City of Bridgeport v. Kasper Group, Inc.
| Decision Date | 06 June 2006 |
| Docket Number | No. 17470.,17470. |
| Citation | 899 A.2d 523,278 Conn. 466 |
| Court | Connecticut Supreme Court |
| Parties | CITY OF BRIDGEPORT v. THE KASPER GROUP, INC. |
Richard F. Wareing, with whom was Gary F. Sheldon, Hartford, for the appellant (defendant).
Jason M. Kuselias, with whom, on the brief, were Craig A. Raabe and Patrick J. Sweeney, Hartford, for the appellee (plaintiff).
SULLIVAN, C.J., and BORDEN, KATZ, PALMER and VERTEFEUILLE, Js.*
The defendant, The Kasper Group, Inc., appeals from the judgment of the trial court granting the application of the plaintiff, the city of Bridgeport, to vacate an arbitration award under General Statutes § 52-418(a)(3),1 claiming that the trial court improperly determined that the arbitrator had committed misconduct in denying the plaintiff's motions to stay the proceedings and to submit additional evidence. We conclude that the trial court properly determined that the arbitrator had committed misconduct in refusing to consider pertinent and material evidence and, therefore, we affirm the trial court's judgment.
The record reveals the following facts and procedural history. In 1998, the Bridgeport city council, desiring to construct a new elementary school, adopted a resolution establishing a school building committee (committee) to develop plans and specifications for the construction of the new West Side School and to apply for state grants to defray the construction costs. The committee invited professional design firms, including the defendant, to present proposals for the design of the new school. About one month after the defendant had presented its proposal, the committee notified the defendant that it had been selected as the design firm for the West Side School. The plaintiff attached to the notification a draft contract. Over the next few months, the parties negotiated the terms of the contract. On February 24, 2000, the defendant signed the contract, but a representative of the plaintiff never subsequently signed the contract.
On December 19, 2000, the committee, acting through its construction manager, notified the defendant that the scope of the project had changed because the number of grades that the new school would serve was increased from kindergarten through sixth grade to kindergarten through eighth grade. Due to the magnitude of the change, the committee decided to repeat the proposal and selection process for a design firm. In response to the committee's decision, the defendant instituted an action seeking to enjoin the plaintiff from taking any further action to terminate the alleged contract and from soliciting new proposals. In addition, the defendant sought damages under theories of breach of express or implied contract, as well as breach of the implied covenant of good faith and fair dealing. The plaintiff subsequently filed a motion to stay the action on the basis of the alleged contract's arbitration provision, which requires the parties to arbitrate disputes that arise in connection with the contract. Before the trial court ruled on the plaintiff's motion to stay, the parties agreed to submit the dispute to the American Arbitration Association for resolution under the construction industry arbitration rules. In the submission, the parties agreed that the dispute to be resolved included the claims raised by the defendant in its complaint, and, alternatively, a claim for unjust enrichment. In addition, the parties agreed in the submission that if a contract did exist, it was the one dated February 24, 2000, that the defendant had signed.
In accordance with the submission, the dispute was submitted to arbitration. The arbitration proceedings began in June, 2001, and consisted of twelve days of hearings spanning nearly nineteen months. During the arbitration, the plaintiff claimed that, if a contract existed, it was void ab initio because it had been procured by illegal means. The undisputed fact underpinning this defense was that, just prior to the start of the arbitration proceedings, Paul Pinto, who owned 99 percent of the shares of the defendant when it was awarded the West Side School project, had entered into a plea agreement with the United States Attorney for the District of Connecticut, admitting, in part, to having engaged in a bribery and kickback scheme with an elected official, then Bridgeport mayor Joseph Ganim, to obtain Bridgeport municipal contracts. In support of its defense that the contract was void ab initio, the defendant submitted into evidence copies of the information charging Pinto and his plea agreement, along with a copy of Ganim's criminal indictment. The plaintiff sought to compel Pinto to testify during the arbitration proceedings, but his attorney represented to both parties that Pinto would refuse to testify in accordance with his right to avoid self-incrimination under the fifth amendment to the United States constitution. In the absence of Pinto's testimony, the parties and the arbitrator agreed that the plaintiff would submit an offer of proof suggesting adverse inferences that the arbitrator could draw from Pinto's refusal to testify. On January 31, 2003, pursuant to that agreement, the plaintiff submitted its offer of proof, and on February 7, 2003, the defendant submitted a memorandum of law in opposition to that offer of proof.
