Opinion
No. CV 04 0491201
May 15, 2008
MEMORANDUM OF DECISION RE WHETHER LETTER OUTLINING ARBITRATION SUFFICIENT AND, IF SO, WHETHER TO CONFIRM ARBITRATION
Factual Background
Plaintiffs Denise Paley and Eric Tibere filed a four-count complaint against the defendant, PMC Design Builders Inc. The complaint alleges breach of a written contract, breach of an express warranty, breach of an implied warranty and violation of the Connecticut Unfair Trade Practices Act due to the defendant's allegedly defective construction of the plaintiffs' new home.
The present dispute arises out of the plaintiffs' motion to confirm an arbitration award filed on January 18, 2008. The defendants filed an objection on January 23, 2008. The portions of the case relevant to the current proceedings follow. The parties had a status conference on June 5, 2007, with this court, in which the parties agreed that if they could not reach a settlement, they would arbitrate the matter. The agreement was outlined in a letter written by the plaintiffs' attorney on June 14, 2007, and sent to the defendant's attorney, the plaintiffs and this court. In that letter, the plaintiffs' attorney recounted that a settlement in the form of certain properties from the defendant to the plaintiffs would be looked into; however, if that did not work, then the parties would proceed to arbitration by a neutral agreed-upon third party. That letter further indicated that each side would choose three arbitrators and if they could not agree, they would have the court assist them in reaching an accord. Lastly, the letter set specific dates for the parties to submit their recommendations for arbitrators and also specified that they should report back to the court by the end of July 2007, for ultimately resolving the matter by September 2007.
The defendant's attorney confirmed that although there was an agreement between the parties to arbitrate, there was never a written signed agreement. Further, the defendant's attorney maintains that the June 14, 2007, letter was a "self serving letter written after the fact" by the plaintiffs' attorney. It was further noted by the defendants' attorney that the time line included in the June 14, 2007 letter was not agreed to by the parties, although the defendant did receive the letter and did not respond.
On October 22, 2007, the plaintiffs' attorney sent out another letter, addressed specifically to this court, and sent that letter to the plaintiffs, defendant's attorney and Harold Hauben, the arbitrator ultimately chosen by the plaintiffs. In that letter, the plaintiffs requested that Harold Hauben be declared the arbitrator by the court. On October 31, 2007, the parties had a conference call with this court in which the defendants' counsel asked the court for an additional two weeks to check with his client to see if there were any names the defendants wanted to submit as potential arbitrators. After two weeks, no names were submitted. The plaintiffs' counsel then chose Harold Hauben to be the arbitrator by way of a letter dated November 12, 2007. That letter was mailed to all parties and the defendants did not respond. Thereafter Harold Hauben rendered an opinion stating that the defendant's defective workmanship entitled the plaintiff to an award of $56,823.50.
The Hearing
At the hearing on March 10, 2008, addressed to the motion to confirm the arbitration award, Harold Hauben testified that once he became the arbitrator, he sent out a letter to everyone introducing himself, and subsequently, called the defendants and the defendants' attorney to discuss scheduling a walk through of the plaintiffs' house. He indicated that he spoke with Philip Catullo, defendant's agent, about setting up a time for him to go and inspect the house; however, Philip Catullo was not receptive and did not give him any dates. Thereafter Harold Hauben sent out an email to everyone involved, specifying two possible dates (December 10, 2007 and December 12, 2007) on which to do the home inspection. He received a response from Eric Tibere, one of the plaintiffs, but not from the defendant nor the defendant's attorney. He testified that he then sent out another email and never heard from the defendants, but again heard from Tibere. According to Hauben's report, he inspected the plaintiffs' house, in the presence of the plaintiffs, on December 10, 2007, and found various problems with the house. Due to the problems he observed during the inspection, he recommended that the plaintiffs receive $56,823.50 dollars.
The plaintiffs argue that the defendant chose not to participate in the arbitration proceedings despite sufficient time to respond, and therefore, the arbitrators decision should be made enforceable by the court. Although the defendant agrees that the parties had agreed to arbitration if a settlement could not be reached; however, the defendants argue that no details regarding the arbitration were ever determined, nor was a scheduling order chosen. Further, the defendants argue that the plaintiffs unilaterally picked an arbitrator and the process to be followed without giving the defendant sufficient notice. Lastly, the defendant argues that the plaintiffs have circumvented the procedural steps necessary to file a motion to confirm an arbitration award.
