Opinion
No. CV 05 4001766S
May 16, 2005
MEMORANDUM OF DECISION
This is an application to compel arbitration filed by the plaintiff, Steven Tozier, a former employee of the defendant, Ward Leonard Electric Company. The defendant has filed an objection to the application. For the following reasons the application must be denied.
Facts
The parties entered into an Employee Confidential Information and Invention Assignment Agreement which contains an arbitration clause which provides, in relevant part, that ". . . any dispute or controversy arising out of, or relating to, or concerning any interpretation, construction, performance or breach of the agreement, shall be settled by arbitration . . . in accordance with the rules then in effect of the American Arbitration Association . . . The company and I [the plaintiff] shall each pay one-half (½) of the costs and expenses of such arbitration . . ."
The plaintiff has filed a demand for arbitration with the American Arbitration Association ("the AAA"). The Association has opened a file and has notified the parties that Rule 39 of the AAA's Rules for the Resolution of Employment Disputes provides: "All expenses of the arbitration, including required travel and other expenses of the arbitrator, AAA representatives, and any witness and the costs relating to any proof produced at the direction of the arbitrator shall be borne by the employer, unless the parties agree otherwise." (Emphasis added) AAA insists that Rule 39 requires that the defendant bear all of the expenses of arbitration.
The AAA has billed the defendant for the expenses of the arbitration pursuant to Rule 39, The defendant has answered the demand for arbitration, has designated acceptable arbitrators, and has paid one-half the filing fee. It has refused to pay more than one-half of the expenses of arbitration including the fees of the arbitrator. The defendant argues that it is willing to arbitrate provided it is done in accordance with the parties' agreement that the arbitration costs will be shared equally. The plaintiff claims that the defendant has wrongfully refused to arbitrate because it has failed to pay the arbitration expenses as billed by AAA.
Discussion
As expressed in C.G.S. § 52-408, Connecticut has a clear public policy in favor of arbitrating disputes. Nussbaum v. Kimberly Timbers, Ltd., 271 Conn. 65, 71 (2004). In furtherance of that public policy, C.G.S. § 52-410(a) provides, in relevant part that "[a] party to a written agreement for arbitration claiming the neglect or refusal of another to proceed with an arbitration thereunder may make application to the superior court for the judicial district in which one of the parties resides . . . for an order directing the parties to proceed with the arbitration in compliance with their agreement . . ." When confronted with an application to compel arbitration, the task of the court is to decide whether the parties did, in fact, enter into an agreement and whether the agreement provides for arbitration. Salomon Smith Barney, Inc. v. Cotrone, 81 Conn.App. 755, 758 (2004).
Sec. 52-408 provides, in relevant part: "An agreement in any written contract, or in a separate writing executed by the parties to any written contract, to settle by arbitration any controversy thereafter arising out of such contract, or out of the failure or refusal to perform the whole or any part thereof . . . shall be valid, irrevocable and enforceable, except when there exists sufficient cause at law or in equity for the avoidance of written contracts generally."
There is no dispute that the parties did agree to arbitrate their disputes arising from their contract. They also specifically agreed to arbitrate them in accordance with AAA rules and to share the costs equally. But AAA insists that their rules prevent the parties from sharing the costs; the defendant must pay all the costs of arbitration. This requirement conflicts with the agreement of the parties.
The position of AAA is difficult to understand. Rule 39 specifically provides that the parties are free to agree to share the expenses of arbitration rather than having them borne solely by the defendant. The agreement of the parties is also clear: the parties shall each pay one-half of the costs and expenses of arbitration. Nothing presented to the court explains why the AAA refuses to bill the costs of the arbitration in accordance with the agreement of the parties. But the court has no control over the AAA or the matter in which they interpret their own rules.
The plaintiff's argument is that the court lacks jurisdiction to do anything more than grant or deny the application to compel arbitration. I agree. C.G.S. § 52-410(a) provides, in relevant part, that after hearing the matter the court ". . . shall either grant the order or deny the application, according to the rights of the parties." See, Merrill Lynch and Company et al v. City of Waterbury, 34 Conn.App. 11, 18 (1994).
As stated above, the court's statutory authority derives from C.G.S. § 52-410(a) which authorizes the court to issue ". . . an order directing the parties to proceed with the arbitration in compliance with their agreement (Emphasis added) Here, the defendant is willing to proceed with arbitration in compliance with the agreement of the parties. If the court were to issue an order that the defendant must proceed with arbitration in accordance with the agreement of the parties, it would be an exercise in futility because the AAA is not willing to process the demand for arbitration in accordance with the agreement of the parties that the costs of arbitration be shared. Therefore, it is impossible to order that the defendant proceed to arbitrate the dispute 1) with the AAA and 2) with the parties sharing the costs, both of which are required by the contract. The defendant's predicament fulfills all of the elements of the doctrine of impossibility of performance.
The concepts of impossibility or impracticability of performance have been recognized in various decisions of [our Supreme Court]. These doctrines represent an exception to the traditional principle that contracts should be enforced as written, in recognition of the fact that certain conditions cannot be met because of unforeseen occurrences. A party claiming that a supervening event or contingency has prevented, and thus excused, a promised performance must demonstrate that: (1) the event made the performance impracticable; (2) the nonoccurrence of the event was a basic assumption on which the contract was made; (3) the impracticability resulted without the fault of the party seeking to be excused; and (4) the party has not assumed a greater obligation than the law imposes.
(Internal citations and quotation marks omitted.)
Sink v. Meadow Wood County Estates, 18 Conn.App. 569, 575-76 (1989).
For these reasons, the application to compel arbitration is denied.
BY THE COURT,
John W. Pickard