Opinion
No. FST CV 096002482 S
June 11, 2010
MEMORANDUM OF DECISION RE MOTION TO STAY AND MOTION FOR TEMPORARY INJUNCTION ##101 104
BACKGROUND
The plaintiff, Laurel Schwartz, filed this civil action against the defendants, E.M.Rose Building Company, LLC (Rose Building) and Eric Rose. In the complaint, the plaintiff alleges the following facts. On October 6, 2008, he entered into an agreement with the defendant Rose Building to construct improvements to his house. The agreement contained a clause for arbitration of any disputes by the parties. There were disputes as to the agreement. The defendant, Rose Building, in accordance with the agreement filed for arbitration of the disputes alleged by the plaintiff. Thereafter, the plaintiff filed this complaint dated October 26, 2009 alleging claims of breach of contract, unjust enrichment and a violation of the Connecticut Unfair Trade Practices Act. The defendants were served on November 9, 2009.
On November 27, 2009, the defendant filed a Motion to Stay this action pending the arbitration proceeding. In response, the plaintiff has filed an Application for Temporary Injunction dated December 16, 2009 to enjoin the pending Arbitration proceeding before the American Arbitration Association. The plaintiff has also filed a Motion to Hold the Arbitration proceeding pending a determination of the Application for a Temporary Injunction.
On March 31, 2010, the parties appeared at short calendar and argued these motions.
DISCUSSION
In response to the filing of this civil action, the defendants filed a motion to stay this civil proceeding pending the resolution of the arbitration. The plaintiff in response has argued that the court should grant a temporary injunction to prevent the defendant from proceeding with the arbitration for two reasons. The plaintiff alleges that the agreement is void for failure to provide a notice of cancellation of the home improvement contract pursuant to General Statute § 20-429 and that the arbitration proceeding is not a proper forum to hear the CUTPA claim raised by the plaintiff.
Although the parties have filed separate motions, the resolution of one will impact and guide the court's ruling as to the other. The defendants' Motion to Stay this proceeding and allow the arbitration to proceed cannot be determined, however, without also reviewing the plaintiff's claim that the arbitration is not sustainable because the contract as a whole is void and unenforceable. In this regard, the plaintiff contends that the defendant failed to provide notice required pursuant to the home improvement statute, General Statutes § 20-429.
"In the absence of a statutory mandate, the granting of an application or a motion for a stay of an action or proceeding is addressed to the discretion of the trial court . . . [T]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants. How this can best be done calls for the exercise of judgment, which must weigh competing interests and maintain an even balance." (Citation omitted; internal quotation marks omitted.) Lee v. Harlow, Adams and Friedman, P.C., 116 Conn.App. 289, 311-12, 975 A.2d 715 (2009).
"The court has the inherent power to stay proceedings before it in the interest of the just resolution of controversies." Kutcher v. Connecticut Vascular Thoratic Surgical Associates, P.C., Superior Court, judicial district of Fairfield, Docket No. CV 09 5026130 (January 7, 2010, Gilardi, J.) ( 49 Conn. L. Rptr. 137, 138).
Arbitration is a creature of contract. Board of Education v. Bridgeport Education Ass'n., 173 Conn. 287, 290, 377 A.2d 323 (1977). It is designed to avoid litigation and secure prompt settlement of disputes and is favored by law. Hartford v. American Arbitration Ass'n., 174 Conn. 472, 480, 391 A.2d 137 (1978). Our courts have found that doubts regarding whether an issue is "arbitrable" should be resolved in favor of the arbitration. John Erricheti Associates v. Boutin, 183 Conn. 481, 488, 439 A.2d 416 (1981).
The plaintiff does not challenge the mandatory nature of the arbitration provision, but the plaintiff contends that there is no enforceable contract and thus no mandate to arbitrate. The second argument is that the scope of the arbitration clause does not permit the review and decision of a claim pursuant to CUTPA because of the public policy issues applicable to this claim. He contends that such a claim can be heard only in the Superior Court. The court finds that neither of these arguments are supported by the facts or the law.
The arbitration provision of the contract, Section 21.4, provides: "If the parties have selected arbitration as the method for binding dispute resolution in the Agreement, any claim, subject to, but not resolved by, mediation shall be subject to arbitration which, unless the parties mutually agree otherwise, shall be administered by the American Arbitration Association, in accordance with the Construction Industry Arbitration Rules in effect on the date of this Agreement. Demand for arbitration shall be made in writing, delivered to the other party to the Contract, and filed with the person or entity administering the arbitration . . ."
