Opinion
No. 390363
April 23, 2003
MEMORANDUM OF DECISION
The plaintiff, Water Pollution Control Authority of the City of Bridgeport (WPCA), has filed an application to vacate an arbitration award on the grounds that the award violates the public policy against municipal officials binding a municipality to an obligation without the authority to do so. The defendant, Professional Services Group, Inc. (PSG), claims that an official of the WPCA had apparent authority to act on behalf of the WPCA. The court holds that the official did not have apparent authority and agrees with the WPCA that the award is against public policy. Accordingly, the application to vacate is granted.
The following facts are not in dispute and are supported by the parties' submissions. On March 27, 1997, the WPCA and PSG entered into a written agreement in which PSG agreed to operate and maintain the WPCA's wastewater treatment facilities. John Marsillio, the Director of Public Facilities of the City of Bridgeport, negotiated the agreement on behalf of the WPCA. In his capacity as Director of Public Facilities, Marsillio is also a non-voting ex officio member of the WPCA's board of directors. The agreement between the WPCA and PSG was signed by the mayor, the city attorney, the WPCA's general manager, and Attorney Charles J. Willinger, Jr., on behalf of the city. An appendix to the agreement provided that the parties would submit to arbitration in the event that a dispute arose between them as to the terms and obligations under the agreement.
The parties entered into two subsequent amendments to the agreement. Both amendments were negotiated by Marsillio on behalf of the WPCA. The second amendment, entered into on May 27, 1999, provided in pertinent part as follows:
PSG has advised the WPCA that the calculations referenced in Article 9.1(A) of the Agreement for contract years One (1) and Two (2) have resulted in a change in the Scope of Services and therefor represent an increase in its compensation for contract years One (1) and Two (2) in the approximate amount of One Million and No/100 ($1,000,000.00) Dollars. Subject to verification by an independent third party, mutually agreeable to the WPCA and PSG, PSG will accept the sum of Eight Hundred Thousand and No/100 ($800,000.00) Dollars in full and final settlement of the aforecited [sic] claim. In such event, the WPCA will pay PSG in three (3) equal annual installments commencing on April 27, 2000 and concluding on April 27, 2002 in the amount of Two Hundred Sixty-six Thousand Six Hundred Sixty-six and 67/100 ($266,666.67) Dollars. Such payments shall be due from WPCA to PSG immediately upon early termination of this Agreement.
(Emphasis added.)
The mayor signed the amendment pursuant Section IV (3) thereof, which provided that he was duly authorized to execute the agreement on behalf of the WPCA. Marsillio signed the agreement as a witness.
Subsequent to the execution of the second amendment, PSG proposed and Marsillio agreed that an entity known as Camp, Dresser McKee (CDM), would serve as the independent third party to verify the calculations that PSG contended supported its claim for additional compensation. CDM subsequently verified PSG calculations.
The WPCA, nonetheless, refused to make payment to PSG. Accordingly, PSG made a claim for arbitration. The WPCA asserted a counterclaim. A hearing was held before an arbitrator who issued an award finding for PSG on its claim and for the WPCA on its counterclaim.
The WPCA brought an application to confirm the arbitrator's award on its counterclaim. The parties agree that the application to confirm, which is the subject of another proceeding, may be granted. In this proceeding, the WPCA has brought an application to vacate the arbitrator's award finding for PSG on its claim. The WPCA argues that the award is against public policy because Marsillio lacked authority to bind the WPCA to the selection of CDM.
The standard of review relative to arbitration awards depends on the nature of the challenge. With a voluntary, unrestricted submission to an arbitrator, as is the case before us, the court may only examine the submission and the award to determine whether the award conforms to the submission . . . In making such a comparison when the submission is unrestricted, the court will not review the evidence or legal questions involved, but is bound by the arbitrator's legal and factual determinations . . .
Certain conditions do exist, however, under which we conduct a more searching review of arbitral awards. In Garrity v. McCaskey, 223 Conn. 1, 6, 612 A.2d 742 (1992), our Supreme Court reiterated that there are three grounds for vacating an award when the submission is unrestricted. These grounds arise when the award (1) rules on the constitutionality of a statute, (2) violates clear public policy or (3) contravenes one or more of the statutory proscriptions of General Statutes § 52-418 . . . Because the defendant's challenge here implicates only the second exception, it will be the focus of our discussion.
Our Supreme Court in Schoonmaker v. Cummings Lockwood of Connecticut, P.C., 252 Conn. 416, 747 A.2d 1017 (2000), enunciated the proper standard of review for determining whether an arbitral decision violates a clear public policy. It stated:
Where there is no clearly established public policy against which to measure the propriety of the arbitrator's award, there is no public policy ground for vacatur. If, on the other hand, it has been determined that an arbitral award does implicate a clearly established public policy, the ultimate question remains as to whether the award itself comports with that policy. We conclude that where a party challenges a consensual arbitral award on the ground that it violates public policy, and where that challenge has a legitimate, colorable basis, de novo review of the award is appropriate in order to determine whether the award does in fact violate public policy.
