Opinion
No. CV 04 0085503 S
January 6, 2005
MEMORANDUM OF DECISION
STATEMENT OF THE CASE
This is an action instituted by the plaintiff, Michael J. Lasalla, to confirm an arbitration award issued in his favor and against the defendant, Doctor's Associates, Inc. The defendant has filed a cross application to vacate the award.
The defendant is a franchiser of Subway sandwich shops. In 1986, the plaintiff and the defendant entered into a Development Agent Agreement ("DA Agreement") in which the plaintiff agreed to develop and support Subway franchises in a specific geographic area of Florida. As compensation, the defendant pays the plaintiff one-third of the royalties and fees that it receives from the Subway stores located in the plaintiff's territory, subject to a reduction based on a modifier. The interpretation of this modifier is the point of contention in the present controversy. Because there were Subway stores established by the defendant before the execution of the agreement, the modifier was designed to reduce the payments to the plaintiff to reflect these earlier efforts of the defendant. The plaintiff's position is that the modifier should benefit upon the closing or relocation of any stores existing when the contract began. The defendant's position is that the modifier calculation does not change because of the closing or relocation of a previously established store.
The modifier provides the following in relevant part: "[F]or Subway units established in the Territory prior to the execution of the Agreement, payment to the Development Agent will be reduced to reflect the efforts of the Company in establishing those units. All units operating at the time the contract is executed shall be counted as four. Royalties from the Territory shall be calculated by multiplying the collected royalties from the Territory by a fraction, the numerator of which shall be the net number of units added in the Territory by the Development Agent after date of this Agreement plus 4 and the denominator shall be the total number of units in the Territory."
Pursuant to the arbitration provision of the agreement, the plaintiff instituted an earlier arbitration with the American Arbitration Association (the "AAA"). The major emphasis of that arbitration involved provisions of the agreement not at issue here, but in this first proceeding, the plaintiff did seek a declaratory determination that his interpretation of the modifier was correct. The AAA arbitration panel issued a decision agreeing with the plaintiff's interpretation. The plaintiff, however, sought no monetary relief in the AAA arbitration regarding the modifier. The plaintiff filed applications to confirm the AAA award in part and to vacate the award in part. The defendant filed an application to confirm the award. In a decision issued by Judge Alander, the AAA arbitration award was confirmed. See Lasalla v. Doctor's Associates, Superior Court, judicial district of Ansonia/Milford at Milford, Docket No. CV 00 0071161 (June 7, 2002, Alander, J.).
More specifically, in the first arbitration proceeding, the plaintiff in an amended prayer for relief asked the American Arbitration Association arbitrators to make the following declarations:
"11. A declaration that the denominator of the Modifier, section 2(d) of the [agreement], shall be reduced for each store that was in place when the [agreement] as signed, and then permanently closed after the execution of the [agreement] so that the Modifier calculation will be as shown in the example in Cl. Ex. 123.
12. A declaration regarding the application of the Modifier in situations where a store in place when the agreement was signed closes permanently subsequent to the execution of the agreement."
The AAA panel's decision said the following regarding the plaintiff's prayer for a declaratory ruling on the interpretation of the modifier:
"The denominator of the modifier under section 2(d) of the [Development Agent Agreement shall be reduced for each store that was in place when the [Development Agent Agreement was signed and thereafter permanently closed, so that the modifier will be determined in the manner suggested by [the plaintiff], reflected on the [plaintiff's] Exhibit 123 . . . that produces a modifier of 0.8642857, rather than in the manner suggested by [the defendant] that produces a modifier of 0.8214286."
After the confirmation of the AAA decision, disputes arose between the parties about its effect and application in regard to the modifier. For example, the parties disagreed about the commencement date for the calculation of any fees owed to the plaintiff pursuant to the award. The defendant's position was that the AAA interpretation of the modifier applied prospectively only, whereas the plaintiff's position was that the decision applied retroactively from the commencement of the parties' agreement.
