Opinion
CV166032761
02-03-2017
A Better Way Wholesale Autos, Inc. v. Rosalind E. Smith
UNPUBLISHED OPINION
MEMORANDUM OF DECISION RE MOTION TO DISMISS OR TO STAY PROCEEDINGS RE APPLICATION TO VACATE ARBITRATION AWARD
Mark H. Taylor, Judge.
I
BACKGROUND
A Better Way Wholesale Auto, Inc. (ABW) has filed an application to vacate an arbitration award, issued on October 18, 2016. Rosalind E. Smith, the respondent, moves to either dismiss or stay these proceedings, while awaiting the adjudication of her motion to confirm the same award in federal district court. After considering the parties' briefs and oral arguments, Smith's motion to dismiss is denied; however, her motion for a stay of these proceedings is granted until further order of the court.
Prior to arbitration, Smith initiated a civil action against ABW in the United States District Court of Connecticut, seeking damages under her retail installment contract to purchase a 2010 Infinity G37. See Memorandum of Law in Support of Motion to Dismiss or to Stay Proceedings, Exhibit A. ABW subsequently moved to compel arbitration pursuant to their contract and for a stay of the federal lawsuit. Id., Exhibit B. Smith subsequently filed her own motion to compel and stay the proceedings. Id., Exhibit C. The Federal Court, Thompson, J., granted the parties' motions to stay and denied the plaintiff's motion to compel, concluding that it was moot. Id., Exhibit D.
Smith's claim was subsequently submitted to arbitration and, upon prevailing in that forum, Smith filed a motion to confirm the arbitration award in the federal action on October 25, 2016. Id., Exhibit E. ABW has not yet filed an objection to Smith's motion to confirm the arbitration award in the federal action and has, instead, filed a separate application to vacate the arbitration award in this court on November 17, 2016. Based upon these generally uncontested facts, Smith considers the matter to be sub judice in federal court and, therefore, this state court case should be dismissed or stayed.
Smith has asserted the prior pending action doctrine in support of her motion to dismiss the application to vacate or, in the alternative, to stay these proceedings. In its objection, ABW counters that the prior pending action doctrine is inapplicable to this case. In reply to ABW's objection, Smith additionally asserts a second, alternative theory of the abstention doctrine to stay these proceedings until the conclusion of the federal action. In its sur-reply, ABW contends that neither doctrine should be applicable under the facts and procedural circumstances of this case. For reasons set forth below, the court agrees with ABW that the prior pending action doctrine is inapplicable to this matter, but concurs with Smith that the action should be stayed pursuant to the abstention doctrine.
II
DISCUSSION
A
Prior Pending Action Doctrine
" Under the prior pending action doctrine, the pendency of a prior suit between the same parties brought to obtain the same end will generally render the latter suit amenable to dismissal. The pendency of a prior suit of the same character, between the same parties, brought to obtain the same end or object, is, at common law, good cause for abatement. It is so, because there cannot be any reason or necessity for bringing the second, and, therefore, it must be oppressive and vexatious. This is a rule of justice and equity, generally applicable, and always, where the two suits are virtually alike, and in the same jurisdiction ." " (Emphasis added; internal quotation marks omitted.) Halpern v. Bd. of Educ. of City of Bristol, 196 Conn. 647, 652-53, 495 A.2d 264 (1985); Hatch v. Spofford, 22 Conn. 485, 494 (1853).
Smith's federal action is clearly related to the present case, brought by ABW. Although these two actions involve the same parties and the arbitration of the same contract, they have been brought within distinguishable jurisdictions. On its face, therefore, the jurisdictional requirement of the prior pending action doctrine precludes proper application to this case.
In addition, although these two matters involve the arbitration of the same contract, the parties have filed motions militating toward opposing ends or objects and are not joined in the same action. In the federal action, there is no application to vacate the award. In the state action, there is no application to confirm the award. Had opposing motions been filed in either action, the prospect of incomplete proceedings or inconsistent results would be of less concern to the court as, optimally, these opposing motions should be heard together.