Id., 429 (emphasis added).
The court, however, feared a considerable increase in such challenges. It therefore cautioned against granting de novo review for a bare public policy claim. The court noted:
We emphasize, however, that a party raising such a challenge to an arbitral award may not succeed in receiving de novo review merely by labeling its challenge as falling within the public policy exception to the normal rule of deference. The substance, not the form, of the challenge will govern. Thus, the court should not afford de novo review of the award without first determining that the challenge truly raises a legitimate and colorable claim of violation of public policy. If it does raise such a claim, de novo review should be afforded. If it does not, however, the normal deferential scope of review should apply.
Id., 429 n. 7.
Recently, [the Appellate Court] had the opportunity to clarify the standard annunciated in Schoonmaker. In State v. AFSCME, Council 4, Local 2663, AFL-CIO, [ 59 Conn. App. 793, 797, 758 A.2d 387, cert. denied, 255 Conn. 905, 762 A.2d 910 (2000)], [the court] held that Schoonmaker `require[s] a two-step analysis in cases such as this one in which a party raises the issue of a violation of public policy in an arbitral award. First, we must determine whether a clear public policy can be identified. Second, if a clear public policy can be identified, we must then address the ultimate question of whether the award itself conforms with that policy.
Cheverie v. Ashcraft Gerel, 65 Conn. App. 425, 430-32, 783 A.2d 474, cert. denied, 258 Conn. 932, 785 A.2d 28 (2001) (citations omitted; internal quotation marks omitted). Accordingly, the court undertakes a determination of whether the WPCA's public policy claim passes this two-step analysis, thereby warranting de novo review of the arbitration award.
I
The WPCA argues that there is a clearly established public policy against "binding a municipality to contracts or agreements made by a municipal agent who had no authority to act . . ." PSG does not deny that such a public policy exists but argues that no such policy is implicated by the arbitrator's award. The court nonetheless must discuss the nature of the public policy in question since an understanding of its contours is necessary to a determination of whether the arbitrator's decision violates it.
We begin our analysis with a review of several general principles regarding . . . municipal corporations and their employees. "Generally, no officer or board, other than the common council, has power to bind the municipal corporation by contract, unless duly empowered by statute, the charter, or authority conferred by the common council, where the latter may so delegate its powers . . ." [10 E. McQuillin, Municipal Corporations (3d Ed. Rev. 2002) § 29.15, p. 307]; see Keeney v. Old Saybrook, 237 Conn. 135, 145-46, 676 A.2d 795 (1996). "It follows that agents of a city . . . have no source of authority beyond the charter. [T]heir powers are measured and limited by the express language in which authority is given or by the implication necessary to enable them to perform some duty cast upon them by express language . . ."
Fennell v. Hartford, 238 Conn. 809, 813-14, 681 A.2d 934 (1996).
The WPCA is a municipal water pollution control authority. See General Statutes § 7-246 (a); see generally General Statutes § 7-245 et seq. "The common council of Bridgeport is the governing body of the city. It can exercise all the powers of the municipality except those expressly granted to other agencies." Shanley v. Jankura, 144 Conn. 694, 703, 137 A.2d 536 (1957). Section 22 of the charter of the city of Bridgeport states:
General Statutes § 7-246 (a) provides in relevant part: "Any municipality may, by ordinance, designate its legislative body, except where the legislative body is the town meeting, or any existing board or commission, or create a new board or commission to be designated, as the water pollution control authority for such municipality." Both the agreement and the second amendment reflect that the WPCA is the authority designated by the city of Bridgeport pursuant to General Statutes § 7-246 to operate the municipal sewerage system. See generally General Statutes § 7-245 et seq. Both agreements also state that the WPCA is the operator of two wastewater treatment facilities and systems and related collection conveyance systems facilities, and associated real estate and personal property. Moreover, they both state that the WPCA, "pursuant to Connecticut General Statutes Section 7-247 et seq., has the ability to contract with outside entities to provide services related to the Facilities.
Nothing in this chapter shall be deemed to limit the authority of the city council to establish, in the manner provided by law, a Water Pollution Control and to transfer to it duties, powers and responsibilities which this charter vests in other agencies of the city, including the duties, powers and responsibilities vested in the city council and the director of public facilities.