In November 2002, the arbitration proceedings at issue here were instituted by plaintiff with the American Dispute Resolution Center ("ADRC"). In this arbitration application, the plaintiff sought to "enforce" the AAA decision and to acquire "an award of money damages, legal fees, interest and cost of this arbitration." In a motion to dismiss and in its post-hearing brief, the defendant argued that the proceedings before the ADRC were barred by res judicata, collateral estoppel and judicial estoppel. The ADRC panel rejected these arguments. The ADRC panel issued two interim decisions and a final award in favor of the plaintiff. The ADRC panel determined, among other conclusions, that whether a franchise unit was "permanently" closed was to be decided by the parties on a case-by-case basis, based on a consideration of a number of factors; that the AAA award was retroactive from the date of the parties' agreement, but damages were recoverable only from June 15, 1992; and that the plaintiff was entitled to damages of $1,096,011 and interest of $608,434. The parties were directed to bear their own attorney fees and to split the arbitration costs.
The relief sought by the plaintiff's arbitration application filed with the American Dispute Resolution Center stated the following:
"[The defendant] has taken the position that the [AAA] award applies only from the date of the award forward. [The plaintiff's] position is that the award interprets the [Development Agent Agreement] and [the defendant] must pay [the plaintiff] all the money that was wrongfully withheld under the now discredited interpretation of the Modifier and an appropriate award of money damages. [The plaintiff] also seeks a declaration that the determination of the net number of units added to the Territory is governed by the contractual definition of the term "unit" so that in the future, the parties will be able to conduct business without further disputes on the application of this clause. For this purpose, a "unit" should be taken out of the Modifier calculation when it closes at one location and ceases operations at that location, as described in the relevant Franchise Agreement."
In denying the defendant's motion to dismiss the arbitration, the ADRC panel stated the following: "The arbitration clause of the Development Agent Agreement between the parties in paragraph 7C is sufficiently broad and inclusive to include, ". . . any controversy or claim arising out of or relating to this Agreement of the breach thereof . . ." There exist open questions and disputes as to the application of the prior award. There is an additional dispute as to the application of the definition of the term "operating unit." Since ". . . [the plaintiff] now seeks an award of money damages, legal fees, interest and cost of this arbitration," the panel will entertain evidence thereon and any other relevant issues.
As previously stated, the plaintiff seeks to confirm the ADRC award. The defendant seeks to vacate the award. As asserted in its cross application and articulated in its supporting memoranda, the defendant essentially makes three arguments in support of its position. The' defendant argues that the award should be vacated because it violates public policies that favor arbitration and support res judicata. Second, the defendant argues that this court lacks "authority" to confirm the award because the result would create inconsistent judicial decisions on the same dispute. Lastly, the defendant asserts that the ADRC decision is premised on a manifestly erroneous and irrational application of the law concerning res judicata and prejudgment interest.
For the following reasons, the plaintiff's application to confirm the arbitration award is granted and the defendant's application to vacate the award is denied.
DISCUSSION I The Plaintiff's Application to Confirm the Arbitration Award
There is no dispute that the arbitration provision of the DA Agreement does not contain any language restricting the scope of the matters subject to arbitration between the parties, nor does it place any explicit conditions or restrictions on the arbitrators' discretion. Moreover, the plaintiff's demand for arbitration and prayer for relief do not place any restrictions or conditions on the scope of the arbitrators' authority. [See footnote 4.] Consequently, the scope of the arbitrators' discretion to address the issues submitted to them was unrestricted. See Perkins Mario, P.C. v. Annunziata, 45 Conn.App. 237, 239-40, 694 A.2d 1388 (1997) ("In determining whether a submission is unrestricted, we look at the authority of the arbitrator. The authority of the arbitrator to adjudicate the controversy is limited only if the agreement contains express language restricting the breadth of issues, reserving explicit rights, or conditioning the award on court review. In the absence of such qualifications, an agreement is unrestricted.").
Paragraph 7C of the Development Agent Agreement provides the following in relevant part: "any controversy or claim arising out of or relating to this Agreement or the breach thereof shall be settled by arbitration in accordance with the Commercial Rules of the American Arbitration Association, and judgment upon an award rendered by the Arbitrator(s) may be entered in any court having jurisdiction thereof."
