Opinion
No. FST CV 04 4000720 S
August 8, 2005
MEMORANDUM OF DECISION RE DEFENDANT'S MOTION FOR SUMMARY JUDGMENT #101
Presently before the court is the defendant H. Franklin Bloomer, Jr.'s motion for summary judgment against plaintiff JLM Marketing, Inc. By a two-count complaint filed on August 12, 2004, the plaintiff corporation alleges malfeasance and negligence on the part of the defendant, stemming from an arbitration proceeding in which the plaintiff was a respondent and the defendant the chair of the arbitration panel.
The plaintiff's complaint alleges the following relevant statement of facts. Stolthaven Perth Amboy, Inc. (Stolthaven), a subsidiary of StoltNielsen SA (Stolt), initiated an arbitration proceeding before the American Arbitration Association (AAA); the arbitration was conducted under the AAA's commercial rules and, via the underlying contract, was subject to review by the New Jersey courts. On April 22, 2002, a hearing was held before the defendant and panel of arbitrators. At the end of the hearing, in accordance with AAA Rule 35, the defendant ruled on the record that the hearing would close upon the submission of post-hearing briefs, due one week after receipt of the transcript. Pursuant to AAA Rule 41, the defendant ordered that the award would be delivered within thirty days after the close of the hearing. On May 16, 2002, briefs were filed, but no award was issued from the panel thirty days later, on June 16, 2002. On June 24, 2002, the plaintiff filed an objection with the AAA, claiming that in failing to render a decision or timely reopen the hearings, the panel executed its powers imperfectly. The plaintiff claims that after the June 16, 2002 deadline passed, the defendant lost all jurisdiction over this matter and was considered "functus officio," meaning that he could not take any further action.
AAA Rule 35 provides: "The arbitrator shall specifically inquire of all parties whether they have any further proofs to offer or witnesses to be heard. Upon receiving negative replies or if satisfied that the record is complete the arbitrator shall declare the hearing closed. If briefs are to be filed, the hearing shall be declared closed as of the final date set by the arbitrator for the receipt of briefs. If documents are to be filed as provided in Section R-32 and the date set for their receipt is later than that set for the receipt of briefs, the later date shall be the closing date of the hearing. The time limit within which the arbitrator is required to make the award shall commence, in the absence of other agreements by the parties, upon the closing of the hearing."
AAA Rule 41 provides: "The award shall be made promptly by the arbitrator and, unless otherwise agreed by the parties or specified by law, no later than 30 days from the date of closing the hearing, or, if oral hearings have been waived, from the date of the AAA's transmittal of the final statements and proofs to the arbitrator."
On June 27, 2002, the plaintiff discovered that the defendant was an elected member of the representative town meeting for the town of Greenwich, and chair of the land use committee; the plaintiff claims that these affiliations were not disclosed by the AAA. The plaintiff called upon the AAA to disqualify the defendant and asked for the defendant's voluntary recusal based on the apparent conflict of interest and appearance of impropriety resulting from the defendant's elected position. The defendant refused to recuse himself prior to the issuance of the award, stating that several interim orders had already been issued and a partial ruling rendered. On July 12, 2002, a majority of the arbitration panel, including the defendant, issued an award finding that the plaintiff breached its contract with Stolt and was liable for damages. As the hearings were bifurcated, a separate hearing was to be held on damages.
The plaintiff avers that the parent of Stolthaven Perth Amboy, Inc. is Stolt Nielsen SA, one of Greenwich's largest employers, a large taxpayer, and the owner or a principal lessee of a major building in Greenwich. Many of Stolt's employees are Greenwich residents and may be part of the defendant's direct constituency. Consequently, the plaintiff asserts that defendant could not have served as a "neutral arbitrator" in a dispute that could have an economic effect — positive or negative — on his constituents or on a major business entity within his sphere of influence. The plaintiff also points to the improper appearance that the defendant could reward Stolt Nielsen or its employees, or that the same could become beholden to the defendant as cause for the plaintiff's challenge to the defendant's involvement in these proceedings.
