ALEX N. CHEREPAKHOV VS. DONNA CHEREPAKHOV (FM-19-0168-03, SUSSEX COUNTY AND STATEWIDE) ( 2019 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-3687-17T2
ALEX N. CHEREPAKHOV,
Plaintiff-Respondent,
v.
DONNA CHEREPAKHOV,
n/k/a DONNA SILVERMAN,
Defendant-Appellant.
__________________________
Argued January 15, 2019 – Decided May 13, 2019
Before Judges Rothstadt and Natali.
On appeal from Superior Court of New Jersey, Chancery
Division, Family Part, Sussex County, Docket No. FM-
19-0168-03.
Cara A. Parmigiani argued the cause for appellant.
Mariann C. Murphy argued the cause for respondent
(Laemers Murphy & Neggia, LLC, attorneys; Peter J.
Laemers and Mariann C. Murphy, on the brief).
PER CURIAM
Defendant Donna Cherepakhov, now known as Donna Silverman, appeals
from the Family Part's April 13, 2018 denial of her motion to vacate an arbitrator's
award that resolved defendant's and plaintiff Alex N. Cherepakhov's disputes about
post-judgment issues arising from their 2003 divorce. Defendant contends that the
trial court erred by refusing to vacate the award based upon (1) the arbitrator's
inordinate eight-year delay in issuing her decision; (2) the award being arbitrary and
capricious because it was unsupported by the facts and based upon incorrect legal
conclusions; (3) the award being contrary to the parties' children's best interest; and
(4) the award failing to comport with the parties' property settlement agreement
(PSA), or with interim administrative orders issued in the arbitration.
We have considered defendant's arguments in light of the record and
applicable legal principles. We affirm substantially for the reasons stated by Judge
Michael C. Gaus in his written decision issued with the April 13, 2018 order denying
defendant's motion.
The salient facts are undisputed. The parties were married in 1992 and had
two children: one daughter born in 1996 and another in 1999. They were divorced
on February 26, 2003 pursuant to a Judgment of Divorce (JOD) that incorporated
their PSA.
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The PSA required plaintiff to pay support in the amount of $7500 per month
for ten years beginning in 2002, with "half of this amount or $3,750.00 [being]
allocated solely as alimony . . . ." Plaintiff agreed that he would not modify his
support obligation during the ten year period "unless his gross income for any year
falls below $375,000.00."
The PSA imposed a child support obligation on plaintiff that required him to
pay $570.00 per month, per child while a child was away at college and "$1,500.00
per month, per child for those complete months that the child returns to [defendant]
while on break from college." In addition, plaintiff was "solely and exclusively
responsible for all of the college education expenses incurred for the children." The
PSA obligated the parties to support their children until emancipation, which it
defined as, among other events, the latter of a "child being graduated from high
school and reaching the age of eighteen (18) years or the completion of four (4)
continuous academic years of college education or other post-high school
education . . . ."
Addressing the distribution of the parties' assets, the PSA included provisions
relating to their home in Sparta and a condominium in Point Pleasant that they owned
jointly. As to the Sparta home, the parties agreed that plaintiff could use it as
collateral for a home equity line of credit (HELOC) and that defendant could
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construct a swimming pool there using funds loaned to her by plaintiff, which were
to be repaid upon the sale of the Sparta home.
As to the condominium, the parties agreed that plaintiff would own the unit,
but that it would eventually be transferred to the children unencumbered by any
liens. During the interim period, the parties would rent the unit to others and the net
income would be paid to defendant until title was transferred to the children. After
the transfer, the net income would be used for the children's college expenses.
After their divorce and years of substantial post-judgment litigation, on
November 9, 2009, the parties and their attorneys1 signed a consent order reflecting
their agreement to participate in binding arbitration to resolve the parties' issues.
Those issues focused upon an application made by plaintiff to reduce his support
based upon an alleged reduction in income as contemplated by the PSA.
In the consent order, the parties gave the arbitrator authority to "grant any
remedy or relief that [she] deems just and equitable . . . ." The only exception related
to custody, as the parties agreed that the arbitrator would not have any authority to
change custody. They designated a specific attorney as the arbitrator and agreed that
1
Although the parties were represented by counsel at the time the order was entered,
at various points throughout their litigation and arbitration, one or both of the parties
was not represented by counsel.
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not only would the arbitrator's award be binding and conclusive, but that they could
not appeal from the award to the Superior Court, with the exception that a party
could seek to vacate the award as provided under N.J.S.A. 2A:24-8.2
Notably, the parties' consent order authorized the arbitrator to seek relief from
the court if a party did not cooperate. Specifically, the consent order stated if a "party
refuse[d] or neglect[ed] to follow the directions of the arbitrator or to furnish the
arbitrator with any papers or information demanded, the arbitrator [was]
empowered . . . to proceed ex parte and if necessary to return to court for the
authority to subpoena . . . witnesses or documents."
