Summary
In DeOliveira v. Liberty Mut. Ins. Co., 2003 Conn. Super. LEXIS 1353 (Conn.Super.Ct. May 1, 2003), the court considered precisely such a situation.
Summary of this case from Singleton v. Grade a Market, Inc.Opinion
No. 329390
May 1, 2003
MEMORANDUM OF DECISION
This action arises out of the plaintiff's claim that the defendant has not paid him adequate workers' compensation benefits. On April 11, 2002, the parties clearly agreed, on the record, in open court, to arbitrate this matter as part of a settlement agreement. The court has been provided with a copy of the certified transcript of the court record in which the parties' agreement is memorialized. The parties further agreed that they would arbitrate the matter before Judge Freedman. Judge Freedman, however, has advised the parties that he only mediates disputes and does not serve as an arbitrator. The court notes that pursuant to canon 5(e) of the Code of Judicial Conduct, "[a] judge should not act as an arbitrator or mediator, except with respect to court-annexed alternative dispute resolution programs." The arbitration to which the parties agreed did not implicate a court-annexed program. Thus, Judge Freedman could not have served as an arbitrator in this case, consonant with the requirements of the Code.
Two Judges named Freedman presently serve as Judge Trial Referees in Connecticut. From the parties' representation that the Judge Freedman they nominated only conducts mediations, the court infers that it was Judge Frederick Freedman to whom the parties referred.
The section of the Code entitled Compliance with the Code of Judicial Conduct states in subsection (b): "The term `judge' includes senior judge and trial referee, except where the context clearly denotes a different meaning."
See also Diagnostic Radiology Associates, P.C. v. Jeffrey M. Brown, Inc., 193 F.R.D. 193, 195 (S.D.N.Y. 2000) ("Canon 5E of the Code of Conduct for United States Judges provides that `[a] judge should not act as an arbitrator or mediator or otherwise perform judicial functions in a private capacity unless expressly authorized by law.'" If no such express authority exists, "[t]he judge . . . would violate the Code were he to arbitrate [the] dispute.").
The plaintiff now refuses to proceed with arbitration. The defendant moves to enforce the settlement agreement and to stay these proceedings pending arbitration and to compel arbitration. The plaintiff objects on the ground that no agreement to arbitrate exists and instead seeks an early jury trial. Specifically, he argues that he did not agree to arbitrate but only agreed to "utilize the services of Judge Freedman . . . and only the services of Judge Freedman, in an attempt to resolve plaintiff's claims."
The defendant premises its arguments pertaining to its motion to stay and to compel arbitration on General Statutes § 52-409, a provision of the Connecticut arbitration statute, and on 9 U.S.C. § 3, a provision of the Federal Arbitration Act.
The Federal Arbitration Act governs disputes that meet the following criteria: "(1) there is a written arbitration agreement; (2) diversity [or another factor] provides an independent basis for federal jurisdiction; and (3) the underlying transaction involves interstate commerce. See 9 U.S.C. § 2." Acequip Ltd. v. American Engineering Corp., 315 F.3d 151, 154 (2nd Cir. 2003).
"[T]he law in [Connecticut] takes a strongly affirmative view of consensual arbitration. Arbitration is a favored procedure in this state . . . Early in our judicial history we expressed the view that, since arbitration is designed to prevent litigation, it commands much favor from the law . . . We have recognized the public policy favoring arbitration which is intended to avoid the formalities, delay, expense and vexation of ordinary litigation." (Citations omitted; internal quotation marks omitted.) Board of Education v. East Haven Education Assn., 66 Conn. App. 202, 207, 784 A.2d 958 (2001). Similarly, under federal law, "[t]he Supreme Court has stated that the Federal Arbitration Act (FAA) `is a congressional declaration of a liberal federal policy favoring arbitration agreements,' and `establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration . . .' Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983)." Opals on Ice Lingerie v. Body Lines Inc., 320 F.3d 362, 369 (2nd Cir. 2003). Accordingly, both the Connecticut and the federal arbitration statutes provide for the remedies sought by the defendant. (Specifically, as to the defendant's request for a stay, see General Statutes § 52-409 and 9 U.S.C. § 3. As to the defendant's motion to compel arbitration, see General Statutes § 52-410 (a) and 9 U.S.C. § 4.
