Opinion
No. CV 04 0085503 S
March 7, 2005
MEMORANDUM OF DECISION ON THE DEFENDANT'S MOTION TO REARGUE
In a Memorandum of Decision dated January 6, 2005, the court issued a decision confirming an arbitration award issued in favor of the plaintiff Michael J. Lasalla and against the defendant Doctor's Associates, Inc. Pending before the court is the defendant's motion to reargue the court's decision. The court granted the motion to the extent that the parties were allowed to present further argument on the issues raised by the defendant. After further review and consideration of the parties' positions, the court reaffirms its decision.
The facts may be summarized as follows. The defendant is a franchiser of Subway sandwich shops, and the parties have an agreement in which the plaintiff develops and supports these shops in Florida. The fees paid to the plaintiff are subject to a modifier designed to reduce the payments to the plaintiff to reflect the defendant's work in establishing franchises before the parties' agreement. Disputes between the parties regarding the modifier were first raised and adjudicated in arbitration proceedings before the American Arbitration Association (The "AAA"). Because of continuing disagreements about the modifier, the plaintiff instituted a second arbitration with The American Dispute Resolution Center (the "ADRC"). The ADRC issued a decision favoring the plaintiff.
In regard to the plaintiff's application to confirm the award, the court concluded that the ADRC decision was within the scope of the unrestricted submission and should be confirmed. Memorandum of Decision, pp. 5-8. In regard to the defendant's application to vacate the award, the defendant argued that the decision violated public policy based on the doctrine of res judicata and that the decision involved a manifestly erroneous or irrational application of the law concerning res judicata and prejudgment interest. The court rejected these arguments. Id., at 8-17.
At pages one through two and at page seven of the Memorandum of Decision, the court indicates that one of the disputes between the parties is about how the modifier should treat stores that relocate out of the plaintiff's territory. In the motion to reargue, the defendant insists that it is undisputed that during the AAA proceedings, the plaintiff disavowed any argument that the modifier should be applied to his benefit when a franchise "relocates" and raised this argument for the first time in the ADRC arbitration. According to the defendant, the court failed to appreciate and consider these particular aspects of the relocation dispute in its decision. The plaintiff, on the other hand, contests the defendant's claim that such "undisputed" facts exist, and contends that its position in the AAA proceedings was not so definitive and fixed. The defendant claims that the modifier's treatment of stores that relocate is an issue of contract construction which was not addressed or resolved by the AAA panel.
In response to these issues as raised in the defendant's motion to reargue, the court reiterates that these disputes exist between the parties and are reflected in the record. The parties' conflicting positions about the modifier and about when the plaintiff asserted his claims were fully presented to the ADRC panel. It is not the role of this court, however, to substitute its discretion for that of the panel as to how such disputes should be best addressed and resolved. More specifically, the court cannot simply substitute its discretion for that of the arbitration panel about whether the issue of relocation as it pertains to the modifier was a proper matter for it to consider, particularly in light of the unrestricted submission. In short, the essence of the defendant's argument is that the arbitrators made a legal error. However, when the scope of the submission is unrestricted, the resulting award is not subject to reversal because of errors of law or even because "it is regarded as unwise or wrong on the merits." Saturn Construction Co. v. Premier Roofing Co., 238 Conn. 293, 304, 680 A.2d 1274 (1996).
The court also rejects the defendant's contention that any of these issues undermine the court's conclusion that established public policy does not mandate the application of res judicata to arbitration decisions. See Memorandum of Decision, January 6, 2005, pp. 8-14. The court fully appreciates that there are strong arguments supporting the view that judicial preclusion doctrines should be uniformly or compulsorily applied to estop a party from instituting arbitration proceedings in a piecemeal or duplicative fashion. Id., at 13, fn. 10. Nevertheless, as explained by this court in its Memorandum of Decision, these competing considerations — the policy supporting the finality of judgments versus the policy supporting the flexibility of arbitrations — were reviewed and balanced by our Supreme Court in Stratford v. International Assn. Of Firefighters, AFL-CIO, Local 998, 248 Conn. 108, 125-28, 728 A.2d 1063 (1999), and the reasoning of Stratford v. International Assn. Of Firefighters persuasively disposes of the defendant's public policy claim.
