Bogaert Construction Co. v. CDO LLC (2015)

MEMORANDUM OF DECISION ON MOTION TO VACATE ARBITRATION AWARD

The plaintiff, Bogaert Construction Co., Inc., submitted to this court on September 12, 2014 an application to confirm arbitration award pursuant to General Statutes § 52–417 ¹ involving matters between the plaintiff and the defendant, CDO Properties, LLC.² Thereafter, on September 18, 2014, pursuant to General Statutes § 52–418,³ the defendant filed an application to vacate arbitration award.⁴  The plaintiff filed a memorandum in support of application to confirm arbitration award and objection to the defendant's motion to vacate on September 26, 2014.⁵  The defendant filed a memorandum in support of application to vacate arbitration award on October 17, 2014.⁶  Oral argument was heard on the defendant's motion to vacate on October 27, 2014.

BACKGROUND

This case arises out of a construction contract entered into by the plaintiff, a contractor, and the defendant, owner of the veterinary hospital, on or about May 23, 2012 for the renovation of a veterinary hospital in Groton, Connecticut.   Article 11 of the construction contract provides for arbitration and states the following:

11.1 All claims, disputes and other matters in question arising out of, or relating to, this Agreement, or the breach thereof, shall be decided by arbitration.   It shall be conducted in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association before a single arbitrator then obtaining unless the parties mutually agree otherwise.   Arbitration proceedings shall be held in New London County in the State of Connecticut.

11.2 Except by written consent of the person or entity sought to be joined, no arbitration arising out of or relating to the Contract Documents shall include, by consolidation, joinder or in any other manner, any person or entity not a party to the Agreement under which such arbitration arises, unless it is shown at the time the demand for arbitration is filed that (1) such person or entity is substantially involved in a common question of fact or law, (2) the presence of such person or entity is required if complete relief is to be accorded in the arbitration, (3) the interest or responsibility of such person or entity in the matter is not insubstantial, and (4) such person or entity is not the Architect, his employee or his consultant.   This agreement to arbitrate with an additional person or persons referred to herein shall be specifically enforceable under the prevailing arbitration law.   The Arbitrator shall be bound and obligated to decide all disputes, claims and costs consistent with and pursuant to the terms of this agreement and the laws of the State of Connecticut.   No punitive damages shall be awarded.   The prevailing party shall be entitled to reasonable attorneys fees.

11.3 The award rendered by the arbitrators shall be final, and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof.

The defendant submitted a demand for arbitration on January 23, 2014 due to dissatisfaction with the timeliness, unworkmanlike manner, and completion of the contracted work.   The demand for arbitration alleged that the plaintiff (builder) breached the contract with the defendant “by failing to complete certain interior and exterior commercial construction work in a timely manner as required under the Contract and the small portion of work that it did perform was not done in a workmanlike manner.  [The plaintiff] also charged [the defendant] for many unapproved extras in violation of the Contract and failed to pay for and secure certain permits necessary for the renovation work.”   As a result of the foregoing, the defendant terminated the plaintiff from the project and hired a new contractor at a cost far in excess of the cost the plaintiff would have charged to complete the work.   The arbitrator issued an award on August 19, 2014, of which the defendant was notified the following day.

LEGAL STANDARDS

When asked to vacate the decision of an arbitrator, “[t]he court must first determine the standard it is required to apply in reviewing the decision of the arbitrators.   This inquiry hinges on whether the arbitration was voluntary or compulsory, and, if voluntary, whether the submission was restricted or unrestricted.”  (Internal quotation marks omitted.)  Connecticut Ins. Guaranty Assn. v. Zasun, 52 Conn.App. 212, 221, 725 A.2d 406 (1999).  “Judicial review of arbitral decisions is narrowly confined ․ When the parties agree to arbitration and establish the authority of the arbitrator through the terms of their submission, the extent of our judicial review of the award is delineated by the scope of the parties' agreement ․ When the scope of the submission is unrestricted, the resulting award is not subject to de novo review even for errors of law so long as the award conforms to the submission ․ Because we favor arbitration as a means of settling private disputes, we undertake judicial review of arbitration awards in a manner designed to minimize interference with an efficient and economical system of alternative dispute resolution.”  (Internal quotation marks omitted.)  Industrial Risk Insurers v. Hartford Steam Boiler Inspection & Ins. Co., 273 Conn. 86, 92–93, 868 A.2d 47 (2005).

