Opinion
Nos. CV11-6011288, CV 11-6011289, CV11-6011353
November 10, 2011
MEMORANDUM OF DECISION
Preliminary Statement
These three matters arise out of a single arbitration. The arbitration at issue arose out of a dispute between a developer, CDIFUND, LLC (CDI), and its principal Gary Bonomo, and two homeowners with whom CDI contracted to build homes in Naugatuck, Connecticut: Robert and Antoinette Lenkowski as well as Anthony and Patricia Teta. The arbitrator entered awards in favor of the homeowners and against both CDI and Bonomo. The case docketed as ending No. 1288 was filed by CDI as a motion to vacate the arbitration award entered in favor of Antoinette Lenkowski. The case docketed as ending No. 1289 was filed by CDI as a motion to vacate the arbitration award entered in favor of the Tetas. The case docketed as ending No. 1353 was filed by Lenkowski and the Tetas as a motion to confirm the arbitration awards entered in their favor and against CDI and Bonomo. All motions were heard in a single proceeding on October 18, 2011. At the hearing and in this memorandum, CDI and Bonomo were and are referred to as the defendants, the Tetas and Lenkowski, as the plaintiffs. Thereafter, post-trial briefs were submitted. The court has reviewed the evidence introduced and the parties' briefs. For the reasons set forth below, the motion to confirm the arbitration awards is GRANTED in part and DENIED in part. The motion to vacate the arbitration award in favor of the Tetas is DENIED. The motion to vacate the arbitration award in favor of Lenkowski is GRANTED in part and DENIED in part.
The Lenkowski's contract was signed by Antoinette Lenkowski only. Judge Hodgson recognized that Robert Lenkowski was not a contract purchaser and therefore her award was as to Antoinette Lenkowski alone.
Factual and Procedural Background.
The homeowners, Lenkowski and Tetas, complained of various deficiencies in the construction of their homes. The construction contract provided that in the event of such disputes, the issues would be resolved by arbitration with the AAA under the AAA Construction Industry Arbitration Rules and Mediation Procedures. Although the parties began that process, the parties, through their respective counsel, determined to have retired Superior Court Judge Beverly Hodgson serve as the arbitrator in lieu of an arbitrator identified by the AAA. As to the selection of Judge Hodgson, all parties agreed.
In advance of the arbitration, on May 12, 2010, Judge Hodgson sent a lengthy email to all counsel in which she disclosed any possible connection between herself, her family, counsel, the parties and the subject matter of their dispute. (Plaintiff's Exhibit 3.) She included the following statement: I do not feel that any of the facts set forth above would in any way impair my ability to be neutral, impartial and fair in arbitrating this dispute." Id. Approximately 11 months later, in June 2011, Judge Hodgson conducted the arbitration over the course of two days. She issued her decision on July 27, 2011. She awarded $57,872.86 in favor of Lenkowski and against CDI. Of that amount, she made Bonomo jointly and severally liable for $16,500.00. Finally, she awarded damages of $33,826.52 in favor of the Tetas and against CDI. The Tetas and Lenkowski seek to confirm these awards. CDI and Bonomo seek to vacate these awards.
CDI and Bonomo identify two bases upon which the award should be vacated. They argue first that Bonomo was not a proper party to the arbitration as he did not sign the construction contract in his personal capacity. Second, they argue that Judge Hodgson's failure to complete the AAA form mandated for AAA arbitrators which is designed to identify any possible conflicts for the arbitrator rendered their consent to Judge Hodgson a nullity. Without valid consent to the arbitrator, they argue, the award cannot stand.
Discussion
Arbitration has long been favored as a means of settling disputes and expediting their resolution. Wolf v. Gould, 10 Conn.App. 292, 296 (1987). An award will therefore generally be upheld and great deference will be given to an arbitrator's decision. Hartford v. Local 760, 6 Conn.App. 11, 13 (1986). "The party challenging the award bears the burden of producing evidence sufficient to invalidate or avoid it, and only upon a showing that it `falls within the proscriptions of § 52-418 of the General Statutes, or procedurally violates the parties agreement' will the determination of an arbitrator be subject to judicial inquiry." OG/O'Connell Joint Venture v. Chase Family Limited Partnership No. 3, 203 Conn. 133, 145-46 (1987). An award rendered in conformity with the submission so as to constitute a mutual final and definite award upon the subject matter submitted should be confirmed. Waterbury Board of Education v. Waterbury Teachers Association, 168 Conn. 54, 61 (1975), citing Costello Construction Corporation v. Teamsters Local 559, 167 Conn. 315, 319.
Conn. Gen. Stat. § 52-418 provides in pertinent part: "Upon the application of any party to an arbitration, the superior court for the judicial district in which one of the parties resides . . . shall make an order vacating the award if it finds any of the following defects: (1) . . . (2) . . . (3) . . .; 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." CDI and Bonomo argue that Judge Hodgson both exceeded her powers when entering an award as to Bonomo personally and executed them imperfectly by reason of her failure to complete the AAA form regarding possible conflicts.
The plaintiffs argue in the first instance that the defendants have waived these claims. With respect to CDI's claim regarding the consent to Judge Hodgson, this court agrees.