The parties first met with the arbitrator in December 2010, after which they
were to engage in discovery and make submissions to the arbitrator. While the
arbitration was pending and the parties exchanged discovery, the arbitrator was
2
Although the order referred to N.J.S.A. 2A:24-8, part of an Act that addresses
arbitration of collective bargaining agreements, the parties agree that the applicable
statute was actually N.J.S.A. 2A:23B-3, a section of New Jersey's Arbitration Act,
which is applicable to all other agreements to arbitrate. See Fawzy v. Fawzy, 199
N.J. 456, 465 n.1 (2009) ("All agreements to arbitrate made on or after January 1,
2005, are governed by N.J.S.A. 2A:23B-1 to -32, except for collective bargaining
agreements. N.J.S.A. 2A:23B-3(c). N.J.S.A. 2A:24-1 to -11 now governs only the
arbitration of collective bargaining agreements"). See also Manger v. Manger, 417
N.J. Super. 370, 375 (App. Div. 2010) ("Both parties apparently agree that the
Arbitration Act governs review of the arbitration award because they fashioned their
arguments with specific reference to the Arbitration Act").
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called upon to resolve several interim disputes. Between April 2010 and August
2011, the arbitrator entered six administrative orders. The final interim order
provided that title to the condominium would be transferred from plaintiff to
defendant, who would manage the property in trust for the children's benefit. The
order also affirmed plaintiff's support obligation in the PSA: a total of $7500 per
month, with $3750 as alimony and $3750 as child support. Plaintiff's obligation
would be reduced by $1875 per month for as long as one of the daughters remained
in his temporary custody. The order also addressed plaintiff's failures to meet
discovery demands and provide the arbitrator with documentation of his financial
circumstances to support his request for a modification of support.
In 2012, defendant filed a motion with the Family Part seeking to enforce
various provisions of the arbitrator's administrative orders dealing with support
issues and to vacate others that addressed custody and parenting time disputes. On
September 28, 2012, the motion judge filed an order granting the motion to vacate
because, as to parenting time and custody issues, the arbitrator exceeded the scope
of her authority because the parties' agreement to arbitrate expressly excluded from
arbitration any issues related to a change in custody. All of the other issues were
referred back to the arbitrator. While the arbitration was pending, neither the parties
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nor the arbitrator sought any further assistance from the court relating to the
arbitration or any delay in a final award being made.
The arbitration hearings began on April 12, 2013. At that day's proceedings,
the arbitrator noted that she had met with the parties several times and that there had
been no resolution despite their good-faith efforts. Additional hearings were
conducted through January 25, 2014, the last day that the arbitrator considered
testimony. On that day, the arbitrator stated that "[t]here [we]re documents that
need[ed] to be obtained" from defendant. They included documentary support for
medical expenses and an accounting for rent defendant collected from the
condominium. However, many of those documents were never provided even
though the parties continued to supply others to the arbitrator.
During the ensuing months, defendant sought on numerous occasions to
obtain a final award, estimating that she contacted the arbitrator approximately 618
times. Emails between defendant and the arbitrator reveal that the parties' failure to
supply needed information contributed to the delay. In one email, the arbitrator
stated that "delays were caused by both [defendant] and [plaintiff] over the course
of time ranging from not providing discovery to changing positions to not being
available for a variety of reasons" and that "documents [we]re missing or [we]re
incomplete and don't tell the story [the parties] each suggest they do." In a
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subsequent email, the arbitrator noted the "many delays, hiatuses, [and] discovery
detours" and stated that "[defendant] and [plaintiff] both opted not to have attorneys,
to not follow through with discovery, to raise new twists and turns, to fail to provide
adequate proofs and to essentially dump a convoluted mess in [her] lap." In 2017,
the arbitrator responded to demands for a final award and stated that the parties "both
kn[e]w that [she] was provided with limited and very convoluted proofs and it ha[d]
been a nightmare to sort it all out." The arbitrator also stated in a July 2017 email
that she had not been paid for her services by either plaintiff or defendant in two
years. In addition to the problem of obtaining information or payment from the
parties, the arbitrator suffered personal hardships during the pendency of the matter
that also contributed to the delay.
The arbitrator issued her final "Arbitration Order" on November 1, 2017. In
the order, the arbitrator continued to express her concern that she was not provided
with sufficient information. For example, she stated that because the parties "have
provided insufficient evidence to adequately and accurately address the [HELOC]
against [defendant]'s home in Sparta, New Jersey on a separate and distinct level . . .
that issue [was] folded into the global consideration of all aspects of this case . . . ."
Because it was unclear how much of the balance of the HELOC was related to the
original cost of the pool, interest, or funds taken out by either party, it could not be
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determined which party should be responsible for which portion of the outstanding
balance. The arbitrator suggested that the parties be guided by the direction in the
remainder of the agreement.