Thereafter, the plaintiff filed a petition with the New Jersey Superior Court to vacate the award as untimely made. On November 15, 2002, based on a finding that the defendant had closed the hearing, the court, Longhi, J., found that the arbitration panel had exceeded the scope of its authority under New Jersey law by failing to issue an award in this matter within the thirty-day time limit set out in AAA rules, and thus vacated the arbitration award. Stolt filed a notice of appeal on December 23, 2002.
The New Jersey Superior Court Appellate Division affirmed the decision of the trial court on April 2, 2004.
The plaintiff further alleges that on February 3, 2003, AAA International Case Manager, Tom Simotas (Tom Simotas) issued a letter attaching an e-mail from the defendant wherein the defendant claims that he did not, in fact, close the hearings. The e-mail was allegedly in response to Mr. Simotas' inquiry of whether the panel considered the hearings closed. The plaintiff contends that Stolt submitted this e-mail to the appellate court in an attempt to influence the appeal, which had yet to be briefed and argued.
In count one of the complaint, sounding in malfeasance, the plaintiff alleges that the defendant took an arbitrator's oath where he swore neutrality, but by acting in a biased manner, and by assisting Stolt in the arbitration, the defendant acted wrongfully and caused the plaintiff damages. In count two, sounding in negligence, the plaintiff alleges that the defendant's negligent actions proximately caused the plaintiff injury in the form of attorneys fees expended to protect its interests in relation to Stolt's appeal.
On September 27, 2004, the defendant filed a motion for summary judgment, together with a memorandum in support thereof. The plaintiff filed an objection to the motion, with memorandum, on December 1, 2004. The defendant filed a timely reply.
I. STANDARD CT Page 11855
Practice Book § 17-49 provides that summary judgment "shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law . . . In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party." (Citation omitted; internal quotation marks omitted.) Barrett v. Montesano, 269 Conn. 787, 791, 849 A.2d 839 (2004). "To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact . . . When documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue . . . Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue . . . It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue. Mere assertions of fact . . . are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court under Practice Book [§ 17-45]." (Citations omitted; internal quotation marks omitted.) Allstate Ins. Co. v. Barron, 269 Conn. 394, 405-06, 848 A.2d 1165 (2004)."Quasi judicial immunity . . . is properly pleaded as a special defense and the issue [may be] raised by using a motion for summary judgment." Carruba v. Moscowitz, 81 Conn.App. 382, 385 (2004), appeal docketed, No. SC 17157 (Conn. March 24, 2004). Immunity in this case flows from the arbitrator's status as a "quasi-judicial proceeding." Jacob v. Seaboard, Inc., 28 Conn.App. 270, 275 (1992). Additionally, "[s]ummary judgment is an appropriate method for resolving issues of res judicata . . ." Zanoni v. Lynch, 79 Conn.App. 325, 338 (2003).
The defendant moves for summary judgment on the ground that he has immunity from suits based on his actions as an arbitrator under the common-law doctrine of arbitral immunity and because the rules applicable to commercial arbitration specifically provide him with contractual immunity. The defendant also contends that res judicata bars the plaintiff's claims in this matter. The defendant submits several materials together with a memorandum in support of his motion. In opposition to the motion for summary judgment, the plaintiff contends that arbitral immunity does not protect the defendant, as the conduct at issue took place after the arbitration was over and after the defendant ceased serving as arbitrator. In addition to a memorandum, the plaintiff has also submitted supplementary materials.
The defendant submits a copy of the transcript of decision from JLM Marketing v. Stolthaven Perth Amboy, Inc., New Jersey Superior Court, Middlesex County, Docket No. 00833402 (November 15, 2002, Longhi, J.) and a copy of the decision of the New Jersey Superior Court Appellate Division, dated April 2, 2004, affirming the lower court's decision.
The plaintiff submits a sworn affidavit of John MacDonald, chairman and founder of the plaintiff's parent corporation, JLM Industries, Inc.; a copy of a portion of the transcript from the April 22, 2002 arbitration hearing; a copy of the New Jersey trial court transcript in JLM Marketing, Inc. v. Stolthaven Perth Amboy, Inc.; and a copy of a letter from Tom Simotas, dated February 3, 2003, to which is attached an e-mail sent from the defendant.
