No. CV 97-0060279 S
April 19, 2006
MEMORANDUM OF DECISION
The above-captioned matter is back before this court with respect to the plaintiffs' claims for attorneys fees and postjudgment interest after the successful confirmation of an arbitration award. See Hadelman v. DeLuca, 274 Conn. 442 (2005). The plaintiffs initially filed with this court motions for an award of attorneys fees in connection with their efforts to confirm the arbitration decision. The plaintiffs have now moved for a stay of these proceedings on the grounds that the award of attorneys fees should be submitted to arbitration in accordance with the parties' underlying arbitration agreement. In the alternative, the plaintiffs request that, should I determine the attorneys fees issue not to be arbitrable, I award them reasonable attorneys fees. The defendants contend that the issue of an award of attorneys fees related to confirmation of the arbitration award is not properly the subject of another arbitration and that this court should deny the plaintiffs' request for attorneys fees because it is untimely. The defendants also assert that an award of postjudgment interest is not warranted.
II Application for Stay
An understanding of the procedural history of this matter is necessary to resolve the issue of the appropriateness of a stay. The plaintiffs Robert Dowell and Dennis Rottinghaus are owners of Subway sandwich store franchises. The defendant Frederick DeLuca is the president of the defendant Doctor's Associates, Inc. (DAI), the franchiser of Subway Sandwich stores. In 1997, the plaintiffs sought election to the board of directors of the Subway Franchise Advertising Fund Trust (SFAFT) which administers the advertising funds for Subway sandwich stores throughout the nation. On November 11, 2001, an arbitration panel concluded that the defendants violated the Connecticut Unfair Practices Act (CUTPA), General Statutes §§ 42-110a et seq., by improperly interfering with the 1997 election in order to prevent the election of the plaintiffs. The arbitration panel awarded the plaintiffs punitive damages in the total amount of $300,000 and attorneys fees and costs incurred in the arbitration of $150,000. The plaintiffs subsequently filed a motion to confirm the arbitration award, which was granted by the trial court, Hadelman v. DeLuca, Superior Court, judicial district of Ansonia/Milford at Milford, Docket No. CV97-0060279S (June 12, 2003, Alander, J.) ( 35 Conn. L. Rptr. 60), and affirmed on appeal, Hadelman v. DeLuca, 274 Conn. 442 (2005).
I have highlighted the salient features of the procedural history of this matter. A more complete rendition can be found in Hadelman v. DeLuca, Superior Court, judicial district of Ansonia/Milford at Milford, Docket No. CV97-0060279S (November 25, 2002, Alander, J.).
On August 8, 2003, the plaintiffs filed a motion for attorneys fees for work performed before the trial court to confirm the arbitration award. On December 8, 2003, the plaintiffs filed an amended motion for attorneys fees. Finally, on August 10, 2005, after the Connecticut Supreme Court affirmed the judgment confirming the arbitration award, the plaintiffs filed their third motion for attorneys fees for work done to confirm the award both before the trial court and before the Supreme Court. On December 15, 2005, the plaintiffs reversed course and filed an application for a stay of these proceedings so that they could submit the issue of attorneys fees to arbitration. The defendants have filed an objection to the plaintiff's stay request.
The plaintiffs assert that the issue of the attorneys fees to be awarded in connection with litigation to confirm the arbitration award is subject to arbitration pursuant to the parties' underlying arbitration agreement. They contend that the arbitration agreement which mandates the arbitration of "any and all disputes that arise from or relate to the termination of the 1997 SFAFT election" requires the arbitration of a dispute over attorneys fees related to the confirmation of the prior arbitration awards. I do not agree.