Section 13.04.070 of the Bridgeport Municipal Code of Ordinances (Bridgeport Municipal Code) provides:
Except as the by-laws of the WPCA may permit in emergency situations, the powers of the WPCA shall be exercised by the members of the board of directors at a meeting duly called and held. No action shall be taken except by the affirmative vote of at least four voting board members.
In New Haven v. Local 884, Council 4, AFSCME, AFL-CIO, 58 Conn. App. 746, 755 A.2d 885, cert. denied, 254 Conn. 929, 761 A.2d 753 (2000), the attorney for the plaintiff city became ill the night before an arbitration hearing with the defendant union. That night, after the state board of mediation and arbitration denied his request for a continuance, the attorney entered into a settlement agreement with the union, which became an award. The city sought to vacate the award on the grounds that it violated public policy pursuant to the city charter because the attorney lacked authority to bind the city. Id., 749.
The union argued that "the city's charter does not set forth an explicit, dominant and well defined public policy . . . the violation of which would require that the arbitral award be vacated." Id., 754. The Appellate Court disagreed, observing that the "Supreme Court has held that an arbitral award that seeks to compel a city to comply with the terms of an agreement that clearly violates the city's charter is against public policy, and that such an award is illegal and unenforceable. Waterbury Teachers Assn. v. Furlong, 162 Conn. 390, 424-25, 294 A.2d 546 (1972)." Id., 754-55. The court concluded "that the city's charter is a legally sufficient source of a public policy on which the arbitral award could be vacated." Id., 755; see also Norwalk v. Board of Labor Relations, 206 Conn. 449, 453, 538 A.2d 694 (1988) (unauthorized labor settlement agreement violated the public policy of the city charter).
Section 13.04.070 of the Bridgeport Municipal Code expresses a clear, explicit, and dominant public policy that the powers of the WPCA can only be exercised corporately, by affirmative vote of four members at a duly called meeting. That § 13.04.070 is a municipal ordinance rather than a charter provision is of no moment where, as here, there is no claim that the ordinance contravenes either the charter, a state statute, or the constitution. In other contexts, it has often been held that a valid municipal ordinance may express public policy. Harris v. Zoning Commission, 259 Conn. 402, 416, 788 A.2d 1239 (2002); Kaufman v. Zoning Commission, 232 Conn. 122, 150, 653 A.2d 798 (1995); Arnold Bernhard Co. v. Planning Zoning Commission, 194 Conn. 152, 164, 479 A.2d 801 (1984); Malafronte v. Planning Zoning Board, 155 Conn. 205, 209, 230 A.2d 606 (1967); see also Sherwood Valley v. Friends of West Willets, 101 Cal.App.4th 191, 206, 23 Cal.Rptr. 708 (2002); McQueen v. Brown, 342 N.J. Super. 120, 129, 775 A.2d 748 (2001); State v. Ruisi, 9 Neb. App. 435, 442, 616 N.W.2d 19 (2000); 56 Am.Jur.2d, Municipal Corporations, Etc. § 351 (2000); 10 E. McQuillin, supra, § 13.03.10, p. 809 ("The general public policy of the municipality is usually a matter for the council to determine"). Accordingly, this court holds that § 13.04.070 is a legally sufficient source of a public policy on which the arbitral award may be vacated. Therefore, the WPCA's challenge to the award has a legitimate, colorable basis.
II
Since the WPCA's challenge to the arbitration award has a legitimate, colorable basis, the court is duty-bound to conduct a de novo review of the award in order to determine the ultimate question of whether the award conforms with that policy. Schoonmaker v. Cummings Lockwood of Connecticut, P.C., supra, 252 Conn. 429.
"The party challenging the award bears the burden of proving that illegality or conflict with public policy is clearly demonstrated . . . Therefore, given the narrow scope of the public policy limitation on arbitral authority, the plaintiff can prevail in the present case only if it demonstrates that the . . . award clearly violates an established public policy mandate." (Internal quotation marks omitted.) State v. AFSCME, Council 4, Local 387, AFL-CIO, 252 Conn. 467, 475, 747 A.2d 480 (2000).
A.
Preliminarily, the court finds that the issue of whether Marsillio had authority to agree to CDM's services was indeed before the arbitrator, and the validity of CDM's selection was the issue on which the award was based. That is, the arbitrator did not make a de novo determination of whether the WPCA owed additional compensation to PSG. Rather, the arbitrator determined that CDM had been validly appointed and had performed the verification of PSG's data, thereby triggering the WPCA's obligation to pay $800,000 in additional compensation to PSG. The following four factors make this clear.