“Where the submission does not otherwise state, the arbitrators are empowered to decide factual and legal questions and an award cannot be vacated on the grounds that ․ the interpretation of the agreement by the arbitrators was erroneous.   Courts will not review the evidence nor, where the submission is unrestricted, will they review the arbitrators' decision of the legal questions involved ․ In other words, [u]nder an unrestricted submission, the arbitrators' decision is considered final and binding;  thus the courts will not review the evidence considered by the arbitrators nor will they review the award for errors of law or fact.”  (Citation omitted;  internal quotation marks omitted.)  Id., 93.

“The resulting award can be reviewed, however, to determine if the award conforms to the submission ․ Such a limited scope of judicial review is warranted given the fact that the parties voluntarily bargained for the decision of the arbitrator and, as such, the parties are presumed to have assumed the risks of and waived objections to that decision ․ It is clear that a party cannot object to an award which accomplishes precisely what the arbitrators were authorized to do merely because that party dislikes the results ․ The significance, therefore, of a determination that an arbitration submission was unrestricted or restricted is not to determine what the arbitrators are obligated to do, but to determine the scope of judicial review of what they have done.   Put another way, the submission tells the arbitrators what they are obligated to decide.   The determination by a court of whether the submission was restricted or unrestricted tells courts what its scope of review is regarding the arbitrators' decision.”  (Internal quotation marks omitted.)   Id., 93–94.

The defendant moves to vacate this arbitration award pursuant to General Statutes § 52–418(a)(4) on the grounds that the arbitrator exceeded his powers or so imperfectly executed them that a mutual, final and definite award on the subject matter was not made.   It is the defendant's position that the submission restricts the arbitrator's power because it states that “[t]he arbitrator shall be bound and obligated to decide all disputes, claims and costs consistent with and pursuant to the terms of the agreement and the laws of the State of Connecticut.”

In its memorandum in support of application to confirm arbitration award and objection to the defendant's motion to vacate, the plaintiff states that the defendant moves to vacate because he simply does not like the arbitrator's decision.   The defendant drafted the construction contract agreement containing the arbitration clause, the defendant demanded arbitration and it is the defendant who now seeks to vacate the arbitration award.   The plaintiff further argues that the submission was unrestricted and therefore, the court cannot review the award so long as it conforms to the submission.   Moreover, the decision by the arbitrator addresses all of the concerns raised by the defendant, the arbitrator carefully considered the evidence adduced over three days of hearings, and the arbitrator issued a thorough and specific award of financial compensation.

In the defendant's memorandum in support of its motion to vacate, it is reasserted that the arbitration clause is restricted specifically by the sentence providing that the arbitrator is obligated to decide all disputes “consistent with and pursuant to the terms of this Agreement and the laws of the State of Connecticut.”   The defendant also argues that the plaintiff has misinterpreted “submission” by incorrectly relying on the language of the demand for arbitration instead of the arbitration clause contained in the construction contract.   Based on its conclusion that the clause is restricted, the defendant believes that the court should determine whether the arbitrator failed to consider and/or interpret the construction contract.   The defendant contends that the arbitrator disregarded provisions of the construction contract in making his determination, manifestly exceeding his authority.

I. The Submission, Restricted or Unrestricted

“Where the language of the arbitration clause indicates an intention on the part of the parties to include all controversies which may arise under their agreement, and where the record reveals no specific questions which the parties submitted to the arbitrator, the submission will be construed as unrestricted.”  (Internal quotation marks omitted.)  United States Fidelity & Guaranty Co. v. Hutchinson, 244 Conn. 513, 519, 710 A.2d 1343 (1998).  “A submission is unrestricted when ․ the parties' arbitration agreement contains no language restricting the breadth of issues, reserving explicit rights, or conditioning the award on court review.”  (Internal quotation marks omitted.)  Industrial Risk Insurers v. Hartford Steam Boiler Inspection & Ins. Co., supra, 273 Conn. 89 n.3;  see also Milford v. Coppola Construction Company, 93 Conn.App. 704, 712, 891 A.2d 31 (2006) (“ ‘express language restricting the breadth of issues' limits the arbitrator's authority”).