"When the scope of the submission is unrestricted, the resulting award is not subject to de novo review even for errors of law so long as the award conforms to the submission . . ." (Internal quotation marks omitted.) Saturn Construction Co. v. Premier Roofing Co., 238 Conn. 293, 304, 680 A.2d 1274 (1996); accord, Stratford v. International Assn. of Firefighters, AFL-CIO, Local 998, 248 Conn. 108, 115, 728 A.2d 1063 (1999) ("One of the principal reasons for this deference is that the scope of our review is expressly limited by § 52-418 . . . and, sometimes, by the terms of the parties' agreement").
"Such a limited scope of judicial review is warranted given the fact that the parties voluntarily bargained for the decision of the arbitrator and, as such, the parties are presumed to have assumed the risks of and waived objections to that decision . . . It is clear that a party cannot object to an award which accomplishes precisely what the arbitrators were authorized to do merely because that party dislikes the results . . . Thus, [the Supreme Court has] . . . held that the parties should be bound by a decision that they contracted and bargained for, even if it is regarded as unwise or wrong on the merits." (Internal quotation marks omitted.) Saturn Construction Co. v. Premier Roofing Co., supra, 238 Conn. 304.
"Where the submission does not otherwise state, the arbitrators are empowered to decide factual and legal questions and an award cannot be vacated on the grounds that the construction placed upon the facts or the interpretation of the agreement by the arbitrators was erroneous. Courts will not review the evidence nor, where the submission is unrestricted, will they review the arbitrators' decision of the legal questions involved." (Internal quotation marks omitted.) Caldor, Inc. v. Thornton, 191 Conn. 336, 340-41, 464 A.2d 785 (1983), aff'd, 472 U.S. 703, 105 S.Ct. 2914, 86 L.Ed.2d 557 (1985).
These well-established rules governing the court's review of unrestricted arbitration decisions are subject to the qualifications that a court may vacate an arbitration decision if the award addresses the constitutionality of a statute, violates clear public policy or contravenes one of the explicit proscriptions of General Statutes § 52-418. Stratford v. International Assn. of Firefighters, AFL-CIO, Local 998, supra, 248 Conn. 116.
General Statutes § 52-418(a) provides, in relevant part, that a court shall make an order vacating an arbitration award if it finds any of the following defects: "(1) If the award has been procured by corruption, fraud or undue means; (2) if there has been evident partiality or corruption on the part of any arbitrator; (3) if the arbitrators have been guilty of misconduct in refusing to postpone the hearing upon sufficient cause shown or in refusing to hear evidence pertinent and material to the controversy or of any other action by which the rights of any party have been prejudiced; or (4) if the arbitrators have exceeded their powers or so imperfectly executed them that a mutual, final and definite award upon the subject matter submitted was not made."
In the present case, the court agrees with the ADRC panel that unresolved issues existed regarding the interpretation and application of the modifier that were not resolved or addressed by the AAA decision. For example, the parties disputed how businesses that "relocated" from the plaintiff's territory should be treated under the modifier. The parties also disagreed about the calculation of the amount of the fees owed to the plaintiff as a result of the AAA decision. These disagreements needed to be resolved in some way, and the parties' agreement identifies arbitration as the dispute resolution mechanism.
Stated differently, to the extent disputes existed between the parties concerning the DA Agreement, even if they were based on the AAA decision, the agreement provides that these disputes are to be resolved through arbitration. The defendant cannot now "object to an award which accomplishes precisely what the arbitrators were authorized to do merely because [it] dislikes the results." Saturn Construction Co. v. Premier Roofing Co., supra, 238 Conn. 304. Indeed, the defendant cannot avoid the ADRC decision even if the arbitrators committed an error of law. Id. "[I]t is the arbitrator's judgment that was bargained for and contracted for by the parties, and [as judges] we do not substitute our own judgment merely because our interpretation of the agreement or contract at issue might differ from that of the arbitrator." Stratford v. International Assn. of Firefighters, AFL-CIO, Local 998, supra, 248 Conn. 116. The arbitrators' decision must be confirmed because the parties agreed to arbitration, the submission was unrestricted, and the award was within the submission.