The first factor is PSG's description of its dispute with the WPCA, which was made on a standard form of the American Arbitration Association. Under "The Claim or Relief Sought (the Amount, if Any)," PSG inserted the words "See attached Exh. B," and attached a document entitled "Nature of Dispute and Claim of Relief Sought," which stated:
A. Nature of Dispute
On May 27, 1999, the parties agreed to resolve disputes with respect to the scope of services and the amounts owed thereunder existing for the sum certain of $800,000. This amount was payable only upon condition that it be subject to verification by an independent third party, mutually agreeable to the parties herein. That verification was performed and submitted. Said $800,000 was to be paid in three (3) annual installments commencing on April 27, 2000, followed by two additional payments of April 27, 2001 and April 27, 2002, each in the amount of $266,666.67. To date, said payment has not been made by the respondent WPCA on April 27, 2000.
B. Claim of Relief Sought
"Claimant seeks (a) payment pursuant to the aforesaid contractual provision of $266.666.67, (b) interest, (c) the cost of this proceeding including the arbitrators [sic] compensation, and its attorneys fees." (Emphasis added.)
Thus, PSG's claim was premised on the WPCA's having agreed to CDM as the independent third party, and CDM's subsequent verification of PSG's claim.
Second, the arbitrator's award did not provide for a lump sum payment of compensation to PSG but, rather, provided for three annual payments to PSG in the amount of $266,666.67. This corresponds to both the compromised sum that PSG agreed to accept in the second amendment and the method of payment prescribed upon the independent third party's verification of PSG's calculations.
Third, the transcript excerpts of the proceedings before the arbitrator, which were submitted by both parties, though incomplete, reflect that the focal issue before the arbitrator was whether Marsillio had authority to individually consent to CDM on behalf of the WPCA.
Finally, PSG does not claim that the arbitrator made a de novo determination of liability and damages. Rather, PSG argues that Marsillio's consent to CDM as the independent third party was within his apparent authority or that the WPCA waived any claim that Marsillio lacked authority. Thus, the critical issue before the arbitrator was whether Marsillio was authorized to act for the WPCA.
B.
There is no dispute between the parties that Marsillio was not expressly authorized to act for the WPCA. However, PSG argues that the arbitrator's award does not violate public policy because Marsillio was merely performing one of the WPCA's obligations under the second amendment and not entering into a contract or otherwise committing the WPCA to any contractual obligations. According to PSG, Marsillio was "only fulfilling an obligation under the contract that the WPCA had already entered into and was performing," and "[n]o public policy is implicated by the mere performance of an obligation under an otherwise binding contract . . ." (Defendant's Brief, p. 6.) The court disagrees.
First, the distinction that PSG seeks to manufacture is unfounded. "Public officers . . . can only act within the scope of the powers and duties which the law prescribes for them." Rogers v. County Commissioners, 141 Conn. 426, 429, 106 A.2d 757 (1954). The public policy expressed by § 13.04.070 of the Bridgeport Municipal Code is that the WPCA may not be bound to any obligation except by vote of its board of directors; "the powers of the WPCA shall be exercised by the members of the board of directors . . ." That policy is not limited to the entry by the WPCA into formal contracts nor does it exclude decisions made under existing contracts.
Second, PSG's argument ignores the plain language of the second amendment. PSG's claim for additional compensation was "[s]ubject to verification by an independent third party, mutually agreeable to the WPCA and PSG . . ." (Emphasis added.) Agreement connotes the exercise of free will. Cf. McCarthy v. Taniska, 84 Conn. 377, 381, 80 A. 84 (1911). The WPCA had no obligation to pay the additional compensation unless it first agreed to the services of an independent third party, and, furthermore, the WPCA was under no obligation to agree with PSG's choice of a third party.
C.
PSG's principal argument is that Marsillio had apparent authority to agree to CDM on behalf of the WPCA. Preliminarily, the WPCA contends that the doctrine of apparent authority does not apply to municipalities. The court disagrees.
WPCA's argument is based on language in Norwalk v. Board of Labor Relations, 206 Conn. 449, 452, 538 A.2d 694 (1988). In that case the Supreme Court stated: "The parameters of this doctrine [apparent authority] . . . are sharply circumscribed when the principal is a municipal corporation. [3 E. McQuillin, supra, § 12.126.10, p. 609-12, and vol. 10, § 29.02, p. 238-40]; see also Pepe v. New Britain, 203 Conn. 281, 293-94, 524 A.2d 629 (1987)." Id.
Just what the parameters of apparent authority are, thus circumscribed, was not explicitly delineated in Norwalk v. Board of Labor Relations. The court's citation to 10 E. McQuillin, supra, § 29.02, and Pepe v. Britain, supra, 203 Conn. 293-94 n. 7, however, signals that the rule is that where a party seeks to bind a municipality by the doctrine of apparent authority, the elements of either ratification or estoppel must be present.
