Brian B. v Lauren B. (2013 NY Slip Op 51066(U))

Brian B. v Lauren B.

2013 NY Slip Op 51066(U) [40 Misc 3d 1207(A)]

Decided on July 8, 2013

Supreme Court, Westchester County

Duffy, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and will not be published in the printed Official Reports.

On March 12, 2013, Defendant Lauren B. ("Defendant") filed an order to show cause, affidavit in support, and affidavit of Kevin M. McDonough, Esq. ("Defendant's Counsel"), and exhibits thereto, seeking an order, pursuant to CPLR § 7510, confirming an arbitration award entered by Arbitrator Bruce J. Wagner, dated February 1, 2013 (hereinafter, the "Arbitration Award"), issuance and entry of a judgment in the amount of $68,315.54 in favor of Defendant as against Plaintiff Brian B. ("Plaintiff"), issuance and entry of an additional judgment in the amount of $90,000.00 in favor of Defendant as against Plaintiff for payment of counsel's fees, directing Plaintiff to put into an escrow account held by Plaintiff's counsel the sum of $158,315.44, upon the closing of the sale of Plaintiff's Westchester home, and any such other and further relief as the Court deems just and proper, together with the costs of the motion.

On April 10, 2013, Plaintiff filed a Notice of Cross Motion, affidavit in support, and affirmation of Peter O. Bodnar, Esq. ("Plaintiff's Counsel"), and exhibits thereto, and memorandum of law in support, seeking an order vacating the Arbitration Award on the grounds that the Arbitrator Bruce J. Wagner ("Arbitrator") exceeded his authority and that the Arbitrator was partial, and directing a rehearing and determination before a new arbitrator to be appointed by the Court. In the alternative, Plaintiff seeks an order from the Court modifying the Arbitration Award, pursuant to CPLR § 7511(c), on the grounds of a miscalculation, and such other relief as the Court deems just and proper.

On April 16, 2013, Defendant filed an affidavit of Kevin M. McDonough, Esq., and [*2]exhibits thereto, in further support of Defendant's application for confirmation of the Arbitration Award and in opposition to Plaintiff's Cross Motion.

BACKGROUND AND PROCEDURAL HISTORY

Plaintiff and Defendant were married in 1994, and had three children during the marriage. The parties entered into a written settlement agreement on September 19, 2005 ("Settlement Agreement"), which was later incorporated by reference but survived the parties' Judgment of Divorce, which was entered on May 1, 2006 ("Judgment of Divorce").

On January 31, 2011, the parties entered into an arbitration agreement ("Arbitration Agreement") which was subscribed to by the Arbitrator on March 1, 2011.

On April 25, 2011, Plaintiff filed a notice of intention to arbitrate, pursuant to CPLR § 7503(c), seeking, pursuant to the parties' Settlement Agreement, a downward modification of his child support obligation and child related "add ons" based upon an involuntary change of financial circumstances.

On May 31, 2011, Defendant filed a cross-notice of intention to arbitrate, pursuant to CPLR § 7503(c), and sought enforcement of child support arrears and additional child support obligations provided under the Settlement Agreement.

Pursuant to the terms of the parties' Arbitration Agreement, the Arbitrator conducted a hearing on September 18, 19 and 27, 2012. Pursuant to the Arbitration Agreement, the Arbitrator was to render an award within sixty days after the matter was fully submitted for determination. The matter was fully submitted by the parties (including submissions of proposed findings of fact and conclusions of law) on November 19, 2012. Thereafter, upon written agreement by counsel for the parties, the date by which the Arbitrator was to render an award was extended to February 1, 2013.

On February 1, 2013, the Arbitrator issued an Arbitration Award which included findings of fact and conclusions of law. In sum and substance, the Arbitration Award denied Plaintiff's application for a downward modification of child support and granted Defendant child support arrears for the period May 1, 2012 through September 30, 2012, in the amount of $10,320.00; awarded Defendant unpaid add-on expenses, other than child care, for the period of May 1, 2012 through August 2012, in the sum of $6,592.17 and certain additional add-on expenses for the period of May 1, 2012 through August 2012, in the amount of $22,153.37, but denied Defendant's claims for gifts from the Subject Children to third parties, Canyon Club membership, and PTSA membership. The Arbitration Award also directed Plaintiff to pay an additional $7,500.00 for a Bar Mitzvah expense to Defendant. The Arbitration Award denied Plaintiff's claim for legal fees, determined that Plaintiff's unilateral reduction of child support payments and refusal to pay add-on expenses was willful, and granted Defendant $90,000.000 in counsel fees, $7,500.00 for arbitrator's fees, and $1,750.00 for reporting services.

