Opinion
No. CV 04 4001079S
May 25, 2005
MEMORANDUM OF DECISION
This matter came before the court on February 22, 2005 on a motion to dismiss filed by the defendant, Thomas C. Bailey. The defendant moves to dismiss the application to confirm an arbitration award filed by the plaintiff, MBNA America Bank. For the reasons stated below, the motion to dismiss is denied.
FACTS
The defendant received a credit card from the plaintiff and, after making charges, went into default on payments. The plaintiff alleges that pursuant to the credit card agreement, the defendant was required to submit to arbitration. On August 6, 2004, an arbitrator found that the defendant owed the plaintiff $10,248.25. The defendant was not present at the arbitration. On November 9, 2004, the plaintiff filed an application to confirm the arbitration award. Attached to the application was a copy of the credit card agreement between the parties.
On January 7, 2005, the defendant filed a motion to dismiss the application to confirm the arbitration award, citing lack of subject matter jurisdiction. The motion to dismiss was accompanied by a memorandum of law in support. The plaintiff filed a memorandum in opposition to the motion to dismiss on January 18, 2005. On January 21, 2005, the defendant submitted a supplemental memorandum in support of his motion to dismiss. The plaintiff submitted a reply to the defendant's supplemental memorandum on February 4, 2005. On February 8, 2005, the defendant submitted a second supplemental memorandum in support of his motion to dismiss.
DISCUSSION
"A motion to dismiss shall be used to assert lack of jurisdiction over the subject matter, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court." (Internal quotation marks omitted.) Kizis v. Morse Diesel International, Inc., 260 Conn. 46, 51, 794 A.2d 498 (2002). "[I]n ruling on a motion to dismiss, the trial court must take the facts to be those alleged in the complaint, including those facts necessarily implied from the allegations, construing them in a manner most favorable to the pleader." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. New London, 262 Conn. 423, 432-33, 829 A.2d 801 (2003); Dyous v. Psychiatric Security Review Board, 264 Conn. 766, 774, 826 A.2d 138 (2003).
The defendant argues that the court lacks subject matter jurisdiction to confirm the arbitration award because there is no valid and enforceable agreement to arbitrate between the parties and as such the arbitration award is not legitimate or binding. He argues that under General Statutes § 52-408, an enforceable arbitration agreement must be executed by the parties. He further states that the plaintiff has submitted no proof that the defendant ever executed an agreement to arbitrate. The agreement to arbitrate, he states, came in the form of an amendment to the original credit card agreement which he never signed. As he never signed an agreement, the defendant concludes, he cannot be held to an arbitrator's decision.
The plaintiff responds that § 52-408 requires merely that an agreement to arbitrate be contained in a written contract and that no signature requirements exist. To support this proposition, the plaintiff cites Schwarzschild v. Martin, 191 Conn. 316, 464 A.2d 774 (1983). The plaintiff also argues that the defendant was bound by the arbitration agreement because he assented to the terms of the credit card agreement and the amendments by accepting the benefit of using the credit card. Further, the plaintiff argues, the defendant had the opportunity to express his concerns and arguments at the arbitration, but he chose not to attend.
The defendant counters that Schwarzschild does not support the plaintiff's position because in Schwarzschild, the party objecting to the arbitration agreement was the party who had signed the agreement. In the present case, the defendant argues, not only did he never sign an agreement to arbitrate, he did not participate in the arbitration sessions, thus making any arbitration award invalid.
The plaintiff replies that, pursuant to the credit card agreement, Delaware law controls in this case. Under Delaware law, as long as the bank follows procedures that permit the borrower to opt-out of amendments to a credit card agreement by sending in written notice of the borrower's rejection of the changes, unilateral amendments to the agreement are valid. The defendant never used the opt-out provision he was given and thus is deemed to have consented to the amendment. The plaintiff also points out that Connecticut law favors integration and in defining the terms of credit card agreements, Connecticut agrees that additional terms and conditions are part of the entire agreement. The defendant counters by stating that the choice of law provision as well as the arbitration agreement are amendments to the original credit card agreement that he did not assent to and that he was never given a meaningful opportunity to opt-out of the amendments.
Connecticut has a public policy favoring arbitration of disputes that is clearly expressed in General Statutes § 52-408 which states in relevant part: "An agreement in any written contract, or in a separate writing executed by the parties to any written contact, to settle by arbitration any controversy thereafter arising out of such contract . . . shall be valid, irrevocable and enforceable, except when there exists sufficient cause at law or in equity for the avoidance of written contracts generally." An application to confirm an arbitration award is controlled by General Statutes § 52-417 which provides that any party to an arbitration may apply for an order confirming the award at any time within one year after the award has been rendered and the parties are notified of the decision of the arbitrator.
General Statutes § 52-417 states in relevant part: "At any time within one year after an award has been rendered and the parties to the arbitration are 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 . . . 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."
