New York Law Review

Tag: Support Modification

  • McNulty v. McNulty, 61 N.Y.2d 921 (1984): Arbitrability of Support Modification Disputes

    McNulty v. McNulty, 61 N.Y.2d 921 (1984)

    When a separation agreement contains a clear and unequivocal arbitration clause covering support modification, the arbitrator, not the court, determines whether a specific dispute, including one involving arrears, falls within the scope of that clause.

    Summary

    This case concerns whether a dispute over arrears in support payments, which accumulated before arbitration was invoked, should be decided by the courts or by an arbitrator. The Court of Appeals held that because the arbitration clause in the separation agreement expressly covered support modification, the arbitrator should decide whether the specific dispute, including the arrears, was a proper subject for arbitration. The Court also determined that by filing a cross-motion to compel arbitration, the defendant effectively commenced arbitration proceedings.

    Facts

    The parties, formerly married, had a separation agreement containing an arbitration clause. This clause expressly covered the issue of downward support modification. A dispute arose regarding arrears in support payments. The defendant (presumably the payor) filed a cross-motion to compel arbitration of the dispute. The plaintiff (presumably the payee) argued that the arrears were a sum certain under Domestic Relations Law § 244 and therefore not subject to arbitration.

    Procedural History

    The Appellate Division’s order was affirmed by the Court of Appeals. The Court of Appeals held that the arbitrator, not the courts, should determine the arbitrability of the arrears dispute given the broad arbitration clause in the separation agreement.

    Issue(s)

    1. Whether a dispute over arrears in support payments, accumulated before the invocation of an arbitration clause in a separation agreement, is a proper subject for arbitration when the agreement’s arbitration clause expressly covers support modification.
    2. Whether the use of the phrase “either party may submit such dispute to arbitration” limits the aggrieved party to a choice between arbitration and abandonment of the claim.
    3. Whether filing a cross-motion to compel arbitration constitutes effectively commencing arbitration proceedings.

    Holding

    1. Yes, because the arbitration clause in the parties’ separation agreement expressly, directly, and unequivocally covered the issue of downward support modification.
    2. Yes, because the phrase should be interpreted to limit the aggrieved party to a choice between arbitration and abandonment of the claim.
    3. Yes, because in view of the arbitrability of this dispute, the defendant effectively commenced arbitration with his cross motion to compel arbitration.

    Court’s Reasoning

    The Court reasoned that the arbitration clause in the separation agreement was broad enough to cover the dispute over support modification, including the arrears. The Court relied on Bowmer v Bowmer, 50 NY2d 288, 293, and Gangel v DeGroot, 41 NY2d 840, 841. Because the arbitration clause was sufficiently broad, the question of whether the specific dispute was arbitrable was for the arbitrator to decide, citing Stillman v Stillman, 80 AD2d 356, 359, affd on opn below 55 NY2d 653.

    The Court further addressed the arrears issue, stating that once it is decided that arrears may be covered by the arbitration clause, the arbitrator is empowered to consider arrears even though they accumulated before the arbitration clause was invoked. Although the plaintiff argued that Domestic Relations Law § 244 made these arrears a sum certain impervious to challenge, the Court noted that even under § 244, the defendant is allowed to show that his failure to seek relief earlier was motivated by “good cause.” The Court held that the defendant should be allowed to make such a showing before the arbitrator.

    The Court also held that the defendant’s cross-motion to compel arbitration effectively commenced arbitration proceedings under CPLR 7503(a).

    The case emphasizes the strong policy in favor of arbitration, particularly when the arbitration clause is broad. It also highlights the principle that procedural issues, such as whether a party has “good cause” for delaying a challenge to support obligations, are generally for the arbitrator to decide once arbitrability is established.

  • Bowmer v. Bowmer, 50 N.Y.2d 288 (1980): Arbitrability of Disputes Under Broad Arbitration Clauses in Separation Agreements

    Bowmer v. Bowmer, 50 N.Y.2d 288 (1980)

    A broad arbitration clause in a separation agreement, encompassing any claim or dispute arising out of or in connection with the agreement, includes disputes over modification of support obligations due to changed circumstances, unless the agreement explicitly excludes such matters from arbitration.

    Summary

    This case addresses whether a broad arbitration clause in a separation agreement allows arbitration of a dispute concerning the modification of support obligations based on changed circumstances. The husband sought arbitration to modify his support payments, arguing a change in circumstances warranted a reduction. The wife opposed, arguing the arbitrator lacked the power to modify the agreement. The New York Court of Appeals held that the broad arbitration clause encompassed the dispute, affirming the order to proceed with arbitration, emphasizing the parties’ intent to resolve all disputes related to the agreement through arbitration.

    Facts

    The Bowmers entered into a detailed separation agreement in 1972, including a broad arbitration clause covering any claim, dispute, or misunderstanding arising out of or connected with the agreement. The agreement also contained a formula for support payments and a provision for the husband to pay for the children’s college education if he could afford it. A dispute arose when the husband began deducting college tuition payments from his direct support payments to the wife. The wife demanded arbitration to recover the deducted amounts, while the husband sought arbitration to modify the support provisions due to changed circumstances.

    Procedural History

    The wife filed a demand for arbitration, which prompted the husband to file his own demand seeking a modification of support. Both parties sought to stay the other’s arbitration application. Special Term concluded the entire dispute should proceed to arbitration. The Appellate Division modified the Special Term’s order by staying arbitration of the husband’s request for modification of support obligations. The husband then appealed to the New York Court of Appeals.

    Issue(s)

    Whether a broad arbitration clause in a separation agreement, which provides for arbitration of “[a]ny claim, dispute or misunderstanding arising out of or in connection with this Agreement,” encompasses a dispute over the modification of support obligations due to a change in circumstances.

    Holding

    Yes, because the broad language of the arbitration clause indicates the parties’ intent to arbitrate all disputes arising from the agreement, including those concerning modification of support obligations due to changed circumstances, unless specifically excluded.

    Court’s Reasoning

    The Court of Appeals emphasized the broad language of the arbitration clause, stating it is difficult to conceive of a broader declaration of arbitrability. The court found that the husband’s claim for modification, whether viewed as an attempt to modify the agreement or as a claim that the agreement impliedly contemplated modification by an arbitrator, fell within the scope of the arbitration clause. The court distinguished between interpreting an agreement and rewriting it, noting that the arbitrator’s role is to interpret the agreement, not to rewrite it. The majority noted that it is for the court to determine whether a valid agreement to arbitrate exists and whether the asserted claim comes within the agreement. The Court reasoned that unless the agreement expressly permits the arbitrator to consider subsequent changes in circumstances, the arbitrator is bound by the terms of the original agreement. The dissent argued that the majority was improperly limiting the scope of the arbitration clause and returning to an outdated approach of judicial scrutiny of arbitration agreements. The dissent contended that the broad language of the arbitration clause should be given full effect, and any limitations on the arbitrator’s power to grant relief should be raised after the award, not before. The dissent highlighted that, “[a]ny claim, dispute or misunderstanding arising out of or in connection with this Agreement…shall be arbitrated” is about as broad as possible. The court held that arbitrators could not “rewrite” the agreement absent express language.