Presently, as narrowed by the parties, whether the submission is restricted or unrestricted hinges entirely on the following sentence of the arbitration clause:  “The arbitrator shall be bound and obligated to decide all disputes, claims and costs consistent with and pursuant to the terms of this Agreement and the laws of the State of Connecticut.”   For the following reasons, the court finds that there is no language in the submission which restricts the breadth of issues, reserves explicit rights, or conditions the arbitration award on court review, and thus, the submission is unrestricted.

The defendant cites to Chase Brass & Copper Co. v. Chase Brass & Copper Workers Union, 139 Conn. 591, 96 A.2d 209 (1953), in support of its argument that if an arbitrator misinterprets contract terms then the resulting award will be contrary to law, however, the court finds this case to be instructive in determining whether the clause is restrictive or unrestrictive.   The arbitration clause at issue in Chase Brass provided relevantly, “[t]he parties agree to accept the arbitrator's award as final and binding, providing it is not contrary to law.”  (Internal quotation marks omitted.)  Id., 592.   Although our Supreme Court of Errors found this provision to make it a restricted submission, the Court notes that “[i]f the arbitrators are required by the agreement to decide according to law, the cases are in conflict ․ [A]n award has been held to be beyond the reach of the courts although the submission was ‘to determine all questions according to the rules of law and equity, the same as though the matter was to be tried in a court of law or equity.’  “ Id., 595.   The Chase Brass court, quoting from Liggett v. Torrington Building Co., 114 Conn. 425, 432, 158 A. 917 (1932), states that “[a]rbitrators ․ are not bound to follow strict rules of law, unless it be made a condition of the restriction ․” (Internal quotation marks omitted.).   Chase Brass & Copper Co. v. Chase Brass & Copper Workers Union, supra, 595–96.   The Chase Brass court then makes the following, important distinction:  “ ‘[P]roviding it is not contrary to law’ imposes a more severe stricture on the conduct of the arbitrator than would the affirmative phrase that he must decide according to law.”  Id. This distinction elucidates the narrow holding of Liggett v. Torrington Building Co., supra, 425, and has been recently recognized by Connecticut courts.   See Bodner v. United Services Auto Assn., 222 Conn. 480, 490, 610 A.2d 1212 (1992) (citing to Chase Brass, holding:  “Had the parties restricted the authority of the arbitrators by including in their arbitration agreement a proviso that the arbitrators' award must not be contrary to law, the court would have been bound to enforce the restriction ․ Here there was no such proviso.   The arbitration proceeding in this case was, therefore, both voluntary and unrestricted, and the court should not have subjected the arbitrators' conclusions to de novo review” [citations omitted] ).   Compare Zavaski v. World Wide Financial Services of Central Connecticut, Inc., Superior Court, judicial district of Middlesex, Docket No. 69853 (October 13, 1993, Arena, J.) (where “[t]he purchase and sale agreement ․ provided that all disputes shall be resolved by a submission to the American Arbitration Association (AAA), and shall be governed and construed according to the laws of the State of Connecticut” [emphasis added] the submission was found to be unrestricted), with Muscarella v. Mish, Superior Court, judicial district of New London, Docket No. CV–07–5006999 (August 24, 2011, Martin, J.) (finding that arbitration agreement which provided:  “All decisions of the arbitrator shall be final and binding, except for any claim(s) that the award is not in compliance with the laws, legal precedents and public policy of the State of Connecticut ․ The award is subject to these grounds in Court, and as otherwise provided by [General Statutes] § 52–408, et seq.” [emphasis added] constituted a restrictive submission).⁷