The parties' arbitration agreement provides, in pertinent part, that "All the parties, acting by counsel, agree to arbitrate any and all disputes that arise from or relate to the termination of the 1997 SFAFT election . . ." Pursuant to this agreement, the parties did arbitrate their dispute regarding the termination of the 1997 SFAFT election, resulting in an arbitration decision which was the subject of these court proceedings and which was ultimately confirmed by the court. The issue of the award of attorneys fees for work performed to confirm that arbitration decision does not constitute a separate dispute for which additional arbitration proceedings are required. Put simply, there is but one dispute here, that is the dispute surrounding the 1997 SFAFT election. The issue of attorneys fees for work performed in court to confirm the arbitration decision is part and parcel of that dispute and the plaintiffs are not entitled under the arbitration agreement to a second arbitration of a dispute which has already been arbitrated. Rather, it is the province of the court to determine what attorneys fees, if any, should be awarded to the plaintiffs for the work performed by their attorneys to confirm the arbitration award. See Universal Computer Servs., Inc. v. Dealer Servs., Inc., 2003 WL 21685567 (E.D.N.Y. July 18, 2003), in which the court rejected a claim that an award of attorneys fees incurred in connection with the judicial confirmation of an arbitration award must be submitted to arbitration pursuant to the broad arbitration clause in the parties' contract. The court noted that such a procedure would result in "endless and multiplicitous" litigation by requiring "a successful party in the arbitration proceeding to move for judicial confirmation of the fee award, then return to the arbitrator to obtain an additional award for fees incurred in confirming the first fee award, return to court to have that award confirmed, and so on, ad infinitum." Id., n. 3. In light of the above, the plaintiffs' application for a stay is denied.
II Motion for Attorneys Fees
The plaintiffs seek an award of attorneys fees for the work done before the trial court and the Connecticut Supreme Court to confirm the arbitration award. The defendants object to the award of any attorneys fees for the work performed before the trial court on the grounds that the plaintiffs' motion for attorneys fees was untimely. Specifically, the defendants contend that the plaintiffs are not entitled to an award of statutory attorneys fees under CUTPA because they failed to comply with the mandate of Practice Book § 11-21 that a motion for attorneys fees be filed within thirty days of the entry of final judgment by the trial court. The plaintiffs maintain that the time limit contained in Practice Book § 11-21 should not be enforced because good cause exists for their failure to adhere to that time limit. I agree with the defendants.
Practice Book § 11-21 provides in relevant part that "[m]otions for attorneys fees shall be filed with the trial court within thirty days following the date on which the final judgment of the trial court was rendered." Final judgment confirming the arbitration award was entered by the trial court in this case on June 12, 2003. See Hadelman v. DeLuca, Superior Court, judicial district of Ansonia/Milford at Milford, Docket No. CV97-0060279S (June 12, 2003, Alander, J.). The plaintiffs did not file their initial motion for attorneys fees until August 8, 2003, after the expiration of the thirty-day time limit established by Practice Book § 11-21.
Practice Book § 11-21 reads in its entirety that "[m]otions for attorneys fees shall be filed with the trial court within thirty days following the date on which the final judgment of the trial court was rendered. If appellate attorneys fees are sought, motions for such fees shall be filed with the trial court within thirty days following the date on which the appellate court or supreme court rendered its decision disposing of the underlying appeal. Nothing in this section shall be deemed to affect an award of attorneys fees assessed as a component of damages." The plaintiffs do not claim that the award of statutory attorneys fees under CUTPA for work performed to confirm an arbitration decision constitutes damages.
The plaintiffs argue that their failure to meet the time requirements of Practice Book § 11-21 is justified by good cause. Specifically, they claim that they failed to file a timely request with the trial court because they were uncertain as to whether their claim for attorneys fees should be decided by arbitration or by the trial court. I am not persuaded that the plaintiffs' professed uncertainty was reasonable. Practice Book § 11-21 clearly provides that motions for attorneys fees shall be filed with the trial court. The plaintiffs have provided me with no case law that holds that a motion for attorneys fees for work performed before a trial court to confirm an arbitration award is subject to arbitration. The practice is to the contrary. See, e.g. Mullick v. Ancker Eagle Inc., Superior Court, judicial district of Litchfield, Docket No. CV03-0091736S (January 5, 2004, Pickard, J.), and Wethersfield Federation of Teachers v. Wethersfield Board of Education, Superior Court, judicial district of Hartford at Hartford, Docket No. CV-98-0580301 (October 11, 2001, Dyer, J.). Even assuming that the plaintiffs' uncertainty were reasonable, I do not find the delay in this case to be justified. Notwithstanding their uncertainty, the plaintiffs could have filed a timely motion for attorneys fees and let the court determine whether arbitration of their request was required. The plaintiffs in fact undertook such a course of action. They did not do so however in a timely manner. Accordingly, the plaintiffs' request for an award of attorneys fees for work performed before the trial court is hereby denied.
