Court Review of Family Law Arbitration Awards in North Carolina

In Gallagher-Masonis v. Masonis, 911 S.E.2d 125 (N.C. Ct. App. 2024), the North Carolina Court of Appeals addressed an important question in family law: When can a court review and modify a binding arbitration award involving property division, alimony, and child support? This decision highlights how the North Carolina Family Law Arbitration Act (NCFLAA) interacts with parties’ written agreements and clarifies the extent of judicial oversight in family law arbitration.

Background of the Case

The dispute arose after a divorcing couple agreed to submit several issues — including equitable distribution, alimony, and child support — to binding arbitration under the NCFLAA. Rather than litigate these matters in court, both parties signed a written arbitration agreement outlining the scope and rules of the process.

A critical provision in that agreement allowed the trial court to review errors of law in the arbitrator’s award. This clause ultimately shaped the outcome of the case.

After the arbitrator issued a final award, the wife moved to confirm the award and enter judgment. The husband, however, argued that parts of the decision were legally incorrect and asked the court to vacate or modify those portions.

The Arbitration and Trial Court Proceedings

The arbitrator heard evidence and arguments from both sides and ultimately issued a final award addressing all contested issues. After the award was entered, the wife filed a motion asking the district court to confirm the award in its entirety, which is the default procedure under the NCFLAA.

The husband disagreed with some parts of the award and filed motions to vacate or modify specific sections. His arguments focused on claims that the arbitrator had misapplied the law in determining certain property classifications and support obligations. He did not challenge factual findings made by the arbitrator. Instead, he argued that the arbitrator used incorrect legal standards, which is exactly the type of issue the parties’ agreement allowed the court to review.

Because the contract explicitly authorized legal-error review, the trial court evaluated the arbitrator’s rulings to determine whether any errors of law had occurred. After reviewing the record, the court concluded that certain aspects of the award did involve legal mistakes. As a result, it vacated or modified those sections. The remaining parts of the award—those that were unaffected by legal error—were confirmed.

Both parties appealed. The wife challenged the trial court’s decision to vacate any portion of the award, while the husband argued that the court should have vacated even more of it.

Court of Appeals Ruling

The North Carolina Court of Appeals upheld the trial court’s approach.

Key Points from the Decision

1. Courts may review arbitration awards for legal error if the parties expressly agree.
   The NCFLAA mandates confirmation of an arbitration award unless specific statutory grounds for modification or vacatur exist. One such ground, allowed only by written agreement, is judicial review for errors of law.
2. The parties’ contract controls the scope of review.
   Because the spouses explicitly permitted review of legal errors, the trial court was authorized to vacate portions of the award that misapplied the law.
3. Not all parts of an award must be vacated if only some contain legal mistakes.
   The trial court correctly confirmed all unaffected portions, preserving the parts of the arbitrator’s decision that were legally sound.
4. Judicial review does not reopen factual determinations.
   The court emphasized that factual findings and discretionary calls by the arbitrator remain off-limits. Only legal errors were subject to correction.

Why This Case Matters

Gallagher-Masonis is a significant decision for family law attorneys, mediators, and parties considering arbitration in North Carolina. Key takeaways include:

• Arbitration agreements under the NCFLAA can expand judicial review—something not permitted in most other arbitration contexts.
• Clear contract drafting is essential. If parties want legal-error review, the agreement must explicitly say so.
• Courts will enforce arbitration contracts strictly, including any agreed-upon review standards.
• The decision preserves both the efficiency of arbitration and the availability of limited judicial oversight where the parties request it.

By upholding the trial court’s authority to review and correct legal errors, the case reinforces the flexibility built into the NCFLAA and provides guidance on how arbitration agreements should be written and interpreted.

Need Guidance in a Family Law Dispute? We’re Here to Help

The outcome in Gallagher-Masonis v. Masonis (2024) highlights how important precise legal strategy is in arbitration and family law matters. When the stakes are high, you need a team that understands both the law and your goals.

Woodruff Family Law Group delivers creative family law solutions for a complex world, designed to help families navigate even the most complex disputes.

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