Thereafter, the instant order to show cause and cross motion ensued.

CONCLUSIONS OF LAW

For the reasons set forth herein, Plaintiff's application to vacate and/or modify the Arbitration Award is denied and Defendant's application for confirmation of the Arbitration Award is granted.

It is policy in New York State to favor and encourage arbitration as a means of expediting resolution of disputes and conserving judicial resources. Rio Algom Inc. v. Sammi Steel Co., [*3]Ltd., 168 AD2d 250, 562 N.Y.S.2d 486, 488 (1st Dep't 1990), app. denied, 78 NY2d 853 (1991).

When parties consent to any type of arbitration, they effectively agree to accept whatever solution is reached by the arbitrator because the arbitrator's determination on the merits is conclusive. Subaru of Am. V. McKelvey, 141 Misc 2d 41, 42 (Sup. Ct., Monroe Co. 1988)(arbitrator's determination is conclusive); David Associates v. Bevona, 109 AD2d 623, 624 (1st Dept. 1985)(issues determined by arbitration have res judicata effect).

It is an arbitrator's duty to seek a "just solution" and the arbitrator does so unhampered by principles of substantive law or rules of evidence. Pearlman v. Pearlman, 169 AD2d 825, 826 (2d Dept. 1991); Matter of Bay Iron Works, 17 AD2d 804, 804-05 (1st Dept. 1962); McLaughlin, Practice Commentaries, McKinney's Cons. Laws of NY, Book 7B, CPLR 7501, et seq.

One of the purposes of arbitration is to permit the parties to select, instead of the courts, their own "judge" and a mode of dispute determination not governed either by the rules of substantive law or rules of evidence applicable to a court. Transpacific Transport Corp. v. Sirena Shipping Co., S.A., 9 AD2d 316, 320 (1st Dept. 1959), aff'd, 8 NY2d 1048 (1960); Matter of Wenger & Co. v. Propper Silk Hosiery Mills, 239 NY 199, 202-03 (1924). Thus, a court may not review questions of fact or even of law. Matter of SCM Corp., 40 NY2d 788, 793 (1976). Indeed, except for certain narrow, statutorily authorized circumstances, judicial review of an arbitration award is proscribed. CPLR § 7511; Pearlman at 826 (judicial review of arbitrator's award is severely limited).

Here, the terms of the parties' Settlement Agreement as well as their Arbitration Agreement are evidence of their intent to avoid litigation and to bind themselves to the determination of an arbitrator. The Settlement Agreement provides, in relevant part, that:

The terms of the Arbitration Agreement likewise manifest the parties' intent to bind themselves to the award of an arbitrator. That Arbitration Agreement provides, in relevant part, that:

. . .[T]o the extent that a dispute arises between the parties regarding designated issues, such dispute(s) are to be resolved by arbitration. As set forth below, the parties agree to submit the matters set forth herein to binding arbitration . . .

The award and judgment and/or order to be entered thereon, shall be a complete bar to any further claims or demands relating to the Arbitration issues through the date of the award (other than as provided in CPLR § 7509), shall be binding upon both parties, and each party [*4]hereby waives any and all right to challenge same.

Arbitration Agreement, ¶¶ 2, 6.

For the reasons set forth below, Plaintiff's cross motion to vacate or modify the Arbitration Award is denied. Defendant's motion to confirm the Arbitration Award is granted, with interest from the date of the award. In addition, Defendant is granted attorneys' fees in connection with the cross-motion.

A.Plaintiff Waived the Right to Seek to

Plaintiff is contractually barred from challenging the Arbitration Award, except as provided in CPLR § 7509. See Arbitration Agreement, ¶ 6; Settlement Agreement ¶ 13. As CPLR § 7509 has no provision to allow Plaintiff to seek to vacate the award, Plaintiff's cross-motion must be denied.