Ganim's criminal trial started after the arbitration proceedings at issue in the present case had begun. On February 11, 2003, approximately two weeks after the last day of hearings in the arbitration, the plaintiff filed with the arbitrator a motion to stay the posthearing briefing schedule until the conclusion of testimony in the Ganim trial. Specifically, the plaintiff sought to supplement the record before the arbitrator with the testimony from Ganim's trial of certain of the defendant's employees, most notably Pinto, who already had testified at length regarding many of his illegal activities. The arbitrator denied this motion.
By agreement, both parties submitted their posthearing briefs on March 10, 2003. At the same time, the plaintiff also filed a motion to submit additional evidence in the form of transcripts containing excerpts of Pinto's testimony in the Ganim criminal trial. The transcripts, submitted with the motion, contained excerpts of Pinto's testimony on February 6, 7, 10 and 19, 2003. On March 19, 2003, the defendant filed an objection to the plaintiff's motion, and, on April 16, 2003, the parties were notified that the arbitrator had denied the plaintiff's motion and had refused to consider Pinto's testimony.
On May 14, 2003, the arbitrator rendered an award in favor of the defendant and ordered the plaintiff to pay the defendant $155,507.36.2 The arbitrator did not set forth his reasoning underlying the award. Pursuant to § 52-418, the plaintiff filed an application with the Superior Court to vacate the arbitrator's award. The defendant responded by filing both an objection to the plaintiff's application to vacate and its own motion, pursuant to General Statutes § 52-417, to confirm the arbitrator's award. After a hearing, the trial court granted the plaintiff's application to vacate the arbitrator's award on the ground that the arbitrator had committed misconduct under § 52-418(a)(3) by denying both the plaintiff's motion to stay the proceedings and its subsequent motion to admit additional evidence at the end of the proceedings. This appeal followed.3
On appeal, the defendant claims that the trial court improperly determined that the arbitrator's denial of the plaintiff's motions had constituted misconduct under § 52-418(a)(3). Specifically, the defendant contends that it was not misconduct for the arbitrator to refuse to consider Pinto's testimony because it was irrelevant and, even if it were relevant, the testimony was cumulative of what had been proffered in the plaintiff's offer of proof. The defendant further contends that the arbitrator's refusal to consider Pinto's testimony was appropriate because its minimal probative value was outweighed by other considerations. Finally, the defendant contends that the exclusion of Pinto's testimony did not deprive the plaintiff of a full and fair opportunity to develop its defense that the contract was void because it was procured illegally.4
In response, the plaintiff claims that Pinto's testimony was relevant to its defense that the contract had been procured illegally. The plaintiff also claims that Pinto's testimony was relevant to rebut the defendant's argument that a prior course of dealing, namely, a long history between the parties of legally obtained contracts, had been established. In particular, the plaintiff contends that one of the prior contracts between the parties on which the defendant relies to establish the prior course of dealing was identified in Pinto's testimony as having been procured illegally. The plaintiff further claims that the arbitrator's denial of its motions deprived it of a full and fair hearing because Pinto had refused to testify in the arbitration proceedings and his testimony at the criminal trial was highly incriminating.5
Finally, the plaintiff asserts two alternate grounds on which the trial court's judgment should be affirmed. First, the plaintiff contends that enforcing the arbitrator's award would violate the public policy against binding a municipality on the basis of the unauthorized acts of its agents. Second, the plaintiff contends that the award also violates the public policy against the enforcement of illegal contracts.6 We agree with the plaintiff that it was deprived of a full and fair hearing because Pinto's testimony at the criminal trial was highly incriminating and instrumental to its defense that the contract was void because it had been procured illegally.
We begin with a restatement of the principles that guide our review of a trial court's judgment vacating an arbitration award. ...
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