Connecticut arbitration legislation is embodied in General Statutes §§ 52-408 though 52-424. Section § 52-408 of the General Statutes gives parties the power to agree to submit any controversy arising out of their contract to arbitration. The purpose of arbitration is to "avoid the formalities, delay, expense, and vexation of ordinary litigation." (Internal quotation marks omitted.) Board of Education v. Wallingford Education Assn., 271 Conn. 634, 640, 858 A.2d 762 (2004).
General Statutes § 52-408 states in relevant part that "[a]n 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 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."
In order to determine if the motion to confirm should be granted, it is first necessary to determined whether the parties had a valid, enforceable arbitration agreement. "It is clear . . . that only written agreements to arbitrate are valid. Oral agreements are not included, implicitly or explicitly, in the description of valid arbitration agreements. This is exemplified in General Statutes 52-421, which requires that any party seeking to modify, confirm to correct an arbitration award in court, a procedure that was prohibited at common law, must file certain papers with the court, one of which is the agreement to arbitrate." Bennett v. Meader, 208 Conn. 352, 359-60, 545 A.2d 553 (1988). The agreement does not have to be signed by both parties, but it must be a `written contract' or `separate writing.'" Id., 361. "[A] written agreement to arbitrate . . . encourages the parties to devise a written submission, which will clarify the rights of the parties for the purposes of both arbitration and judicial review." Id., 364.
In this matter, during a mediation session with this court, the parties orally agreed to arbitrate the matter in the event a settlement could not be reached. After the mediation session, the plaintiffs' attorney wrote a letter dated June 14, 2007, and sent the letters to all parties, including this court. In that letter, he stated that "if the settlement proposal as outlined above was not acceptable to my clients after completion of their due diligence, the parties would enter into binding arbitration with a neutral third party to be mutually agreed upon." (Plaintiffs' Ex., 1.) Further, the plaintiffs' attorney wrote that both parties agreed to provide a minimum of three potential mediators for review by the other and in the event an arbitrator could not be chosen, the court would assist the parties in reaching an accord. (Plaintiffs' Ex., 1.)
Ultimately, the settlement proposal fell through and the plaintiffs proceeded to arbitration. Based on the evidence given at the hearing and the attorneys' admissions, the parties never agreed on a mutual arbitrator, nor did the plaintiff file any pleadings or motions to have the court pick an arbitrator due to the defendants' non-responsive behavior. At the March 10, 2008 hearing, the parties both agreed that an agreement to arbitrate existed, however, the defendants argue that the details of the arbitration agreement were never worked out and that the letter dated June 14, 2007, does not serve as a sufficient arbitration agreement within the context of the General Statutes. Further, the defendants argue that the general extent of the letter was correct, but that any time frames or particular details discussed in the letter were the plaintiffs' details, not the agreement of the parties.
The record shows that the defendants never responded to any of the letters written by the plaintiffs with regards to picking an arbitrator, nor did the defendants submit any potential arbitrator's names, despite being given a two-week extension by the court to do so.
In Bennett v. Meader, supra, 208 Conn. 362-63, the court discussed two important policy reasons for having a written arbitration agreement. "First, and more apparent, is that this requirement eliminates the problems of proving an oral agreement . . . The content of the agreement would then have to be determined by the court and this would not be as efficient or as easy as establishing the existence and content of a written agreement . . . Second, because the parties must memorialize their agreement to arbitrate, it also is likely that they will establish, either separately or within the agreement to arbitrate, a written submission setting forth the arbitrable issues. It is from the submission alone that the arbitrator receives his or her authority, and the submission largely controls the parties' rights on judicial review." (Citations omitted; Internal quotation marks omitted.) Id.
In this matter, arguably, there is a writing, produced by the plaintiffs' attorney in the form of a letter, however, that letter does not describe the arbitrable issues nor any of the parties' rights. Further, it is clear that the defendant never responded to the June 14, 2007 letter, nor confirmed it as an arbitration agreement. Although the defendant agrees that it would arbitrate if the settlement did not work out, the letter written by the plaintiffs' attorney is not a sufficient writing in accordance with § 52-408 or the policy considerations established in Bennett. In fact, at the time the June 14, 2007 letter was written, the parties were involved in settlement negotiations and only if those negotiations fell through would the parties "enter into binding arbitration." (Plaintiffs' Ex. 1.)