As to the first argument concerning the lack of an enforceable contract, there are two reasons why the argument must fail. The first and most obvious is the inclusion of an Exhibit dated October 8, 2008 that appears to satisfy the notice of cancellation signed by the plaintiff and a representative for the defendant and available to the plaintiff prior to the service and filing of this complaint. This notice negates the plaintiff's position that the agreement is void for a failure to include a notice of cancellation policy. If the plaintiff does not agree that this notice suffices the legal requirements, then he has the ability and opportunity to challenge this notice in the arbitration proceeding. Assuming arguendo the notice to cancel was not provided to the plaintiff, the court finds that the Supreme Court decision in Nussbaum v. Timbers, 271 Conn. 65 (2004), provides the guidance as to whether the matter can proceed to arbitration. In the Nussbaum action, the contractor was not licensed in accordance with the statutory provisions for new home construction. The court, in viewing the statutory provisions, found that there is a distinction between a contract that is not properly formed and thus is void and legally valid contracts which are voidable because of substantive defects. In particular, the court determined that notice requirements under the statute pertain to voidability and thus could be determined by the arbitrator. So, too, in the instant action the challenge as to the notice provisions is a substantive defect which can be considered by the arbitrator and does not void the contract as the plaintiff has argued in his memorandum. Therefore, the decision as to whether the arbitration clause applies to a factual scenario where there was allegedly no notice of cancellation provision would be a question to be resolved in the arbitration process. The court in C.R. Klewin Northeast, LLC v. Bridgeport, 282 Conn. 54 (2007), stated: "We agree with Klewin, and conclude that, in the absence of an attack specifically on the validity of the entire underlying contract lies solely and squarely within the pervue of the panel."
The defendant has included as an exhibit attached to the memorandum in opposition an e-mail sent on October 29, 2009 with the reference to the notice of cancellation.
The plaintiff cites three Superior Court cases for the proposition that the failure to provide notice of cancellation pursuant to the Home Improvement Act would void the contract and make it unenforceable. However, the cases cited by the plaintiff pre-date the Supreme Court decision in Nussbaum which would, if applicable, make the claim voidable and subject to a decision by the arbitrator.
The plaintiff's second argument that the cause of action for a Connecticut Unfair Trade Practice cannot be subject to a clause for arbitration is likewise not supported by the recent case law. In Fink v. Golenbock, 238 Conn. 183, 680 A.2d 1243 (1996), the court found that the plaintiff was precluded from litigating claims in the court because the plaintiff could have litigated the claims in the arbitration proceeding . . ." Fink v. Golenbock, supra, 238 Conn. 189. In particular, among the claims that the plaintiff failed to include in the arbitration proceeding was a claim of violation of the Connecticut Unfair Trade Practices Act. In particular, the court citing Herbert S. Newman Partners, v. CFC Construction Ltd. Partnership, 236 Conn. 750, 759-60, 674 A.2d 1313 (1996), addressed the CUTPA claims and stated that their submission to arbitration was broad and there is no public policy reason to preclude. Fink v. Golenbock, supra, 196-97, n. 10. The court's opinion in Fink evinces a continued commitment by the court to support the promotion of judicial economy and the prevention of inconsistent judgments. The Fink court very clearly has indicated that a claim pursuant to CUTPA can be one of the claims considered during the course of arbitration. In fact, the Supreme Court in Fink ruled that matters such as CUTPA that were not raised in arbitration are precluded from consideration in a superior court action under the theory of res judicata. This case very clearly supports the position that arbitration should proceed and include all issues that have been outlined in the instant motions.
TEMPORARY INJUNCTION
"A temporary injunction is a preliminary order of court, granted at the outset or during the pendency of an action, forbidding the performance of the threatened acts described . . . until the rights of the parties . . . shall have been finally determined by the court." Deming v. Bradstreet, 85 Conn. 650, 659, 84 A. 116 (1912). The primary purpose of a temporary injunction is to maintain the status quo until the rights of the various parties can be sorted out, after a hearing on the merits. Clinton v. Middlesex Mutual Assurance Co., 37 Conn.App. 269, 270, 655 A.2d 814 (1995).
In order for the court to issue a temporary injunction, the applicant must establish: (1) a reasonable probability of success on the merits at a final hearing; (2) irreparable and imminent injury unless the injunction is granted; (3) no adequate remedy at law and (4) a balancing of the equities. Waterbury Teachers Ass'n. v. Freedom of Information Commission, 230 Conn. 441, 446, 645 A.2d 978 (1994); Covenant Radio Corp., v. Ten Eighty Corp., 35 Conn.Sup. 1, 3, 390 A.2d 949 (1977). Based upon the argument of counsel, the memoranda and the law applicable to the motion to stay as noted above, the plaintiff does not satisfy the criteria for the granting of a temporary injunction. In particular, the court's findings that the claims can be part of the arbitration in accordance with the agreement and that arbitration is encouraged as a means of securing prompt and efficient settlement, preclude a finding that a temporary injunction should issue.
CONCLUSION
Based upon the memorandum, the exhibits and the argument of counsel, the allegations of the lack of notice of cancellation in itself does not prevent the enforcement of the arbitration clause. Additionally, the CUTPA claim can be part of the claims to be considered by the arbitrator. Therefore, the defendants' motion for a stay of the present action is GRANTED. The plaintiff's motion for a temporary injunction is DENIED. Based upon these findings, the motion to hold the arbitration proceeding in abeyance is moot.