II The Defendant's Application to Vacate the Arbitration Award A
As previously stated, the defendant argues that the arbitration award should be vacated because it violates Connecticut public policy. An arbitration award is properly vacated on public policy grounds "when the award is clearly illegal or clearly violative of a strong public policy." Garrity v. McCaskey, 223 Conn. 1, 7, 612 A.2d 742 (1992). "[T]he public policy exception to arbitral authority should be narrowly construed and a court's refusal to enforce an arbitrator's [award] . . . is limited to situations where the [award] . . . would violate some explicit public policy that is well defined and dominant, and is to be ascertained by reference to the laws and legal precedents and not from general considerations of the supposed public interest." (Brackets omitted; internal quotation marks omitted.) Watertown Police Union Local 541 v. Watertown, 210 Conn. 333, 340, 555 A.2d 406 (1989); see New Haven v. AFSCME Council 15, Local 530, 208 Conn. 411, 416-17, 544 A.2d 186 (1988).
The crux of the defendant's public policy arguments is that in initiating the two arbitration proceedings, the plaintiff impermissibly split his causes of action between the AAA and the ADRC arbitrations. More specifically, the defendant contends that the issues addressed in the ADRC arbitration, particularly plaintiff's claim for damages, could have and should have been resolved in the AAA arbitration. According to the defendant, the ADRC panel's refusal to dismiss the arbitration on grounds of res judicata violates established public policy emphasizing the finality of judgments.
"The doctrine of res judicata holds that an existing final judgment rendered upon the merits without fraud or collusion, by a court of competent jurisdiction, is conclusive of causes of action and of facts or issues thereby litigated as to the parties and their privies in all other actions in the same or any other judicial tribunal of concurrent jurisdiction . . . If the same cause of action is again sued on, the judgment is a bar with respect to any claims relating to the cause of action which were actually made or which might have been made." (Citations omitted; internal quotation marks omitted.) Wade's Dairy, Inc. v. Fairfield, 181 Conn. 556, 559-60, 436 A.2d 24 (1980).
The procedure used by the plaintiff to acquire "declaratory" relief from the AAA panel and then to seek "damages" from the ADRC panel does appear to involve a splitting of his cause of action that would violate the principal of res judicata if done in judicial, as compared to arbitral proceedings. See Duhaime v. American Reserve Life Ins. Co., 200 Conn. 360, 511 A.2d 333 (1986) (res judicata precludes a party from first suing for breach of contract and then suing for violation of the Connecticut Unfair Trade Practices Act); Orselet v. DeMatteo, 206 Conn. 542, 539 A.2d 95 (1988) (a party cannot split its cause of action by first suing for rental expenses incurred as a result of the unavailability of a damaged vehicle and then suing to recover for the damages sustained by the vehicle.)
Additionally, the defendant is correct that the judicial doctrine of res judicata is premised on established policy considerations often expressed by the courts. Our Supreme Court has described these policy concerns as follows:
We have stated that res judicata should be applied as necessary to promote its underlying purposes. These purposes are generally identified as being (1) to promote judicial economy by minimizing repetitive litigation; (2) to prevent inconsistent judgments which undermine the integrity of the judicial system; and (3) to provide repose by preventing a person from being harassed by vexatious litigation . . . The judicial [doctrine] of res judicata . . . is based on the public policy that a party should not be able to relitigate a matter which it already has had an opportunity to litigate . . . Stability in judgments grants to parties and others the certainty in the management of their affairs which results when a controversy is finally laid to rest . . . We review the doctrine of res judicata to emphasize that its purposes must inform the decision to foreclose future litigation. The conservation of judicial resources is of paramount importance as our trial dockets are deluged with new cases daily. We further emphasize that where a party has fully and fairly litigated his claims, he may be barred from future actions on matters not raised in the prior proceeding.
(Citations omitted; internal quotation marks omitted.) Fink v. Golenbock, 238 Conn. 183, 192-93, 680 A.2d 1243 (1996).
However, judicial rules promoting the finality of adjudicative decisions, as advanced by the doctrine of res judicata, are not fixed or inflexible. See Delahunty v. Massachusetts Mutual Life Insurance Co., 236 Conn. 582, 592, 674 A.2d 1290 (1996) ("The doctrines of preclusion, however, should be flexible and must give way when their mechanical application would frustrate other social policies based on values equally or more important than the convenience afforded by finality in legal controversies").