It should be noted that the defendants rely on Audubon Parking Assn. Ltd. Partnership v. Barclay Stubbs, 225 Conn. 804, 626 A.2d 729 (1993), arguing that you "only have an enforceable arbitration agreement if you have an agreement to arbitrate that was under the terms of Audubon and was clear and unambiguous." (T., p. 24.) In Audubon, supra, 225 Conn. 805-06, the parties had agreed in open court that they had reached a settlement agreement and the trial court ordered that counsel withdraw the complaint and counterclaim without prejudice. After the defendants failed to abide by the terms of the settlement, the plaintiff filed a motion to open, reserving its right to either enforce the settlement contract or to prosecute the original action. Id., 807. The trial court granted the motion to open and the plaintiff later filed a motion for judgment on the settlement contract, which the trial court granted. Id. The defendants appealed and the Appellate Court reversed the trial court's decision, stating that the trial court deprived the defendants of their right to a jury trial. Id. The plaintiff then appealed to the Supreme Court. Id., 808.
The Supreme Court stated that the defendants' claim was that once the plaintiff filed a motion to open the judgment, the plaintiff had elected to pursue its claim under the original complaint and was therefore precluded from seeking enforcement of the settlement agreement. Id. Further, the defendants argued that they were deprived of their right to due process when the trial court summarily enforced the settlement agreement. Id., 809. The Supreme Court, however, rejected the defendants' claims and held that the plaintiffs had informed the defendants on three separate occasions that it was reserving its right to enforce the settlement contract and that a "trial court has the inherent power to enforce summarily a settlement agreement as a matter of law when the terms of the agreement are clear and unambiguous." Id., 811. Further, the court held that "a trial court may summarily enforce a settlement agreement within the framework of the original lawsuit as a matter of law when the parties do not dispute the terms of the agreement." Id., 812.
In the present matter, the holding of Audubon does not apply and the defendants' reliance on the case is misplaced. Although the court in Audubon indicated that "settlement agreements" can be enforced if they are clear and unambiguous, nothing in Audubon speaks to the actual issue in this case, which is whether there is a valid arbitration agreement and whether the arbitration award should be confirmed. The facts of Audubon are clearly distinguishable from the facts of this case.
During the hearing on this matter, the plaintiffs' attorney stated that the defendants should be estopped from arguing that the arbitration agreement is not enforceable. The plaintiffs do not offer any case law or evidence to support this claim, nonetheless, in an effort to be thorough, the issue will be addressed. Case law indicates that "even if a party has not signed the written arbitration clause, it nevertheless may be deemed to have consented to the arbitration because conduct that constitute[s] an acceptance of the benefits of the contract to arbitrate . . . estops them from asserting a claim of lack of authority." (Internal quotation marks omitted.) Alexson v. Foss, 276 Conn. 599, 609, 887 A.2d 872 (2006).
In Alexson v. Foss, supra, 276 Conn. 609-10, the court determined that there was not a serious dispute that all parties agreed in writing to the arbitration, and further, the party disputing the writing participated fully in the arbitration proceedings, submitted evidence and witnesses, and never once questioned the arbitrator's authority until the appeal. Further, in Sawmill Brook Racing Assn., Inc. v. Boston Realty Advisors, Inc., 39 Conn.App. 444, 454-55, 664 A.2d 819 (1995), the court determined that even though some of the parties did not sign the arbitration agreement, those parties nevertheless assented to the arbitration proceedings when they filed a counterclaim in the arbitration proceedings and arbitrated the matter over a period of three years.
The facts of this case are distinguishable from both Alexson and Sawmill Brook. First of all, the defendant takes the position that there is no valid, written arbitration agreement. As previously found, the June 14, 2007 letter does not constitute a sufficient writing. Although it was clear that the defendant was aware that the plaintiffs had unilaterally chosen an arbitrator (although the defendant was given an opportunity to participate in choosing the arbitrator) and the defendant knew that the arbitrator would inspect the plaintiffs' house, the defendant did not agree to the arbitrator, did not assist the arbitrator in any way, and most importantly, did not agree to the terms of the letter dated June 14, 2007.
Accordingly, the court finds that the defendant is not estopped in this matter.
Conclusion
In conclusion, the court finds that inasmuch as the parties did not enter into a valid, written arbitration agreement, the motion to confirm should be and hereby is denied.
CT Page 8175
Further Order: Return of File
Inasmuch as the undersigned trial judge retained the court file in an effort to oversee the settlement of this case, and this case has not settled, the court file shall be returned herewith to the Judicial District of New Haven for further proceedings.