Again, here, the clause states that the arbitrator shall “decide ․ consistent with and pursuant to ․ the laws of the State of Connecticut.”   This is an affirmative phrase, as opposed to a conditional one.   Connecticut courts have held that this distinction makes a difference and place the former, affirmative phrase, in the category of unrestricted submissions.   See Chase Brass & Copper Co. v. Chase Brass & Copper Workers Union, supra, 139 Conn. 595;  Zavaski v. World Wide Financial Services of Central Connecticut, Inc., supra, Superior Court, Docket No. 69853.   Moreover, the arbitration clause does not contain any express language which restricts the breadth of issues or reserves explicit rights.   The contract's terms are all-encompassing:  “All claims, disputes and other matters in question arising out of, or relating to, this Agreement, or the breach thereof, shall be decided by arbitration,” The construction contract “clearly delegates all disputed issues to binding arbitration, and therefore can only be construed as unrestricted.”  Carroll v. Aetna Casualty & Surety Co., 189 Conn. 16, 20, 453 A.2d 1158 (1983).

Accordingly, for the foregoing reasons, this court finds that the arbitration clause is unrestricted.

II. The Award, Conformance to the Submission

Because the submission is determined to be unrestricted, it must be determined whether the facts fall under the fourth recognized ground for vacating an unrestricted award pursuant to General Statutes § 52–418(a)(4) which “provides that an arbitration award shall be vacated if the arbitrators have exceeded their powers or so imperfectly executed them that a mutual, final and definite award upon the subject matter submitted was not made.”  (Internal quotation marks omitted.)  Comprehensive Orthopaedics & Musculoskeletal Care, LLC v. Axtmayer, 293 Conn. 748, 754, 980 A.2d 297 (2009).  “If a party specifically contends ․ that the arbitrator's award does not conform to an unrestricted submission in violation of § 52–418(a)(4), we engage in what we have termed ‘in effect, de novo judicial review.’  “ (Internal quotation marks omitted.)  Office of Labor Relations v. New England Health Care Employees Union, District 1199, AFL–CIO, 288 Conn. 223, 229, 951 A.2d 1249 (2008).  “In our construction of § 52–418(a)(4), we have, as a general matter, looked to a comparison of the award with the submission to determine whether the arbitrators have exceeded their powers.”  (Internal quotation marks omitted.)   Harty v. Cantor Fitzgerald & Co., 275 Conn. 72, 81, 881 A.2d 139 (2005).

The defendant relies on Chase Brass & Copper Co. v. Chase Brass & Copper Workers Union, supra, 139 Conn. 591, for the proposition that where an arbitrator has clearly misinterpreted terms of the applicable contract which he has applied to law, then his award is contrary to law.   Law governing review of an unrestricted submission, however, is clear:  “In determining whether an arbitrator has exceeded the authority granted under the contract, a court cannot base the decision on whether the court would have ordered the same relief, or whether or not the arbitrator correctly interpreted the contract.   The court must instead focus on whether the [arbitrator] had authority to reach a certain issue, not whether the issue was correctly decided.   Consequently, as long as the arbitrator is even arguably construing or applying the contract and acting within the scope of authority, the award must be enforced.   The arbitrator's decision cannot be overturned even if the court is convinced that the arbitrator committed serious error ․ Moreover, [e]very reasonable presumption and intendment will be made in favor of the award and of the arbitrator's acts and proceedings.”  (Citations omitted;  footnote omitted;  internal quotation marks omitted.)  Comprehensive Orthopaedics & Musculoskeletal Care, LLC v. Axtmayer, supra, 293 Conn. 755.

“Such a limited scope of judicial review is warranted given that the parties voluntarily bargained for the decision of the arbitrator and, as such, the parties are presumed to have assumed the risks of and waived objections to that decision ․ It is clear that a party cannot object to an award which accomplishes precisely what the arbitrators were authorized to do merely because that party dislikes the results.”  (Internal quotation marks omitted.)  Industrial Risk Insurers v. Hartford Steam Boiler Inspection & Ins. Co., 258 Conn. 101, 110, 779 A.2d 737 (2005).