This may be especially important for appellate purposes.
B
Abstention Doctrine
Although the prior pending action doctrine is not applicable, this action should be stayed under the abstention doctrine, as asserted by Smith. This doctrine applies to both state and federal actions as a matter of judicial efficiency and comity. " Under the abstention doctrine, federal courts stay their consideration of federal questions until a litigant has exhausted state administrative and judicial remedies. The rule of exhaustion . . . is rooted in considerations of federal-state comity. The principle was defined in Younger v. Harris, 401 U.S. 37, 44, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971), as a proper respect for state functions, and it has as much relevance in areas of particular state administrative concern as it does where state judicial action is being attacked." Gnutti v. Heintz, 206 Conn. 628, 635, 539 A.2d 118 (1988), citing Preiser v. Rodriguez, 411 U.S. 475, 491, 93 S.Ct. 1827, 36 L.Ed.2d 439 (1973).
In Gnutti, the Connecticut Supreme Court held that Connecticut courts should similarly follow the abstention doctrine when there are ongoing federal actions. To determine whether abstention is appropriate, federal courts weigh six factors: (1) the assumption of jurisdiction by either court over any res or property; (2) the inconvenience of the federal forum; (3) the avoidance of piecemeal litigation; (4) the order in which jurisdiction was obtained; (5) whether state or federal law supplies the rule of decision; and (6) whether the [other] court proceeding will adequately protect the rights of the party seeking to invoke federal jurisdiction. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 16, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983).
In its sur-reply, dated February 2, 2017, ABW challenges the application of the abstention doctrine on three grounds: First, the underlying sales transaction and arbitration occurred in Connecticut " under the presumption that they were following Connecticut law"; second, that the federal action was filed unnecessarily and erroneously, as the parties " elect[ed] to resolve any dispute via arbitration"; and third, Connecticut and federal arbitration law are essentially the same and, therefore, the rights of the parties will be adequately protected under state law in a Connecticut state court.
Generally, ABW concludes that there is no risk of conflicting results, stating in a " header" that " there would be no piecemeal litigation." Although the court agrees, in part, with ABW's assertions, the court concludes, to the contrary, that the federal action was appropriate until the arbitration clause was invoked and, on balance, in weighing the six Gnutti factors, this matter ought to be stayed until further action by, or direction from, the federal district court, particularly in light of the risk of piecemeal litigation and contradictory results.
The Connecticut statutory scheme regarding the enforcement of arbitration awards appears to contemplate confirmation, unless the award is vacated, modified or corrected. To vacate the award, as applied for here by ABW, the court " 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." General Statute § 52-418.
Absent an order to vacate, modify or correct, however, an arbitration award is required to be confirmed under both Connecticut and federal law. Under Connecticut law, " [t]he 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." (Emphasis added.) General Statute § 52-417. Under federal law, 9 U.S.C.A § 9 similarly provides that " [i]f the parties . . . have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration . . . any party to the arbitration may apply to the court so specified for an order confirming the award, and thereupon the court must grant such an order unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of this title." (Emphasis added.)
Although objections to the opposing, pending actions may be filed in either or both courts, the procedural path to the full and complete resolution of the dispute may be in jeopardy if, for example, the Connecticut court application to vacate fails and there is no timely, pending application to confirm before this court or, even worse, where simultaneous and opposing court orders are issued. These scenarios lead to a significant concern over the potential for piecemeal litigation and conflicting results without the full and sequential consideration and conclusion of the issues in dispute. In the court's view, where there are opposing applications to vacate and confirm an arbitration award, it would be best to adjudicate an application to vacate prior to confirming an award.
The court concludes that the procedural posture of this case militates toward a stay of this state action until the federal court determines how it will proceed, either independently, or in conjunction and in proper sequence with this state court. This conclusion and deference is based upon the fact that Smith's federal action and her motion to confirm were filed prior in time to ABW's application to vacate the award here in state court.
III
CONCLUSION
The respondent's motion to dismiss is denied. Her motion for stay is granted. SO ORDERED.