The arbitrator also explained that defendant had not "fully accounted for the
rental income and expenses relative to" the condominium through evidence and
plaintiff had not transferred title to the children or to a trust for their benefit, as he
was ordered to do numerous times. The arbitrator ordered that the condominium
was to be immediately appraised, after which defendant would have the right of first
refusal to purchase it. If she chose not to purchase it, it would immediately be listed
for sale and sold for the highest price obtainable, and the proceeds would be used
first to satisfy the HELOC associated with the Sparta property. Any remaining funds
would be applied to the children's undergraduate college expenses.
Regarding plaintiff's support obligation, the arbitrator found that he had
proven that his income declined for the years 2009 and 2010, but no other years were
evaluated and there was no sufficient basis to make adjustments relative to other
years. The order also indicated that defendant had failed to provide any
documentation regarding other reimbursements she sought from plaintiff, such as
the children's dental expenses and extracurricular activities, and as such, they were
denied. Finally, the order stated that any of the parties' younger child's college
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expenses not covered by the sale of the condominium would be shared equally
between the parties.
Before the parties received a copy of the final Arbitration Order, on October
20, 2017, defendant filed a motion to compel the arbitrator to render her decision.
She also sought an order requiring that plaintiff pay alimony and child support
arrears; repay the HELOC on the Sparta property; transfer the condominium to a
trust for the children's benefit; and pay counsel fees. After the parties received
copies of the final Arbitration Order in December 2017, defendant withdrew her
motion.
Plaintiff filed a motion to confirm the final arbitration award and seeking
counsel fees and costs. Defendant filed a cross-motion to set aside the final
arbitration award and enforce previous orders entered in the arbitration.3
In support of her cross-motion, defendant submitted a certification stating that
she never agreed to arbitration; that by December 2010, the arbitrator had all of the
information necessary to render a decision and never requested additional
information; and that she had paid $10,000 for the arbitrator's services. Defendant
3
The parties did not provide a copy of this cross-motion in their appendices. We
glean from the ensuing order denying defendant's applications that her motion
sought an order directing plaintiff to pay alimony and child support arrears; the
children's tuition expenses; the balance owed on the HELOC; and the cost of the
pool. Defendant also sought relief relating to the condominium.
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further stated that upon receiving the Arbitration Order on December 8, 2017, she
noticed that plaintiff had already signed it and concluded that he "had an opportunity
to read and review the document before [she] even received it." Defendant
contended that the decision resulted in a windfall to plaintiff; that the sale of the
condominium could not cover the HELOC and the children's college expenses; and
that she was "stunned" to learn that the arbitrator was lacking documents because
she had never requested any. Defendant asserted that the decision "radically
differ[ed]" from the parties' PSA and the August 2011 administrative order,
rendering it "pattently unfair" (sic).
On April 13, 2018, Judge Gaus entered an order granting plaintiff's motion to
confirm the Arbitration Order and denying plaintiff's motion for counsel fees and all
of the relief sought by defendant, including her motion to vacate the Arbitration
Order. In his accompanying Statement of Reasons, the judge explained that
defendant failed to prove that the Arbitration Order should be vacated for any of the
reasons stated in N.J.S.A. 2A:23B-23(a)4 or because its implementation resulted in
4
N.J.S.A. 2A:23B-23 states in pertinent part the following:
a. Upon the filing of a summary action with the court by a
party to an arbitration proceeding, the court shall vacate an
award made in the arbitration proceeding if:
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any harm to the children that would warrant vacating the Arbitration Order under
Fawzy, 199 N.J. at 478-79. The judge denied plaintiff's motion for counsel fees
because he failed to submit an affidavit of services as required by Rule 5:3-5(c) and
Rule 5:3-5(d), and denied defendant's motion for additional monetary relief because
the parties agreed that their financial issues would be decided in arbitration. The
(1) the award was procured by corruption, fraud, or other
undue means;
(2) the court finds evident partiality by an arbitrator;
corruption by an arbitrator; or misconduct by an arbitrator
prejudicing the rights of a party to the arbitration
proceeding;
(3) an arbitrator refused to postpone the hearing upon
showing of sufficient cause for postponement, refused to
consider evidence material to the controversy, or
otherwise conducted the hearing contrary to section 15 of
this act, so as to substantially prejudice the rights of a party
to the arbitration proceeding;
(4) an arbitrator exceeded the arbitrator's powers;
(5) there was no agreement to arbitrate, unless the person
participated in the arbitration proceeding without raising
the objection pursuant to subsection c. of section 15 of this
act not later than the beginning of the arbitration hearing;
or
(6) the arbitration was conducted without proper notice of
the initiation of an arbitration as required in section 9 of
this act so as to substantially prejudice the rights of a party
to the arbitration proceeding.
