A Better Way Wholesale Autos, Inc. v. Paul

• Decision Date: 15 April 2021
• Docket Number: SC 20386
• Citation: 338 Conn. 651,258 A.3d 1244
• Parties: A BETTER WAY WHOLESALE AUTOS, INC. v. James SAINT PAUL et al.
• Court: Connecticut Supreme Court

338 Conn. 651

258 A.3d 1244

A BETTER WAY WHOLESALE AUTOS, INC.

v.James SAINT PAUL et al.

SC 20386

Supreme Court of Connecticut.

Argued October 15, 2020

Officially released April 15, 2021^*

Kenneth A. Votre, New Haven, for the appellant (plaintiff).

Richard F. Wareing, Hartford, with whom was Daniel S. Blinn, Rocky Hill, for the appellees (defendants).

Robinson, C.J., and McDonald, D'Auria, Mullins, Kahn and Ecker, Js.

McDONALD, J.

This certified appeal requires us to determine the statutory time limitation applicable to a motion to vacate an arbitration award brought in state court when review of the underlying arbitration is governed by the Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq., pursuant to a private arbitration agreement. This determination presents two issues. First, we consider whether the Connecticut thirty day time limitation applicable to a motion to vacate an arbitration award, General Statutes § 52-420 (b),¹ implicates the subject matter jurisdiction of our courts. Second, we consider whether this state's law is preempted by the FAA as a result of an actual conflict between the different time limitations contained in the two statutes.

The plaintiff, A Better Way Wholesale Autos, Inc., appeals from the judgment of the Appellate Court, which affirmed the trial court's judgment and concluded, among other things, that the plaintiff's application to vacate an arbitration award rendered in favor of the defendants, James Saint Paul and Julie J. Saint Paul, was untimely under § 52-420 (b). See A Better Way Wholesale Autos, Inc. v. Saint Paul , 192 Conn. App. 245, 247, 257, 217 A.3d 996 (2019) (en banc). On appeal, the plaintiff claims that the Appellate Court incorrectly concluded that its application to vacate the arbitration award was governed by the thirty day time limit set forth in § 52-420 (b) in contravention of a private agreement between the parties.

The Appellate Court's decision sets forth the facts and procedural history; id., at 247–50, 217 A.3d 996 ; which we summarize in relevant part. In 2015, the defendants bought a motor vehicle from the plaintiff, and the parties entered into an agreement to finance the purchase. The financing agreement contained an arbitration clause that provided, among other things, that any dispute arising from the defendants’ purchase of the vehicle would be resolved by binding arbitration. The arbitration clause contained a choice of law provision, which provided in relevant part: "Any arbitration under this [a]rbitration [p]rovision shall be governed by the [FAA] ... and not by any state law concerning arbitration. ..." (Citation omitted.) The clause further provided in relevant part: "Any court having jurisdiction may enter judgment on the arbitrator's award. ..."

Later that year, the defendants initiated an arbitration proceeding, claiming, among other things, that the plaintiff failed to disclose certain charges in violation of the federal Truth in Lending Act, 15 U.S.C. § 1601 et seq., and the Connecticut Unfair Trade Practices Act, General Statutes § 42-110a et seq. On July 21, 2016, the arbitrator ruled in favor of the defendants with respect to the Truth in Lending Act claim and awarded damages, attorney's fees, and costs.

On August 26, 2016, the plaintiff filed an application to vacate the arbitration award in the Superior Court pursuant to the FAA, claiming that the arbitrator exceeded his powers. The defendants opposed the plaintiff's application to vacate on the ground that the trial court lacked subject matter jurisdiction. Specifically, the defendants argued that the plaintiff's application was untimely under § 52-420 (b), which imposes a thirty day limitation period to seek to vacate an arbitration award. The trial court agreed with the defendants and dismissed the plaintiff's application to vacate as untimely under § 52-420 (b). The plaintiff appealed from the trial court's judgment of dismissal to the Appellate Court. Specifically, the plaintiff argued that its application to vacate was not untimely because the arbitration agreement specified that the FAA—and not any state law provision—would apply, and the limitation period for a motion to vacate an arbitration award under the FAA is three months. See 9 U.S.C. § 12 (2012).

