Opinion
No. HHD-CV-02-0819031-S
October 24, 2005
MEMORANDUM ORDER RE MOTION TO DISMISS FOR LACK OF SUBJECT-MATTER JURISDICTION
Upon considering all materials submitted and arguments presented by the parties in support of and in opposition to the February 24, 2005 Motion to Dismiss the instant action for alleged lack of subject-matter jurisdiction by defendant White Oak Corporation ("White Oak"), the Court hereby concludes that said Motion must be:
A. GRANTED, on the ground of mootness, with respect to the underlying request of the plaintiff, State of Connecticut Department of Transportation ("State"), to enjoin White Oak from prosecuting an arbitration entitled White Oak Corporation v. State of Connecticut Department of Transportation, AAA Case No. 12 Y 110 00208-98, concerning disputes arising under or relating to a contract for the reconstruction of the Tomlinson Bridge in New Haven (the "Tomlinson Arbitration"); but
B. DENIED on all grounds with respect to the State's parallel claim to enjoin White Oak from prosecuting a separate arbitration entitled White Oak Corporation v. State of Connecticut Department of Transportation, AAA Case No. 12 Y 110 01054-01, concerning disputes arising under or relating to a contract for the construction of the Green Project of Yellow Mill Pond Bridge Reconstruction in Bridgeport (the "Bridgeport Arbitration").
The Court bases its decision on the following findings of fact and conclusions of law. CT Page 13940-et
1. The State commenced this action against White Oak in August of 2002 to enjoin it from prosecuting the Tomlinson and Bridgeport Arbitrations.
2. In support of its requests for injunctive relief, the State has argued that White Oak cannot compel it to participate in either challenged Arbitration because it assertedly failed to give proper statutory notice of the claims to be presented therein, as required by General Statutes § 4-61, and has no standing to prosecute either claim because it previously assigned all of its rights under the subject contracts to its surety.
3. After the merits of the State's underlying claims were briefed by counsel, they were orally argued before the Court on two occasions. Following the second round of arguments, the Court took the matter under advisement pursuant to the parties' waiver of the 120-day deadline for filing its memorandum of decision.
4. Before the Court could issue its memorandum of decision, the Tomlinson Arbitration was finally concluded by the issuance of the arbitrators' final award. In that award, the arbitrators ruled in favor of the State both on White Oak's claim against it for wrongful termination of its contract to perform work on the Tomlinson Bridge reconstruction project and on the State's related counterclaim for money damages in connection with that project.
5. Following the issuance of the final award in the Tomlinson Arbitration, the State filed a timely application with the Superior Court for an order confirming that award under General Statutes § 52-417 and White Oak filed a countering motion to vacate the award under General Statutes § 52-418.
6. Thereafter, on February 24, 2005, White Oak filed the instant Motion to Dismiss for alleged lack of subject-matter jurisdiction on following grounds: (a) that insofar as the underlying action seeks to enjoin it from prosecuting the Tomlinson Arbitration, the action has become moot due to the arbitrators' issuance of their final award; (b) that insofar as the underlying action seeks to enjoin it from prosecuting either CT Page 13940-eu challenged Arbitration on the ground that it was commenced without proper notice of the claims to be arbitrated therein — in alleged violation of General Statutes § 4-61, and thus without waiver by the State of its sovereign immunity from the prosecution of such improperly noticed claims — the action must be dismissed on grounds of waiver due to the State's alleged prosecution of affirmative counterclaims in each such Arbitration; and © that insofar as the underlying action seeks to enjoin it from prosecuting the Bridgeport Arbitration, which by statute has been conducted under the Construction Industry Dispute Resolution Procedures ("rules") of the American Arbitration Association ("AAA"), as amended though July 1, 2001, the Court lacks jurisdiction to grant the relief requested because Rule 9 of those rules assertedly grants exclusive power to the arbitrators to decide such jurisdictional challenges.
