child support [was] not restricted to 'earned income' set forth in the agreement[.]" The arbitrator was convinced of husband's sincerity in joining the Church of Scientology on a full-time basis, and refused to impute to him any income. The arbitrator proceeded to "determine an appropriate amount [of child support] under the circumstances" based on the needs of the child as set forth in wife's case information statement and her testimony. He concluded that husband should pay $1800 a month in child support to wife for two of their three children. Once the middle child was emancipated, the obligation would drop to $900 a month.
Husband's investment earnings were meager: in 2009 he reported $50.16 in investment income and in the first month of 2010, the same month as arbitration, he had $8.30 in investment income.
The doctrine of parens patriae refers to the government's duty to protect the best interests of individuals who are unable to care for themselves, including minor children. See Faherty v. Faherty, 97 N.J. 99, 108-09 (1984).
To secure this obligation in light of the fact that husband had been making substantial contributions to the Church of Scientology, the arbitrator froze husband's brokerage account containing $200,000 and turned it over to wife as collateral. The arbitrator also awarded wife $7500 in counsel fees.
This determination was later reversed by the reviewing judge.
Wife moved to confirm the arbitration award and husband moved to vacate the award and cross-moved to set aside the MSA. The judge affirmed the child support award as well as counsel fees, finding that "the arbitrator acted appropriately by determining husband's child support obligation pursuant to the MSA."
Parties may arbitrate family matters. Faherty, supra, 97 N.J. at 108. "[W]hen parties in a dissolution proceeding agree to arbitrate their dispute, the general rules governing the conduct of arbitration shall apply, N.J.S.A. 2A:23B-1 to -32," The New Jersey Arbitration Act of 2003 (NJAA or the Act). Fawzy v. Fawzy, 199 N.J. 456, 480 (2009).
The NJAA provides that a "court shall vacate an award made in the arbitration proceeding if . . . an arbitrator exceeded the arbitrator's powers[.]" N.J.S.A. 2A:23B-23(a)(4). The Act further provides that if an award is vacated because an arbitrator exceeded the scope of his or her powers, "the rehearing may be before the arbitrator who made the award or the arbitrator's successor." N.J.S.A. 23B:-23(c).
"'A party seeking to vacate an arbitration award must first obtain trial court review of the award.'" Minkowitz v. Israeli, 433 N.J. Super. 111, 135, (App. Div. 2013) (quoting Manger v. Manger, 417 N.J. Super. 370, 376 (App. Div. 2010)). We review de novo a trial court's denial of a motion to vacate an arbitration award. Manger, supra, 417 N.J. Super. at 376.
An "arbitrator's powers are limited by the agreement of the parties and an arbitrator may not exceed the scope of the powers granted to him or her by the parties." Kimm v. Blisset, LLC, 388 N.J. Super. 14, 25 (App. Div. 2006). "[A]n arbitrator may not disregard the terms of the parties' agreement, nor may he rewrite the contract for the parties." Cnty. Coll. of Morris Staff Assoc. v. Cnty. Coll. of Morris, 100 N.J. 383, 391 (1985).
Husband relies on Cnty. Coll. of Morris, where a public employee challenged his termination from Morris County College, which, per his employment contract, required him to submit to binding arbitration on that issue. Id. at 386-87. The contract provided that he could only be fired for "just cause," a word which the document expressly defined. Id. at 387.
The arbitrator found just cause for the employee's termination existed, requiring him to be discharged, but also construed "just cause" to require the employer to engage in incremental disciplinary measures against the employee before termination could occur, which was not specified in the provision of the contract that defined "just cause." Id. at 392-93. As such, the arbitrator reduced the employee's termination to suspension. Id. at 393. The New Jersey Supreme Court concluded that the arbitrator had exceeded his powers.
Justice Clifford, writing for the majority, remarked that "the arbitrator's 'reading in' [of the requirement of incremental disciplinary measures] ignored the contractual provision that prohibited him from adding to, altering, or modifying the parties' agreement. It overlooked the fact that the . . . agreement was considered to be the complete understanding of the parties[.]" Ibid. The Court stated that "the arbitrator's authority is circumscribed by whatever provisions and conditions the parties have mutually agreed upon." Ibid.
The arbitrator here did not impute income to husband. He did not use husband's total income, both passive and earned, nor did he use only earned income as urged by husband. He opined that, regardless of the language of the MSA, pursuant to the doctrine of parens patriae, he had a duty to protect the best interests of the parties' children in fashioning child support. The arbitrator ignored the law of this state, as well as the provisions of the MSA, stating that child support was to be calculated according to the parties' income and instead based child support solely on the needs of the children as expressed by the mother. See N.J.S.A. 2A:34-23(a)(3) (requiring a court to consider "[a]ll sources of income" when awarding child support); see also Pressler & Verniero, Current N.J. Court Rules, Appendix IX-A to R. 5:6A at 2589 (2014) (explaining that the Child Support Guidelines "are based on the combined net income of the parents.").
The arbitrator wrote that he did not "accept the argument that I am precluded from going beyond the scope of the [MSA]." Arbitrators are not judges and do not share in the wellspring of powers afforded to the judiciary. Kimm, supra, 388 N.J. Super. at 35. Moreover, the NJAA requires an arbitrator to comply with the terms of an agreement. N.J.S.A. 2A:23B-21(c).
The doctrine of parens patriae is not available to an arbitrator. In Fawzy, the New Jersey Supreme Court rejected the argument that arbitration deprives the court of its parens patriae obligation to assure the best interests of a child. Fawzy, supra, 199 N.J. at 467, 476-77. Rather, the Fawzy Court observed that parents may submit to binding arbitration on custody matters and that the courts, bound by parens patriae, may review and vacate a subsequent award if harm to the child is shown. Id. at 478-79. The Court did not invest arbitrators with the power to apply the doctrine.
Husband argues alternatively that if we accept the determination of the arbitrator that there was no meeting of the minds on the issue of income, the MSA should be set aside because the child support agreement was an integral part of the parties' matrimonial settlement. The arbitrator's decision is unsustainable in its entirety. We reverse also the portion of the arbitration awarding counsel fees given the reversal on the issue the parties agreed to arbitrate.
We do not reach the issue of whether these counsel fees should be awarded to wife as part of the new arbitration conducted as a result of our decision.
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Both judges' orders are reversed and the matter remanded for arbitration to determine child support and, if necessary to resolve the issue, a plenary hearing in court to determine custody.
Reversed 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