In applying these rules to the facts of this case, this court concludes that the Supreme Court's reasoning in Stratford v. International Assn. of Firefighters, AFL-CIO, Local 998, supra, 248 Conn. 108, is controlling. The flexible nature of res judicata and the consensual nature of voluntary arbitration mitigate against the defendant's position that policy considerations warrant the application of res judicata to bind arbitrators to prior arbitration decisions.
In Stratford v. International Assn. of Firefighters, AFL-CIO, Local 998, supra, 248 Conn. 108, the Supreme Court was asked to apply collateral estoppel to vacate an arbitration decision that interpreted a provision of the parties' collective bargaining agreement different from an interpretation made by another arbitration panel. After extensive examination of this issue, the Court held that "in the absence of a specific contract provision to the contrary, an arbitrator is not bound to follow prior arbitration decisions, even in cases in which the grievances at issue involve the same parties and interpretation of the same contract provisions." Id., 125. The Court concluded that the policy considerations that promote the use of arbitration outweigh the strict application of preclusion doctrines to arbitration awards. The Court reached this conclusion by emphasizing the consensual nature of the arbitration contract itself: "In negotiating the agreement, the parties are free to bargain for whatever terms they choose, including a provision establishing a system or arbitral precedent. If, however, the parties elect not to include such a provision, or if one party's attempts to negotiate for the inclusion of such a provision are unsuccessful, arbitrators are free to attach to prior awards whatever precedential value they deem appropriate." Id., 121.
The defendant's attempt to distinguish Stratford v. International Assn. of Firefighters, AFL-CIO, Local 998, on the ground that that case involves collateral estoppel and this case involves res judicata must fail. Under the rationale of Stratford v. International Assn. of Firefighters, AFL-CIO, Local 998, there is no sound or principled reason why res judicata should apply to arbitral decisions and collateral estoppel should not. Collateral estoppel has been characterized as a cousin of res judicata; Daw v. Zoning Board of Appeals of Westport, 63 Conn.App. 176, 181, 772 A.2d 755, cert. denied, 256 Conn. 931, 776 A.2d 1145 (2001); and "[b]oth legal doctrines promote judicial economy by preventing relitgation of issues or claims previously resolved." Delahunty v. Massachusetts Mutual Life Insurance Co., supra, 236 Conn. 589. Indeed, the Court in Stratford v. International Assn. of Firefighters, AFL-CIO, Local 998 approvingly endorsed the general rule that "[p]rinciples of stare decisis and res judicata do not have the same doctrinal force in arbitration proceedings as they do in judicial proceedings . . ." Stratford v. International Assn. of Firefighters, AFL-CIO, Local 998, supra, 248 Conn. 119 (Citations omitted; emphasis added.). In short, as held by the Court in Stratford v. International Assn. of Firefighters, AFL-CIO, Local 998, the parties were free to include in the DA Agreement a provision articulating a rule for arbitral precedent. The parties' failure to do so does not allow the defendant to now utilize a judicial rule of claim preclusion to acquire what was not bargained for.
Consequently, the defendant's reliance on Fink v. Golenbock, 238 Conn. 183, 680 A.2d 243 (1996), is misplaced. In Fink, a plaintiff instituted arbitration proceedings alleging that a defendant breached her employment contract and a covenant not to compete. After the arbitrators found in favor of the defendant, the plaintiff proceeded to prosecute a civil action based on tort claims, and a claim alleging violation of the Connecticut Unfair Trade Practices Act (General Statutes § 42-110, et seq.). The Supreme Court held that under the doctrine of res judicata, the arbitration proceedings operated to bar litigation of the claims asserted in the civil action.
Thus, the holding in Fink is that under the doctrine of res judicata, the courts will apply an arbitration decision to preclude re-litigation of a claim in court. The present case involves a request for the court to use an arbitration decision to preclude re-litigation of a claim in a subsequent arbitration. This latter issue is most directly addressed by the Supreme Court in Stratford v. International Assn. of Firefighters, AFL-CIO, Local 998, supra, 248 Conn. 108, and in that case, the Court found that judicial preclusion doctrines are inapplicable.