II. ARBITRAL IMMUNITY
"Arbitration is the voluntary submission, by the interested parties, of an existing or future dispute to a disinterested person or persons for final determination." Gary Excavating, Inc. v. North Haven, 164 Conn. 119, 121, 318 A.2d 84 (1972). "Arbitration is a quasi judicial proceeding . . . [and a] contractual remedy intended to avoid the formalities of ordinary litigation." (Citations omitted.) Jacob v. Seaboard, Inc., 28 Conn.App. 270, 275, 610 A.2d 189, cert. denied, 223 Conn. 923, 614 A.2d 822 (1992). "Because an arbitrator's role is functionally equivalent to a judge's role, courts . . . have uniformly extended judicial or quasi-judicial immunity to arbitrators . . . As with judicial and quasi-judicial immunity, arbitral immunity is necessary to protect decision makers from undue influence, and the decision-making process from reprisals by dissatisfied litigants." (Citation omitted; internal quotation marks omitted.) New England Cleaning Services, Inc., v. American Arbitration Assn., 199 F.3d 542, 545 (1st Cir. 1999).
Arbitral immunity extends to protect all acts within the scope of the arbitral process, even when one of the parties to arbitration has alleged bias on the part of an arbitrator. Olson v. National Assoc. of Securities Dealers, 85 F.3d 381, 383 (8th Cir. 1996); see LH Airco, Inc. v. Rapistan Corp., 446 N.W.2d 372, 380 (Minn. 1989) (concluding that although an ethical duty may exist to disclose prior and present social and professional relationships with parties to the arbitration proceeding, an arbitrator is entitled to immunity from liability for a failure to disclose such information.) Under these principles, therefore, the defendant would be immune from suit for bias stemming from his alleged ties to Stolt.
As several courts have noted, an aggrieved party to an arbitration proceeding is not without redress, even where the arbitrator and the AAA are protected by arbitral or contractual immunity. "Courts can vacate tainted arbitration decisions . . . [and parties may] receive a new arbitration proceeding free from actual or perceived bias." Olson v. National Assoc. of Securities Dealers, supra, 85 F.3d 383; see LH Airco, Inc. v. Rapistan Corp., supra, 446 N.W.2d 374; Corey v. New York Stock Exchange, 691 F.2d 1205, 1211 (6th Cir. 1982). In Connecticut, General Statutes § 52-418(a) allows for the vacature of awards if, in part, "there has been evident partiality or corruption on the part of any arbitrator." The plaintiff, in fact, sought redress with the New Jersey Superior Court and had the original arbitration award vacated in its favor.
III. CONTRACTUAL IMMUNITY
In addition to arbitral immunity, the defendant also asserts contractual immunity in the present matter, pursuant to the AAA's Commercial Arbitration Rules and Mediation Procedures. Both the defendant and the plaintiff concur that the plaintiff and Stolthaven agreed to arbitrate pursuant to the AAA rules. Rule 48 of the AAA's Commercial Arbitration Rules, as referenced by the defendant, is titled "Applications to Court and Exclusion of Liability," and states, in pertinent part: "(b) Neither the AAA nor any arbitrator in a proceeding under these rules is a necessary or proper party in judicial proceedings relating to the arbitration . . . (d) [N]either the AAA nor any arbitrator shall be liable to any party . . . for any act or omission in connection with any arbitration conducted under these rules." American Arbitration Association, Commercial Arbitration Rules and Mediation Procedures, R. 48 (amended and effective July 1, 2003). "The American Arbitration Rules . . . are not secondary interpretive aides that supplement [the court's] reading of the contract; they are prescriptions incorporated by the express terms of the agreement itself." CL Enterprises, Inc. v. Citizen Band Potawatomi Indian Tribe of Okla., 532 U.S. 411, 419 n. 1, 149 L.Ed.2d 623, 121 S.Ct. 1589 (2001). As the parties, by contract, agreed to arbitrate under the AAA's rules, and Rule 48 provides that the arbitrator and the AAA shall have immunity, the defendant is thereby contractually immune from suit in his role as arbitrator.