The parties' voluntary agreement to restrict judicial review of the Arbitration Award is a valid contractual provision that will not be undermined by this Court. Jarvis v. Regdos, 147 Misc 2d 1088, 1090 (County Ct., Erie Co. 1990) (parties to voluntary agreement may agree to anything they wish, so long as it does not violate public policy); Mt. St. Mary's Hospital v. Catherwood, 26 NY2d 493, 507 (1970)(no requirement for judicial review of consensual arbitration; parties to voluntary agreement are free to agree to contract in any way they wish); see also 22 NYCRR § 210.41 (in small claims cases, parties must consent to the finality of the arbitrator's decision and agree to give up any right to appeal).

In this case, there is no dispute that the parties voluntarily agreed to arbitrate and to limit the Court's review of any arbitration award. Arbitration Agreement ¶ 6; Settlement Agreement, ¶ 13. Accordingly, unlike a compulsory arbitration situation, judicial review of this Arbitration Award can be, and was, waived by the parties pursuant to agreement. Compare Caso v. Coffey, 41 NY2d 153, 156 (1976).

There also is no public policy reason to vitiate the parties' agreement to limit judicial review of the Arbitration Award to only those circumstances set forth in CPLR § 7509. Nor has Plaintiff articulated any such reason. Indeed, the public policy of this State - favoring arbitration as a means of reducing litigation and conserving judicial resources - is served by this Court's recognition and enforcement of the parties' contractual decision to limit judicial review. Sprinzen v. Nomberg, 46 NY2d 623, 629 (1979)(arbitration favored as efficacious procedure in which parties may select nonjudicial forum for resolution of disputes at minimum expense); N.Y.C. Transit Auth. v. Transport Workers Union of Am., 99 NY2d 1, 6-7 (2002); Matter of Transport Workers Union, Local 100 v. N.Y.C. Transit Auth., 57 AD.3d 684, 685 (2d Dept. 2008)(policy in New York to support arbitration and discourage judicial interference).

For the same reasons, the Court finds that Plaintiff also has abandoned any claim he may have had to seek to modify the Arbitration Award. Pursuant to CPLR § 7509, a party seeking to modify an arbitration award must apply to the Arbitrator within [*5]20 days of the delivery of the award, on any of the grounds stated in CPLR § 7511(c).^[FN1] In this case, the parties' Arbitration Agreement provided that this was the only recourse that either party had to challenge the Arbitrator's determination. See Arbitration Agreement, ¶ 6.

Plaintiff never sought modification of the Arbitration Award from the Arbitrator, either within the 20 day statutory period or thereafter. Accordingly, Plaintiff has abandoned that claim and his motion to this Court to modify the award is denied. Phoenix Mar. Co., Inc. v. New York City Transit Auth., 4 Misc 3d 1014A, 798 N.Y.S.2d 347 (Sup. Ct., New York Co. 2004); see also Excel Group, Inc. v. New York City Tr. Auth., 28 AD3d 708 (2d Dept. 2006)(party abandoned its claim by failing to pursue the contractual resolution procedure within agreed-upon time period); Calandro v. Home Ins. Co., 199 AD2d 262 (2d Dept. 1993)(failure to timely seek review from master arbitrator precludes judicial review).

B.Even if Judicial Review had not Been

Even if Plaintiff had not waived his right to seek to vacate the Arbitration Award, Plaintiff's cross-motion to vacate the Arbitration Award would be denied as Plaintiff has failed to "meet the heavy burden required of a party seeking to vacate an arbitration award." North Syracuse Cent. School Dist. v. North Syracuse Educ. Assn., 45 NY2d 195, 200 (1978).

Pursuant to CPLR § 7511(b)(1)(iii), an arbitration award will be upheld unless the moving party can establish, by clear and convincing evidence, that the arbitrator "exceeded his power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made." CPLR § 7511(b)(1)(iii); Muriel Siebert & Co., Inc. v. Ponmany, 190 AD2d 54, 593 N.Y.S.2d 1010, 1010 (1st Dept. 1993); Hausknecht v. Comprehensive Medical Care of NY, P.C., 24 AD3d 778, 779 (2d Dept. 2005). Only where an arbitrator gives a completely irrational construction to the contract provisions at issue, such that he creates a new contract for the parties, will an arbitrator be found to have exceeded his powers. National Cash Register Co. Wilson, 8 NY2d 377, 383 (1960); Amalgamated Transit Union v. Green Bus Lines, Inc., 50 NY2d 1007, 1009 (1980).

