Opinion
No. CV 03-0478695 S
August 26, 2003
MEMORANDUM OF DECISION
The plaintiff has brought an eleven-count complaint against the defendants, Pathology Associates and Consultants, P.C. (PAC), Irwin Nash, Il Long Hahn, and Paul Fielder seeking injunctive relief and money damages. The plaintiff and the individual defendants are all medical doctors specializing in pathology. The four doctors are the only employees, directors, officers and stockholders in PAC. Each of them owns twenty-five percent of the stock in PAC. Effective January 1, 1998, all of the parties signed an amended and restated stockholders agreement. At the same time, each of the individual parties signed identical employment agreements with PAC. The employment agreements provided in paragraph 10B that the agreement could be terminated by PAC or the doctor, without cause, upon 90 days notice, provided that PAC could terminate the employment of the doctor without cause only upon the affirmative vote of shareholders holding no less than seventy-five per cent of the outstanding shares. The stockholders agreement provided that if a stockholder's employment by PAC was terminated other than by death, retirement or disability then PAC shall purchase all of the shares held by that stockholder at a price as determined by other provisions of the agreement.
On May 15, 2003, PAC voted to terminate the plaintiff's employment, without cause, effective August 15, 2003. The termination was approved by the three individual defendants who are the owners of seventy-five percent of the outstanding shares of stock in PAC. The plaintiff then filed this action.
Before the court at this time is the defendants' motion to stay the litigation pending arbitration.
Each of the employment agreements provides for the arbitration of any dispute in connection with the agreement.
12. Arbitration. Any and all disputes arising out of, under, in connection with or in relation to this Agreement other than any dispute for which injunctive relief may be available may, at the request of any party hereto, be settled by arbitration in New Haven, Connecticut before the American Arbitration Association in accordance with its Employment Dispute Resolution Rules then obtaining. The decision of the arbitrator shall be final and binding upon the parties, and judgment upon the award rendered may be entered in any court having jurisdiction thereof.
The stockholders agreement also provides for arbitration of any dispute arising under the agreement.
18b. Arbitration. Any controversy arising under this Agreement (other than one involving the purchase and sale of Shares) shall be settled by arbitration in New Haven, Connecticut under the then prevailing rules of the American Arbitration Association, and judgment upon any reward rendered therein may be entered by any court of competent jurisdiction. This provision for arbitration shall not prevent any party hereto from applying to a court for, and obtaining, injunctive relief by showing that, in the absence thereof, the rights of such party cannot be adequately protected by an arbitration award.
The defendants' motion to stay is based on the provisions of Connecticut General Statutes § 52-409.
Section 52-409. Stay of Proceedings in Court
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 defendants' claim that all of the issues raised by the complaint are referable to arbitration under the employment and the stockholders agreements, that the defendants are ready and willing to proceed with arbitration, and therefore, pursuant to § 52-409, the motion to stay should be granted.
The plaintiff objects to the motion to stay on various grounds. He claims that the employment agreement is invalid because it was not authorized by any valid action of the defendants, and that any agreement of the plaintiff to the employment agreement was procured by the defendants by misrepresentation and their failure to fully disclose the terms of the agreement.
He further claims that the use of the word "may" instead of "shall" in the arbitration paragraph of the employment agreement implies that arbitration can be had only with the consent of all parties.
The plaintiff also claims that an allegation of a violation of CUTPA, which is included in the complaint, cannot be arbitrated but rather must be determined in a judicial proceeding.
The court conducted an evidentiary hearing on August 18, 2003 on the defendants' motion to stay. Testimony was given by the plaintiff, Dr. Romeo Vidone, who was a member of PAC until his retirement in 2000, Nash, Fielder, and Attorney Alice Mick.
The purpose of the evidentiary hearing was to afford the plaintiff an opportunity to offer evidence in support of his claim that the 1998 employment agreement signed by the plaintiff was not authorized and was obtained by misrepresentation and a failure to disclose the terms to the plaintiff. The principal provision of the employment agreement to which the plaintiff's claims of misrepresentation and failure to disclose relate is the "termination without cause" set forth in paragraph 10B.
It is not necessary in this memorandum to detail the evidence produced at the hearing concerning the preparation and execution of the two agreements. It is sufficient to say that there was absolutely no credible evidence to support the plaintiff's claims. Drafts of the proposed agreements were circulated among all of the parties for over a year before they were finally executed. All of the various drafts included the provision concerning termination without cause. The agreements were signed at a duly authorized meeting of PAC called for the express purpose of taking action on the agreements. The plaintiff's testimony concerning whether he ever saw the drafts, whether he read the drafts or the final agreements before signing, and why he chose not to read them, is not credible. The plaintiff has failed to prove that the employment agreement was not authorized by the defendants, or that his agreement thereto was procured by misrepresentation, or that the defendants failed to disclose the terms of the agreement.
The plaintiff also claims that since the arbitration clause provides that either party to the employment agreement "may" seek arbitration that this language indicates that the consent of both parties is required for the matter to go to arbitration. In support of this claim, the plaintiff refers to the case of A. Dubreuil Sons, Inc. v. Lisbon, 215 Conn. 605 (1990). In that case the parties were using a standard pre-printed contract which used the word "shall" in connection with the arbitration clause. The parties amended the printed form by substituting "may" for "shall." Under that unusual fact situation the Supreme Court held that it was reasonable for the trial court to interpret the arbitration clause as permissive, requiring the consent of both parties, rather than mandatory. The court indicated in footnote 3 on page 613 that if it had not been for the express change the result might have been different. In the case at bar, to interpret the arbitration clause as permissive would make the provision meaningless, since the parties could always agree to go to arbitration even without an arbitration clause. The use of the work "may" means that either party may request arbitration if he or she desires. See New York Harbor Railroad Terminal Corporation v. Consolidated Rail Corporation, 72 F. Sup.2d 70 (E.D.N.Y. 1998). In Paranko v. State, 200 Conn. 51 (1986), the arbitration agreement provided that "an unresolved grievance may be submitted to arbitration . . ." While the significance of the use of the word `may" was not litigated, it is obvious that all parties construed the arbitration agreement as mandatory. This court finds that it was the intent of the parties in this case that arbitration be mandatory upon the request of any party.
The plaintiff also claims that a claim of a violation of CUTPA, which is one of the counts in the complaint, cannot be arbitrated. The law in Connecticut is that a claim of a violation of CUTPA is arbitrable, Fink v. Golenback, 238 Conn. 183, 196 (1996).
Following the evidentiary hearing the plaintiff filed an additional memorandum in which he claimed that the arbitration clause in the employment agreement is ambiguous because it provides that all disputes in relation to the agreement are arbitrable "other than any dispute for which injunctive relief may be available." At the evidentiary hearing the plaintiff claimed that the reference to injunctive relief meant that in any case where one of the claims was for injunctive relief, a party could not be compelled to arbitrate the case. The court does not agree that the arbitration clause is ambiguous, or that arbitration is precluded in a case which includes a request for an injunction. In the opinion of the court the clause referring to injunctive relief affords the plaintiff the same rights as are provided in General Statues § 52-422 which allows any party to seek orders pendente lite before an award is rendered pursuant to arbitration.
The court finds that both agreements satisfy General Statutes § 52-408, concerning agreements to arbitrate in a written contract. All of the issues raised in the complaint are referable to arbitration under the agreements, and the defendants are ready and willing to proceed with arbitration.
The motion to stay litigation pending arbitration is granted.
William L. Hadden, Jr. Judge Trial Referee