That a party to an arbitration can be found to have waived arguments subsequently presented to the Superior Court through their conduct at the arbitration is well-settled. See, Waterbury Board of Education v. Waterbury Teachers Association, 168 Conn. 54, 61-62 (1975); C.R. Klewin Northeast, LLC v. City of Bridgeport, 282 Conn. 54, 63-64 (2007) (City of Bridgeport waived the claim of illegality of the contract when it participated in the arbitration and did not raise the illegality argument therein); Vincent Builders, Inc. v. American Application Systems, Inc., 16 Conn.App. 486, 488-91 (1988) (plaintiff waived argument that the wrong defendant was named and that therefore the arbitrator exceeded his authority where plaintiff had failed to raise the issue with the arbitrator).
Waterbury Board of Education v. Waterbury Teacher's Association, 168 Conn. 54 (1975), is instructive. There, the Waterbury Teacher's Association appealed the trial court's decision to vacate an arbitration award rendered in its favor. The Supreme Court reversed the trial court holding that the agreement of the parties regarding the scope of the issues submitted to arbitration, although arguably beyond the scope of the agreements under which arbitration was sought, served as a waiver of the claims made after the fact that the award exceeded the powers of the arbitrator. On matters of whether an arbitration award exceeds the limits of the parties' agreement, the principles of waiver were held applicable to subsequent challenges based thereon. Id. "This court has always respected the autonomy of the CT Page 23348 arbitration process and has been circumspect in its pronouncements with respect to that process. It is a remedy bargained for by the parties and one which they are free to negotiate with respect to the procedure to be employed. Where the parties have agreed to a procedure and have delineated the authority of the arbitrator, they must be bound by those limits." (Emphasis added.) Id. at 62.
Here, CDI never challenged the adequacy of Judge Hodgson's disclosure. CDI never claimed that she was required to complete a specific AAA promulgated form disclosing any conflicts. This, coupled with CDI's full participation in the arbitration well over one year from receiving the disclosure renders this argument waived. "Our holding in Costello, is not to be read to allow parties to forego objections to arbitration, gambling upon a favorable result and, when losing, to raise the procedural defects in a motion to vacate." Waterbury Board of Education v. Waterbury Teacher's Association, supra, 168 Conn. at 63. " Arbitration is a creature of contract . . . The continued autonomy of that process can be maintained only with a minimum of judicial intrusion. It is the responsibility of those employing arbitration to ensure that every right and limitation on the arbitration process for which they have contracted is preserved. (Citation omitted.) Id.
Notably, Rule 39 of the Construction Industry Arbitration Rules of the American Arbitration Association provides that "[a]ny party who proceeds with the arbitration after knowledge that any provision or requirement of these rules has not been complied with and who fails to state an objection thereto in writing, shall be deemed to have waived the right to object." See Defendant's Exhibit B. See also, Vincent Builders, Inc. v. American Application Systems, Inc., 16 Conn.App. 486, 488-91 (1988).
Alternatively, the court finds that the May 12, 2010 email to both counsel adequately complied with the disclosure obligations mandated by the AAA at Rule 19. Indeed, the guidelines for neutrals which is part of Defendant's Exhibit A, identifies the various matters which must be disclosed by an AAA neutral. Whether the form was used or not, which is not specifically mandated by Rule 19, the substance of the disclosure requirements were clearly met. Thus, the defendants' arguments are substantively without merit as well.
Next, defendant Bonomo asserts that he was not a party to any written arbitration agreement and therefore the award against him personally is invalid. This issue is controlled by Pinard v. Dandy Lions, LLC, 119 Conn.App. 368 (2010). There, the parties agreed in open court to resolve their dispute through a mediation which would result in an arbitration award. The parties agreed that the judge's award would be enforced through the arbitration statutes. The parties willingly participated in the arbitration process. After the judge entered an award in favor of the plaintiff, the defendants sought to vacate the award on the grounds that the agreement to arbitrate was not in writing, as required by Conn. Gen. Stat. § 52-408. The trial court vacated the award and the Appellate Court affirmed that decision: "it is clear . . . that only written agreements to arbitrate are valid. Oral agreements are not included, implicitly or explicitly, in the [statutory] description of valid arbitration agreements." Id., quoting, Bennett v. Meader, 208 Conn. 352 (1988). Although Judge Hodgson found that Bonomo had "assented to the arbitration" by filing an answer and special defense and by participating therein through counsel, the fact that Bonomo was not a party, in his individual capacity, to the written agreement to arbitrate, renders any award as to him invalid. This court sees no basis upon which the Appellate Court's decision can be or should be distinguished.
Conclusion
The motion to confirm filed in Dkt. No. CV 11 6011353S ( Lenkowski and Tetas v. CDI and Bonomo) is granted in part and denied in part. The award in favor of Lenkowski ($57,872.86) and the Tetas ($33,826.52) as against CDI is confirmed. The award in favor of Lenkowski as against Bonomo ($16,500.00) is not confirmed.
The motion to vacate filed in Dkt. No. CV 11 6011289S ( CDI v. Tetas) is denied.
The motion to vacate filed in Dkt. No. CV 11 6011288S ( CDI and Bonomo v. Lenkowski) is denied in part and granted in part. The court denies the motion to vacate the award in favor of Lenkowski ($57,872.86) as against CDI. The court grants the motion to vacate the award in favor of Lenkowski ($16,500.00) as against Bonomo.
SO ORDERED.