Arbitration: Connecticut Appeals Court's Statutory Interpretation (Web)

A Connecticut appellate court, in Remax Right Choice et al. v . Aryeh, AC 26571, 2007 WL 1016887 (April 10, 2007)(available at www.jud.ct.gov/external/supapp/Cases/AROap/AP100/100AP93.pdf), reversed and remanded a trial court decision that confirmed an arbitration award. The three-judge panel vacated the award and rendered a judgment in the defendant’s favor.

The dispute involved a real estate deal between the plaintiffs, Remax Right Choice and Jeffery Wright. In February 2003, the parties submitted the matter to private, binding arbitration. Arbitrator Richard J. Kenny was to determine whether the plaintiffs were entitled to a commission, as well as statutory interest.
Kenny held a Aug. 6, 2004, hearing, and the defendant submitted a final post-hearing brief on Sept. 24, 2004.

Kenny issued an award in favor of the plaintiffs on Jan. 4, 2005. The plaintiffs filed an application to confirm the award, which totaled nearly $130,000, on March 18, 2005.

About a month later, the defendant opposed the application, arguing that because the award was untimely, and the arbitrator was deprived of subject matter jurisdiction. Therefore, the award was void as a matter of law.

Two laws significantly affected the claim: Connecticut General Statutes § 52-416 (a), which gives an arbitrator 30 days to file an award if there is no specified time period in the arbitration agreement, and 52-420 (b), which gives a party 30 days from the notice of an award to file a motion to vacate.

A Danbury, Conn., Superior Court ruled after April 25, 2004, arguments, that the “defendant did not make a timely motion to vacate per General Statutes § 52-420(b) and that the parties waived [any objection to] the late filing of the award by failing to raise an objection after the deadline [of October 24, 2004] and prior to the entry of the award dated [January 4, 2005].”

On appeal, the defendant made two specific claims, that the court “improperly (1) concluded that the award was not void as a matter of law and (2) found that the parties waived the thirty day requirement” set forth in General Statutes § 52-416(a).

The unanimous panel, addressing the first claim, examined the 52-416 language:

If the time within which an award is rendered has not been fixed in the arbitration agreement, the arbitrator . . . shall render the award within thirty days from the date the hearing or hearings are completed, or, if the parties are to submit additional material after the hearing or hearings, thirty days from the date fixed by the arbitrator . . . for the receipt of the material. An award made after that time shall have no legal effect unless the parties expressly extend the time in which the award may be made by an extension or ratification in writing.

The opinion focused on the “no legal effect” language.

The appellate court first disagreed with the defendant, rejecting his claim that because the award was not filed within 30 days of Sept. 24, 2004, that, as of Oct. 25, 2004, the arbitrator immediately lost subject matter jurisdiction.

The panel states, “The parties do not dispute that the arbitrator received the final brief on Sept. 24, 2004, and that there was no written agreement or stipulation to modify the terms of § 52-416(a). For the award to comply with the terms of § 52-416(a), it needed to be filed by October 24, 2004. The arbitrator, however, did not issue his award until January 4, 2005.”

But the appeals panel noted the general principle that arbitration is a favored method of settling disputes. “[T]he failure to comply with the temporal requirement of § 52-416(a) does not implicate subject matter jurisdiction but rather the continuing personal jurisdiction of the arbitrator over the parties. A late award, therefore, is not void as a matter of law.”

The reversal in the defendant’s favor resulted from his second claim. The appeals panel found that there was no evidence in the record to support the court's finding that the parties waived the 30-day period set forth in § 52-416(a).

Even though the court held that the failure to comply with the 30-day 52-416(a) limit is not the requisite requirement of a valid award, it acknowledged that the phrase “no legal effect” has meaning.

The appeals court, in reviewing statutory interpretation law, relied on the decisions in Marsala v. Valve Corp. of America, 157 Conn. 362, 254 A.2d 469 (1969), and Hayes v. Travelers Indemnity Co., 26 Conn. App. 418, 420, 601 A.2d 555 (1992), to indicate that the “no legal effect” phrase has a definitive meaning.
The idea that the parties had waived the 30-day period “is a question of fact and subject to the clearly erroneous standard of review.”

The panel found that the lower court’s reliance on AFSCME, Council 4, Local 704 v. Dept. of Public Health, 80 Conn. App. 1, 8, 832 A.2d 106 (2003), rev'd, 272 Conn. 617, 866 A.2d 582 (2005), in support of its decision that the defendant’s failure to raise the timeliness issue before the award was released, and therefore the claim was waived, was “misplaced.”

The panel instead concluded that “the failure to object to an untimely arbitration award pursuant to § 52-416(a), standing alone, is insufficient to indicate waiver and that the court's finding to the contrary was clearly erroneous.”

The opinion asserts that the plaintiff's contention that the defendant's failure to file a motion to vacate the award within 30 days from notice of the award pursuant to § 52-420(b) is fatal to his appeal. The opinion notes that under the case’s “unique facts and circumstances,” the defendant wasn’t required to file a motion to vacate within the 52-420(b) time frame because the arbitration award had “no legal effect” due to the arbitrator's untimely award.

The panel reversed the judgment and remanded, with the direction to vacate the arbitration award and to render judgment for the defendant.

–Ongmu Tshering, CPR Intern