Arbitration, Alimony, and Equitable Distribution: Lessons from Gallagher-Masonis v. Masonis

The North Carolina Court of Appeals recently addressed the limits of judicial review over family law arbitration awards in Gallagher-Masonis v. Masonis. The case highlights how premarital and postnuptial agreements, the division of marital versus separate property, and arbitration in family law disputes intersect in practice. It also shows how appellate courts will respect arbitration awards, even when one spouse strongly disagrees with the outcome.

Case Background

– Marriage & Agreements: John Masonis (“Husband”) and Mary Jane Gallagher-Masonis (“Wife”) married in 2015 and had one child in 2017. They entered into a premarital agreement waiving alimony and designating all property as separate. Later, in 2017, they executed a postnuptial agreement that voided the premarital agreement and reclassified some property, notably designating the Myers Park marital home as marital property but keeping the mortgage as Husband’s separate debt.
– Claims Filed: In 2021, Wife filed claims for custody, support, equitable distribution, postseparation support, and alimony. The parties agreed to arbitrate their financial disputes under the North Carolina Family Law Arbitration Act.
– Arbitration Award: After a multi-day arbitration, the arbitrator issued an award that:
• Classified the Myers Park Home as marital property but the mortgage as Husband’s separate debt.
• Distributed the marital estate unequally (57% to Wife, 43% to Husband).
• Ordered Husband to pay $10,000/month in alimony through December 2025, citing Wife’s dependency and Husband’s misconduct (including illicit sexual behavior).
• Ordered child support of $6,000/month for one year, then $4,895/month thereafter, with Husband also paying insurance and medical expenses.

The trial court confirmed most of the award but vacated certain provisions that improperly directed how Husband must pay his separate mortgage debt. Husband appealed; Wife cross-appealed.

Issues on Appeal

1. Equitable Distribution of the Myers Park Home and Mortgage
   Husband argued it was unfair that Wife got the house while he remained solely responsible for the separate mortgage debt. The Court rejected his argument, noting that the postnuptial agreement itself created this arrangement, and Husband had not challenged the validity of that contract. Courts cannot re-write such agreements.
2. Authority to Compel Sale of Marital Property
   The arbitrator suggested courts cannot order sale of marital property under N.C.G.S. § 50-20. The trial court struck this portion as unnecessary; the Court of Appeals declined to address it further because neither spouse could show it affected the outcome.
3. IOP Home (Isle of Palms property)
   The parties stipulated that 22% of the home’s net value was Wife’s separate property and 78% was marital. Husband argued he deserved credits for payments made during and after the marriage. The arbitrator reimbursed some post-separation payments but treated earlier contributions as “support,” and the Court found no legal error.
4. Alimony and Child Support
   Husband argued the arbitrator erred by not imputing greater earning capacity to Wife. The Court held that alimony and child support are based on actual income unless bad-faith underemployment is proven. No such finding was made, so the award stood.

The Court of Appeals’ Decision

The Court of Appeals affirmed the trial court’s confirmation of the arbitration award. It emphasized:

– Judicial review of arbitration awards is extremely limited. Courts can only vacate or modify for statutory reasons like arbitrator partiality, exceeding authority, or evident mathematical/formal errors. Dissatisfaction with the outcome or alleged mistakes of law/fact are not enough.
– Because the parties agreed to arbitrate and allowed judicial review only for legal error, the Court’s role was not to “retry” the case but only to check for clear statutory violations.

Key Lessons

1. Contracts Control: Premarital and postnuptial agreements will be enforced, even if they create an outcome one spouse later regrets.
2. Arbitration Is Binding: Arbitration can streamline family disputes, but it also sharply limits appellate review. Once an award is issued, overturning it is very difficult.
3. Separate vs. Marital Property Matters: Courts may confirm an arrangement where one spouse receives the marital home but remains solely responsible for a mortgage deemed separate debt, if that’s what the parties agreed to in contracts.
4. Support Calculations: Alimony and child support typically rely on actual income, not speculative earning capacity, unless bad-faith underemployment is proven.

Final Thoughts

Gallagher-Masonis v. Masonis reinforces the binding power of agreements and arbitration in North Carolina family law. While arbitration may reduce litigation costs, it also limits opportunities for appeal. Spouses entering premarital or postnuptial agreements—or agreeing to arbitrate—should carefully consider long-term consequences, as courts will hold them to their bargains.

About Adkins Law, PLLC

At Adkins Law, PLLC, based in Huntersville, North Carolina, we focus on family law matters including equitable distribution, arbitration, alimony, and support. Our firm provides experienced guidance to ensure your rights are protected and that the law is applied fairly. If you are facing issues related to marital agreements, arbitration awards, or support disputes, contact Adkins Law to discuss your options and strategy.