The court concludes in the present case that the arbitrator's award conforms to the submission, and accordingly, the arbitrator did not exceed his authority such as to be subject to a motion to vacate under § 52–418(a)(4).   Here, the submission broadly authorized:  “[a]ll claims, disputes and other matters in question arising out of, or relating to, this Agreement, or the breach thereof, shall be decided by arbitration.”   Further, “[t]he Arbitrator shall be bound and obligated to decide all disputes, claims and costs consistent with and pursuant to the terms of this agreement and the laws of the State of Connecticut.   No punitive damages shall be awarded.   The prevailing party shall be entitled to reasonable attorneys fees.”

The facts show that the defendant drafted the construction agreement including the arbitration clause contained therein, the defendant demanded arbitration, the arbitrator was appointed by the American Arbitration Association, and the defendant now seeks to vacate the arbitrator's decision.   The defendant's demand for arbitration submitted to the arbitrator sought “money damages, interest, attorneys fees and costs” pursuant to the allegations that the plaintiff breached the construction contract by failing to complete the contract in a timely manner, failing to complete work in a workmanlike manner, charged for unapproved extras, and failing to pay for and secure necessary permits.   The arbitrator rendered the decision after conducting three days of evidentiary hearings and after issuing orders for discovery and expert witnesses.  “In short, the question comes down to whether the arbitrator had the authority to reach the issue, not whether the issue was correctly decided.”  Comprehensive Orthopaedics and Musculoskeletal Care, LLC v. Axtmayer, supra, 293 Conn. 759.   The arbitrator's decision includes references to multiple provisions of the subject construction contract, an award of damages with detailed calculations thereof, and an award of attorneys fees.   In the present case, it is clear that the parties granted the arbitrator authority to reach the issues raised by the defendant, including determination of damages and award of attorneys fees.

For the foregoing reasons, and making every reasonable presumption and intendment in favor of the award and the arbitrator's acts and proceedings;  Comprehensive Orthopaedics and Musculoskeletal Care, LLC v. Axtmayer, supra, 293 Conn. 755;  it is apparent that the award conforms to the submission.   The arbitrator did precisely what he was empowered to do:  determine the parties' damages.   That the defendant wished for a different result is an insufficient basis to vacate the award.

As this court now affirms and as the parties freely contracted:  “The award rendered by the arbitrators shall be final, and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof.”

ORDER

For the foregoing reasons, the court confirms the award of the arbitrator, and thereby denies the defendant's motion to vacate and grants the plaintiff's application to confirm.

Zemetis, J.

FOOTNOTES

FN1. General Statutes § 52–417 provides:  “At any time within one year after an award has been rendered and the parties to the arbitration notified thereof, any party to the arbitration may make application to the superior court for the judicial district in which one of the parties resides or, in a controversy concerning land, for the judicial district in which the land is situated or, when the court is not in session, to any judge thereof, for an order confirming the award.   The court or judge shall grant such an order confirming the award unless the award is vacated, modified or corrected as prescribed in sections 52–418 and 52–419.”.  FN1. General Statutes § 52–417 provides:  “At any time within one year after an award has been rendered and the parties to the arbitration notified thereof, any party to the arbitration may make application to the superior court for the judicial district in which one of the parties resides or, in a controversy concerning land, for the judicial district in which the land is situated or, when the court is not in session, to any judge thereof, for an order confirming the award.   The court or judge shall grant such an order confirming the award unless the award is vacated, modified or corrected as prescribed in sections 52–418 and 52–419.”

FN2. Attached to the plaintiff's application to confirm arbitration award is an exhibit A entitled, Construction Contract and an exhibit B entitled, Award of Arbitrator..  FN2. Attached to the plaintiff's application to confirm arbitration award is an exhibit A entitled, Construction Contract and an exhibit B entitled, Award of Arbitrator.