IV. DOCTRINE OF FUNCTUS OFFICIO
The plaintiff asserts that the defendant's involvement in the matter ceased on June 16, 2002, when he failed to timely issue an award in the arbitration proceedings pursuant to AAA Rule 41. Although the arbitration panel issued an award in Stolt's favor on July 12, 2002, the plaintiff maintains that on its appeal to the New Jersey Superior Court, wherein the court vacated the award as untimely, it was clear that the defendant's role as arbitrator had been terminated and he was functus officio. Therefore, the plaintiff argues that the defendant was acting as a private citizen, and not as an arbitrator, when he, as the plaintiff alleges, wrote an e-mail to the AAA's Tom Simotas attempting to influence Stolt's appeal. As such, the plaintiff maintains that arbitral and contractual immunity cannot protect the defendant.
"[A]s a general rule, once an arbitration panel renders a decision regarding the issues submitted, it becomes functus officio and lacks any power to reexamine that decision . . . Courts have also recognized, however, that the doctrine has limitations and contains three exceptions that allow an arbitrator's review of a final award . . . The three exceptions to the rule of functus officio include: (1) [where] an arbitrator can correct a mistake which is apparent on the face of his award . . . (2) where the award does not adjudicate an issue which has been submitted, then as to such issue the arbitrator has not exhausted his function and it remains open to him for subsequent determination; and (3) [w]here the award, although seemingly complete, leaves doubt whether the submission has been fully executed, an ambiguity arises which the arbitrator is entitled to clarify." (Citations omitted; internal quotation marks omitted.) Hartford Steam Boiler Inspection Ins. Co. v. Underwriters at Lloyd's Cos. Collective, 271 Conn. 474, 484-85, 857 A.2d 893 (2004), cert. denied, 125 S.Ct. 1826, 161 L.Ed.2d 723 (2005).
Both the plaintiff and the defendant have stated that the arbitration panel had initially determined liability but had not adjudicated damages. The defendant had therefore not exhausted his function as to that issue, and is squarely within the second exception to the functus officio doctrine as articulated by the Connecticut Supreme Court. If he is not functus officio in the arbitration, the defendant is immune from suit. Viewing the evidence in the light most favorable to the plaintiff as the nonmoving party, there is no genuine issue of material fact as to the defendant's status as an arbitrator and consequent arbitral and contractual immunity from suit. Although the plaintiff claims that the defendant was no longer an arbitrator at the time of his e-mail communication to the AAA, the plaintiff has not presented evidence to establish that this is so. In light of the court's ruling on the issue of immunity, the court will not address the issue of res judicata.
The plaintiff submits a copy of a letter from Tom Simotas to which an e-mail from the defendant is attached, but the court will not consider them with the plaintiff's motion in opposition. Likewise, the court will not consider various letters submitted with the defendant's reply brief between the parties to arbitration and the AAA. Before a document may be considered by the court in support of or in opposition to a motion for summary judgment, `There must be a preliminary showing of [the document's] genuineness, i.e., that the proffered item of evidence is what its proponent claims it to be. The requirement of authentication applies to all types of evidence, including writings . . . Documents in support of or opposition to a motion for summary judgment may be authenticated in a variety of ways, including, but not limited to, a certified copy of a document or the addition of an affidavit by a person with personal knowledge that the offered evidence is a true and accurate representation of what its proponent claims it to be." (Citation omitted; internal quotation marks omitted.) New Haven v. Pantani, 89 Conn.App. 675, 679 (2005). None of these documents are certified or their accuracy attested to by affidavit.
Accordingly, for the foregoing reasons, the defendant has met his burden of showing that no genuine issues of material fact exist that he is immune from suit under the doctrines of arbitral and contractual immunity, and therefore, the defendant's motion for summary judgment is hereby granted.
IT IS SO ORDERED
BY THE COURT
WILSON, J.