A three judge panel of the Appellate Court heard oral argument. A Better Way Wholesale Autos, Inc. v. Saint Paul , supra, 192 Conn. App. at 250 n.3, 217 A.3d 996. Thereafter, pursuant to Practice Book § 70-7 (b), the court, sua sponte, ordered reargument en banc. Id. The Appellate Court also ordered the parties to file supplemental briefs addressing, among other things, the applicability of that court's decision in Doctor's Associates, Inc. v. Searl , 179 Conn. App. 577, 180 A.3d 996 (2018), overruled in part by A Better Way Wholesale Autos, Inc. v. Saint Paul , 192 Conn. App. 245, 217 A.3d 996 (2019) (en banc). See A Better Way Wholesale Autos, Inc. v. Saint Paul , supra, at 250 n.3, 217 A.3d 996. The Appellate Court subsequently affirmed the judgment of the trial court. Id., at 265, 217 A.3d 996. Relevant to this appeal, it concluded that parties cannot, "as a matter of law , agree to have the FAA's three month limitation period set forth in 9 U.S.C. § 12 apply to a vacatur proceeding filed in Connecticut state court so as to supplant or override the thirty day limitation period in § 52-420 (b)." (Emphasis in original.) Id., at 252, 217 A.3d 996. It reasoned that this court has repeatedly held that the thirty day limitation period in § 52-420 (b) is subject matter jurisdictional. Id., at 255, 217 A.3d 996. It also noted that "parties cannot agree to confer subject matter jurisdiction on a court ... [or] waive the lack of subject matter jurisdiction." Id., at 257, 217 A.3d 996. Finally, the Appellate Court overruled Doctor's Associates, Inc. , "insofar as [that decision stood] for the proposition that, as a matter of contract interpretation, parties can agree to have" the FAA's three month limitation period supplant the thirty day limitation period prescribed by § 52-420 (b). Id., at 260, 217 A.3d 996.

Two members of the en banc court dissented. The dissent conceded that the FAA did not preempt § 52-420 (b) ; id., at 269, 217 A.3d 996 (Lavery , J. , dissenting); but explained that it would nevertheless apply the three month limitation period to give effect to the FAA's bedrock principle of contractual freedom. See id., at 268–69, 275, 217 A.3d 996 (Lavery , J. , dissenting). The dissent noted that "the parties agreed to be bound by the FAA in its entirety," including the time limitation period contained in 9 U.S.C. § 12. Id., at 267, 217 A.3d 996 (Lavery , J. , dissenting). Finally, the dissent reasoned that the thirty day limitation period in § 52-420 (b) was not properly characterized as subject matter jurisdictional because it "could be considered an element necessary to establish a right, and, therefore, substantive in nature." Id., at 272–73, 217 A.3d 996 (Lavery , J. , dissenting).

Thereafter, the plaintiff filed a petition for certification to appeal, which we granted, limited to the following issue: "Did the Appellate Court correctly conclude that parties to an arbitration agreement did not avoid Connecticut's thirty day statutory deadline for filing an application to vacate an arbitration award set forth in ... § 52-420 (b) by including in their agreement a choice of law provision stating that any arbitration shall be governed by the [FAA] ... which contains a three month deadline for filing a motion to vacate?" (Citation omitted.) A Better Way Wholesale Autos, Inc. v. Saint Paul , 333 Conn. 935, 218 A.3d 593 (2019).

On appeal, the plaintiff contends that the arbitration clause contained in the parties’ financing agreement requires the application of the FAA in all respects, including its three month limitation period for filing a motion to vacate. See 9 U.S.C. § 12 (2012). Specifically, the plaintiff contends that we should reverse the judgment of the Appellate Court because § 52-420 (b) is not subject matter jurisdictional. The plaintiff also argues that, even if we were to conclude that § 52-420 (b) is subject matter jurisdictional, reversal is required because that statute is preempted by the FAA. The defendants disagree and contend that the Appellate Court correctly determined that state law governs the timeliness question because § 52-420 (b) is subject matter jurisdictional. The defendants also argue that the FAA does not preempt § 52-420 (b).

As the Appellate Court noted, whether the plaintiff's application to vacate was untimely "depends on whether state or federal law controls the limitation period in which the plaintiff was required to file such application." A Better Way Wholesale Autos, Inc. v. Saint Paul , supra, 192 Conn. App. at 252, 217 A.3d 996. This question is a legal one, as are the incorporated issues concerning the trial court's subject matter jurisdiction and federal preemption of a state statute. Therefore, our review is plenary. "We have long held that because [a] determination regarding a trial court's subject matter jurisdiction is a question of law, our review is plenary. ... Moreover ... [s]ubject matter jurisdiction involves the authority of the court to adjudicate the type of controversy presented by the action before it. ... [A] court lacks discretion to consider the merits of a case over which it is without jurisdiction ...." (Footnote omitted; internal quotation marks omitted.) Bloomfield v. United Electrical, Radio & Machine Workers of America, Connecticut Independent Police Union, Local 14 , 285 Conn. 278, 286, 939 A.2d 561 (2008). Furthermore, "[j]urisdiction of the [subject matter] is the power [of the court] to hear and determine cases of the general class to which the proceedings in question belong. ... A court has subject matter jurisdiction if it has the authority to adjudicate a particular type of legal controversy." (Internal quotation marks omitted.) Rayhall v. Akim...