FN3. General Statutes § 52–418 provides in relevant part:  “(a) Upon the application of any party to an arbitration, the superior court for the judicial district in which one of the parties resides or, in a controversy concerning land, for the judicial district in which the land is situated or, when the court is not in session, any judge thereof, shall make an order vacating the award if it finds any of the following defects:  (1) If the award has been procured by corruption, fraud or undue means;  (2) if there has been evident partiality or corruption on the part of any arbitrator;  (3) if the arbitrators have been guilty of misconduct in refusing to postpone the hearing upon sufficient cause shown or in refusing to hear evidence pertinent and material to the controversy or of any other action by which the rights of any party have been prejudiced;  or (4) if the arbitrators have exceeded their powers or so imperfectly executed them that a mutual, final and definite award upon the subject matter submitted was not made.”.  FN3. General Statutes § 52–418 provides in relevant part:  “(a) Upon the application of any party to an arbitration, the superior court for the judicial district in which one of the parties resides or, in a controversy concerning land, for the judicial district in which the land is situated or, when the court is not in session, any judge thereof, shall make an order vacating the award if it finds any of the following defects:  (1) If the award has been procured by corruption, fraud or undue means;  (2) if there has been evident partiality or corruption on the part of any arbitrator;  (3) if the arbitrators have been guilty of misconduct in refusing to postpone the hearing upon sufficient cause shown or in refusing to hear evidence pertinent and material to the controversy or of any other action by which the rights of any party have been prejudiced;  or (4) if the arbitrators have exceeded their powers or so imperfectly executed them that a mutual, final and definite award upon the subject matter submitted was not made.”

FN4. Though not attached, the defendant references in its annex exhibits A and B already on file with the court as they are attached to the plaintiff's motion to confirm..  FN4. Though not attached, the defendant references in its annex exhibits A and B already on file with the court as they are attached to the plaintiff's motion to confirm.

FN5. Attached to the plaintiff's memorandum are the following exhibits:  exhibit A, Construction Contract;  exhibit B, Demand for Arbitration;  and exhibit C, Award of Arbitrator..  FN5. Attached to the plaintiff's memorandum are the following exhibits:  exhibit A, Construction Contract;  exhibit B, Demand for Arbitration;  and exhibit C, Award of Arbitrator.

FN6. Attached to the defendant's memorandum are the following exhibits:  exhibit A, Construction Contract;  exhibit B, Demand for Arbitration;  and exhibit C, Award of Arbitrator..  FN6. Attached to the defendant's memorandum are the following exhibits:  exhibit A, Construction Contract;  exhibit B, Demand for Arbitration;  and exhibit C, Award of Arbitrator.

FN7. In its memorandum in support of the application to vacate the arbitration award, on page 7, the defendant purports to cite to Garrity v. McCaskey, 223 Conn. 1, 612 A.2d 742 (1992), and in a parenthetical following the citation represents that the case holds that an arbitration clause containing the proviso, “provided it is not contrary to law” was restrictive.   Another, subsequent citation suggests that the holding may come from “Metropolitan Dist. Comm'n v. Council 4, 1996 WL 289191.”   A Westlaw search using this citation, however, returns Civil Action Against Comparator Systems Corporation.   Presumably, the defendant is relying on Metropolitan District Commission v. Council 4, Superior Court, judicial district of Hartford, Docket No. CV–94–0705133 (May 13, 1996, Corradino, J.).   Regardless, the proviso referred to mirrors that in both Chase Brass and Bodner, and is readily distinguishable from the present case which does not contain the phrase, “provided it is not contrary to law.”.  FN7. In its memorandum in support of the application to vacate the arbitration award, on page 7, the defendant purports to cite to Garrity v. McCaskey, 223 Conn. 1, 612 A.2d 742 (1992), and in a parenthetical following the citation represents that the case holds that an arbitration clause containing the proviso, “provided it is not contrary to law” was restrictive.   Another, subsequent citation suggests that the holding may come from “Metropolitan Dist. Comm'n v. Council 4, 1996 WL 289191.”   A Westlaw search using this citation, however, returns Civil Action Against Comparator Systems Corporation.   Presumably, the defendant is relying on Metropolitan District Commission v. Council 4, Superior Court, judicial district of Hartford, Docket No. CV–94–0705133 (May 13, 1996, Corradino, J.).   Regardless, the proviso referred to mirrors that in both Chase Brass and Bodner, and is readily distinguishable from the present case which does not contain the phrase, “provided it is not contrary to law.”

Zemetis, Terence A., J.