10 E. MccQuillin, supra, § 29.02, p. 239, provides that "if the particular department, board, officer or agent had in fact no power to bind the municipality, there is no liability on the express contract unless it has been properly ratified by the municipality or its conduct has been such as to estop it to deny the validity of the contract." (Emphasis added.)
In Pepe v. New Britain, supra, 203 Conn. 281, a select committee of the common council of the City of New Britain approved the retention of an outside law firm to represent it because corporate counsel was disqualified due to a conflict of interest. Thereafter, two thirds of the council were informally polled and endorsed the selection of the plaintiff's law firm, but the council did not hold a duly noticed authorized meeting. The law firm rendered substantial services to the council which then refused to pay the firm's bill. The law firm brought suit and prevailed. The Supreme Court affirmed the judgment of the trial court on the ground that the council was equitably estopped from denying liability to the law firm.
It is, however, unnecessary for this court to divine the precise parameters of the doctrine of apparent authority where the party sought to be bound is a municipality. Suffice it to say that the court in Norwalk v. Board of Labor Relations, supra, 206 Conn. 452, did not sound the death knell of apparent authority in the context of municipal officials but, rather, pronounced that its parameters were "sharply circumscribed." Subsequent to Norwalk v. Board of Labor Relations, the doctrine of apparent authority has been recognized in appellate case law with respect to municipal officials. See, e.g., Hall-Brooke Foundation, Inc. v. Norwalk, supra, 58 Conn. App. 344-48 (holding it was error not to find municipal employees had been clothed with apparent authority); New Haven v. Local 884, Council 4, AFSCME, AFL-CIO, supra, 58 Conn. App. 749; New Haven v. Local 884, Council 4, AFSCME, AFL-CIO, 44 Conn. App. 764, 769-70, 694 A.2d 417, cert. denied, 241 Conn. 915, 696 A.2d 984 (1997); cf. 111 Whitney Avenue, Inc. v. Commissioner of Mental Retardation, 70 Conn. App. 692, 702-05, 802 A.2d 117 (2002) (holding evidence insufficient to prove regional director of defendant state agency had apparent authority to bind agency commissioner). The WPCA's claim that apparent authority does not apply to municipal corporations is, therefore, incorrect.
Federal law provides that not even equitable estoppel can be employed to grant money that Congress has not authorized. OPM v. Richmond, 496 U.S. 414, 110 S.Ct. 2465, 110 L.Ed.2d 387, rehearing denied, 497 U.S. 1046, 111 S.Ct. 5, 111 L.Ed.2d 821 (1990). "Extended to its logical conclusion, operation of estoppel against the government in the context of payment of money from the Treasury could in fact render the Appropriations Clause a nullity." Id., 428.
D.
Whether Marsillio had apparent authority to act on behalf of the WPCA by agreeing to CDM as the independent third party was a question of fact for the arbitrator. Nowalk v. Capitol Motors, Inc., 158 Conn. 65, 71, 255 A.2d 845 (1969); 111 Whitney Avenue, Inc. v. Commissioner of Mental Retardation, supra, 70 Conn. App. 704. The issue is whether the arbitrator properly found this fact.
1.
At the outset, the court is confronted with the question as to what standard is appropriate for reviewing an arbitrator's subordinate finding of fact on an application to vacate an award for violation of public policy. This issue has not been explicitly decided by our appellate courts, nor is it addressed by the parties.
Where binding arbitration is compelled by statute, the Supreme Court has held that questions of fact are to be reviewed under the substantial evidence standard. Chmielewski v. Aetna Casualty Surety Co., 218 Conn. 646, 656, 591 A.2d 101 (1991) (coverage questions with respect to uninsured/underinsured motorist arbitration). Although in this case, the arbitration was consensual, rather than compulsory, the substantial evidence standard should nonetheless apply to the review of findings of fact where, as here, a challenge to the award "truly raises a legitimate and colorable claim of a violation of public policy." Schoonmaker v. Cummings Lockwood of Connecticut, P.C., supra, 252 Conn. 429 n. 7.
The General Assembly has provided that the substantial evidence standard governs the review of questions of fact in statutorily mandated Lemon Law arbitrations. General Statutes § 42-181 (c)(4).
The Supreme Court has stated that a challenge to an arbitration award based on a violation of clear public policy is an "[exception] to the general discretion of the arbitrator to decide all questions of fact and law . . ." (Emphasis added.) Garrity v. McCaskey, 223 Conn. 1, 7, 612 A.2d 742 (1992). The public policy exception "evinces a willingness, in limited circumstances, to employ a heightened standard of judicial review of arbitral conclusions, despite the traditional high level of deference afforded to arbitrators' decisions . . ." Id., 428. Review of an arbitrator's conclusions without meaningful review of subordinate findings of fact would be little more than an empty gesture, in cases where, as here, the award is a conclusion dependent on a finding of fact that itself violates public policy. Legal conclusions, after all, are tested by the subordinate facts found. Baston v. Ricci, 174 Conn. 522, 527-28, 391 A.2d 161 (1978); see New Milford Block Supply Corp. v. N. Grondahl Sons, Inc., 51 Conn. App. 454, 458, 722 A.2d 1218, cert. denied, 248 Conn. 901, 732 A.2d 177 (1999).
