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As a general matter, resolving disputes in a private agreement is nearly always the superior option over resolving via litigation. Litigation comes with the disadvantage of uncertainty, because disputes often aren’t resolved in a manner consistent with prior projections; furthermore, litigation can be time-consuming, and of course expensive. Hence handling disputes in private settlement agreements is a desirable option, unless a given issue needs to be litigated for whatever reason.
When agreements are drafted, using “arbitration clauses” may be beneficial. Basically, an arbitration clause states that a future dispute (over a certain contractual issue) must be resolved by an arbitrator, not a judge in a normal court environment. Using an arbitrator confers several potential advantages, including a less formal dispute resolution process in general. If the parties add an arbitration clause to a marital settlement agreement, and the agreement is otherwise sound and valid, then this arbitration clause becomes a binding part of the larger agreement. This means that, among other things, taking a dispute to a judge before an arbitrator would result in a faulty ruling.
The recent case of McCutcheon v. McCutcheon (2025) is a case which involved an arbitration clause used to settle disputes regarding alimony. Let’s explore this case to get a better sense of how these clauses work.
Facts of the Case
The parties in this case married in 1983 and separated in 2017. In 2021, the parties were able to resolve most of their issues in a private marital settlement agreement. One of the issues they resolved was property division, with the wife ending up with multiple pieces of real estate (including the marital home in Maryland) as well as $5,000 per month in alimony. The agreement contained an important provision on the alimony: if the husband wanted to challenge the alimony amount after his retirement, any disputes would be resolved via arbitrator. The divorce was finalized soon after this private agreement was finished.
Eventually, the parties used an arbitrator when the husband wished to cease payments altogether following his retirement. The arbitrator didn’t eliminate the alimony payments immediately, but instead modified the payment structure so that the husband would continue making $5,000 payments for several months through May of 2024, and then make $2,500 payments until December 1, 2025. Then, after that point, the payments would drop to zero.
The wife was unhappy with this outcome at arbitration and petitioned the court to review the arbitrator’s ruling. The wife argued that the arbitrator’s ruling should be discarded on the ground that the arbitrator exceeded his proper authority. The trial court agreed with the wife’s argument and the wife was successful in overturning the arbitrator’s ruling. The husband then appealed this ruling.
Ruling & Discussion
The husband argued that the arbitrator hadn’t exceeded his powers at all, but that the ruling was simply unfavorable to the wife. There may be valid examples of arbitrators exceeding their powers, but this didn’t qualify. For example, an arbitrator may be exceeding powers when he or she awards attorney’s fees even without any specific fee shift request. In this situation, the arbitrator had the power to alter the alimony arrangement, even if the new arrangement was more or less favorable to one side. Although the husband may have desired the outcome a bit more, the arbitrator made the decision after independently reviewing all relevant evidence, and the outcome was well within the arbitrator’s legal authority.
This is clearly a good lesson for those considering an arbitration clause: an arbitrator’s ruling is not an easy thing to throw out, and so in most cases whatever the arbitrator rules will be final. This is something which must be properly weighed when making the decision to avoid litigation.
Contact the Murphy Law Firm for Additional Information
Readers who want to know more about the utility of arbitration agreements, appealing rulings of an arbitrator, alimony in settlement agreements, or any other related family law matter, contact one of the family law attorneys at the Murphy Law Firm today by calling 240-219-1187.
