Opinion
Nos. CV-074034047, CV074034311
November 18, 2008
MEMORANDUM OF DECISION RE APPLICATIONS TO CONFIRM AND TO VACATE
This case raises the question of whether the decision of an arbitrator can be confirmed by the Superior Court when the arbitration agreement was made orally in court, but not in writing. The short answer is "No," because of the requirement of General Statutes § 52-408 that an agreement to submit to arbitration be in writing.
This arbitration dispute arises from litigation concerning a commercial lease between the plaintiff landlord, Mark Pinard, and the defendant tenants, Dandy Lions, LLC, Sally Tyszka and Mark Tyszka. The lease contains no arbitration agreement. On June 28, 2004, the plaintiff filed an application for a prejudgment remedy against the defendants in the Superior Court in the judicial district of Hartford. On June 24, 2005, the case was transferred to the Housing Session. The plaintiff filed an amended complaint on November 2, 2005, setting forth claims of, inter alia, breach of contract, replevin, conversion, negligence, recklessness, fraudulent conveyance and misrepresentation. Subsequently, the defendants filed an answer and counterclaim, and the parties engaged in discovery over several years.
For convenience sake, the court will refer to the plaintiff in the arbitration as the plaintiff herein and the defendants in the arbitration action as the defendants herein.
On October 19, 2007, a hearing was held in the housing court. During the morning, the court, Wiese, J. presiding, heard preliminary matters, including the withdrawal of the defendants' counterclaim and the plaintiff's motion to cite in a party defendant. The court urged the parties to consider the effect and expense of citing in a new defendant. The parties agreed to discuss ways to expedite the litigation and the court recessed. When the parties returned, the plaintiff stated:
"The parties have agreed to proceed this afternoon with a mediation before Your Honor that will be informal in nature. The parties will each take as briefly as they can, take the time to present their case to you in chambers.
"As plaintiff proceeds defense counsel will be present and visa versa, with the hopes that upon hearing the presentations and reviewing the documentation, Your Honor may issue a decision that would be binding upon the parties with the understanding that it would be final in nature. The parties would understand or agree that there are no further rights of appeal and so on.
"It is our hope to do this informally so as to save both the court and the parties time and expense and resolve their disputes before Your Honor." (Trial Tr., p. 13.)
Then the court briefly canvassed the parties and obtained their consent. No one drafted a written agreement. The arbitration occurred later that same day.
The court and the parties referred to both "mediation" and "arbitration" during the hearing. Initially, the plaintiff stated that the parties sought a "mediation . . . informal in nature." (Trial Tr., p. 13.) Later in the hearing, the parties described the informal proceeding as an "arbitration" and analogized the proposed proceeding to a personal injury arbitration. Id., 15-16.
On October 23, 2007, the defendants wrote to the arbitrator to ask whether they could submit "short statements of position or summaries." The arbitrator responded by agreeing to accept position statements from each party. The parties submitted position statements on October 30, 2007. On November 5, 2007, an arbitrator's ruling issued, finding that the plaintiff had prevailed on his burden and awarding the plaintiff damages of $13,000 for rent, $31,846.41 for repairs and replacement of building fixtures and $8,970 in attorneys fees. The arbitrator noted in a footnote that "[t]he agreement to arbitrate was placed on the record. The presentations of the parties were not on the record."
The plaintiff filed an application to confirm the arbitrator's award on November 16, 2007. On December 4, 2007, the defendants filed a separate application to vacate the award. The defendants filed an objection to the application to confirm on December 13, 2007.
A motion to consolidate the two actions was filed without objection, and the parties treated them as consolidated for purposes of briefing and argument. The court formally consolidated them before issuing this decision.
On December 24, 2007, the defendants wrote to the arbitrator asking for clarification. On January 8, 2008, the arbitrator issued an articulation. In light of the arbitrator's articulation, the plaintiff's filed an amended application to confirm the arbitration award on January 29, 2008.
The parties subsequently briefed the issues arising from the amended application to confirm and the application to vacate the arbitrator's decision. Oral argument followed.
The plaintiff argues that the trial transcript established a written arbitration agreement, and if not, then the totality of the circumstances, including all parties' voluntary participation in the arbitration and their correspondence with the arbitrator subsequent to the arbitration, demonstrates that a valid and enforceable arbitration agreement exists. In their reply, the defendants argue that, inter alia, the arbitration award must be vacated because no written agreement to arbitrate exists which defines the parties' rights.