"It is well established that [a]rbitration is a creature of contract . . . It is designed to avoid litigation and secure prompt settlement of disputes . . . [A] person can be compelled to arbitrate a dispute only if, to the extent that, and in the manner which, he has agreed so to do . . . No one can be forced to arbitrate a contract dispute who has not previously agreed to do so . . . Moreover, [i]t is the province of the parties to set the limits of the authority of the arbitrators, and the parties will be bound by the limits they have fixed . . . The arbitration provision in an agreement is, in effect, a separate and distinct agreement. Courts of law can enforce only such agreements as the parties actually make . . . Accordingly, because an arbitrators jurisdiction is rooted in the agreement of the parties . . . a party who contests the making of a contract containing an arbitration provision cannot be compelled to arbitrate the threshold issue of the existence of an agreement to arbitrate. Only a court can make that decision." (Citations omitted; emphasis in original; internal quotation marks omitted.) Nussbaum v. Kimberly Timbers, Ltd., 271 Conn. 65, 72-73, 856 A.2d 364 (2004).
The credit card agreement attached to the plaintiff's application to confirm the arbitration award states: "Your Credit Card Agreement with us consists of these Additional Terms and Conditions and the document called the Required Federal Disclosures or the Initial Disclosure. You agree to the terms and conditions of this Agreement." Included within the terms and conditions is an arbitration and litigation clause that states in relevant part: "This Arbitration and Litigation provision applies to you, unless you were given the opportunity to reject the Arbitration and Litigation provisions and you did so reject them, in the manner and timeframe required." The provision goes on to provide that the National Arbitration Forum would conduct the arbitration in the event of any disputes between the bank and the cardholder.
The defendant argues that he did not sign this agreement and that the arbitration agreement is invalid as a result. General Statutes § 52-408, however, does not specifically require a signature. "In the absence of a statute requiring a signature . . . parties may become bound by the terms of a contract, even though they do not sign it, where their assent is otherwise indicated, such as by the acceptance of benefits under the contract." (Internal quotation marks omitted.) Schwarzchild v. Martin, supra, 191 Conn. 321-22. See also Bennett v. Meader, 208 Conn. 352, 361, 545 A.2d 553 (1988) (holding that the signature of both parties is not needed, but the agreement must be a written contract or a separate writing). By using the credit card, the defendant assented to the terms under which credit was extended to him. Submitting disputes to arbitration was one of those terms. "The general rule is that where a person [who is] of mature years and who can read and write, signs or accepts a formal written contract affecting his pecuniary interests, it is [that person's] duty to read it and notice of its contents will be imputed to [that person] if [that person] negligently fails to do so . . . This rule is qualified by the intervention of fraud, artifice or mistake not due to negligence." (Citation omitted; internal quotation marks omitted.) Phoenix Leasing, Inc. v. Kosinski, 47 Conn.App. 650, 654, 707 A.2d 314 (1998).
The defendant claims that the arbitration agreement was not part of the original credit card agreement but rather came by way of a notice of additional terms and conditions to the original agreement. The agreement attached to the plaintiff's application to compel arbitration is the only agreement before the court. As stated above, the language of the agreement outlines what terms and conditions apply to the agreement as a whole. The agreement consisted of the required federal disclosures and the additional terms and conditions which included an arbitration clause.
The court finds that even if the arbitration clause was included by way of subsequent amendment to the credit card agreement, it is still valid. "Where . . . a contract . . . refers to another instrument in such a manner as to establish that [the parties] intended to make the terms and conditions of that other instrument a part of their understanding, the two may be interpreted together as the agreement of the parties." (Internal quotation marks omitted.) Berlin v. Nobel Ins. Co., 60 Conn.App. 56, 62, 758 A.2d 436 (2000). The language of the agreement submitted by the plaintiff clearly expresses the intent of making the terms and conditions contained therein part of the credit card agreement. By accepting benefits under the agreement (i.e., using the credit card), the defendant assented to the terms.
The court also notes that the Supreme Court has outlined the ways in which a respondent can raise issues relating to a lack of agreement to arbitrate and arbitrability. The court has stated: "First, a party may refuse to submit to arbitration at the outset and instead compel judicial determination of the issue of arbitrability . . . Alternatively, threshold questions may properly be committed to the arbitrators themselves for determination under the terms of the contract, along with the merits of the underlying dispute . . . In such cases a court, on a motion to vacate, may properly entertain a challenge to an award alleging disregard of the limits in the parties' agreement with respect to arbitration." (Citations omitted; internal quotation marks omitted.) White v. Kampner, 229 Conn. 465, 476, 641 A.2d 1381 (1994). See also New Britain v. Connecticut Board of Mediation Arbitration, 178 Conn. 557, 560, 424 A.2d 263 (1979). The defendant chose not to avail himself of any of these options. He did not move to compel judicial determination of the validity of the arbitration agreement prior to the arbitration itself, he did not appear at the arbitration to contest the arbitrability of the dispute and, once receiving notice of the arbitration award, he did not file a motion to vacate the award.
General Statues § 52-420(b) states: "No motion to vacate, modify or correct an award may be made after thirty days from the notice of the award to the party to the arbitration who makes the motion."
CONCLUSION
The motion to dismiss is denied. The arbitration clause contained in the credit card agreement is valid. Therefore, the arbitrator had jurisdiction to hear the dispute, as does the court.
BY THE COURT,
Bozzuto, J.