Opinion
No. CV06 500 49 16 S
February 1, 2007
MEMORANDUM OF DECISION
FACTS
The defendant, Home Comfort Now, LLC, is a licensed home improvement contractor, which entered into a written agreement with the plaintiffs, Benedict P. Mazotas and Ann R. Mazotas, on August 19, 2002. The contract required the defendant to install a sunroom at the plaintiff's home, 5 Stephen Drive, Shelton.
The contract called for the payment of $20,438, and work at the residence was to be performed between September 23, 2002 and September 30, 2002.
The plaintiffs have initiated this action in four counts and claim to have sustained damages as a result of the defendant's workmanship.
Count One claims a breach of the written contract, Count Two alleges negligence, while Count Three claims that the defendant violated the Connecticut Unfair Practices Act (CUTPA), § 42a-110a, et. seq. of the General Statutes. A fourth count alleging negligent infliction of emotional distress has also been included.
The plaintiffs sought a prejudgment remedy against Home Comfort Now, LLC, claiming to have incurred damages in the amount of $39,653 for construction related expenses only. The defendant countered by filing a motion to stay pending arbitration, pursuant to § 52-409 of the General Statutes. That section provides:
If 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 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 held in compliance with the agreement, provided the person making application for the stay shall be ready and willing to proceed with the arbitration.
The written agreement consists of two pages. In page two, clauses a through x are printed. Paragraph k reads:
Dispute Resolution: Any controversy or claim arising out of this Agreement that cannot be resolved shall be submitted to binding arbitration before a neutral arbitrator chosen by the Company. Company and Owner shall share the initial arbitration fee, if any. Upon decision by the arbitrator, the nonprevailing party shall bear the full cost of the arbitration, including reasonable attorneys fees, if any. In no event shall any claims against the work performed be asserted more that two (2) year after completion of the work performed.
The defendant maintains that the plaintiffs have agreed to arbitrate any dispute and that it is entitled to a stay of the court proceedings, including the prejudgment remedy sought, pending the completion of the arbitration process.
The plaintiffs argue that the clause is vague and unenforceable and that the defendant has waived its rights to insist upon arbitration. They ask for an evidentiary hearing to determine whether the right to a trial by jury, as guaranteed by Article First § 19 of the Constitution of the State of Connecticut, has been waived. They have also asked for a hearing to determine whether the clause is unenforceable, based upon the relative bargaining positions of the party.
THE ARBITRATION CLAUSE IS NOT UN-ENFORCEABLE ON ITS FACE
It is well established in this jurisdiction, that a strong public policy exists favoring the use of arbitration by parties to an agreement as a means of resolving private disputes. State v. New England Health Care Employees Union, 271 Conn. 127, 134 (2004); Garrity v. McCaskey, 223 Conn. 1, 4-5 (1992). The authority of an arbitrator to adjudicate the controversy in question is limited only by the agreement itself. Unless the agreement contains express language restricting the breadth of issues, reserving explicit rights, or conditioning the award on court review, the agreement is unrestricted. Carroll v. Aetna Casualty Surety, Co., 189 Conn. 16, 20 (1983); Bridgeport v. Bridgeport Police Local 1159, 183 Conn. 102, 106-07 (1981).
The language in the agreement concerning "Any controversy or claim renders the submission, in this case, unrestricted. Therefore, unless in the context of the particular case, the challenged clause is so one sided as to be unconscionable, courts will give effect to and enforce, a valid arbitration clause. Cheshire Mortgage Services, Inc. v. Montes, 223 Conn. 80, 89 (1992). (Involving unconscionablility in the context of a foreclosure action.)
The Connecticut Supreme Court dealt with a case involving a clause which authorized an arbitration panel consisting solely of the directors and partners of one of the parties to the agreement, in Hottle v. BDO Seidman, LLP, 268 Conn. 694 (2004).
This case, in which the Connecticut courts considered the issue, including the Connecticut Appellate court, Hottle v. BDO Seidman, LLP, 74 Conn.App. 276 (2002), applied the law of New York to the dispute, involved a partnership agreement signed by partners in a major accounting office.
The clause at issue stated: "The members of the arbitration panel shall be mutually agreed to by the Board of Directors and the parties to the controversy or dispute . . ." Hottle v. BDO Seidman, LLP, supra, 669, n. 4. The Connecticut courts determined that the clause was enforceable under both the law of New York and the Federal Arbitration Act, 9 U.S.C. § 1 through 16.
In the opinions, however, attention was devoted to the notion of "neutrality," as mandated by both state law and the federal act.
For an arbitrator to satisfy the "neutrality" requirement, that arbitrator must be free of structural bias, which demonstrates probable partiality in favor of one of the parties to the dispute. Hottle v. BDO Seidman, LLP, 74 Conn.App. 271, 278-79 (2002). This requires more than the mere appearance of bias, which might be sufficient to disqualify a judge, but not an arbitrator. Clisham v. Board of Police Commissioners, 223 Conn. 354, 361-62 (1992). The clause contained in the agreement executed by Benedict and Ann Mazotas and Home Comfort Now, LLC, would fail as unconscionable were it not for the requirement that the arbitrator chosen be "neutral."
In the absence of that requirement, there would be no restriction whatever upon the individual who could be chosen as an arbitrator. Unlike the panel in Hottle, there is no requirement that the arbitrator be selected from among a pre-qualified list of individuals, or that he or she have any particular knowledge or expertise in the construction trades.
Furthermore, the losing party to the arbitration is liable for the payment of costs, including reasonable attorneys fees.
However, since the clause requires that the selected arbitrator be "neutral," and mindful of the neutrality requirement announced by the Appellate Court in Hottle v. Sideman, LLP, supra, at 278-79, a finding of unconscionability cannot be made.
The motion to stay pending arbitration is GRANTED, subject to the right of the plaintiffs to immediately challenge, in court, the arbitrator selected, should he fail to meet the requirement of "neutrality."