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Chen v. Chen

February 14, 1997


On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Essex County.

Approved for Publication February 20, 1997.

Before Judges Shebell, Baime, and Braithwaite. The opinion of the court was delivered by Baime, J.A.D.

The opinion of the court was delivered by: Baime

The opinion of the court was delivered by


This appeal and cross-appeal arise out of a judgment of the Family Part confirming certain aspects of an arbitrator's decision and modifying others. We are satisfied that the arbitrator "imperfectly exercised [her] powers" and that the Family Part erred by failing to vacate the award. N.J.S.A. 2A:24-8.


Plaintiff Hui Mei Chen and defendant Michael Chen, both citizens of Taiwan, were married in 1964. During the marriage, plaintiff resided in New Jersey, and defendant continued to live in Taiwan while making monthly visits here. In 1991, plaintiff filed a complaint for divorce in the Family Part. After defendant filed his answer, the parties' three children - Annie Mu-En Chen, Scott Kuan-Chi Chen, and Ben Hong Bin Chen intervened.

While the action was pending, defendant commenced legal proceedings in Taiwan, seeking to obtain title to an extensive parcel of unimproved real property located in Kaohsiung province. Plaintiff had conveyed title to the property to her relative, Lin You. Prior to the conveyance, plaintiff had held title in her own name. However, defendant contended that he shared in ownership of the property and that the conveyance to Lin You was intended to insulate the asset from the reach of his creditors. Defendant sought to invalidate the conveyance to Lin You and "restore" title to him and the plaintiff.

While the action in Taiwan was pending, plaintiff and defendant entered into a written arbitration agreement. The agreement provided that "all issues" were to be submitted to the arbitrator, that no question was "reserved," and that New Jersey's substantive law was to apply. In accordance with the parties' agreement, the Family Part issued a consent order which stated that "the matter shall be submitted to binding arbitration in regard to all issues."

Neither the arbitration agreement nor the consent order made reference to the litigation pending in Taiwan. However, the subject was raised in correspondence between counsel and in the course of various proceedings in the Family Part. In letters between the attorneys, it was agreed that the Taiwan courts would decide the "title" to the Kaohsiung property, but the issue of equitable distribution would "revert to the trier of fact in this jurisdiction." Despite the disarming ease with which the agreement was phrased, substantial controversy continues to be generated concerning the meaning of this stipulation. According to plaintiff, the agreement envisioned that if the Taiwan court were to conclude that she had sole title to the property and that her conveyance to Lin You was valid, the arbitrator would be bound by that determination and could not consider the land as a marital asset. According to defendant's interpretation, the Taiwan court was to determine only the question of title and the arbitrator could nevertheless decide that the property was a marital asset subject to equitable distribution, even if the parcel was owned solely by the plaintiff. We will return to this issue later in our opinion.

The Taiwan High Court determined that, although the Kaohsiung property was purchased during the parties' marriage, it belonged solely to plaintiff. The Court found that prior to the marriage, plaintiff had used her earnings as a nurse to purchase other property, that this other property was subsequently sold, and that the proceeds, together with a loan from plaintiff's father, were devoted to the purchase of the Kaohsiung parcel. Unfortunately, the Court's opinion respecting the validity of plaintiff's conveyance of the Kaohsiung property to Lin You is not altogether clear. The opinion recites that Mr. Chen was involved in a financial "scandal" and, as a personal guarantor for Cathay Plastics Corporation, became indebted to the company's creditors in the amount of NT $85 million. Plaintiff, defendant, and Lin You were said to have "collaborated [in a] fake transaction" to transfer the land to Lin You to avoid the claims of defendant's creditors. The transcription appearing in the record seems to indicate that the reference to a "fake transaction" was part of the Court's description of defendant's allegations, and was not one of the Court's actual findings. Although this point is indeed murky, it is plain from our reading of the opinion that the Court found the conveyance from plaintiff to Lin You to be valid and not subject to challenge by the defendant. The Court added that the property was purchased with plaintiff's "hard earned money," that it was not part of the "matrimonial property regime under [the Taiwan] civil code," and that plaintiff had the absolute right to convey the parcel to Lin You.

The Taiwan Supreme Court affirmed the Taiwan High Court's judgment, upholding the finding that "the funds used to buy the land were [provided by plaintiff through] her hard work, gift money and borrowing." The Taiwan Supreme Court also sustained the finding that the Kaohsiung parcel was plaintiff's "exclusive property and [was] not under [the parties'] marital property regime[], though purchased after [the commencement of the] marriage." The Taiwan Supreme Court refused to consider defendant's argument that Mrs. Chen's conveyance of the Kaohsiung property to Lin You was designed to defraud creditors and should be invalidated, noting that defendant lacked standing to raise that issue.

Pursuant to the parties' agreement, arbitration proceedings were commenced in New Jersey in July 1994. Under the parties' stipulation, the decision of the Taiwan High Court was marked as an exhibit and admitted in evidence to be "afforded the appropriate weight by the Arbitrator." The decision of the Taiwan Supreme Court was rendered after the arbitrator issued her decision. The record does not disclose exactly what instructions the arbitrator received with respect to whether, ...

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