Here, no such showing has been made. Indeed the Court finds that Plaintiff's contention that the Arbitrator used the incorrect standard to determine whether Plaintiff was entitled to a downward modification is entirely baseless.

Pursuant to the parties' Settlement Agreement, in the event that Plaintiff's annual income fell below $2,000,000, he could seek a downward modification of child support. Settlement Agreement, ¶ 9(b). The standard agreed to by the parties for determining such application [*6]required consideration of "all of the parties financial circumstances at the time, including assets as well as all forms of income . . . ." Settlement Agreement, ¶ 9(b). In so doing, the parties expressly agreed to deviate from the applicable law for a downward modification.^[FN2] Id.

The Arbitration Award itself evidences that the Arbitrator used the exact standard set forth in the parties' Settlement Agreement. The language in the Arbitration Award expressly provides that the standard to be applied in considering Plaintiff's application for a downward modification of child support and maintenance is "the parties [sic] total financial circumstances at the time." Indeed, the Arbitration Award quotes the language from the parties' Settlement Agreement regarding the applicable standard to be considered. See Arbitration Award at ¶¶ 11, 96.

In addition, the Arbitration Award expressly recognizes that the parties had stipulated to vary from certain statutory and legal standards which might otherwise govern child support modification, and that their stipulation did not violate public policy. Id. at ¶ 95.

Moreover, the Arbitration Award evidences that the Arbitrator engaged in an exhaustive analysis of the parties' total financial circumstances, examining each party's total assets, total income, spending history, and lifestyle. Id. at ¶¶ 17-94. The Arbitrator specifically noted the lavish expenditures made by the Plaintiff at the time he was seeking a downward modification, including a boat purchase for $20,000, a vacation rental in the Hamptons for $12,000 per week, a new $100,000 investment, large cash withdrawals every month, large restaurant and liquor store expenses every month, and improvements to his current home. Id. at ¶ 24, 25, 27-36.

The Arbitrator concluded:

that "based upon the testimony and evidence adduced at the hearing, and considering the credibility of the witnesses and the parties total financial circumstances at the time, including the actual (and all forms of) income of the Husband, which is the standard by which an application for modification is to be adjudicated (Plaintiff's Exhibit 1 at 20), Plaintiff has not proved sufficient grounds, under the agreed standard, for a downward modification of the basic child support obligation or add-on expenses set forth in the September 2005 agreement and judgment of divorce . . . . "

Arbitration Agreement at ¶ 96 (emphasis added).

Where, as here, the Arbitrator specifically applied the parties' agreed-upon standard to resolve the dispute brought before him, interpreting the parties' agreement in light of what he found to be the parties' intent, this Court may not overturn the award unless it is irrational, violative of a strong public policy, or exceeds a specific limitation on the Arbitrator's power. [*7]Amalgamated at 1009. The Court finds no such bases to overturn the award here.

Plaintiff's contention that the Settlement Agreement should be interpreted as requiring a downward modification because Plaintiff's annual income fell below $2,000,000, the threshold amount in the parties' Settlement Agreement below which Plaintiff may seek a downward modification, also is without merit. There is no reading of the Settlement Agreement which supports such interpretation. The Agreement provides that, when Plaintiff's income falls below the threshold amount, the determination of any application for a downward modification shall be made using the standard of the parties' "total financial circumstances at the time."^[FN3] Settlement Agreement ¶ 9(b).

Accordingly, Plaintiff's cross-motion to vacate the Arbitration Award on the grounds that the Arbitrator exceeded his authority is denied.

