Opinion
No. FST-CV-06-4009558-S
March 15, 2007
MEMORANDUM OF DECISION RE APPLICATION TO VACATE ARBITRATION AWARD 102.00
The Plaintiff, Thomas E. Golden Realty Company, Inc. (the "Plaintiff") and the Defendant, Montowese Industrial Park, Inc. (the "Defendant"), entered into a fifty-six (56) year ground lease on July 1, 1968 (the "Lease") for property in Darien, Connecticut, known as 138 Heights Road (the "Premises"). (Def.'s Ex. 1). The Lease provided that the Defendant pay fixed annual rent to the Plaintiff as follows:
1. 7/1/68 through 5/31/78 — $26,400.00 dollars (Ex. 1, Article IV, Section 4, 1(a)); . . .
3. For subsequent periods, including the period 6/1/99 through 5/31/04, " . . . the greater of (i) 26,400.00 or (ii) the fair rental value as of the first day of the applicable period of the demised premises as completely vacant land for its highest and best use (as limited by applicable zoning and building regulations)." (Ex. 1, Article IV, Section 4.1(c)).
In the absence of an agreement as to the rent between the Parties, or between appraisers appointed by them, the determination of the fair market rental value of the Premises is to be submitted to arbitration. (Ex. 1, Article IV, Section 4.1(c) in accordance with the provisions of Article XX, Section 20.14). On November 1, 1999, the Parties executed a Modification to the Lease, entitled "Lease Addendum", in which they consensually agreed that the rent for the year June 1, 1999 through May 31, 2000 would be $500,000.00 dollars. (Plaintiff's Ex. 1). They could not agree, however, on a rent for the years June 1, 2000 through May 31, 2004. As a result, the Plaintiff submitted this rental dispute to arbitration (the "Submission") to establish the fair market rental value of the Premises as of June 1, 2000, for the period through May 31, 2004. Id.
As required by the Lease, the Plaintiff's Submission was directed to the American Arbitration Association ("AAA"), in accordance with whose procedures the Parties agreed upon Gerald M. Levy as their Arbitrator ("Arbitrator"). On June 9, 2006, after five days of hearings, the Arbitrator submitted a written award ("Award") to the Parties, via facsimile, finding the fair market rental value for the Premises during the Disputed Period to be $580,000.00 dollars per annum. (Def.'s Ex. 4). In its Application to Vacate the Arbitration Award (the "Application") dated July 10, 2006, the Plaintiff seeks to have this Court vacate the Award for the following reasons: (1) the Arbitrator considered and/or entered into evidence a Gordon Jones' appraisal commissioned by the Plaintiff dated June 1, 1999; and (2) the Award was made beyond the time limited prescribed by law and AAA Rules of Procedure.
The Plaintiff's Application is denied because the Arbitration was held in response to the Plaintiff's unrestricted Submission under applicable precedent, the Court's ability to vacate an Award made from such an unrestricted submission is limited to two specific situations: to wit, that the Award (1) does not conform to the Submission; or (2) is in manifest disregard of the law.
The party challenging the arbitration award bears the burden of producing evidence sufficient to invalidate or avoid it, Bridgeport Firefighters Ass'n, IAFF, Local 834 v. City of Bridgeport, 48 Conn.App. 667 (1998), and the burden of demonstrating the nonconformity of an award to its submission is on the party seeking to vacate it. Board of Education v. Hartford Federation of School Secretaries, 26 Conn.App. 351 (1992). Furthermore, in conducting its review, a court will be mindful that "[e]very reasonable presumption and intendment will be made in favor of the award and of the arbitrator's acts and proceedings." Bic Pen Corp. v. Local No. 134, United Rubber, Cork, Linoleum Plastic Workers of America, 183 Conn. 579 (1981). Additionally, in deciding whether an arbitrator has exceeded his powers, a Court, as a general rule, will examine only the award itself to determine whether it is in conformity with the submission, and thus the memorandum of the arbitrator is irrelevant. Board of Educ. of City of New Haven v. AFSCME, Council 4, Local 287, 195 Conn. 266 (1985).
The first step in judicial review of the arbitration decision before this Court is to determine whether the instant submission to arbitration is restricted or unrestricted, i.e. was the arbitrator limited as to how he could render his decision? Industrial Risk Insurers v. Hartford Steam Boiler Inspection Ins. Co., 273 Conn. 86, 92-93 (2005). "The authority of an arbitrator to adjudicate the controversy is limited only if the agreement contains express language restricting the breadth of issues, reserving explicit rights, or conditioning the award on court review. In the absence of any such qualifications, an agreement is unrestricted". Carroll v. Aetna Casualty Surety Co., 189 Conn. 16, 20, 453 A.2d 1158 (1983). Arbitration is a creature of contract and the parties themselves, by the terms of their submission, define the powers of the arbitrator. Where the language of the arbitration clause indicates an intention on the part of the parties to include all controversies which may arise under their agreement, and where the record reveals no specific questions which the parties submitted to the arbitrator, the submission will be construed as unrestricted. Id. at p. 20.
In the instant matter, the Submission simply requests a "[D]etermination of rent for the four year period". (Plaintiff's Ex. 1). In determining whether a submission is unrestricted, the focus is not on the ultimate issue(s) to be decided but rather the scope that an arbitrator has in deciding the issue. Carroll, supra, 189 Conn. at 19. Section 20.14 of the Lease does not limit the arbitrator's authority and unequivocally allows the arbitrator to resolve any dispute and/or disagreement between the parties. (Plaintiff's Ex. 1).