"At common law, an oral agreement to arbitrate was valid." Bennett v. Meader, 208 Conn. 352, 359, 545 A.2d 553 (1988). "General Statutes § 52-408 provides, however, that any agreement to arbitrate in any written contract, or in a separate writing executed by the parties to a written contract . . . or an agreement in writing between two or more persons to arbitrate a controversy that exists between them at the time of the agreement, shall be valid, enforceable and irrevocable unless sufficient legal or equitable cause exists to avoid a written contract in general. Because we have decided that our statutory scheme controls arbitration in Connecticut where inconsistent with the common law, it is clear from this latchkey provision that only written agreements to arbitrate are valid. Oral agreements are not included, implicitly or explicitly, in the description of valid arbitration agreements." Id., 359. "[A]n agreement to arbitrate must meet the requirements of the arbitration statute, including the requirement that the agreement be in writing, or it is invalid." Id., 364.
General Statutes § 52-408 provides in relevant part: "Agreements to arbitrate. 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 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."
As an example of the importance of a written arbitration agreement, the Bennett court cited General Statutes § 52-421(a), which provides in relevant part: "Any party applying for an order confirming, modifying or correcting an award shall, at the time the order is filed with the clerk for the entry of judgment thereon, file the following papers with the clerk: (1) The agreement to arbitrate . . ." See Bennett v. Meader, supra, 208 Conn. 359-60.
In Bennett v. Meader, the Supreme Court provided two policy justifications for strictly enforcing the requirement that arbitration agreements must be in writing. First, "this requirement eliminates the problems of proving an oral agreement. It is likely that the parties' understanding of a purported oral agreement to arbitrate will differ." Id., 362. Second, "requiring a written agreement to arbitrate also 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.
For purposes of § 52-408, a valid arbitration agreement "[does] not necessarily require that the agreement contain the signature of both parties, but the agreement [has] to be a `written contract' or `separate writing.'" Id., 361. Judges of the Superior Court have held that a "separate writing" can include an agreement to arbitrate that is recorded in an exchange of correspondence between parties prior to submitting the issue to arbitration. In one case, the court held that an oral agreement to arbitrate that was "confirmed and memorialized by virtue of correspondence" between the parties' attorneys before submission to an arbitrator was a valid arbitration agreement. Bisconti v. McEachin, Superior Court, judicial district of Waterbury, Docket No. CV 98 0143911 (June 14, 2000, West, J.) (27 Conn. L. Rptr. 401); see also Balch v. Zukerman, Superior Court, judicial district of Litchfield, Docket No. 055398 (March 3, 1992, Dranginis, J.) (7 C.S.C.R. 360) (oral agreement to arbitrate and subsequent confirmation through correspondence created valid contract to submit to arbitration). "There is no necessity that the agreements between the parties be contained in one, and only one, fully integrated document." Paoletti v. Preferred Mutual Ins. Co., Superior Court, judicial district of Fairfield, Docket No. CV 95 0323820 (November 1, 1995, Rush, J.). But in a recent decision, the Superior Court held that the parties did not have a written agreement to arbitrate when the only evidence of agreement was an oral agreement at a mediation session and a single letter following the mediation that did not describe the arbitrable issues or the parties' rights. Paley v. PMC Design Builders, Inc., Superior Court, judicial district of Middlesex, Docket No. CV 04 0491201 (May 15, 2008, Jones, J.) (45 Conn. L. Rptr. 515).
In the present case, the parties do not dispute that they reached an oral agreement to arbitrate. The plaintiff argues that this agreement was "written" for purposes of § 52-408 because it was made on the record in court. Although in some circumstances, a memorialization on the record may be sufficient evidence of an enforceable agreement, in this case it is not. It does not satisfy § 52-408, which sets forth a statutory precondition that the agreement to arbitrate be written.
A transcript of the court proceedings was not prepared until after the arbitration decision was issued and the applications to confirm and vacate were filed.
Bennett v. Meader requires that arbitration awards be vacated if the parties have not created a written agreement before submitting the dispute to arbitration. Here, there was no such written agreement. Nor have the parties established a written agreement though proof of "separate writings." The parties submitted correspondence to the arbitrator only after the arbitration occurred and that was inadequate in describing the parties' rights.
For the above reasons, the plaintiff's application to confirm the arbitration award is denied and the application to vacate the award is granted.