Undertaking a trial de novo of findings of fact would be most inconsistent with the procedure that the parties bargained for, and would cause unnecessary delay and expense to the parties, as well as, further congestion in the courts. Cf. Chmielewski v. Aetna Casualty Surety Co., supra, 218 Conn. 660, 666. The substantial evidence standard avoids these ills. It is a reliable, time tested standard, used by state and federal courts in the review of the factual underpinnings of some of the most important decisions in society, arising out of administrative agencies. Id., 663; see, General Statutes § 4-183 (j); 5 U.S.C. § 706 (2)(E). It is also the standard that our Supreme Court has found to be constitutionally appropriate in the review of factual determinations in statutorily mandated arbitrations. Chmielewski v. Aetna Casualty Surety Co., supra, 218 Conn. 656-67. This court concludes that on an application to vacate an arbitration award for violation of a clear public policy, the appropriate standard, by which to test the factual findings of the arbitrator is the substantial evidence standard.
2.
The substantial evidence test for judicial review of factual findings "requires a court to determine whether there is substantial evidence in the . . . record to support the . . . findings of basic fact and whether the conclusions drawn from those facts are reasonable." Connecticut Light Power Co. v. DPUC, 216 Conn. 627, 639, 583 A.2d 906 (1990). "Substantial evidence" will be found to exist if the record supplies "a substantial basis of fact from which the fact in issue can be reasonably inferred." Id., 639-40.
This standard of review provides less room for judicial scrutiny than do the "clearly erroneous" or "weight of the evidence" standards. Connecticut Building Wrecking Co. v. Carothers, 218 Conn. 580, 593, 590 A.2d 447 (1991). "In determining whether an [arbitrator's] finding is supported by `substantial evidence,' a court must defer to the [arbitrator's] . . . right to believe or disbelieve the evidence presented by any witness, even an expert, in whole or in part . . ." Briggs v. State Employees Retirement Commission, 210 Conn. 214, 217, 554 A.2d 292 (1959) (addressing standard with respect to administrative findings of state agency).
3.
The court now determines whether there is substantial evidence in the record to support the arbitrator's finding of fact that Marsillio had apparent authority to bind the WPCA to the selection of CDM as the independent third party.
Apparent authority is that semblance of authority which a principal, through his own acts or inadvertence, causes or allows third persons to believe his agent possesses . . . Consequently, apparent authority is to be determined, not by the agent's own acts, but by the acts of the agent's principal . . . The issue of apparent authority is one of fact, requiring the trier of fact to evaluate the conduct of the parties in light of all the surrounding circumstances . . . Only in the clearest of circumstances, where no other conclusion could reasonably be reached, is the trier's determination of fact to be disturbed . . .
The issue of apparent authority is . . . to be determined based on two criteria . . . First, it must appear from the principal's conduct that the principal held the agent out as possessing sufficient authority to embrace the act in question, or knowingly permitted [the agent] to act as having such authority . . . Second, the party dealing with the agent must have, acting in good faith, reasonably believed, under all the circumstances, that the agent had the necessary authority to bind the principal to the agent's action . . . The doctrine of apparent authority was developed by the courts to protect third parties who deal with agents who lack express authority . . .
(Citations omitted; internal quotation marks omitted.) Hall-Brooke Foundation, Inc. v. City of Norwalk, 58 Conn. App. 340, 345-46, 752 A.2d 523 (2000). The court concludes that there is not substantial evidence in the record to support a finding that Marsillio had apparent authority to bind the WPCA.
First, there is no evidence that the WPCA, directly or indirectly, did or said anything that could be construed as cloaking Marsillio with the authority to bind the WPCA to the selection of CDM.
Although there is no evidence that PSG was told that Marsillio was not authorized to bind the WPCA, as observed, infra, PSG had notice that the board's authorization was required in order to bind the WPCA.