Whether an established public policy was implicated in this case was considered by the court as presenting an issue of law governed by this court's plenary authority. See Memorandum of Decision, January 6, 2005, pp. 8-14. As the court found that no such policy was involved here, the court evaluated the arbitrators' disposition of the res judicata issue on the basis of the deferential scope of review typically applied in such cases, rather than on the basis of a de novo review. Id., pp. 14-16. The defendant's contention that this review by the court was erroneous in some way is clearly meritless. See generally, Schoonmaker v. Cummings Lockwood of Connecticut, P.C., 252 Conn. 416, 429, n. 7, 747 A.2d 1017 (if a legitimate, established public policy is not implicated by the arbitrator's decision, than "the normal deferential scope of review should apply"). The defendant relies on dicta in Schoonmaker v. Cummings Lockwood of Connecticut, P.C., supra, that de novo review of an arbitration decision may be acquired based on a "colorable" public policy claim. See Schoonmaker v. Cummings Lockwood of Connecticut, P.C., supra, 252 Conn. 429. This dicta is neither controlling, nor applicable to the facts of this case, especially in light of this court's explicit conclusion that no public policy, colorable or otherwise, is implicated by the arbitrators' decision. See generally, Tracy v. Allstate Ins. Co., 76 Conn.App. 329, 337, 819 A.2d 859 (2003) (statements that are dicta are not binding authority), aff'd, 268 Conn. 281, CT Page 4290 842 A.2d 1123 (2004).
The court agrees with the defendant that Stratford v. International Assn. Of Firefighters involves collateral estoppel, whereas the present case involves res judicata, but under the Supreme Court's reasoning, this is a distinction without legal significance. The defendant contends that without the application of res judicata to arbitral decisions there would be endless, duplicative arbitrations, and this is why res judicata raises public policy concerns when collateral estoppel does not. The defendant even opines that a rejection of its position would mean that in response to this court's confirmation of the award, the defendant could initiate still another arbitration in hopes of acquiring a panel that would undo what the ADRC panel has done. The response to the defendant's dire predictions is twofold.
First, nothing in this court's decision precludes a party from making a res judicata argument to an arbitrator, and nothing in this court's decision precludes an arbitrator from either considering the doctrine of res judicata or relying on it. See generally, Stratford v. International Assn. Of Firefighters, AFL-CIO, Local 998, supra, 248 Conn. 108, 121-22 ("arbitrators are free to attach to prior awards whatever precedential value they deem appropriate.)" Certainly, an arbitrator's discretion may be very broad, especially in an unrestricted submission, but it still is not entirely unbounded or unbridled. See Saturn Construction Co. v. Premier Roofing Co., supra, 238 Conn. 304 (an arbitration award should be set aside when it "manifests an egregious or patently irrational application of the law").
See generally, Stratford v. International Assn. Of Firefighters, AFL-CIO, Local 998, 248 Conn. 108, 116, 728 A.2d 1063 (1999). ("Even in the case of an unrestricted submission, we have, however, recognized three grounds for vacating an award: (1) the award rules on the constitutionality of a statute; (2) the award violates clear public policy; or (3) the award contravenes one or more of the statutory proscriptions of § 52-418.")
Second, as the court has previously explained, the parties themselves have agreed to arbitration, and consequently, the scope of the arbitrator's discretion, as well as the use of res judicata in the arbitral process, are matters fully subject to the parties' contractual control. See Stratford v. International Assn. Of Firefighters, AFL-CIO, Local 998, supra, 248 Conn. 108, 121. ("In negotiating the agreement, the parties are free to bargain for whatever terms they choose, including a provision establishing a system of arbitral precedent.")
In conclusion, the parties have received full opportunity to present their positions regarding the ADRC decision. The court has reviewed the record and addressed the parties' arguments. On the basis of this consideration, the court's decision granting the plaintiff's application to confirm the arbitration award and denying the defendant's cross-application to vacate the arbitration award is hereby reaffirmed and adopted as the final order of the court.
So ordered.
STEVENS, J.