Opinion
No. CV-04-0527411-S
October 13, 2004
MEMORANDUM OF DECISION
This is an application filed pursuant to General Statutes § 52-418 to vacate an arbitration award. The application was filed by Robert and Sandra Sultar from an award issued by National Association of Securities Dealers (NASD) dismissing an arbitration proceeding brought against respondents Merrill Lynch, Pierce, Fenner Smith, Inc. and a stockbroker, Howard Lippman. The defendants have moved to dismiss on the ground that the application to vacate was not timely made.
This arbitration was filed in the beginning of 2003. On July 29, 2003, the respondents moved to dismiss the arbitration, claiming that the Sultars had failed to comply with a discovery order. Eventually on December 23, 2003, the arbitration panel granted the respondents' motion for the reason that the Sultars' "repeated failure to take any action whatsoever to comply with the arbitration panel's discovery orders." The panel also indicated that it "will entertain a motion to vacate the dismissal upon proof that Claimant has complied with all discovery orders."
On February 20, 2004, the arbitrators issued an award in the matter, confirming the dismissal. The award noted that "[a]s of January 29, 2004, Claimants have taken no action to comply with the discovery order . . ." The cover letter to the award indicated that "[a]ll awards are final . . . Any party wishing to challenge the award must make a motion to vacate the award in a federal or state court of appropriate jurisdiction pursuant to the Federal Arbitration Act, 9 U.S.C. § 10, or applicable state statute . . . [A] party must bring a motion to vacate within the time period specified by the applicable statute."
On March 12, 2004, the Sultars moved to vacate the order of dismissal because they had on that date supplied numerous documents to the respondents; and there were "relatively few outstanding discovery requests" in any event due to prior submissions. The NASD arbitration administrator sent this motion to the respondents for their reply. She noted that "the time will not toll for Claimants to file a motion to vacate in federal or state court while waiting for the Panel to consider this request. Claimants' counsel should consult federal and state statutes and case law to determine the appropriate limitation for filing a motion to vacate in federal or state court in the event that the Panel denies the Motion to Vacate." A copy of this letter was sent to the attorney for the Sultars.
The arbitration panel denied the motion to vacate on April 15, 2004 On May 14, 2004, the Sultars applied to this court "pursuant to Connecticut General Statutes § 52-418 et seq. to vacate a certain arbitration order and award . . ." In the prayer for relief, the Sultars asked that the panel's order of dismissal and denial of the motion to vacate the order of dismissal be vacated. The respondents have, as indicated, moved to dismiss the application due to untimeliness.
Section 52-418 allows a party to an arbitration to apply to this court to issue an order vacating an award. Section 52-120(b) provides that "[n]o motion to vacate . . . an award may be made after thirty days from the notice of the award to the party to the arbitration who makes the motion." These statutes have been interpreted to indicate that the thirty-day period to move to vacate the award is one of subject matter jurisdiction. Wu v. Chang, 264 Conn. 307 (2003). The common-law rules of tolling do not apply. Id. at 313. Thus the fact that the Sultars moved to vacate the award before the arbitrators does not extend the time to vacate under § 52-418. See also J.R. Keenan Co. v. White House Apartments, 517 So.2d 1141 (La.App. 1987). Nor may the Sultars seek a review under § 52-418 from the arbitrators' denial of the Sultars' motion to vacate submitted to them. Town of Fairfield v. Connecticut Siting Council, 238 Conn. 361 (1966); Southern New England Telephone Co. v. Department of Public Utilities Control, 64 Conn.App. 134 (2001) (similar rule in the context of an appeal from an administrative agency).
The court concludes that since the award was rendered on February 20, 2004, and the application to vacate was filed on April 14, 2004, it was untimely under the general statutes. The plaintiffs make a further argument, however, that the application to vacate in paragraph 8 alleges a violation of "law." It was stated at oral argument that this "law" includes a violation of the Federal Arbitration Act (FAA). FAA, § 12, has a three-month deadline to bring a motion to vacate an arbitration award. Therefore the Sultars claim that the application was timely.