I. Alleged Mootness of the State's Jurisdictional Challenge to the Tomlinson Arbitration Based Upon the Arbitrators' Issuance of their Final Award
7. As for White Oak's claim of mootness with respect to the State's underlying challenge to the jurisdiction of the arbitrators over the Tomlinson Arbitration, the State concedes that that challenge is moot with respect to the limited matters the arbitrators actually decided, to wit: White Oak's claim that the State wrongfully terminated the contract under which it performed work on the reconstruction of the Tomlinson Bridge and the State's related counterclaim for money damages. Oral Argument Transcript (6/24/05), pp. 21, 40. Agreeing that the arbitrators had jurisdiction over those issues, as narrowly construed by the arbitrators in light of original defense counsel's express representations before this Court as to the limited scope of the dispute of which White Oak had given the challenged notice under General Statutes § 4-61, the State is understandably satisfied with the arbitrators' final award, as evidenced by its filing of an application to confirm that award.
8. Notwithstanding this concession, however, the CT Page 13940-ev plaintiff has advanced two reasons why its underlying challenge to the arbitrators' jurisdiction over the Tomlinson Arbitration should not be dismissed for lack of subject-matter jurisdiction on the ground of mootness. First, it notes that White Oak, in its pending motion to vacate, has asserted that the final award should be vacated because, inter alia, the arbitrators failed to decide, and thus to return a final, mutual and definite award with respect to, its claim for damages for alleged destruction of its business. To the extent that this challenge seeks to broaden the scope of the arbitration to include within it a claim other than White Oak's claim of wrongful termination or its own related counterclaim, the State insists that there is still a genuine controversy as to the sufficiency of the White Oak's notice of claim under General Statutes § 4-61, and thus as to the true scope of its waiver of sovereign immunity and of the arbitrators' resulting jurisdiction over the Tomlinson arbitration.
9. In its colloquy with White Oak's current counsel at the oral argument on this Motion, however, the Court sought and received clarification as to the true nature of White Oak's challenge, on its pending motion to vacate, to the arbitrators' alleged failure to decide its business destruction claim. Oral Argument Transcript (6/24/05), pp. 27-37. In particular, counsel agreed with the Court's suggestion that that claim was not a free-standing tort claim, which should have been adjudicated separately from its wrongful termination claim, but instead a separate claim for damages allegedly flowing from the wrongful termination of its contract. Id., pp. 33-37. In short, defense counsel conceded that White Oak's business destruction claim is purely derivative of its wrongful termination claim, which the arbitrators actually decided with what the State now concludes to have been proper statutory notice and rejected on the merits in a manner the State no longer challenges. Id., pp. 29-30.
10. On the basis of the foregoing concession, which would equitably estop White Oak from ever arguing in the future that the Tomlinson arbitrators' final award must be vacated for failure to adjudicate its claim for destruction of its business, the Court concludes CT Page 13940-ew that the continuing prosecution of its motion to vacate affords no basis for concluding that the State's underlying challenge to the jurisdiction of those arbitrators is still in dispute.
See Haekal v. Refco, Inc., 198 F.3d 37, 43 (2nd Cir. 1999) (where principles of fairness required tolling of the limitation period after the plaintiff submitted an untimely complaint due to his reliance on false information given to him by the Commodity Futures Trading Commission Proceeding's Director).
11. The second basis upon which the State argues that its jurisdictional challenge to the sufficiency of the plaintiff's notice of claim as to the Tomlinson Arbitration is not moot is that subsequent to the arbitrators' issuance of their final award, the defendant filed a new notice of claim with respect to the Tomlinson Bridge reconstruction project, which it characterized as a "supplemental" to its original notice of claim with respect to that project. Oral Argument Transcript (6/24/05), p. 38. In light of that new filing, the State asserts that the jurisdictional issues raised by it in the underlying action are capable of repetition, yet evading review. Id., p. 54.