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judge also found defendant's assertion that she did not agree to arbitrate but was
"ordered" to attend arbitration "simply not true."
Turning to the "extraordinary" amount of time between the commencement
of arbitration and the final order, the judge found that it was due to defendant's failure
to provide documents, fund expenses for a joint expert, and pay arbitration fees. The
judge pointed to the arbitrator's numerous emails to the parties requesting
documentation and found defendant's assertion that she was "'stunned'" to learn that
the arbitrator was lacking documents to be "meritless."
Judge Gaus also found that the arbitrator's decision reflected the lack of
information with which she was supplied, and explained that there was "no valid or
even persuasive justification provided by defendant for failing to supply sufficient
proofs, while simultaneously demanding that the arbitrator render a final
decision . . . ." The judge held that the arbitrator did not exceed her powers. Finally,
the judge found defendant's allegation that plaintiff received a copy of the final
decision before she did to be without merit, and concluded that no circumstances
existed to warrant overturning the arbitration agreement or vacating the final award.
This appeal followed.
On appeal, defendant avers that it was error for Judge Gaus to not set aside
the Arbitration Order. She asserts that overall, the Arbitration Order "results in a
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substantial windfall to [plaintiff] in that it does not require him to pay back alimony,
child support, or educational expenses, and it does not adequately address the
division of the parties' real estate, and fails to include direction to [plaintiff] to pay
for" the HELOC. She also contends that the arbitrator's decision regarding child
support, college expenses, and graduate school expenses caused the children harm
"to the extent that they would not receive the monies owed to them for their support
as set forth in the parties' PSA and prior [o]rders."
A court's review of an arbitration award is necessarily "narrow" so that the
benefits of arbitration as an "effective, expedient, and fair" means of dispute
resolution are preserved. Fawzy, 199 N.J. at 470. Because a trial court's decision to
affirm or vacate an arbitration award is a decision of law, our review is de novo.
Minkowitz v. Israeli, 433 N.J. Super. 111, 136 (App. Div. 2013); see also Manger,
417 N.J. Super. at 376.
We conclude from our review that defendant's arguments on appeal are
without merit. We affirm substantially for the reasons expressed by Judge Gaus in
his cogent written decision. We only add the following comments.
Judge Gaus correctly applied N.J.S.A. 2A:23B-23 and Fawzy in determining
whether defendant proved she was entitled to any relief. Defendant's contentions
about the arbitrator's decision being arbitrary and capricious or failing to comport
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with the parties' PSA or pendente lite administrative orders are not cognizable bases
to set aside the award in the absence of an agreement to expand the scope of judicial
review to encompass the claimed errors. See Fawzy, 199 N.J. at 482 n.5 ("parties
may agree to a broader review than provided for by the default provisions in the
Arbitration Act [if] the agreement . . . accurately reflect[s] the circumstances under
which a party may challenge the award and the level of review agreed upon")
(citation omitted); see also Tretina Printing, Inc. v. Fitzpatrick & Assocs., Inc., 135
N.J. 349, 358 (1994). Moreover, we too discern no harm to the now adult children
in accordance with the parties' agreement. See Fawzy, 199 N.J. at 479 ("Mere
disagreement with the arbitrator's decision obviously will not satisfy the harm
standard. The threat of harm is a significantly higher burden than a best-interests
analysis"). We also reject defendant's unsupported contention that she established
that the delay in the arbitration being finalized caused her to suffer any prejudice.
Accordingly, we agree with Judge Gaus that defendant failed to meet her burden to
establish cause for vacating the Arbitration Order. See Minkowitz, 433 N.J. Super.
at 136; see also Pressler & Verniero, Current N.J. Court Rules, cmt. 3.3.3 on R. 4:5-
4 (2019).
Having said that, we would be remiss if we did not comment on the
unacceptable delay in completing the arbitration. It is beyond cavil that "[t]he goal
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of arbitration is to bring the parties' issues to a final resolution, 'in a speedy,
inexpensive, expeditious, and perhaps less formal manner' than full-blown litigation
in court culminating in a lengthy trial." Curran v. Curran, 453 N.J. Super. 315, 321
(App. Div. 2018) (quoting Minkowitz, 433 N.J. Super. at 132). Certainly, we
understand that an arbitrator's or attorney's or a party's personal hardship can cause
an unavoidable obstacle to achieving the goals of an arbitration. However, where
parties to a court-ordered arbitration do not comply with an arbitrator's directive to
produce information necessary to a quick resolution, the remedy is not to wait for
years hoping they shall comply. Rather, a party or an arbitrator should seek judicial
intervention on an expedited basis to assist in securing the needed information,
especially where, as here, the parties' agreement incorporated a provision
authorizing the arbitrator to seek court assistance even on an ex parte basis.
Affirmed.
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