Opinion
No. CV05 4011886
May 3, 2006
MEMORANDUM OF DECISION MOTION TO DISMISS #102
The defendants Edward Nusbaum and the law firm of Nusbaum and Parino, P.C. have filed a motion to dismiss dated October 26, 2005. The defendants argue that the plaintiffs and the defendants agreed by way of a written contract to submit all disputes to binding arbitration, yet the plaintiffs have failed to participate in said arbitration proceedings, opting to file the subject action instead. The defendants claim that the court lacks jurisdiction to hear this action, since the parties' sole avenue for dispute resolution is by way of arbitration proceedings. Therefore, the defendants request that the court dismiss the plaintiffs' complaint.
A summary of the dispute between the parties is necessary prior to determining the merits of Schaefer Inc.'s motion to dismiss. The plaintiffs have filed an eight-count complaint against the defendants for a breach of an implied covenant of good faith and fair dealing and violations of the Connecticut Unfair Trade Practices Act (CUTPA).
The allegations arise out of a fee dispute as a result of the representation by the defendants of the plaintiff Christopher Homonnay in a dissolution of marriage action. The plaintiff Christopher Homonnay signed a written retainer agreement with the defendants on or about March 27, 2003. The plaintiffs, Thomas Homonnay and Jill Homonnay also signed the retainer agreement as guarantors of the fees to be incurred by the plaintiff Christopher Homonnay. The retainer agreement, of copy of which has been submitted to the court for review, contains a provision that any dispute arising out of or relating to any aspect of the contractual relationship will be submitted to binding arbitration before the American Arbitration Association.
The plaintiffs in their complaint allege that the defendants charged the plaintiff Christopher Homonnay the sum of $397,831.28 in legal fees. To date the plaintiffs have paid the defendants the sum of $335,304.78, and that the defendants claim a balance due and owing in the amount of $24,720. The plaintiffs claim that they have demanded arbitration through the Connecticut Bar Association, but the defendants have refused to submit to the Connecticut Arbitration Association for arbitration proceedings. The plaintiffs allege that the fees charged by defendant Edward Nusbaum and Parino and Nusbaum, P.C. are unreasonable and "breaches the faithfulness of the agreed, common purpose of the retainer agreement in that the plaintiff Christopher Homonnay thought he would only be charged a reasonable fee," and that the fees charged by Nusbaum are "excessive, unconscionable and contrary to public policy." The plaintiff further claim that the defendants engaged in unfair or deceptive acts or practices in violation of CUTPA, General Statutes § 42-110b.
The court first addresses the standard of law to be applied to a motion to dismiss. "The motion to dismiss shall be used to assert (1) lack of jurisdiction over the subject matter . . ." (Internal quotation marks omitted.) Sadloski v. Manchester, 235 Conn. 637, 645-46 n. 13, 668 A.2d 1314 (1995). "A motion to dismiss . . . properly attacks the jurisdiction of the court, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court." (Emphasis in original internal quotation marks omitted.) Gurliacci v. Mayer, 218 Conn. 531, 544, 590 A.2d 914 (1991); Third Taxing District of Norwalk v. Lyons, 35 Conn.App. 795, 803, 647 A.2d 32, cert. denied, 231 Conn. 936, 650 A.2d 173 (1994). "Subject matter jurisdiction is the power of the court to hear and determine cases of the general class to which the proceedings in question belong." (Internal quotation marks omitted.) Grant v. Bassman, 221 Conn. 465, 470, 604 A.2d 814 (1992). "When a [trial] court decides a jurisdictional question raised by a pretrial motion to dismiss, it must consider the allegations of the complaint in their most favorable light." (Citation omitted.) Antinerella v. Rioux, 229 Conn. 479, 489, 642 A.2d 699 (1994). A court is deprived of subject matter jurisdiction in the arbitration context when the parties to a contract have agreed to arbitrate their disputes and such arbitration is a precedent to court action. Multi-Service Contractors, Inc. v. Town of Vernon, 181 Conn. 445, 448, 435 A.2d 983 (1980).
The subject retainer agreement contains a broad arbitration clause providing for an unrestricted arbitration submission to the American Arbitration Association. The retainer agreement specifically provides in relevant part, as follows:
In the event that you and this firm have a dispute with each other arising out of or relating to any aspect of our relationship, including but not limited to, issues pertaining to payment of attorneys fees and/or disbursements or issues pertaining to the adequacy of this firm's representation of your interests, both of us agree to submit any and all disputes to binding arbitration before the American Arbitration Association in accordance with their rules and procedures which exist on the date of submission (using their expedited procedures whenever possible.).