12. Several factors affect the applicability of the "capable of repetition, yet evading review, exception to the mootness doctrine. They include: (1) whether the challenged action, or the effect of the challenged action, occurs so quickly that most cases raising a question about its validity will become moot before they can be properly litigated; (2) whether there is a reasonable likelihood that the question presented will arise again in the future; and if so, whether it will affect either the same complaining party or a reasonably identifiable group of persons or entities for whom that party can be said to act as a surrogate; and (3) whether the question has some public importance. Russo v. Common Council of Middletown, 80 Conn.App. 100, 106, 832 A.2d 1227 (2003) (citing Loisel v. Rowe, 233 Conn. 370, 378, 660 A.2d 323 (1995)). Compare Stamford Hospital v. Vega, 236 Conn. 646, 654-55 (declaring that a dispute about a Jehovah's Witness's refusal of a medically necessary blood transfusion involves a "functionally insurmountable time constraint" of the sort that makes invocation of the exception appropriate) with Russo v. City Council, supra, (holding that, although the manner in which taxes are levied by municipalities is of some public importance and the plaintiff adequately represented the interests of taxpayers likely to be affected by the case, he had failed to demonstrate that CT Page 13940-ex claims like his, which did not have an intrinsically limited life span but was of limited duration only because the defendants had stopped the challenged practice, would evade review, or that it was capable of repetition, there being no indication of a reasonable likelihood that the defendants planned to use the contested method of calculating the grand list in the future.)
13. The questions raised in the parties' underlying dispute as to the jurisdiction of the arbitrators over the Tomlinson Arbitration are in fact capable of repetition and reasonably likely to remain so as long as White Oak persists in its longstanding effort to recover from the State for losses it claims to have suffered in or as a result of its dealings with the State on the Tomlinson Bridge reconstruction project. In this Court's view, however, such questions are not at all likely to evade review since they are not time-sensitive, and thus can almost certainly be litigated effectively before they become moot, either on a later application for an order to proceed with arbitration under General Statutes § 52-410 or in a subsequent action to enjoin arbitration if further arbitration is pursued. The Court thus has no basis for relying upon this exception to the mootness doctrine as a ground for denying the first aspect of White Oak's Motion to Dismiss for lack of subject-matter jurisdiction.
14. Accordingly, the defendant's Motion to Dismiss must be GRANTED, for lack of subject-matter jurisdiction on the ground of mootness, with respect to the State's underlying challenge in this action to the jurisdiction of the arbitrators over the Tomlinson Arbitration.
II. Alleged Waiver by the State of its Jurisdictional Challenge to the Tomlinson and Bridgeport Arbitrations Due to its Alleged Prosecution of Counterclaims Therein15. As for White Oak's claim that this Court lacks subject-matter jurisdiction over the State's underlying challenges to the arbitrators' jurisdiction over the Tomlinson and Bridgeport Arbitrations on the ground that it has waived those challenges by filing and prosecuting CT Page 13940-ey its own counterclaims in those Arbitrations, White Oak has concededly neither found nor presented any legal authority in support of that claim. Oral Argument Transcript (6/24/05), p. 14. Instead, it relies, by analogy, on case law tending to establish that, by prosecuting affirmative claims for relief before a tribunal whose jurisdiction has otherwise been challenged, a party waives its jurisdictional challenge to that tribunal for all purposes.
16. A claim of waiver, however, is a special defense to the merits of an opponent's jurisdictional challenge, not a basis for divesting the Court of its subject-matter jurisdiction to hear and decide that challenge. Accordingly, even if White Oak's claim of waiver is well founded in law and in fact — which the State has hotly disputed for several cogent reasons the Court need not address — this aspect of the defendant's Motion to Dismiss must be DENIED.
III. Alleged Lack of Jurisdiction Over Action to Enjoin Bridgeport Arbitration Based Upon Statutory Authority of AAA Arbitrators to Determine Their Own Jurisdiction17. As to White Oak's final claim — that this Court lacks subject-matter jurisdiction over the State's underlying challenge to the jurisdiction of the Bridgeport Arbitration panel because the State has agreed by statute to commit all questions concerning the jurisdiction of the panel to the arbitrators themselves — White Oak relies principally upon longstanding Connecticut case law declaring that the arbitrability of a dispute is a question for the court unless the parties have "clearly agreed" to submit that question to the arbitrators. See, e.g., Board of Education v. Frey, 174 Conn. 578, 392 A.2d 466 (1978). Here, it insists, the parties have "clearly agreed" to submit all questions of arbitrability to the arbitrators by entering into a contract governed by General Statutes § 4-61. That statute, it claims, makes the rules of the AAA applicable to all arbitrations conducted under the contract, and Rule 9 of those rules has provided, at all times relevant to the Bridgeport Arbitration, that: "The CT Page 13940-fz arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope or validity of the arbitration agreement." Accordingly, it contends that this Court lacks subject-matter jurisdiction to decide the State's underlying challenge to the jurisdiction of the arbitrators in the Bridgeport Arbitration because that challenge assertedly raises questions that only the arbitrators can lawfully decide.