In support of its position, the defendant also relies on Corey v. Avco-Lycoming Division, 163 Conn. 309, 318, 307 A.2d 155 (1972), cert denied, 409 U.S. 1116, 34, 93 S.Ct. 903, L.Ed.2d 699 (1973) which holds that an arbitration decision should have collateral estoppel effect in proceedings before a hearing tribunal of the commission on human rights and opportunities ("commission"). In Stratford v. International Assn. of Firefighters, AFL-CIO, Local 998, supra, 248 Conn. 108, the Supreme Court squarely addressed the defendant's argument by explaining that the holding of Corey applies to the preclusive effect of prior arbitration proceedings to commission hearings, which are controlled by statute and regulation, and not to consensual, arbitration proceedings, in which the parties can decide for themselves whether collateral estoppel should apply. Id., 122, n. 7.
The defendant further argues that the inapplicability of the doctrine of res judicata in arbitration decisions would frustrate the public policy promoting the use of arbitration by civil litigants. According to the defendant, this is so because the consequence would be to render the first arbitration worthless and would allow a party, such as the plaintiff here, to "repackage the same claims" before another panel in hopes of escalating his recovery. Additionally, the defendant insists that any bona fide "enforcement" of the AAA decision must be pursued through the procedures available through the Superior Court, rather than through a subsequent arbitration. See General Statutes § 52-421(b) (a judgment confirming, modifying or correcting an arbitration award "may be enforced as if it had been rendered in a civil action in the court in which it is entered.").
Although the ADRC proceedings involved more than mere enforcement of the AAA award, the defendant's argument has some weight and has persuaded some jurisdictions to apply judicial preclusion doctrines to arbitration decisions. However, our Supreme Court has adopted a different position on this issue and has expressly held that the public policy supporting arbitration is actually advanced by making preclusion doctrines, such as collateral estoppel, inapplicable to consensual, arbitration proceedings:
See, e.g., International Assn. of Firefighters, Local 1285 v. Las Vegas, 107 Nev. 906, 911, 823 P.2d 877 (1991); Dane County v. Dane County Union Local 65, AFSCME, AFL-CIO, 210 Wis.2d 267, 279, 565 N.W.2d 540 (1997); Thibodeau v. Crum, 4 Cal.App. 4th 749, 6 Cal.Rptr.2d 27 (1992).
Implicit in our conclusion that arbitrators are free to apply the principles of collateral estoppel as they deem appropriate . . . is the notion that the public policy in favor of maintaining the flexibility that is central to the arbitral process outweighs any public policy in favor of the rigid application of collateral estoppel principles to arbitration proceedings. We recognize the town's argument that the public policy favoring application of the doctrine carries particular force in public sector arbitration because the cost of multiple grievances to resolve inconsistent awards might be borne, ultimately, by the taxpaying public. Nevertheless, in light of the strong public policy favoring arbitration as an alternative method of dispute resolution . . . and our desire to maintain the flexibility of the process and to remain true to its contractual nature, we conclude that the public policy favoring application of the doctrine of collateral estoppel must yield. Consequently, we conclude that there is no merit to the town's argument that the second arbitration panel's failure to apply the doctrine violated public policy . . .
(Citations omitted.) Stratford v. International Assn. of Firefighters, AFL-CIO, Local 998, supra, 248 Conn. 127-28. In short, the concerns expressed by the defendant about duplicitous arbitrations frustrating the use or effectiveness of arbitration can be addressed by parties themselves as part of the bargaining process.
The defendant also makes the separate argument that this court has no "authority" to confirm the ADRC award because such action would be "inconsistent with a binding judgment of the Superior Court," making reference to Judge Alander's decision in Lasalla v. Doctor's Associates, Superior Court, judicial district of Ansonia/Milford at Milford, Docket No. CV 00 0071161 (June 7, 2002, Alander, J.). This argument is not actually an attack on this court's jurisdiction, but emanates from the defendant's contention that the failure to apply res judicata under the circumstances presented could result in court confirmations of conflicting arbitration awards. Consequently, this argument is merely another aspect of the defendant's res judicata argument and, as discussed above, is a position undercut by the Supreme Court's reasoning in Stratford v. International Assn. of Firefighters, AFL-CIO, Local 998, supra, 248 Conn. 108; see also, Middlebury v. Teamsters Local Union No. 677, 57 Conn.App. 223, 748 A.2d 340 (2000).
