50 N.Y.2d 288 | NY | 1980
Lead Opinion
OPINION OF THE COURT
Confronting in this case the increasingly common use of arbitration in the context of a dispute between former
After nearly 17 years of marriage, in April of 1972 John and Dorothy Bowmer entered into a lengthy and detailed separation agreement which, as later incorporated but not merged in a judgment of divorce, provided for the husband’s payment of alimony and support for their three minor children pursuant to a carefully arranged formula. Its arbitration clause, numbered paragraph 17, reads in pertinent part: "Any claim, dispute or misunderstanding arising out of or in connection with this Agreement, or any breach hereof, or any default in payment by the Husband, or any matter herein made the subject matter of arbitration, shall be arbitrated”.
As the clause suggests, at various points the agreement delineated certain matters that were expressly made arbitrable, including adjustments in the support formula (upon the stated contingencies that the tax laws were amended to make support payments taxable to the husband and that the Government’s cost of living index was discontinued or its method of publication altered) and in the extent of the husband’s obligation to underwrite college costs should the parties disagree over the husband’s ability to meet them.
The present dispute had its genesis in July, 1977, when Bowmer informed his former wife that, because of changed circumstances, as of February, 1978 he would reduce his support payments by almost $1,000 per month and make no further tuition payments.
But, on Ms. Bowmer’s appeal from so much of the order that directed arbitration on the issue of reduction in the level of support payments, the Appellate Division modified, holding that issue to be nonarbitrable (67 AD2d 8, 10). On the former husband’s appeal to us, therefore, the sole question is whether the arbitrator may properly consider the claim for downward modification on the support obligations. For the reasons which follow, we conclude he may not and, therefore, wé now affirm the order from which this appeal arises.
Arbitration clauses are by now familiar provisos in separation agreements. Indeed, aside from expressing the parties’ preference for a means of dispute resolution more informal, more expedient and possibly less costly than litigation (Matter of Siegel [Lewis], 40 NY2d 687, 689), an arbitration provision may well have been intended to furnish insulation from the potential for notoriety and other stresses that so often accompanies the airing of marital disputes in court (see Matter of Lasek v Lasek, 13 AD2d 242, 244). Moreover, resort to the arbitral forum may afford the spouses an opportunity to have their grievances heard by someone who they think may be especially well qualified in matrimonial matters. (See 1 Lindey, Separation Agreements and Ante-Nuptial Contracts, §29.)
But as with such provisions in the commercial context generally, the rule is clear that unless the agreement to arbitrate expressly and unequivocally encompasses the subject
For, though the parties might well have thought that the particularized matters were subsumed under the general arbitration language — in which case they could be understood as merely intending to emphasize the arbitrability of certain disputes — the inclusion perhaps more reasonably suggests that the spouses viewed the general language somewhat qualifiedly. This accords with the rule of construction that, in such cases, the specific provisions tend to restrict the general (see 4 Williston, Contracts [3d ed], § 624, pp 822-825). Thus, rather than place reliance on a single boilerplate proviso,
Further evidence that the arbitration clause was not intended to encompass the dispute here comes from the fact that the support provisions themselves were particularly detailed and drawn flexibly to anticipate changes in the spouses’ circumstances. Exemplifying this is the agreement’s design for a sliding scale of support payments equivalent to 50% of the husband’s gross income, but in no event less than $14,000 or more than $30,000, less an amount equivalent to one half of
The sense of these provisions, taken together, is to indicate that the parties gave their attention to the possibility of changed circumstances and tried to address the problem by injecting elasticity into the support formula itself. Given this and the fact that the husband’s obligation to pay for the costs of his children’s college education was expressly made modifiable under changed circumstances and specifically made the subject of arbitration, it is significant that neither the modification nor arbitrability of the more fundamental support obligation is addressed by any term of the 37-page separation agreement.