An arbitration award will not be vacated on claims of bias unless a court finds, by clear and convincing evidence, that "the rights of that party were prejudiced by . . . partiality of an arbitrator appointed as a neutral." CPLR 7511(b)(1)(ii); Rose v. J.J. Lowrey & Co. et al., 181 AD2d 418, 418-19 (1st Dept. 1992); 645 First Ave. Manhattan v. Kalisch-Jarcho, Inc., 220 AD2d 517, 517 (2d Dept. 1995)(claim of actual partiality must be established by clear and convincing evidence); Hausknecht at 779; Santana v. Country-Wide Ins. Co., 177 Misc 2d 1, 8 (Civil Court., Queens Co. 1998), aff'd, 184 Misc 2d 420 (1st Dept. 2000). The mere inference of impartiality is insufficient to warrant interference with the arbitrator's award; the evidence must be stronger than that; it must be clear and convincing. Matter of Provenzano, 28 AD2d 528, 279 N.Y.S.2d 973, 974 (1st Dept. 1967), aff'd, J.D.H. Rest. Inc. v. New York State Liquor Authority, 21 NY2d 846 (1968); Rose v. J.J. Lowrey & Co. et al., 181 AD2d at 419.

Here, Plaintiff has shown no evidence that the Arbitrator was biased. Indeed, Plaintiff's contentions that the Arbitrator's findings were "so one-sided as to clearly indicate bias" and that the Arbitrator's adoption of the proposed findings of fact and conclusions of law submitted by Defendant, including some mathematical discrepancies, are wholly insufficient to establish partiality.

As an initial matter, the Arbitrator's determination that Defendant's position was much stronger, or more correct, than Plaintiff's position is not a basis for a finding of partiality. E. Arthur Tutein, Inc. v. Hudson Valley Coke & Products Corp., 230 A.D. 419, 423-24 (1st Dept. 1930)(that arbitrator was strongly convinced of merits of party's claim does not establish bias), aff'd, 256 NY 530 (1931).

Second, the contention that a near verbatim adoption of proposed findings submitted by Defendant, including errors, is evidence of partiality stands the purpose of such submission by [*8]the parties on its head. Adoption of such findings by the Arbitrator is the very reason the parties submit such proposed determinations to the Arbitrator. See, e.g., Altieri v. Altieri, 35 AD3d 1093, 1096 (3d Dept. 2006(court's adoption of party's proposed findings proper where supply reasons for court's decision and court edited the findings); Henery v. Henery, 105 AD3d 903, 904 (2d Dept. 2013)(adoption of proposed findings permissible, particularly since court edited them). Thus, the Arbitrator's adoption of Defendant's proposed findings of fact and conclusions of law simply illustrates the Arbitrator's determination that Defendant's position was the correct one.

In addition, any errors by the Arbitrator, even if adopted from one of the parties, do not demonstrate partiality. Lee v. Omni Berkshire Palace Hotel, 302 AD2d 286, 287 (1st Dept. 2003)(errors of law or fact do not demonstrate partiality).

Finally, Plaintiff's contention that the Arbitrator relied upon "minor, petty, and irrelevant points" argued by Defendant, does not establish clear and convincing evidence of bias. Matter of Eastman Assoc., Inc. (Juan Ortoo Holdings, Ltd.), 90 AD3d 1284, 1286 (3d Dept. 2011)(allegations that Arbitrator unfairly weighed evidence against one party does not establish clear and convincing evidence of bias); Scollar v. Cece, 28 AD3d 317, 317 (1st Dept. 2006), rearg. denied, 2006 NY App. Div. Lexis (1st Dept. 2006)(conclusory allegations of bias insufficient to warrant vacating award).

In sum, Plaintiff's failure to establish that the Arbitrator was biased mandates denial of Plaintiff's application to vacate the Arbitration Award on that ground.

C.The Arbitration Award is Binding Upon the

Parties and Is Hereby Confirmed by the Court

CPLR § 7510 provides that the Court "shall confirm an award upon application of a party made within one year after its delivery to him, unless the award is vacated or modified upon a ground specified in section 7511."

Here, the Arbitration Award was issued on February 1, 2013 and Defendant's order to show cause seeking its confirmation was filed on March 12, 2013, well within the one year required by CPLR § 7511.

As the Court finds no reason to vacate or modify the Arbitration Award, it is hereby confirmed. Bernstein Family Ltd. Partnership v. Sovereign Partners L.P., 66 AD3d 1, 5 (1st Dept. 2009)(unless opposing party puts forth sufficient ground for vacatur or modification, court must confirm award).