B
The defendant's next argument is that the ADRC decision should be vacated because it addresses the issues of res judicata and prejudgment interest in a patently egregious and irrational manner. Under General Statutes § 52-418(a)(4), an arbitration award may be vacated "if the arbitrators have exceeded their powers or so imperfectly executed them that a mutual, final and definite award upon the subject matter submitted was not made." An award that manifests a patently irrational application of the law may be vacated under General Statutes § 52-418(a)(4), but as explained by the Supreme Court, the authority of the court to vacate an arbitration on this ground is extremely "narrow and should be reserved for circumstances of an arbitrator's extraordinary lack of fidelity to established legal principles." Saturn Construction Co. v. Premier Roofing Co., supra, 238 Conn. 304.
Our Supreme Court has enunciated the following test for determining whether an arbitration panel manifestly disregards the law within the meaning of § 52-418(a)(4): "(1) the error was obvious and capable of being readily and instantly perceived by the average person qualified to serve as an arbitrator; (2) the arbitration panel appreciated the existence of a clearly governing legal principle but decided to ignore it; and (3) the governing law alleged to have been ignored by the arbitration panel is well defined, explicit, and clearly applicable." Saturn Construction Co. v. Premier Roofing Co., supra, 238 Conn. 305.
The defendant's claims that the arbitrators wrongly decided the issues of res judicata and prejudgment interest are identical to the types of arguments raised in and rejected by the Court in Garrity. See Garrity v. McCaskey, supra, 223 Conn. 11-12. The ADRC panel expressly addressed the res judicata argument in its denial of the defendant's motion to dismiss the arbitration, and as discussed above, the panel was not bound as a policy matter to follow the principles of res judicata in this case.
A case on point is the Appellate Court's decision in Middlebury v. Teamsters Local Union No. 677, 57 Conn.App. 223, 748 A.2d 340 (2000). In the Middlebury case, an arbitration panel found that an employee had improperly submitted invoices to the defendant town for payment of personal items. The employee's union applied to vacate the decision on the ground that the arbitrators considered two invoices relating to an earlier charge of theft for which the employee had been exonerated in a prior arbitration. The union claimed that the arbitrators' consideration of those invoices violated principles of res judicata and "amounted to an egregious misperformance of duty." Id., 226. The Appellate Court concluded that because the submission was unrestricted and the award conformed to the submission, res judicata did not provide a basis to vacate the award. Accord, Administrative and Residual Employees Union v. State of Connecticut Department of Revenue Services, Superior Court, judicial district of Hartford, Docket No. CV 99 0589921 (February 23, 2000, Booth, J.) ( 26 Conn. L. Rptr. 431).
In regard to prejudgment interest, the unrestricted submission expressly asked the panel to consider an appropriate amount of damages to be awarded to the plaintiff based on the defendant's erroneous interpretation of the modifier. The law is established that under Connecticut statute, prejudgment interest may be awarded as part of an award for damages, and the award of such interest is within the discretion of the trier. See General Statutes § 37-3a ("interest at the rate of ten per cent a year, and no more, may be recovered and allowed in civil actions . . . as damages for the detention of money after it becomes payable"); see generally, Advanced Financial Services, Inc. v. Associated Appraisal Services, Inc., 79 Conn.App. 22, 30, 830 A.2d 240 (2003) ("The allowance of prejudgment interest [under General Statutes § 37-3a] as an element of damages is an equitable determination and a matter lying within the discretion of the trial court . . ."). All the arguments now presented by the defendant concerning the recovery of interest under § 37-3a were presented to the panel, and these arguments were rejected by the panel's decision to award prejudgment interest. The defendant's contention that the arbitrators ignored the provisions of this statute or misapplied the criteria of this statute is no more than a claim that the panel made a legal error. As previously stated, the court cannot vacate an arbitration decision because of errors of law, and nothing in the award evidences an "extraordinary lack of fidelity to established legal principles." Saturn Construction Co. v. Premier Roofing Co., supra, 238 Conn. 304.
CONCLUSION
Therefore, for the foregoing reasons, the application to confirm the arbitration award filed by the plaintiff, Michael Lasalla, is hereby granted, and the cross-application to vacate the arbitration award filed by Doctor's Associates, Inc., is hereby denied.
So ordered.
Stevens, J.