Our Supreme Court for many years has endorsed arbitration as an effective alternative method of settling disputes intended to avoid the formalities, delay, expense and vexation of ordinary litigation. Fink v. Golenbock, 238 Conn. 183, 194, 680 A.2d 1243 (1996); OG/O'Connell Joint Venture v. Chase Family Limited Partnership No. 3, 203 Conn. 133, 145, 523 A.2d 1271 (1987). Arbitration is the voluntary submission, by the interested parties, of an existing or future dispute to a disinterested person or persons for final determination. Gary Excavating, Inc. v. North Haven, 164 Conn. 119, 121, 318 A.2d 84(1972); Jacob v. Seaboard, Inc., 28 Conn.App. 270, 273, 610 A.2d 1899 (1992); Harry Skolnick Sons v. Heyman, 7 Conn.App. 175, 179, 508 A.2d 64 (1986). Additionally, General Statutes 52-408 provides a statutory right for parties to agree in writing to arbitration.
General Statutes § 52-408 reads as follows:
An agreement in any written contract, or in a separate writing executed by the parties to any written contract, to settle by arbitration any controversy thereafter arising out of such contract, or out of the failure or refusal to perform the whole or any part thereof or a written provision in the articles of association or bylaws of an association or corporation of which both parties are members to arbitrate any controversy which may arise between them in the future, or an agreement in writing between two or more persons to submit to arbitration any controversy existing between them at the time of the agreement to submit, shall be valid, irrevocable and enforceable, except when there exists sufficient cause at law or in equity for the avoidance of written contracts generally.
The right to arbitration can be created only by contract. Wesleyan University v. Rissil Construction Associates, Inc., 1 Conn.App. 351, 472 A.2d 972, cert. denied, 193 Conn. 802, 474 A.2d 1259 (1984). Our statutes do not require any particular words or form to create an arbitration agreement. "`The intent of the parties that arbitration be the exclusive method for the settlement of disputes arising under the contract must be clearly manifested. This express intent by both parties to enter into the arbitration agreement is essential to its existence.' . . . An agreement to arbitrate must be clear and direct and not depend on implication. (Citations omitted; emphasis in original.) Harry Skolnick Sons v. Heyman, supra, 179, citing M. Domke, Commercial Arbitration 5.01, p. 49." Jacob v. Seaboard, Inc., supra, 28 Conn.App. 273.
"Whether an agreement makes arbitration a condition precedent to an action in court depends on the language of the arbitration clause. While it is true that in the absence of express language a provision for arbitration may be construed, by implication, to be a condition precedent to suit that implication must be so plain that a contrary intention cannot be supposed. It must be a necessary implication. The mere agreement to arbitrate, standing alone, does not give rise to the necessary implication that arbitration is a condition precedent to an action in court. For arbitration to be a condition precedent, the agreement to arbitrate must expressly so stipulate, or it must necessarily be implied from the language used." Multi-Service Contractors, Inc. v. Vernon, supra, 181 Conn. 447.
The subject retainer agreement contains a broad arbitration clause providing for an unrestricted arbitration submission to the American Arbitration Association. The retainer agreement specifically provides in relevant part, as follows:
In the event that you and this firm have a dispute with each other arising out of or relating to any aspect of our relationship, including but not limited to, issues pertaining to payment of attorneys fees and/or disbursements or issues pertaining to the adequacy of this firm's representation of your interests, both of us agree to submit any and all disputes to binding arbitration before the American Arbitration Association in accordance with their rules and procedures which exist on the date of submission (using their expedited procedures whenever possible.).
The subject arbitration clause unequivocally provides that the parties must submit to binding arbitration before the American Arbitration Association. It implies from the language used therein that arbitration is a necessary precedent to court proceedings. The parties to a contract were free to negotiate the arbitration agreement to establish the procedure to resolve disputes arising from the contract/retainer agreement. "[W]here the parties have agreed to a procedure and have delineated the authority of the arbitrator, they must be bound by those limits." Waterbury Board of Education v. Waterbury Teachers' Association, 168 Conn. 54, 62, 357 A.2d 466 (1975).
The plaintiffs do not contest the existence of a contract between the parties. The plaintiffs argue that the fee dispute portion of their claims be referred to the Connecticut Bar Association for resolution of this "fee dispute." They also question whether the arbitration procedure is the proper forum for allegations regarding CUTPA violations. They also imply possible criminal conduct by the defendants, but offer the court no evidence that they have pursued any criminal allegations with the proper law enforcement authorities. The plaintiffs have not persuaded the court that the arbitration clause of the retainer agreement should not be enforced or that the arbitration procedures available through the American Arbitration Association are insufficient for a dispute of this type, or in the alternative, that the procedures of the Connecticut Bar Association are superior for a dispute of this type.
The State of Connecticut has a strong public policy favoring arbitration clauses. The court finds that the upholding of arbitration clauses and the public policy which favors them, dispositive of this matter. See. Hekeler v. Kaufman, Superior Court, judicial district of New Haven at New Haven, No. CV 020470710 (May 18, 2004, Arnold, J.), 37 Conn. L. Rptr. 102. The written agreement between the plaintiffs and the defendants provides for arbitration as a condition precedent to the filing of the plaintiffs' action against the defendants. The arbitration clause is valid, irrevocable and enforceable. The arbitration clause designates the American Arbitration Association, and the plaintiffs have failed to submit their claim against the defendants to arbitration prior to proceeding in court. Accordingly, the court orders that the motion to dismiss filed by the defendants is hereby granted for a lack of the court's jurisdiction.