18. Even, however, if White Oak is correct in its predicate assertion that the State, by entering into the construction contract now at issue in the Bridgeport Arbitration, consented to submitting all jurisdictional questions arising in any arbitration under that contract to the arbitrators, there are several important reasons why its ultimate conclusion — that such consent ousts this Court of subject-matter jurisdiction over the instant action, insofar as it seeks to enjoin the Bridgeport Arbitration based upon White Oak's alleged lack of standing and the alleged deficiency of its statutory notice of claim — must be rejected. To begin with, the very cases upon which White Oak relies in advancing this aspect of its argument clearly contemplate that this Court, not the arbitrators, must always decide at least the threshold question whether or not the parties, by their contract, have "clearly agreed" to submit to the arbitrators all jurisdictional questions concerning any arbitration of a dispute arising under the contract. They establish, moreover, that the Court's decision on that question, regardless of its outcome, can appropriately be made in an action like the present one — to enjoin an arbitration — and thus that the Court retains its subject-matter jurisdiction to decide that question in such an action.
19. In Board of Education v. Frey, supra, 174 Conn. 578, for example, where the Supreme Court was called upon to review a trial court's decision to enjoin the arbitration of a grievance because it was not arbitrable under the parties' collective bargaining agreement, the Court ruled initially as follows that, in the absence of "clear agreement" between the parties that the arbitrability of the subject grievance should be decided by the arbitrators, the trial court had properly reached CT Page 13940-fa that issue in deciding the case before it:
The first issue that we consider is whether the arbitrability of the grievance was a question to be decided by the court or by the arbitrator. The arbitration provision of the agreement provides that if a grievance "is based solely upon an alleged breach of this agreement" the aggrieved person may request in writing that the grievance be submitted to arbitration. This court has long followed the rule that the arbitrability of a dispute is a legal question for the court unless the parties have clearly agreed to submit that question to arbitration. The intention to have arbitrability determined by an arbitrator can be manifested by an express provision or through the use of broad terms to describe the scope of arbitration, such as "all questions in dispute and all claims arising out of" the contract or "any dispute that cannot be adjudicated." [Citations omitted.] The collective bargaining agreement before us contains no express provision, nor is its language sufficiently all-inclusive to warrant the conclusion that the parties intended to have the question of arbitrability submitted to an arbitrator. On the contrary, the agreement makes no mention of who is to determine the question of arbitrability and specifically limits arbitration to "grievance[s] . . . based solely upon an alleged breach of [the agreement." The trial court correctly concluded that it, not an arbitrator, should decide the question of arbitrability.
Board of Education v. Frey, supra, 174 Conn. at 580-81. Though the Court went on to rule that the trial judge had erred in deciding that the subject grievance was not arbitrable under the parties' agreement, and thus that he should not have granted the requested injunction, its above-quoted holding plainly established that this Court has subject-matter jurisdiction over an action to enjoin an arbitration, at least for the purpose of deciding if the parties, in their contract, "clearly agreed" to submit the question of arbitrability to the arbitrators rather than to the court itself. The obvious implication of this analysis is that if the trial court, in deciding that threshold question, concluded that the parties had CT Page 13940-fb agreed to submit the question of arbitrability to the arbitrators, it should deny the plaintiff's claim for an injunction on the merits rather than ruling that it lacked subject-matter jurisdiction to decide that claim. Accord, Policemen's Firemen's Retirement Board v. Sullivan, 173 Conn. 1, 8-9, 376 A.2d 399 (1977) (similarly concluding that this Court has the power, in an action to enjoin an arbitration, to decide if parties to a contract, by the terms of their arbitration agreement, "excluded from court determination not merely the decision of the merits of the grievance but also the question of its arbitrability, vesting power to make both decisions in the arbitrator[.]")