The only evidence is that Marsillio was a non-voting, ex-officio member of the board and had been the WPCA's negotiator of its prior contract and amendments with PSG. A single member of a board lacks authority to bind the whole; rather, the board must act as a corporate body. Keeney v. Old Saybrook, 237 Conn. 135, 149-50, 676 A.2d 795 (1996) ("It is a well-settled rule that . . . municipal councils or boards of any kind . . . can only act at authorized meetings duly held . . . The members cannot make a valid determination binding upon the [municipality] by their assent separately and individually expressed"); Wadsworth v. Middletown, 94 Conn. 435, 442-43, 109 A. 246 (1920) ("No more can the individual member of the board bind the board . . . for acts which lie outside the province of their public duty"); see also Driscoll v. New Haven, 75 Conn. 92, 97, 52 A. 618 (1902) ("Unauthorized agents or representatives can of themselves alone no more bind equitably than they can legally"); Norwalk v. Board of Labor Relations, supra, 206 Conn. 450, 452; cf. 2 Fletcher Cyclopedia Corporations (Perm. Ed. Rev. 1990) § 278, p. 52-53.
Second, although Marsillio had been the WPCA's negotiator for its agreements with PSG, this, without more, is insufficient evidence that Marsillio had the authority to bind the WPCA without board approval. See Norwalk v. Board of Labor Relations, supra, 206 Conn. 449; New Haven v. Local 884, Council 4, AFSCME, AFL-CIO, supra, 58 Conn. App. 759-60; New Haven v. Local 884, Council 4, AFSCME, AFL-CIO, supra, 44 Conn. App. 769-70; see also Ferguson v. FDIC, 164 F.3d 894, 899-900 (5th Cir. 1999); United States v. D'Apice, 664 F.2d 75, 78 (5th Cir. 1981); Warwick Teachers' Union Local No. 915 v. Committee, 624 A.2d 849, 850-51 (R.I. 1993) (holding concept of apparent authority inapplicable to negotiations with representatives of municipalities); Schmidt v. Jackson Cty. Juvenile Dept., 49 Or. App. 349, 353-54, 619 P.2d 1307 (1980); 2 Williston on Contracts (3d Ed. Jaeger) § 305, pp. 419-20. "Our case law holds that authority to perform services on behalf of a principal does not automatically confer actual or apparent authority to bind the principal in other respects." 111 Whitney Avenue, Inc. v. Commissioner of Mental Retardation, supra, 70 Conn. App. 703.
Notably, there is no evidence that Marsillio, alone, bound the WPCA to its prior contracts with PSG. Thus, PSG was on notice that something more than Marsillio's concurrence was necessary to form a binding agreement. Cf. Bussing v. Lowell Film Productions, Inc., 233 App.Div. 493, 495, 253 N.Y.S. 719 (1931), aff'd., 259 N.Y. 593, 183 N.E. 194 (1932) ("The principal is responsible only for that appearance of authority which is caused by himself, and not for that appearance of conformity to the authority which is caused only by the agent"). Neither by word nor by act did the WPCA hold Marsillio out as having the authority to bind the WPCA to the selection of CDM. Hallas v. Boehmke Dobosz, Inc., 239 Conn. 658, 675, 686 A.2d 491 (1997). The claim based on apparent authority cannot succeed, absent a showing that any acts or conduct on the part of the WPCA caused or allowed PSG to believe that Marsillio was duly authorized to bind the WPCA to the selection of CDM. Hollywyle Assn., Inc. v. Hollister, 164 Conn. 389, 397, 324 A.2d 247 (1973).
PSG relies on Hall-Brooke Foundation, Inc. v. Norwalk, supra, 58 Conn. App. 340 (2000), in support of its argument that Marsillio had apparent authority to bind WPCA to the selection of CDM. In Hall-Brooke, caseworkers from the city of Norwalk Department of Social Services (department) had in previous years authorized the admission of certain patients to the plaintiff hospital for detoxification and had agreed that the city would pay for the services provided. Although there was no line item in the city's budget for such services, the expense was paid from the city's generalized welfare fund. "Further, the mayor conceded that he delegated the authority to authorize expenditures from that generalized budget to the department, and that the head of the department delegated the authority to the department operations manager and caseworkers." Id., 344.
Subsequently, however, the mayor instructed the head of the department not to refer patients to the plaintiff. Department caseworkers, however, continued to do so for a six-month period. When the city refused to pay for these services, the plaintiff sued.
The attorney trial referee found for the city. "The referee [relied] primarily on the city's charter to conclude that there was no budget line item from which the plaintiff could have been paid, and on Norwalk v. Board of Labor relations, [ supra, 206 Conn. 449], to charge the plaintiff, as a matter of law, with knowledge of how municipal employees under the city's charter may bind the city." Id., 346-47.
The Appellate Court reversed, holding that the caseworkers continued to have apparent authority to bind the city. First, the budget would not have given the plaintiff notice of a change in city policy since there had never been a line item in the budget for payment of services such as those rendered by the plaintiff, yet the city had previously paid for those services. It was, therefore, reasonable for the plaintiff to have concluded that the same budget mechanism remained in place. Second, the trial court's finding that the city charter did not permit caseworkers to authorize admission of patients and payment for plaintiff's services was not supported by the evidence. "Instead, it appears that it was an internal policy decision of the mayor's office to discontinue referrals to . . . providers like the plaintiff that deprived the department of actual authority to make the referrals." Id., 347.