Where the language of the arbitration clause indicates an intention of the parties to include all controversies which may arise under their agreement, as is the case in the instant matter, and where the authority of an arbitrator to adjudicate the controversy is not limited by express language restricting the breadth of issues, reserving explicit rights, or conditioning the award on court review, the submission is unrestricted. See, Carroll v. Aetna Casualty Surety Co., 189 Conn. 16, 20, 453 A.2d 1158 (1983). Under this definition, the Plaintiff's submission is, therefore, clearly "unrestricted".
As a consequence, Mr. Levy's award is not subject to de novo review — even for errors of law so long as the award conforms to the submission. The underlying rationale for this limitation is that courts favor arbitration as a means of settling private disputes and undertake judicial review of arbitration awards in a manner designed to minimize interference with an efficient and economical system of alternative dispute resolution. Blakeslee Arpaia Chapman, Inc. v. Dept. of Transportation, 273 Conn. 746, 754-55 (2005). Courts, therefore, will not and should not review either evidence or the arbitrators' decision of the legal questions involved. This Court must limit its inquiry simply to whether the award conforms to the Submission. The Plaintiff's claim of error regarding the admission of Gordon Jones' June 1, 1999 appraisal therefore cannot be considered by the Court because it would require the Court to review an alleged error of law, the appraisal's admission.
The Court's review of the Award's conformity with the Submission is also limited because the Parties voluntarily bargained for the arbitrator's decision and are presumed to have assumed the risks and waived objections to that decision. Blakeslee, supra, 273 Conn. at 755-56. There are three grounds for vacating an award in a review of an unrestricted submission: to wit, (1) the award rules on the constitutionality of a statute . . . (2) the award violates clear public policy . . . [and] (3) the award contravenes one or more of the statutory proscriptions of Connecticut General Statutes § 52-418. Blakeslee, supra, at 756. Here, the potentially relevant exception is whether the award contravenes § 52-418 of the Connecticut General Statutes.
The relevant portion of § 52-418(a) states, "Upon the application of any party to an arbitration, the superior court . . . shall make an order vacating the award if it finds . . . (4) . . . the arbitrators have exceeded their powers or so imperfectly executed them that a mutual, final and definite award upon the subject matter submitted was not made." The appropriate inquiry is a review of whether the parties vested the arbitrator(s) with the authority to decide the issue presented or to award the relief conferred. State v. New England Health Care Employees Union, District 1199, AFL-CIO, 265 Conn. 771, 790 (2003). If ". . . the arbitrator's remedies [are] consistent with the agreement, they [are] within the scope of the submission." Id. The court, moreover, may not engage in fact finding by providing an independent interpretation of the contract. Metropolitan District Commission v. AFSCME, Council 4, Local 3713, 35 Conn.App. 804, 809 (1994). The Court must simply determine if the arbitrator ignored his obligation to interpret and to apply the contract as written. Id.
Here, the Submission states:
THE NATURE OF THE DISPUTE: See attached paragraphs of Lease of July 1, 1968, 4.1(c) and 20.14 and paragraph 1 of the September 1999 amendment. Parties cannot agree on fair rental value for the four year period beginning June 1, 2000, to May 31, 2004.
THE CLAIM OR RELIEF SOUGHT: Determination of rent for the four year period.
The Award states, in relevant part) that:
The fair rental value for the demised 4.773 acre panel . . . as completely vacant land for its highest and best use . . . for the four year period commencing on June 1, 2000 and terminating on May 31, 2004 is FIVE HUNDRED EIGHTY THREE THOUSAND DOLLARS AND NO CENTS ($583,000.00) per annum. (Plaintiff's Exhibit 12.)
The Award conforms to the Submission. The Submission requests a determination of the fair market rental value for the four-year period beginning June 1, 1999 to May 31, 2004. With full authority to answer the Submission, the Arbitrator did so with "precision and exactitude" see, e.g., International Association of Fire Fighters, 35 Conn.App. 775, 780 (1994).
The Plaintiff also claims the Award should be vacated because it was not issued within the time prescriptions of AAA Rules and Connecticut statutes. More specifically, the Plaintiff claims that AAA's facsimile transmission of the Award on June 9, 2006 to the Parties did not satisfy the notice requirements prescribed by Rule 44 of AAA (requiring Award to be in writing) and the Connecticut General Statutes. Instead, the Plaintiff claims that it did not "receive" the Award until June 15, 1999 — beyond the thirty (30) day window following the close of the hearing.
Section 43 of the AAA Rules provides, in relevant part, that the arbitrator shall endeavor to issue the award within 30 days from the date of closing of the hearing. The hearing was closed on May 12, 2006. (Plaintiff's Ex. 9). Thus, the Award was due on or before June 12, 2006. On June 9, 2006, the Parties received the Award via facsimile. (Plaintiff's Ex 12). On or about June 15, AAA sent the Parties a "hard copy of the Award. (Plaintiff's Exhibit 13).
The plaintiff concedes that it received the Award on June 9, 2006 via facsimile transmission. The Plaintiff requests this Court to vacate this Award because it received the Award by fax instead of mail. The AAA's Rule 42 specifically provides that the AAA may use facsimile transmission to give notices required by these rules. The Plaintiff's own course of conduct over the nine-month arbitration proceedings demonstrate that it, like AAA and the Defendant, used facsimile transmission to communicate. (Plaintiff's Exhibits 10, 11). The Plaintiff, moreover, did not once object to the use of facsimile transmissions as a means of information exchange until the Award was issued. (Plaintiff's Exhibits 1, 4, 5, 6, 7, 8, 9).
In Shore v. Haverson Architecture and Design, P.C., 92 Conn.App. 469 (2005), the Court rejected a claimant's "timeliness" argument because it was not raised until after the unfavorable award was rendered.
The Court finds this to be an unrestricted submission. The ruling conformed to the submission. The Court finds the decision was timely filed.
Accordingly, the Court denies the application to vacate the arbitration award.