20. The foregoing conclusion, moreover, is consistent with Connecticut's statutory scheme for protecting and enforcing the contractual right to arbitrate. Under General Statutes § 52-410, in particular, this Court is expressly empowered to compel arbitration of any dispute arising under a written agreement to arbitrate even when parties to that agreement have "clearly agreed" to submit all questions of arbitrability to the arbitrators. College Plaza, Inc. v. Harlaco, Inc., 152 Conn. 707, 206 A.2d 832 (1965). In such circumstances, the obvious caveat is that the Court can only order that the parties arbitrate the issue of arbitrability, for the substantive question whether or not the parties' dispute is truly arbitrable must be decided by the arbitrators themselves. Gary Excavating, Inc. v. North Haven, 164 Conn. 119, 125, 318 A.2d 84 (1972). Plainly, this Court has subject-matter jurisdiction to decide if the parties to an arbitration agreement have "clearly agreed" to submit all questions of arbitrability concerning disputes under that agreement to the arbitrators even though it may ultimately decide that they have so agreed.
21. Of final note and interest on this third aspect of White Oak's Motion to Dismiss is that any resolution of its claim other than that proposed above would be wholly unworkable. If a trial court had no subject-matter jurisdiction to decide, as a threshold matter, whether or not the parties to an arbitration agreement have agreed to submit all questions concerning the arbitrability of their disputes to the arbitrators, then CT Page 13940-fc that issue, by necessary implication, would also be decided by the arbitrators. In that event, however, if the arbitrators determined that they were not in fact authorized to decide the threshold question of arbitrability, the parties would have been forced to arbitrate a matter they had not agreed to arbitrate, in violation of what is generally agreed to be the first principle of arbitration law, to wit: that since arbitration is a creature of contract, no person can be required to arbitrate any issue he has not voluntarily agreed to submit to arbitration. Hence, as our Supreme Court declared in Connecticut Union of Telephone Workers, Inc. v. Southern New England Telephone Co., 148 Conn. 192, 197-98, 169 A.2d 646 (1961):
Arbitration is a creature of contract. It 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. Pratt, Read Co. v. United Furniture Workers, 136 Conn. 205, 209, 70 A.2d 120 [(1949)]. 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. Chase Brass Copper Co. v. Chase Brass Copper Workers Union, 139 Conn. 591, 595, 96 A.2d 209 [(1953)]. The parties may, if they choose, confide to arbitrators the decision of legal as well as factual disputes. Colt's Industrial Union v. Colt's Mfg. Co., 137 Conn. 305, 307, 77 A.2d 301 [(1950)]. When they do so, the arbitrators may have the authority to interpret the provisions of the agreement which are involved in, or applicable to, the facts of the dispute submitted. United Electrical Radio Machine Workers v. Union Mfg. Co., 145 Conn. 285, 289, 141 A.2d 479 [(1958)]. This does not necessarily mean that the arbitrators are also empowered to determine the preliminary question of arbitrability. Whether the parties have agreed to submit to arbitration not only the merits of the dispute but the very question of arbitrability, as well, depends upon the intention manifested in the agreement they have made. No one is under a duty to submit any question to arbitration except to the extent that he has signified his willingness. Colt's Industrial Union v. Colt's Mfg. Co., supra, 308. The CT Page 13940-fd construction of the agreement and the determination of the intent expressed therein present an issue for the court. Connecticut Co. v. Division 425, 147 Conn. 608, 616, 164 A.2d 413 [(1960)]; Chase Brass Copper Co. v. Chase Brass Copper Workers Union, supra.
IV. CONCLUSION
For all of the foregoing reasons, the Court hereby ORDERS that White Oak's February 24, 2005 Motion to Dismiss the instant action for alleged lack of subject-matter jurisdiction be:
A. GRANTED, on the ground of mootness, with respect to the State's underlying request to enjoin White Oak from prosecuting the Tomlinson Arbitration; but
B. DENIED on all grounds with respect to the State's parallel claim to enjoin White Oak from prosecuting the Bridgeport Arbitration.
IT IS SO ORDERED.