Opinion
No. FST CV 08 5009105 S
March 12, 2009
MEMORANDUM OF DECISION RE MOTION FOR STAY #103
Procedural History
The plaintiff, EJV Development, LLC, is the owner of property located at 45 Circle Drive in Greenwich (the property). The defendant, CRC Real Estate Development, LLC, filed and recorded a mechanics lien certificate on the property. The lien certificate claimed that the plaintiff owed $88,812 to the defendant for services rendered and material furnished by the defendant.
On October 22, 2008, the plaintiff filed an application for discharge or reduction of the mechanic's lien alleging a lack of probable cause to sustain the validity of such lien and asserting that the amount claimed was excessive. Thereafter, the defendant made written demand upon the plaintiff, pursuant to article eight of the written Joint Venture Agreement, to proceed to arbitration. Prior to the hearing on the application for discharge or reduction of the mechanic's lien, the defendant filed a motion to stay the proceedings in this matter until such time as the parties adjudicate their pending disputes in arbitration.
Legal Discussion
"The court has the inherent power to stay proceedings before it in the interest of the just resolution of controversies." Hilb Rogal Hobbs Co. v. Siech, Superior Court, judicial district of Hartford, Docket No. CV 04 4004817 (March 23, 2005, Beach, J.) (38 Conn. L. Rptr. 706, 710, n. 5). "An order staying proceedings does not terminate the action but merely postpones its disposition. It may be modified or vacated by the court whenever, in the exercise of a sound discretion, it is considered necessary or proper to do so." (Internal quotation marks omitted.) Success Centers, Inc. v. Huntington Learning Centers, Inc., 223 Conn. 761, 771, 613 A.2d 1320 (1992). "Motions to stay proceedings are interlocutory." State v. Spendolini, 189 Conn. 92, 96, 454 A.2d 720 (1983).
"[A]rbitration is a creature of contract . . . It is designed to avoid litigation and secure prompt settlement of disputes." State v. Philip Morris, Inc., 289 Conn. 633, 642 (2008). 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."
The defendant seeks to enforce the arbitration clause in the Joint Venture Agreement between the parties. The plaintiff claims, however, that the actions of the parties were equivalent to an abandonment of the Joint Venture Agreement, thereby invalidating the contract in total, including the arbitration clause. The defendant asserts that all disputes regarding the Joint Venture Agreement, including any claims of abandonment or rescission, fall within the ambit of a "claim or dispute arising out of the [c]ontract" and, must therefore be submitted to arbitration.
The court must initially determine whether there is a valid arbitration agreement. A party who contests the making of a contract which contains an arbitration clause can not be compelled to arbitrate the threshold issue of the actual existence of the contract itself. Nussbaum v. Timbers, 271 Conn. 65, 73, 856 A.2d 364 (2004). "[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." State v. Phillip Morris, Inc., supra, 289 Conn. 642. Where the language of the contract is clear and unambiguous, however, the contract is to be given effect according to its terms and conditions. Goldberg v. Hartford Fire Ins. Co., 269 Conn. 550, 559, 849 A.2d 368 (2004).
In the present matter it is undisputed that the parties entered into a valid contract for arbitration by way of the Joint Venture Agreement. "In a situation where the parties are at one in asserting that they entered into a binding contract, but a difference has arisen between them whether there has been a breach by one side or the other, or whether circumstances have arisen which have discharged one or both parties from further performance, such differences should be regarded as differences which have arisen `in respect of,' or `with regard to,' or `under' the contract, and an arbitration clause which uses these, or similar, expressions should be construed accordingly." (Internal quotation marks omitted.) Batter Building Materials Co. v. Kirschner, 142 Conn. 1, 9-10, 110 A.2d 464 (1954).
The plaintiff next asserts that the Joint Venture Agreement, and by extension the arbitration agreement, was abandoned, thereby invalidating the arbitration clause. "Abandonment . . . has been defined as the voluntary relinquishment of ownership of property without reference to any particular person or purpose[.] . . . It implies a voluntary and intentional renunciation." (Citation omitted; internal quotation marks omitted.) Reiff v. D'Angelo, Superior Court, judicial district of New Britain, Docket No. CV 05 4005479 (March 20, 2006, Shaban, J.). The well-established rule is that "abandonment of contracts, like entry into a contractual relation, depends upon the intent of the parties and that the relevant intent is to be inferred from the attendant circumstances and conduct of the parties." (Internal quotation marks omitted.) Young v. Young, 78 Conn.App. 394, 402, 827 A.2d 722 (2003).
The plaintiff additionally asserts that the contract was rescinded and is therefore unenforceable. "Rescission, simply stated, is the unmaking of a contract. It is a renouncement of the contract and any property obtained pursuant to the contract, and places the parties as nearly as possible, in the same situation as existed just prior to the execution of the contract." (Internal quotation marks omitted.) Altberg v. Paul Kovacs Tire Shop, Inc., 31 Conn.App. 634, 641-42, 626 A.2d 804 (1993).
In addressing the issues of abandonment and rescission of contracts as they relate to arbitration provisions, our courts have relied on the decision in Batter Building Materials Co. v. Kirschner, supra, 142 Conn. 1, which involved a claim that a contract containing an arbitration clause had been repudiated. In rendering its decision, the court in Batter Building clarified that repudiation or total breach of contract, whether acquiesced in by the other party or not, does not abrogate the contract. While it may relieve the injured party from further fulfillment of his contractual obligations, the contract still exists and the arbitration clause therefore survives for determining the mode of settlement. Id., 10. Under the arbitration clause contained in the Joint Venture Agreement the right of the defendant to demand arbitration is not affected by the plaintiffs' claim of repudiation or total breach of contract by the defendants. Id., 11.
"The Supreme Court has been constant and resolute, indeed, even enthusiastic, in upholding voluntary arbitration." Carlin Contracting Co. v. Blakeslee Arpaia Chapman, Inc., Superior Court, judicial district of New London, Docket No. CV 99 00551690 (February 22, 2000, Parker, J.) [26 Conn. L. Rptr. 466]. If the "language of the arbitration clause is broad enough in scope to reflect the parties' general agreement to settle disputes relating to their contract through arbitration, including the issue of rescission . . . Any determination with regard to rescission . . . was within the arbitrator's scope of authority." Milford v. Coppola Construction Co., 93 Conn.App. 704, 712-13, 891 A.2d 31 (2006).
Conclusion
The parties here have willing entered into a binding written contract containing an arbitration provision. The arbitration clause is clear and unambiguous. Disputes, including allegations pertaining to rescission and abandonment of the contract, should be regarded as differences which have arisen under the contract and the arbitration clause within the Joint Venture Agreement which uses similar, expressions should be construed accordingly. (Internal quotation marks omitted.) Batter Building Materials Co. v. Kirschner, supra, 142 Conn. 10. As such the defendant's motion for stay is granted.