Unenforceable Clause In Arbitration Agreement Does Not Void Agreement

 by:  Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Arbitration (pd)One of my children's preschool teachers was fond of saying, "you get what you get and you don't get upset." (Not to my little angel, of course, but to other children.) In Curran v. Curran, the Appellate Division basically applied this admonition to the parties to an arbitration agreement, holding that they got what they intended out of the agreement, therefore they could not argue, after the fact, that an unenforceable provision in the agreement voided the entire agreement.

In Curran, plaintiff filed for divorce from defendant. With the advice of counsel, the parties entered into a consent order to refer all issues incident to their divorce to arbitration under the New Jersey Arbitration Act. In the consent order, the parties acknowledged that any arbitration award that was entered could only be set aside or modified by a court under the limited grounds set forth in the Arbitration Act — e.g., the award was procured by fraud, corruption, or undue means, the court found evidence of "evident partiality" by the arbitrator, the arbitrator exceeded his or her powers, etc.  But the parties also included a handwritten provision, which provided: "The parties reserve their rights to appeal the arbitrator's award to the appellate division as if the matter was determined by the trial court." This is the provision that would cause all of the problems.

After the arbitrator entered a preliminary award, plaintiff requested reconsideration. The arbitrator then issued a comprehensive award setting forth his findings of fact and conclusions of law. Plaintiff filed a motion in the Law Division for an order modifying the award, citing eight alleged "mistakes of law" made by the arbitrator. Plaintiff also argued that the intent of the handwritten provision was not to allow for direct appeal to the Appellate Division, but was instead was evidence that the parties intended a more searching review of the award that what would normally be allowed under the Arbitration Act. The trial court agreed, holding that the paragraph itself was unenforceable because it purported to "create subject matter jurisdiction by agreement." The trial court noted that "[t]he authority of a court to hear and determine certain classes of cases rests solely with the Constitution and the Legislature." But the trial court agreed with plaintiff that the handwritten provision demonstrated the parties' intent to provide for "a little more review" than what would normally be allowed under the Arbitration Act. Therefore, the trial court "in essence act[ed] as the Appellate Division of the arbitrator." It performed a comprehensive review of the arbitrator's decision and affirmed the award. 

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Married in 1967, Divorced in 1982, Sued for 47 Years of Alimony in 2014

by:  Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Divorce (pd)It seems like the plot of a Lifetime movie, but it is not (or, at least, not yet). Plaintiff and defendant marry in 1967 in Vietnam. In 1975, plaintiff flees Vietnam because of the "impending communist takeover." He ends up in New Jersey where, in 1981 he files for divorce. The judgment of divorce is entered in 1982, after which plaintiff re-marries. In 2004, defendant immigrates to the United States and ten years later seeks to vacate the divorce and collect alimony and equitable distribution "based on a 47 year marriage." These are the basic facts in a recent unpublished Appellate Division decision, Chau v. Khon.  

Here are the relevant missing details. After coming to America in 1975, plaintiff sent letters to defendant, "including a signed application for family reunification." Plaintiff's brother also sent letters to defendant. These letters were sent between 1975 and 1981, but defendant never responded. Plaintiff filed for divorce in 1981, asserting a separation of more than 18 consecutive months as the basis for the divorce. Because he had not heard from his wife in six years, and did not know here whereabouts, he sought permission to serve her by publication. The court agreed, and following publication, a judgment of divorce was entered.

Plaintiff remarried and the couple had a son. Plaintiff also had two daughters from his first marriage. In 1993, the daughters came to live with their father and his new wife. In 1996, plaintiff and his son even visited Vietnam and met with defendant. In 2004, defendant immigrated to the United States. She claims that she learned about the divorce in 2006 when she obtained copies of the original complaint and judgment of divorce. Nonetheless, she waited until 2014 to (1) move to vacate the original divorce and (2) file her own complaint for divorce, seeking alimony and equitable distribution going back to the original 1967 wedding date. She also filed lis pendens on three properties, only one of which was owned by plaintiff (the other two were owned by his son). Defendant claimed that she waited ten years to file the complaint because it took her that long to "obtain all of the papers they needed to prove that plaintiff knew where she was living in 1981 and 1982 so she could challenge his fraudulent divorce from her." This was important to her because, among other arguments, defendant claimed that plaintiff's assertion that he did not know her whereabouts when he filed the complaint for divorce was a fraud on the court.

Plaintiff opposed the motion to vacate the divorce and cross moved to discharge the lis pendens and for an award of attorney's fees. The trial court denied defendant's motion and granted plaintiff's motion (except the request for fees). The trial court explained that defendant "admitted that she knew of the divorce in 2006 , but failed to act diligently by waiting until 2014 to file her motion to vacate the divorce."  It also held that defendant failed to "address[] how her motion and proposed new divorce complaint would affect plaintiff's second wife, who had been married to plaintiff for over thirty years." Defendant appealed.

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Borrowers Cannot Vacate Final Judgment Of Foreclosure Because They “Read Something Wrong”

Foreclosure (PD)
This might have seemed obvious, but the Appellate Division nonetheless recently confirmed that a borrower's claim that it "read something wrong" could not establish "excusable neglect" sufficient to vacate a final judgment of foreclosure.

In New Jersey Housing and Mortgage Finance Agency v. Wolinski, borrowers defaulted on their mortgage and their lender filed a foreclosure complaint. The first complaint named borrowers and "John Doe and Jane Doe 1-10 (Names Being Fictitious) Tenants/Occupants." This complaint was voluntarily dismissed against all parties, real and fictitious. The second complaint, filed approximately six months later, also named borrowers and "John Doe and Jane Doe 1-10 (Names Being Fictitious) Tenants/Occupants." This complaint was also voluntary dismissed, but only as to the fictitious defendants.

Borrowers never answered the complaint and the lender filed a request to enter default, and then obtained final judgment by default. The lender scheduled a sheriff's sale but the borrowers filed for bankruptcy protection. The lender moved to lift the bankruptcy stay. After this motion was granted, the borrowers moved to vacate final judgment. They argued: (1) that they misread the dismissal of the second foreclosure complaint to be, like the dismissal of the first one, a dismissal of all defendants, not just the fictitious ones; and (2) that the trial court abused its discretion when it allegedly miscalculated the amount due in the final judgment. The Appellate Division rejected both of these arguments.

 

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When Is Time Really Of The Essence For Purposes Of Attacking A Final Judgment Or Order?

by:  Steven P. Gouin

In a recent decision, Orner v. Liu, the Appellate Division supplied some clarity on the issue of how long a party has to move for relief from a final judgment or order.  Unlike motions for relief from default judgments, which are routinely granted, motions under R. 4:50 are governed by a higher standard of proof, are appropriate in only six specific situations, and must be made “within a reasonable time” after entry of the final judgment or order.  What has caused some confusion is the requirement, found in Rule 4:50-2, that motions based on three of the six situations — mistake, newly discovered evidence, and fraud — must be brought “within a reasonable time . . . not more than one year after the judgment, order, or proceeding was entered or taken.”  Does this mean that one year is presumptively reasonable in these situations?  According to the Appellate Division in Orner, the answer to this question is no. While motions like these are always fact sensitive, Orner will be instructive going forward because there are only a handful of reported decisions construing the limits of reasonableness under Rule 4:50.

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