In addition, pursuant to CPLR § 7514(a), upon submission of a proposed judgment by Defendant, on notice, the Court will enter judgment on behalf of Defendant as against Plaintiff in the amount of $158,315.54, the amount awarded to Defendant in the Arbitration Award, plus interest (see Section E, infra). See Arbitration Award, ¶¶ 100 -104, 107, 109-10.

D.Defendant is Awarded Reasonable Attorney Fees for this Motion

It is within the Court's discretion to award counsel fees in post-judgment proceedings involving enforcement. Domestic Relations Law § 237; DeCabrera v. DeCabrera-Rosete, 70 NY2d 879, 881 (1987). The Court notes that the parties' Settlement Agreement also provides for an award of counsel fees if a party fails to comply with the terms of the Settlement Agreement. See Settlement Agreement, ¶ 16.

The standard for awarding counsel fees includes an inquiry into the nature and extent of services, the performance of counsel under the circumstances, the difficulty of [*9]the case, the results achieved and counsel's reputation in the legal community. Id.; see also Barnes v. Barnes, 54 AD2d 963 (2d Dept. 1976); McCann v. Guteri, 100 AD2d 577 (2d Dept. 1984). The party seeking the requested fees does not need to prove an inability to pay the fees, although the Court is guided by the relative financial circumstances of the parties and the merits of the matter before the Court. DeCabrera at 881.

The Court may consider, as here, the fact that Plaintiff failed to comply with the Arbitration Award and engaged in conduct which resulted in unnecessary litigation as a basis for the award of fees to Defendant. Despite the unambiguous language of the parties' Settlement Agreement and Arbitration Agreement, Plaintiff failed to make the full amount of such payments awarded to Defendant by the Arbitration Award and instead filed a cross motion seeking to vacate or modify such award.

Unless the parties' consent to a determination of such fees upon submission by Defendant's counsel of an accounting of fees incurred in connection with the cross-motion, the Court will hold a hearing for determination of such fees on August 6, 2013.

E.Defendant is Awarded Interest from the Date of the Award

Defendant also is awarded statutory interest in the amount of 9% per annum on the Arbitration Award, computed from February 1, 2013, the date of the award. See CPLR § 5002 (interest shall be recovered upon total sum awarded from the date the decision was made to the date of entry of final judgment); CPLR § 5004 (interest at rate of 9% per annum); Board of Education v. Niagara-Wheatfield Teachers Assoc., 46 NY2d 553, 558 (1979)(upon confirmation of an arbitrator's award, interest should be awarded from the date of the award); Matter of Shimon v. Silberman, 92 AD3d 789, 790-91 (2d Dept.), app. denied, 2012 NY Slip Op. 71961 (2012).

F.Establishment of Escrow Funds

With respect to the temporary relief granted in Defendant's Order to Show Cause, directing Plaintiff's counsel to retain $158,315.54 in an escrow account upon any sale of Plaintiff's Westchester home, the sum of $158,315.54, plus 9% interest from February 1, 2013, to the date of this Decision and Order, shall be placed in escrow with Plaintiff's Counsel, to be used to pay the judgment awarded herein. If funds already have been placed in escrow pursuant to the March 12, 2013 Order to Show Cause, such funds shall be immediately released to the Defendant in payment of the judgment awarded herein. Defendant is directed to submit a proposed judgment on notice consistent with this Decision and Order.

The Court considered the following submissions by the parties: Defendant's Order to Show Cause, filed March 12, 2013, and accompanying Affidavit of Lauren B., sworn to March 11, 2013, Affidavit of Kevin M. McDonough, Esq., sworn to March 11, 2013, and exhibits; Plaintiff's Notice of Cross-Motion, filed April 10, 2013, and accompanying Affirmation of Peter O. Bodnar, Esq., dated April 10, 2013, Affidavit of Brian B., sworn to April 9, 2013, and exhibits thereto, and Memorandum of Law, filed April 10, 2013; Defendant's Memorandum of Law, and Affidavit of Kevin M. McDonough, Esq., in further support of Order to Show Cause and in opposition to Plaintiff's cross-motion, filed April 16, 2013.

This constitutes the Decision and Order of the Court.

Dated: White Plains, New York