Hall-Brooke undermines, rather than supports, the plaintiff's position. First, in Hall-Brooke, the plaintiff relied on the past practice of the caseworkers authorizing the referral of patients and the payment for the plaintiff's services. Here, by contrast, there is no evidence that Marsillio, in his dealings with PSG, had previously bound the WPCA to anything. Second, in Hall-Brooke, "the mechanism that prevented the social service caseworkers from authorizing the challenged payment to the plaintiff was a purely internal policy of which the plaintiff had no knowledge." Id., 348. Here, the Bridgeport Municipal Code, a public document, alerted PSG that the powers of the WPCA could only be exercised by the affirmative vote of at least four voting members of its board of directors. Third, in Hall-Brooke, "the plaintiff relied in good faith on the authorization of the department agents to its detriment. The plaintiff [had] already provided the services to the general assistance recipients and the city [was] therefore equitably estopped from . . . claiming that the contract was invalid." Id., 348. Here, there is no evidence, or any claim, that PSG did anything in reliance on Marsillio's concurrence in the selection of CDM. By vacating the arbitrator's decision, it will leave PSG no worse off. PSG will only be required to continue negotiations with the WPCA or arbitrate the issue of additional compensation on the merits.
For these reasons, the court holds that the arbitrator's implicit finding that Marsillio was cloaked with apparent authority to bind the WPCA to the selection of CDM is not supported by substantial evidence.
III
Finally, PSG argues that the WPCA has waived its right to challenge Marsillio's authority by waiting more than a year after CDM's action to raise the issue.
"Waiver, as distinguished from estoppel, is the intentional relinquishment of a known right." Andover v. Hartford Accident Indemnity Co., 153 Conn. 439, 444, 217 A.2d 60 (1966). "A waiver occurs, therefore, only if there is both knowledge of the existence of the right and intent to relinquish it . . . [Waiver] involves the idea of assent, and assent is an act of understanding . . . Intention to relinquish [must] appear, but acts and conduct inconsistent with [the] intention [to assert a right] are sufficient . . . Waiver does not have to be express, but may consist of acts or conduct from which waiver may be implied . . . In other words, waiver may be inferred from the circumstances if it is reasonable to do so." (Citations omitted; internal quotation marks omitted.) Schreck v. Stamford, 72 Conn. App. 497, 500, 805 A.2d 776 (2002). The Supreme Court repeatedly "has held that `implied waivers and estoppels by conduct are so similar that they are nearly indistinguishable.'" O'Hara v. State, 218 Conn. 628, 641, 590 A.2d 948 (1991).
The WPCA had a right not to be bound by CDM's determination because it did not agree to PSG's selection of CDM in accordance with the second amendment to the parties' contract. Accordingly, CDM's verification of PSG's calculations was a nullity. Since CDM was a private entity whose determination was neither a judicial or quasi-judicial decision, which must be contested within specified time limits, the WPCA was not obliged to do anything to disavow it. Cf. General Statutes § 52-420 (motion to vacate arbitration award must be made no later than thirty days from notice of award). Under these circumstances, the WPCA was entitled to ignore CDM's findings and its failure to expressly disavow CDM's determination cannot be transformed into a waiver.
PSG does not claim that the WPCA ratified the selection of CDM. "As a general rule, [r]atification is defined as the affirmance by a person of a prior act which did not bind him but which was done or professedly done on his account . . . Ratification requires acceptance of the results of the act with an intent to ratify, and with full knowledge of all the material circumstances . . . In order to ratify the unauthorized act of an agent and make it effectual and obligatory upon the principal . . . the ratification must be made by the principal with a full and complete knowledge of all the material facts connected with the transaction to which it relates; and this rule applies . . . to ratification by a corporation of an unauthorized contract or other act by its officers or agents, whether the ratification is by the stockholders or by the directors, or by a subordinate officer having authority to ratify." (Citations omitted; internal quotation marks omitted.) Community Collaborative of Bridgeport, Inc. v. Ganim, 241 Conn. 546, 561, 698 A.2d 245 (1997). Here, there is no evidence that the WPCA did anything that affirmed the selection of CDM or accepted CDM's decision.
The arbitrator's decision is necessarily based on a finding that Marsillio, the Director of Public Works, had apparent authority to bind the WPCA. That finding is not supported by substantial evidence. The arbitrator's decision, therefore, is clearly contrary to public policy. For this reason, the application to vacate the award is granted.
Bruce L. Levin Judge of the Superior Court