Opinion
No. CV 02 0461384
June 8, 2004
MEMORANDUM OF DECISION
Before the court is the defendant Chase Manhattan Automotive Finance Corporation's Motion To Dismiss and/or For Stay.
On February 27, 2002, the plaintiff, Rose Bohen, filed a four-count complaint against the defendant, Chase Manhattan Automotive Finance Corporation. The plaintiff alleges the following facts in count one. In August 2000, the plaintiff entered into a consumer credit transaction to purchase a motor vehicle. The plaintiff financed part of the purchase price and the defendant was the assignee of the retail installment contract (the contract). On December 21, 2001, the defendant repossessed the plaintiff's motor vehicle. The plaintiff alleges that she did not timely receive written notice of the unaccelerated sum under the contract and the actual and reasonable expense of retaking and storage pursuant to General Statutes § 36a-785(c).
In count two the plaintiff alleges that the defendant's actions violated General Statutes §§ 42a-9-504 and 42a-9-506. In count three the plaintiff alleges that the defendant committed conversion of the plaintiff's personal property. The fourth count alleges a claim under the Connecticut Unfair Trade Practices Act, General Statutes § 42-110a et seq.
On May 2, 2002, the defendant moved to dismiss the complaint pursuant to the Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq. and General Statutes § 52-408 et seq. or, alternatively, to stay this action and to compel arbitration. The defendant submitted a memorandum of law in support of its motion, attached to which are three documents, entitled "Retail Installment Contract," "Estimate of Record" and "Affidavit of Repossession." In opposition, the plaintiff has submitted a memorandum of law, attached to which is a document entitled "Brief on Arbitration Service Provider Bias."
The defendant argues, in its motion and memorandum of law, that the arbitration clause in the contract requires the plaintiff to submit her claims to arbitration as opposed to a court action. Therefore, the defendant's motion to dismiss challenges the court's subject matter jurisdiction.
"A motion to dismiss shall be used to assert lack of jurisdiction over the subject matter, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court." (Internal quotation marks omitted.) Kizis v. Morse Diesel International, Inc., 260 Conn. 46, 51, 794 A.2d 498 (2002). "In ruling upon whether a complaint survives a motion to dismiss, a court must take the facts to be those alleged in the complaint, including those facts necessarily implied from the allegations, construing them in a manner most favorable to the pleader . . . A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction." (Internal quotation marks omitted.) Dyous v. Psychiatric Security Review Board, 264 Conn. 766, 773, 826 A.2d 138 (2003).
The defendant argues that the complaint must be dismissed because "arbitration of [the] plaintiff's claims is mandated by [the] plaintiff's agreement to arbitrate under the terms of the Contract." In Connecticut, "arbitration is the favored means of settling differences . . ." (Internal quotation marks omitted.) State v. AFSCME, Council 4, Local 387, AFL-CIO, 252 Conn. 467, 473, 747 A.2d 480 (2000). "It is designed to avoid litigation and secure prompt settlement of disputes and is favored by the law." (Internal quotation marks omitted.) Green v. Connecticut Disposal Service, Inc., 62 Conn. App. 83, 86, 771 A.2d 137, cert. denied, 256 Conn. 912, 772 A.2d 1124 (2001). "[A] person can be compelled to arbitrate a dispute only if, to the extent that and in the manner in which, he has agreed so to do." (Internal quotation marks omitted.) White v. Kampner, 229 Conn. 465, 471, 641 A.2d 1381 (1994). "[A]rbitration and its scope remain dependent on the contract. The courts are empowered to direct compliance with the provisions of arbitration agreements, but no one may be compelled to arbitrate a dispute outside the scope of the agreement . . ." Gary Excavating, Inc. v. North Haven, 164 Conn. 119, 122, 318 A.2d 84 (1972).
The defendant moves to dismiss this action. The court, however, needs only to dismiss the action if arbitration is a condition precedent to filing the action in court. "Where a contract contains a stipulation that the decision of arbitrators on certain questions shall be a condition precedent to the right of action on the contract itself; such a stipulation will be enforced and, until arbitration has been pursued or some sufficient reason given for not pursuing it, no action can be brought on the contract . . . Whether an agreement makes arbitration a condition precedent to an action in court depends on the language of the arbitration clause . . . For arbitration to be a condition precedent, the agreement to arbitrate must expressly so stipulate; or it must necessarily be implied from the language used." (Citation omitted.) Multi-Service Contractors, Inc. v. Vernon, 181 Conn. 445, 447, 435 A.2d 983 (1980); see also Travelers Property Casualty Co. v. Cormier Construction, Superior Court, judicial district of New Haven at Meriden, Docket No. CV 01 0278215 (February 4, 2004, Wiese, J.) ( 36 Conn. L. Rptr. 521).
"The mere agreement to arbitrate, standing alone, does not give rise to the necessary implication that arbitration is a condition precedent to an action in court." Multi-Service Contractors, Inc. v. Vernon, supra, 181 Conn. 448. "[I]n the absence of express language [for] a provision for arbitration [to] be construed, by implication, to be a condition precedent to suit that implication must be so plain that a contrary intention cannot be supposed. It must be a necessary implication." Id. See also Koeck v. Harris, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. CV 00 0377121 (October 27, 2000, Skolnick, J.). The court must, therefore, look to the contract between the parties, submitted as an exhibit to the defendant's motion to dismiss, to determine whether any agreement to arbitrate is an express or implied condition precedent to bringing this action.