The Sultars' additional brief at 2 does not disagree with this analysis.
The Sultars have also filed a request for leave to amend to indicate that their application to vacate was made pursuant to both the state law and the FAA.
Even assuming that the FAA is a basis for the application, the court concludes that the Sultars have filed an untimely application. The question is not whether the FAA may be applied in state court; it clearly does apply. Hartford Steam Boiler Inspection Insurance Co. v. Underwriters At Lloyd's Companies Collective, 271 Conn. 474 (2004); Hottle v. BDO Seidman, LLP, 68 Conn. 694, 702 (2004) (FAA creates body of substantive federal law to be consulted). Rather the issue is whether the time limitation of thirty days as set forth in § 52-420 applies to a motion to vacate brought under § 52-418 or whether the Sultars are entitled to the three-month time period of the FAA to bring the motion to vacate.
The court in Atlantic Painting Contracting, Inc. v. Nashville Bridge Co., 670 S.W.2d 841, 846 (Ky. 1984) resolved this issue as follows:
But there is nothing in the [FAA] preempting state jurisdiction of the contract action filed by Atlantic/Buckeye and nothing in the [FAA] remotely suggesting that the `motion to vacate' procedure, including the three months time limitation set up for federal proceedings, has any application at all to such state action. The [FAA] covers both substantive law and a procedure for federal courts to follow where a party to arbitration seeks to enforce or vacate an arbitration award in federal court. The procedural aspects are confined to federal cases.
Under the Atlantic Painting rationale, the court concludes that the Connecticut deadline applies and not the longer period set forth in the FAA. Requiring the movant to file within thirty days does not conflict with the primary purpose of the FAA, which is to encourage arbitration to the fullest scope of the parties' agreement to arbitrate. See New England Utilities v. Hydro-Quebec, 10 F.Sup.2d 53, 59 (1998) relying on Ekstrom v. Value Health, Inc., 68 P.3d 1391, 1395-96 (D.C. Cir. 1995) for the proposition that "Connecticut's 30-day provision `surely does not conflict with the FAA's `primary purpose.'" See also Manson v. Dain Bosworth, Inc., 623 N.W.2d 610, 615 (Minn.App. 1998) (three-month time limit of FAA has no application to a state court motion to vacate).
The Sultars argue further that there is a choice of law provision in the investment contract that is relevant. The agreement provides in paragraph 13 that there is an agreement to arbitrate controversies and paragraph 17 provides that the investment contract and its enforcement are governed by New York law. Exhibit A, § 9, Sultars' additional memorandum. The Sultars represent at page 6 of their additional memorandum that, under New York law, there is a ninety-day period to move to vacate an award of arbitrators.
The court cannot agree that the provisions in the investment contract demonstrate that there was an agreement to apply the New York law on time to file a motion to vacate an arbitration award. The arbitration clause, § 13, covers controversies involving "any transaction . . . performance or breach." The clause also indicates that judgment on the award may be entered in any federal or state court having jurisdiction. The remaining clause, § 17, merely provides that the law of the state of New York applies to the enforcement of the agreement. These provisions do not allow for an interpretation that the parties intended New York law to apply to the process of vacating the award. Cf. Levine v. Advest, Inc., 244 Conn. 732 (1998) (interpreting arbitration contract).
In addition, taking the approach of New England Utilities, supra at 60, analyzing choice of law, New York law is not applicable here. The Sultars themselves took this position before the arbitrators: "New York law does not apply. This case involves a Connecticut couple (the Sultars), a broker and a branch office located in New Jersey, and an arbitration hearing to be held in Massachusetts." Exhibit 7, opposition to motion to dismiss.
Since the application was untimely under § 52-420, the court is without jurisdiction and the motion to dismiss is granted.
So ordered.
COHN, J.