General Statutes § 52-409 provides: "If any action for legal or equitable relief or other proceeding is brought by any party to a written agreement to arbitrate, the court in which the action or proceeding is pending, upon being satisfied that any issue involved in the action or proceeding is referable to arbitration under the agreement, shall, on motion of any party to the arbitration agreement, stay the action or proceeding until an arbitration has been had in compliance with the agreement, provided the person making application for the stay shall be ready and willing to proceed with the arbitration."
9 U.S.C. § 3 provides: "If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitrate under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration."
General Statute § 52-410 (a) provides in relevant part: "A party to a written agreement for arbitration claiming the neglect or refusal of another to proceed with an arbitration thereunder may make application to the superior court . . . for an order directing the parties to proceed with the arbitration in compliance with their agreement."
9 U.S.C. § 4 provides in relevant part: "A party aggrieved by the alleged failure to arbitrate under a written agreement for arbitration may petition any United States district court which would have jurisdiction . . . of the subject matter of a suit arising out of the controversy between the parties, for an order directing that such arbitration proceed in the manner provided for in such agreement."
"Nevertheless, a person can be compelled to arbitrate a dispute only if, to the extent that, and in the manner in which, he has agreed so to do . . . This limitation on contractual arbitration includes the requirement of satisfying any conditions precedent to arbitration." (Citations omitted; internal quotation marks omitted.) White v. Kampner, 229 Conn. 465, 471-72, 641 A.2d 1381 (1994). "Arbitration is a creature of contract . . . No one can be forced to arbitrate a contract dispute who has not previously agreed to do so." (Internal quotation marks omitted.) A. Dubreuil Sons, Inc. v. Lisbon, 215 Conn. 604, 608, 577 A.2.d 709 (1990). "[I]t is also true that `the FAA's proarbitration policy does not operate without regard to the wishes of the contracting parties.' Mastrobuono v. Shearson Lehman HuttoN, 514 U.S. 52, 57, 115 S.Ct. 1212, 131 L.Ed.2d 76 (1995). `Arbitration under the Act is a matter of consent, not coercion.' Volt Info. Scis. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 479, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989). `The purpose of congress . . . was to make arbitration agreements as enforceable as other contracts, but not more so.' Prima Paint Corp. v. Flood Conklin Mfg. Co., 388 U.S. 395, 404 n. 122, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967). . . Thus, although the presumption in favor of arbitration is strong, the law still requires that parties actually agree to arbitration before it will order them to arbitrate a dispute." (Emphasis in original.) Opals on Ice Lingerie v. Body Lines Inc., supra, 320 F.3d 369.