The omission becomes especially important in light of the inability of courts to effect any change in an adequate level of support fixed by a valid and unimpeached separation agreement unless it has been merged in a judgment of divorce (Goldman v Goldman, 282 NY 296, 302-304; Schmelzel v Schmelzel, 287 NY 21, 26-27; 2 Foster and Freed, Law and the Family, § 28.64). Of course, had they so intended, the parties could have agreed that the support provisions be modifiable by judicial proceedings under appropriate circumstances (see Kleila v Kleila, 50 NY2d 277; Hunter v Hunter, 57 AD2d 797). But they did not. And, although the power to alter the support provisions in a separation agreement may likewise be conferred upon on arbitrator (Matter of Robinson [Robinson], 296 NY 778; Matter of Luttinger [Luttinger], 294 NY 855), the cases so holding have involved contracts explicitly authorizing such relief (see Braverman v Braverman, 9 Misc 2d 661, supra; Storch v Storch, 38 AD2d 904; 1 Lindey, Separation Agreements and Ante-Nuptial Contracts, § 29, pp 29-13 to 29-15). Against this background — the frame of reference of the drafters of this detailed and comprehensive document — appellant’s claim that a downward modification of support "arises out of or in connection with” the terms of the agreement is hardly persuasive.
More fundamentally, what appellant seeks, in essence, is to
Appellant insists that our decision in Matter of SCM Corp. (Fisher Park Lane Co.) (40 NY2d 788) sanctions such an arbitral rewriting. However, the rationale of that case was considerably more limited. There, though holding that a landlord’s counterclaim for reformation was time-barred, we took the occasion to state that the arbitrator, acting pursuant to a broad arbitration clause, could permissibly reform the terms of a lease on the landlord’s assertion that the instrument failed to conform to the parties’ original intent (40 NY2d, supra, at pp 792-794; see International Union of Operating Engrs. v Carl A. Morse, Inc., 529 F2d 574, 580; American Home Assur. Co. v American Fid. & Cas. Co., 356 F2d 690, 692). Reformation of a contract to express what the parties in fact agreed upon has been held to be a claim which arises out of the contract, in contradistinction to modification of contract terms to reflect changed circumstances, a claim of a fundamentally different nature, which finds no basis at all in the agreement (see Matter of Agora Dev. Corp. [Low], 19 AD2d 126, 127; cf. Matter of Lipman [Haeuser Shellac Co.], 289 NY 76, 79). Pointedly, appellant nowhere suggests that by reason of accident, mistake or fraud the agreement failed to express the real intentions of the contracting parties (see Matter of Weinrott [Carp], 32 NY2d 190, 199); he seeks instead to create a wholly new contract.
Clearly, in this case we need not be so rigidly confined because, Ms. Bowmer having moved to stay the arbitration, we are bound to inquire whether the parties have agreed to arbitrate the particular dispute (Matter of Nationwide Gen. Ins. Co. v Investors Ins. Co., 37 NY2d 91, 95; CPLR 7503, subd [b]). We hold that they did not (cf. Matter of Silver v Pilzer, 59 AD2d 680, 681).
Accordingly, the order of the Appellate Division should be affirmed.
. Petitioner asserted that it was no longer economically feasible for him to meet the support obligations in the agreement because his second wife was no longer employéd and because, with all three children in college, the additional payments for educational expenses had grown to $12,000 per year.
. In his demand, Bowmer also sought to direct the sale of the marital abode, reading the agreement as permitting his former spouse to reside there only while the children, then attending college away from home, lived there on a full-time basis. Although Ms. Bowmer unsuccessfully contested the arbitrability of this issue below, it was not appealed to the Appellate Division.
. The separation agreement specifically provided: "If the Husband is of the opinion that he cannot afford to pay for the [college] education of a particular Child, and if the Wife does not agree with his alleged inability to do so, she shall have the right to have the matter arbitrated, pursuant to Article '17’ of this Agreement”.
. Paragraph 17, in fact, seems to have been taken almost verbatim from a sample arbitration clause that appears in Lindey, Separation Agreements and Ante-Nuptial Contracts (Vol 1, Form 29.04).
Dissenting Opinion
(dissenting). I am impelled to dissent, for I cannot concur in the misapplication of previously well-settled principles of law to this rather simple case. The dispositive issue presented by this appeal is whether a separation agreement requiring arbitration of "[a]ny claim, dispute or misunderstanding arising out of or in connection with” the agreement authorizes arbitration of the husband’s claim that his support obligations under the agreement should be modified because of a change in circumstances. Also implicated, because of the analysis employed by the majority of this court, is whether an arbitrator’s power to grant certain requested relief may be challenged by an application to stay arbitration.
