Opinion
No. CV 02 0398650 S
March 31, 2004
MEMORANDUM OF DECISION
The defendant, Fran Environmental, LLC filed a demand for arbitration with the American Arbitration Association claiming breach of contract, breach of covenant of good faith and fair dealing, intentional and negligent misrepresentation and violation of CUTPA. The plaintiff, Startech Environmental Corporation, objected to the arbitration asserting that the claims were beyond the scope of the arbitration provision in the contract. Arbitration proceedings were commenced at which the plaintiff asserted that the claims were not subject to arbitration because they were beyond the scope of the arbitration clause. On November 26, 2002, the arbitrator ruled that these objections would be "heard and determined as part of the merits of the case."
On December 10, 2002, the plaintiff filed the present action, which consists of an application for temporary injunction and an order to show cause. The plaintiff seeks to enjoin the defendant from proceeding with an arbitration that is currently assigned to an arbitrator at the American Arbitration Association.
On January 6, 2003, Judge Wolven issued a temporary injunction, based upon the plaintiff's representations, which were made by one of its officers in an affidavit. Judge Wolven's order prohibited the defendant from proceeding with the arbitration until such time as the court could hold a further hearing on the issue. The order also specifically provided that it was without prejudice and that the defendant would have an opportunity to be heard and argue its position.
On March 22, 2004, a hearing was held before the undersigned. At this hearing, the defendant argued its motion to stay the present action and its motion to dissolve the January 6, 2003, temporary injunction. The plaintiff also presented its argument in objection to these motions.
The defendant cites Welch Group, Inc. v. Creative Drywall, Inc., 215 Conn. 464 (1990), for the proposition that a trial court decides whether a dispute is subject to arbitration. The agreement in Welch had both a clause limiting arbitrations to disputes involving less than $100,000, as well as, a clause providing that all other disputes were to be determined by a court. The parties to the Welch agreement desired and required that all claims and disputes were to be decided by a court, except for those involving less than $100,000.
Thus, when viewed in its totality, the contract expresses the intent that all claims and disputes are to be decided in the first instance by a court, subject to a limited exception for those matters in dispute that are less than $100,000. Id., 468.
The instant case is distinguishable from Welch Group, Inc. v. Creative Drywall, Inc. because the arbitration provision in Welch was very different from the one at issue here. In this case, a written contract existed between the defendant and the plaintiff in which the defendant agreed to promote and sell the plaintiff's product. This contract also stated the parties' intentions regarding which disputes that may arise under the contract are subject to arbitration. Specifically, the parties included an arbitration clause, which delineates the scope and nature of matters subject to arbitration under the contract.
In the arbitration clause, the parties here provided broad and inclusive language regarding the matters to be arbitrated, and more specific language limiting the scope of matters under the contract which are not to be arbitrated. The arbitration clause provides in pertinent part: "Any differences, claims, or matters in dispute arising between Principal and Representative out of or connected with this agreement shall be submitted by them to arbitration by the American Arbitration Association . . . and the determination of the American Arbitration Association, in Connecticut, or its successor shall be final and absolute. This arbitration clause shall only apply to the decisions NOT left to the sole discretion of the Principal. There shall be no right to arbitration for any decision left to the sole discretion of Principal." (Emphasis added.)
"Principal" is the plaintiff, Startech Environmental Corp. "Representative" is the defendant, Fran Environmental, LLC.
The defendants claim that inclusion of the exclusionary language for decisions left to the Principal's sole discretion indicates that the arbitration clause was not intended to be all-inclusive. In particular, the defendants contend that the arbitration clause does not include questions of arbitrability; therefore, the defendants request that the injunction continue. The agreement does contain several specifics which are to be left to the sole discretion of the Principal. Nevertheless, the agreement is silent regarding who is to decide a dispute as to whether an item is within the sole discretion of the Principal.
In Combustion Engineering, Inc. v. International Brotherhood of Boilermakers, 15 Conn. App. 332, 544 A.2d 256 (1988), the Appellate Court considered an agreement with an arbitration clause and exclusionary language. The Appellate Court determined that the exception from a broad arbitration clause should be clear in order to preclude the submission of a question of arbitrability on a given issue to an arbitrator.
While the full meaning of the exclusionary clause has not been presented in this appeal, it does not follow that, in the context of the entire arbitration clause, the question of arbitrability falls within the ambit of the exclusionary language so as to preclude the arbitrator from deciding questions of arbitrability. Furthermore, in determining whether an agreement confers on the arbitrator the authority to arbitrate, "any `[d]oubts [concerning arbitrability] should be resolved in favor of coverage.' United Steelworkers of America v. Warrior Gulf Navigation Co., 363 U.S. 574, 583, 80 S.Ct. 1347, 4 L.Ed.2d 1409 [1960]; International Union v. General Electric Co., 148 Conn. 693, 701, 702, 174 A.2d 298 [1961]. Board of Police Commissioners v. Maher, 171 Conn. 613, 621, 370 A.2d 1076 (1976)."
Id., 335.
The language of the arbitration clause in this contractual agreement between the parties requires arbitration for "[a]ny differences, claims, or matters in dispute arising . . . out of or connected with this agreement . . ." The clause does contain an exception, i.e., the arbitration clause "should only apply to decisions NOT left to the sole discretion of the Principal." Otherwise, it does not except or exclude questions as to which matters arising under the contract are subject to arbitration. As Connecticut law requires that "any [d]oubts [concerning arbitrability] should be resolved in favor of coverage," this issue is more appropriately determined by the arbitrator. See Combustion Engineering, Inc. v. International Brotherhood of Boilermakers, supra, 15 Conn. App. 335, citing, Board of Police Commissioners v. Maher, 171 Conn. 613, 621, 370 A.2d 1076 (1976).
Accordingly, the court grants the defendant's motion to stay the present action and compel arbitration, as well as, the defendant's motion to dissolve the temporary injunction. The plaintiff's objection to the defendant's motion to stay is denied.
HILLER, J.