"State law generally governs the determination of whether the parties agreed to arbitrate a certain matter, First Options of Chicago, Inc. v. Kaplan, [ 514 U.S. 938, 944] 115 S.Ct. 1920, 1924, 131 L.Ed.2d 985 (1995). Doctor's Associates, Inc. v. Distajo, 66 F.3d 438, 452 (2nd Cir. 1995), cert. denied, 517 U.S. 1120, 116 S.Ct. 1352, 134 L.Ed.2d 520 (1996). "Arbitration agreements are contracts and their meaning is to be determined . . . under accepted rules of [state] contract law." (Internal quotation marks omitted.) Levine v. Advest, Inc., 244 Conn. 732, 744-45, 714 A.2d 649 (1998). "The issue of whether the parties to a contract have agreed to arbitration is controlled by their intention." A. Dubreuil Sons, Inc. v. Lisbon, supra, 215 Conn. 608. Moreover, in evaluating contracts under Connecticut law, "the intent of the parties . . . is determined from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction . . . [T]he intent of the parties is to be ascertained by a fair and reasonable construction of the written words and . . . the language used must be accorded its common, natural, and ordinary meaning and usage . . . Where the language of the contract is clear and unambiguous, the contract is to be given effect according to its terms . . . [A]ny ambiguity in a contract must emanate from the language used in the contract rather than from one party's subjective perception of the terms." (Internal quotation marks omitted.) Tallmadge Bros., Inc. v. Iroquois Gas Transmission System, L.P., 252 Conn. 479, 498, 746 A.2d 1277 (2000). "Contract language is unambiguous when it has a definite and precise meaning . . . concerning which there is no reasonable basis for a difference of opinion." (Internal quotation marks omitted.) Levine v. Advest, Inc., 244 Conn. 732, 746, 714 A.2d 649 (1998). In addition, "as a general matter . . . because we favor arbitration, we will defer to this alternative method of dispute resolution if the contractual arbitration provisions fall within the grey area of arbitrability . . ." (Internal quotation marks omitted.) Quigley-Dodd v. General Accident Ins. Co. of America, 256 Conn. 225, 246, 772 A.2d 577 (2001).
In this case, the transcript of the proceeding before the court on April 11, 2002, provides direct and unambiguous evidence that the parties agreed to arbitrate. In response to the court's statement that it understood that the parties had reached an agreement, both attorneys responded, "Yes, Your Honor." The plaintiff's attorney then detailed the terms of the agreement: "We have agreed that the matter will be referred to Judge Freedman for arbitration . . . This case will not proceed it — it will go through arbitration . . . The arbitration will be binding upon the parties. It will be submitted to Judge — Judge Freedman under the laws of the State of Connecticut . . . and . . . the provisions of Section 52-408 [of] the Arbitration Statutes will apply to the arbitration."
Regarding the plaintiff's contention that he is not required to arbitrate because Judge Freedman is unavailable, General Statutes § 52-411 provides in relevant part: "(a) If, in a written agreement to arbitrate, a method of appointing an arbitrator . . . has been provided, the method shall be followed.
"(b) If no method is provided therein, or if a method is provided and any party thereto fails to use the method, or if for any other reason there is a failure in the naming of an arbitrator . . . or if any arbitrator . . . dies or is unable or refuses to serve, upon application by a party to the arbitration agreement, the superior court for the judicial district in which one of the parties resides . . . or, when the court is not in session, any judge thereof, shall appoint an arbitrator . . . as the case may require." (Emphasis added.) The Federal Arbitration Act contains a similar provision at 9 U.S.C. § 5, which provides: "If in the agreement provision be made for a method of naming or appointing an arbitrator . . . such method shall be followed; but if no method be provided therein, or it a method be provided and any party thereto shall fail to avail himself of such method, or if for any other reason there shall be a lapse in the naming of an arbitrator . . . or in filling a vacancy, then upon the application of either party to the controversy the court shall designate and appoint an arbitrator . . . who shall act under the said agreement with the same force and effect as if he . . . had been specifically named therein . . ."
Due to the similarities in these provisions and the dearth of cases decided under this section of the Connecticut statute, it is instructive to examine case law under the federal statute. See Acequip Ltd. v. American Engineering Corp., 315 F.3d 151, 154 (2nd Cir. 2003). Ordinarily, if a particular arbitrator is identified as a term of an arbitration agreement and the arbitrator is unable or unwilling to serve, § 5 of "the Federal Arbitration Act steps in to cure the defect." Zechman v. Merrill Lynch, Pierce, Fenner Smith, 742 F. Sup. 1359, 1365 (N.D.Ill. 1990). Thus, "[a]s a general rule, where the arbitrator named in the arbitration agreement cannot or will not arbitrate the dispute, a court does not void the agreement but instead appoints a different arbitrator. Astra Footwear Indus. v. Harwyn Int'l, Inc., 442 F. Sup. 907, 910 (S.D.N.Y.), aff'd. mem., 578 F.3d 1366 (2d Cir. 1978); Zechman v. Merrill Lynch, Pierce, Fenner Smith, Inc., 742 F. Sup. [at 1364-66].