Although the factual and procedural background to this appeal is rather complex, the relevant portions thereof are readily stated. The parties entered into an unusually detailed separation agreement in 1972. That agreement contains a
It is beyond dispute that the parties to a separation agreement may agree to arbitrate disputes concerning the support provisions of that agreement (see Hirsch v Hirsch, 37 NY2d 312). Hence, the only issue in this case is whether in fact the Bowmers have so agreed. As is noted above, the agreement provides for arbitration of "[a]ny claim, dispute or misunderstanding arising out of or in connection with” the separation agreement. It is difficult to conceive of a broader declaration of arbitrability. Appellant’s claim, whether it be viewed as an attempt to modify the agreement or, more accurately, as a claim that the agreement itself impliedly contemplated modification of the support obligation by an arbitrator, certainly must fall within the purview of that wide-sweeping language.
The majority, however, now concludes that this seemingly broad language does not truly mean what it says, but is instead limited in some inarticulable manner and to some uncertain extent. Unfortunately, there exists no support for such an interpretation in the language of the agreement. As noted above, the arbitration clause explicitly provides for arbitration of "[a]ny claim, dispute or misunderstanding arising out of or in connection with this Agreement, or any breach hereof, or any default in payment by the Husband, or any matter herein made the subject matter of arbitration”. The majority suggests that the provision for the arbitration of "any claim, dispute or misunderstanding arising out of or in connection with” the agreement has no real application or meaning, and that the only controversies actually made arbitrable by the agreement are those involving "any breach hereof, or any default in payment by the Husband, or any matter herein made the subject matter of arbitration”. To so hold is to simply read the opening words of the arbitration provision out of existence entirely, and that is something which a court may not do under the guise of contract interpretation. Had the parties desired to provide for arbitration of only those disputes mentioned in the latter phrases of the arbitration clause, there would have been no reason to include the broad opening words. However, that language was made an integral part of the agreement and should be given effect by the courts.
This judicial evisceration of an extremely broad arbitration provision portends a return to that outmoded and heavy-handed judicial scrutiny of arbitration agreements which I had thought this court had abandoned by its decision in Matter of Weinrott (Carp) (32 NY2d 190). Today’s decision resurrects, in new guise, the so-called "specifically enumerated” approach to arbitration clauses which we explicitly rejected in Weinrott. The effect of this decision is to render meaningless the otherwise broad provisions of any arbitration agreement in which the parties, possibly from an excess of caution, have taken the care to specify those particular types of disputes which they feared might not be covered by the general language of the arbitration agreement. I cannot concur in such an approach. It serves no valid purpose where, as here, the intent of the parties is plainly to submit to arbitra
No more persuasive is the majority’s suggestion that the instant dispute is not arbitrable because appellant is attempting to have the arbitrator "rewrite” the agreement and not merely interpret it. Initially, I note that there exists no reason why two persons may not enter into an agreement authorizing an arbitrator to modify the terms of that agreement upon the application of one of the parties. Any objections to the concept of an arbitrator "rewriting” a contract for the parties stems not from some evil inherent in the idea itself, but rather from the more general doctrine that, at least in the area of consensual arbitration, a party may be bound by the decision of an arbitrator only to the extent that he has agreed to be bound. Normally, the parties to an agreement will not wish to confer upon an arbitrator the power to modify their agreement, and it is for that reason that the arbitrator will lack the power to "rewrite” the agreement. Such objections, however, pertain not to the arbitrability of a dispute, but rather to the power of the arbitrator to provide certain relief, and as such may only be raised by application to vacate an award, not by application to stay arbitration (compare CPLR 7503, with 7511; see Board of Educ. v Barni, 49 NY2d 311).
That the instant application to stay involves no more than a premature contention, that the arbitrator will exceed his power is shown by the fact that regardless of the outcome of this appeal, arbitration will proceed on the question of appellant’s obligations under the contract. The only effect of this proceeding can be to limit the range of remedies which the arbitrator may employ in an attempt to resolve the dispute between the Bowmers. The expenditure of so much time and effort merely to inform an arbitrator in advance of arbitration that he may not grant certain requested relief is hardly consistent with the function of arbitration as an inexpensive and swift alternative forum. Moreover, it serves to take from the arbitrator the power to determine, at least in the first instance, the range of remedies authorized by the agreement, and creates yet another preliminary inquiry to be made by the. courts before ordering arbitration.
Judges Jasen, Jones, Wachtler and Meyer concur with Judge Fuchsberg; Judge Gabrielli dissents and votes to reverse in a separate opinion in which Chief Judge Cooke concurs.
Order affirmed, with costs.