The plaintiffs also move for an award of attorneys fees for work performed before the Connecticut Supreme Court in connection with the confirmation of the arbitration award. That request is timely as it was made within thirty days following the date on which the Supreme Court rendered its decision disposing of the underlying appeal. See Practice Book § 11-21. The defendants argue however that the plaintiffs' fee request is not reasonable because (1) the requested fees are greater than the fees actually billed the plaintiffs pursuant to their fee agreement; (2) the fees for past work are based on counsel's current hourly rate; (3) the rates are not reasonably related to the experience of the attorneys performing the work; and (4) certain time entries are vague and appear excessive. In order to properly resolve these issues, a revised affidavit needs to be submitted by plaintiffs' counsel. First, in light of my decision denying attorneys fees for work performed before the trial court, a revised affidavit should be filed which is limited to work performed on the appeal to the Connecticut Supreme Court. Second, it is unclear from the affidavits filed whether the plaintiffs' fee agreement with their counsel fixed counsel's hourly rate to the rate expressly stated in the agreement dated October 20, 1997 or whether plaintiffs were to be billed at the hourly rate in effect at the time the work was performed. Plaintiffs' counsel needs to submit an affidavit clearing up this issue. In addition, plaintiffs need to disclose the amounts, if any, actually billed the plaintiffs during the relevant time period and the basis for determining the amounts billed. The plaintiffs are ordered to file a revised affidavit by May 6, 2006.
III Motion for Postjudgment Interest
Finally, the plaintiffs seek an award of postjudgment interest pursuant to General Statutes § 37-3a. The plaintiffs assert that interest is warranted because they have been forced to wait for approximately four and one-half years for money that was rightfully awarded them in an arbitration proceeding. The defendants maintain that interest is not appropriate because the delay was due to the prosecution of an appeal made in good faith on an unsettled legal issue. I agree with the defendants.
General Statutes § 37-3a provides in relevant part that "[I]nterest 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." "The decision of whether to grant interest under § 37-3a is primarily an equitable determination and a matter lying within the discretion of the trial court." (Internal quotation marks omitted.) MedValUSA Health Programs, Inc. v. Memberworks, Inc., CT Page 7334 273 Conn. 634, 666 (2005). "A trial court must make two determinations when awarding compensatory interest under § 37-3a: (1) whether the party against whom interest is sought has wrongfully detained money due the other party; and (2) the date upon which the wrongful detention began in order to determine the time from which interest should be calculated." Metcalfe v. Talarski, 213 Conn. 145, 160, 567 A.2d 1148 (1989); West Haven Sound Development Corp. v. West Haven, supra, 207 Conn. 321." Blakeslee Arpaia Chapman, Inc. v. EI Const, Inc., 239 Conn. 708, 734-35 (1997).
On November 11, 2001, the arbitration panel in this case awarded the plaintiffs substantial punitive damages but no compensatory damages. The defendants appealed the arbitration award to court on the grounds that it violated the clearly defined public policy prohibiting the imposition of grossly excessive punitive damages. While ultimately unsuccessful, see Hadelman v. DeLuca, 274 Conn. 442 (2005), the defendants' claim was made in good faith and raised legal issues that were substantial and in flux. See Hadelman v. DeLuca, Superior Court, judicial district of Ansonia/Milford at Milford, Docket No. CV97-00602795 (June 12, 2003, Alander, J.). "Imposition of interest should not be used to discourage parties from raising good faith challenges to arbitration awards in an area uncharted by controlling precedent." Prudential Property Casualty Ins. Co. v. Jones, Superior Court, judicial district of New Haven, Docket No. CV 91 0323814 (February 5, 1992, Hodgson, J.) ( 6 Conn. L. Rptr. 13). See also MedValUSA Health Programs, Inc. v. Memberworks, Inc., Superior Court, judicial district of Hartford at Hartford, Docket No. CV-02-0821887 (Sep. 26, 2003, Berger, J.), in which the court declined to award postjudgment interest in an appeal of an arbitration award which raised legal issues identical to those in the case at bar. Accordingly, the plaintiffs' request for postjudgment interest is denied.