"There is an exception to this rule. Where `it is clear that the failed term is not an ancillary logistical concern but rather is as an important a consideration as the agreement to arbitrate itself, a court will not sever the failed term from the rest of the agreement and the entire arbitration provision will fail.' Zechman, 742 F. Sup. at 1364 (citing National Iranian Oil Co. v. Ashland Oil, Inc., 817 F.2d 326 (5th Cir.), cert. denied, 484 U.S. 943, 108 S.Ct. 329, 98 L.Ed.2d 356 (1987)." McGuire, Cornwell Blakey v. Grider, 771 F. Sup. 319, 320 (D.Colo. 1991); see also Brown v. ITT Consumer Financial Corp., 211 F.3d 1217 (2000).
Where a party becomes unreasonably dissatisfied with his choice of an arbitrator, however, the courts will not intervene. Compare Brookfield Clothes, Inc. v. Rosewood Fabrics, Inc., 4 App.Div.2d 458, 166 N.Y.S.2d 928, 931 (1957), with Klines v. Green, 2 Misc.2d 902, 150 N.Y.S.2d 370-71 (Sup. 1956), aff'd., 3 N.Y.2d 816, 144 N.E.2d 650, 166 N.Y.S.2d 12 (1957). See also Hottle v. BDO Seidman, LLP, 74 Conn. App. 271, 811 A.2d 745 (2002), cert. granted, 262 Conn. 950, 817 A.2d 109-10 (2003).
"The decision between substituting a new term for the failed provision and refusing to enforce the agreement altogether turns on the intent of the parties at the time the agreement was executed, as determined from the language of the contract and the surrounding circumstances." (Internal quotation marks omitted.) Zechman v. Merrill Lynch, Pierce, Fenner Smith, Inc., supra, 742 F. Sup. 1364. "To determine this intent, courts look to the `essence' of the arbitration agreement; to the extent the court can infer that the essential term of the provision is the agreement to arbitrate, that agreement will be enforced despite the failure of one of the terms of the bargain, [i.e., the unavailability of the named arbitrator]." Id.; see also Ex parte Warren, 718 So.2d 45, 49 (Ala. 1998). On the other hand, if the parties contractually agreed that only the named arbitrator would arbitrate their dispute so that this term was "central to the parties' agreement to arbitrate," and that individual is unavailable, the court should decline to appoint a substitute and should not compel arbitration. In re Salomon Inc. Shareholders' Derivative Litigation, 68 F.3d 554, 561 (2nd Cir. 1995).
Here, the plaintiff fails to show that Judge Freedman's service as arbitrator was other than an ancillary logistical concern and that it was as an important a consideration as the agreement to arbitrate itself. First, Judge Freedman is not available to resolve civil disputes because he remains in the judicial system. The court takes judicial notice of this reality. Moreover, there undoubtedly are other persons who are now equally available to arbitrate the issues in this action. Second, there is nothing so unusual about the parties' dispute as to require a particular species of arbitrator. While some familiarity with the Workers' Compensation Act would be highly desirable, the dispute does not require specialized knowledge of a particular industry or specialized area of the law. See Zechman v. Merrill Lynch, Pierce, Fenner Smith, Inc., supra, 742 F. Sup. 1376.
The parties' agreement to arbitrate was clear, on the record in open court and was "fundamentally an agreement to resolve their disputes through arbitration." Id. Therefore, their agreement will be enforced pursuant to the line of cases beginning with Audubon Parking Associates Ltd. Partnership v. Barclay Stubbs, Inc., 225 Conn. 804, 626 A.2d 729 (1993); cf. General Statutes § 52-410. The defendant's motion to enforce to the settlement agreement and the motion to stay pending arbitration are granted.
BY THE COURT
Bruce L. Levin Judge of the Superior Court