Directly over the plaintiff's signature, the contract contains an acknowledgment stating that the plaintiff is aware of, and has read, the agreement to arbitrate disputes. The agreement does not, however, contain any express language making resort to arbitration a condition precedent to bringing suit. Compare Zymol Enterprises, Inc. v. Sheppard, Mullin, Richter Hamption, LLC, Superior Court, judicial district of Middlesex at Middletown, Docket No. CV 03 102646 (December 24, 2003, Silbert, J.) ( 36 Conn. L. Rptr. 282, 283). Therefore, only if the language is so clear from which the court must imply a condition precedent would the court dismiss this action.
The agreement expressly provides that either party " may choose to have the Dispute resolved by binding arbitration . . ." (Emphasis added.) The use of the word "may" in a contract raises the inference that arbitration is not mandatory, and, therefore, the court would have subject matter jurisdiction to consider the factual issues raised. DiCesare-Bentley v. City of New London, Superior Court, judicial district of New London, Docket No. 513992 (August 3, 1990, Burns, J.) ( 2 Conn. L. Rptr. 209). The agreement continues, " [i]f either party chooses to have a Dispute resolved by binding arbitration . . ." (Emphasis added.) Finally, the contract provides that "[t]he election to arbitration may be made even if an action has been filed in court . . ." (Emphasis added.)
Therefore, it is clear that the language in the agreement to arbitrate enables either party to submit claims raised in the complaint to arbitration at any time prior to obtaining a judgment in court. It is neither express nor is it necessarily implied, however, that resort to arbitration was made a condition precedent to maintaining an action in court. Accordingly, the court has authority to adjudicate this action and the defendant's motion to dismiss challenging the court's subject matter jurisdiction is denied.
II
In the alternative, the defendant moves that the court stay this action and compel arbitration pursuant to 9 U.S.C. § 1 et seq. and General Statutes § 52-408 et seq. "A stay of a court action is appropriate in cases in which the parties have agreed to arbitrate disputes but have not agreed that arbitration shall be a condition precedent to instituting a lawsuit." Zymol Enterprises, Inc. v. Sheppard, Mullin, Richter Hamption, LLC, supra, 36 Conn. L. Rptr. 284.
Both Connecticut and federal law make agreements to arbitrate fully enforceable. See General Statutes § 52-408; 9 U.S.C. § 2. "State law [however] generally governs the determination of whether the parties agreed to arbitrate a certain matter . . ." (Citation omitted; internal quotation marks omitted.) DeOliveira v. Liberty Mutual Ins. Co., Superior Court, judicial district of Fairfield at Bridgeport, Docket No. 329390 (May 1, 2003, Levine, J.) ( 34 Conn. L. Rptr. 673, 674). The parties have provided in paragraph twenty-six of the retail installment contract that the contract is governed by the law of the state of Connecticut.
Section 3 of the FAA states, in part: "If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement . . ." Similarly, General Statues § 52-409 provides that, "[i]f 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 agreements, provided the person making application for the stay shall be ready and willing to proceed with the arbitration." "To establish its right to a stay of proceeding under this statute, a movant must establish the following facts: (1) that both it and the plaintiff in the action sought to be stayed are parties to a written arbitration agreement; (2) that at least one issue involved in the action sought to be stayed is referable to arbitration under the agreement; and (3) that the movant is ready and willing to proceed with the arbitration." American Materials Corp. v. Eagle Crusher, Co., Superior Court, judicial district of Hartford, Docket No. CV 03 0827738 (December 16, 2003, Sheldon, J.).
Under both statutes, the court must grant the defendant's motion for stay if it finds that at least one issue is referable to arbitration. Although the parties' written arbitration agreement broadly defines "disputes" which can be referred to arbitration, the court need not decide whether the plaintiff's claims are disputes that must be referred to arbitration. The agreement explicitly provides that "whether a matter is subject to arbitration under this Contract" is also a matter to be decided by an arbitrator. "Whether a particular dispute is arbitrable is a question for the court, unless, by appropriate language, the parties have agreed to arbitrate that question, also . . . The intention to have arbitrability determined by an arbitrator can be manifested by an express provision or through the use of broad terms to describe the scope of arbitration, such as all questions in dispute and all claims arising out of the contract or any dispute that cannot be adjudicated." (Citation omitted; internal quotation marks omitted.) Welch Group, Inc. v. Creative Drywall, Inc., 215 Conn. 464, 467, 576 A.2d 153 (1990); see also Levine v. Advest, Inc., 244 Conn. 732, 749-50, 714 A.2d 649 (1998) (discussing the determination of arbitrability of a dispute under the FAA). In that the written agreement to arbitrate expressly provides that the issue of arbitrability is to be determined by an arbitrator, the requirements of both 9 U.S.C. § 3 and General Statutes § 52-409 have been satisfied and this action should be stayed pending arbitration.
The agreement defines a dispute as "any controversy or claim . . . arising from or relating to this Contract. The term Dispute includes, but is not limited to, the negotiation or breach of this Contract, or any aspect of the sale of the vehicle involving any Buyer . . . The term Dispute also includes all tort, common law, constitutional, statutory and equitable claims arising from the transaction to which this Contract relates or arising from our enforcement of this Contract and any question regarding whether a matter is subject to arbitration under this Contract to Arbitrate Disputes."
The defendant movant is ready and willing to proceed with arbitration based on the current motion.
Accordingly, the defendant's motion to stay, therefore, is granted until the matter is arbitrated in compliance with the arbitration clause. It is further ordered, that the defendant submit the matter to arbitration no later than thirty days after this order and also to advance the first $125 of hearing fees incurred by the plaintiff, as required under the agreement to arbitrate.
Because of the court's order staying this action and referring the matter to arbitration, the court need not decide the defendant's motion for protective order.
Skolnick, J.