O & G/O'Connell Joint Venture v. Chase Family Ltd. Partnership No. 3

• Citation: 523 A.2d 1271,203 Conn. 133
• Decision Date: 14 April 1987
• Docket Number: No. 12964,12964
• Court: Supreme Court of Connecticut
• Parties: O & G/O'CONNELL JOINT VENTURE v. CHASE FAMILY LIMITED PARTNERSHIP NO. 3 et al. CHASE FAMILY LIMITED PARTNERSHIP NO. 3 et al. v. O & G/O'CONNELL JOINT VENTURE.

Page 1271

523 A.2d 1271

203 Conn. 133

O & G/O'CONNELL JOINT VENTURE v. CHASE FAMILY LIMITED PARTNERSHIP NO. 3 et al.

CHASE FAMILY LIMITED PARTNERSHIP NO. 3 et al. v. O & G/O'CONNELL JOINT VENTURE.

No. 12964.

Supreme Court of Connecticut.

Argued Feb. 4, 1987.

Decided April 14, 1987.

John C. Yavis, Jr., Hartford, with whom was Barry J. Waters, Hartford, for appellant (plaintiff in the first case and defendant in the second case).

Frank J. Silvestri, Jr., Bridgeport, with whom was Charles F. Corcoran III, Hartford, for appellees (defendants in the first case and plaintiffs in the second case).

Before PETERS, C.J., and ARTHUR H. HEALEY, SANTANIELLO, DUPONT and CURRAN, JJ.

PETERS, Chief Justice.

The dispositive issue in this appeal is whether an arbitration panel engaged in misconduct warranting the vacation of an arbitration award under General Statutes § 52-418(a)(3) when the panel failed to admit into evidence a single document proffered by the defendants after the completion of extensive hearings. ¹ Pursuant to an arbitration clause in the construction contract between the parties, the plaintiff, O & G/O'Connell Joint Venture, submitted to the American Arbitration Association (AAA) a demand to arbitrate a dispute arising out of the defendants' allegedly wrongful termination of that contract. Upon the completion of arbitration hearings and the submission of post-hearing briefs, a three member arbitration panel awarded the plaintiff the sum of $1,877,084 plus interest as damages, and the defendants the sum of $52,570 plus interest on a counterclaim. The defendants then filed an application in the Superior Court to vacate the award pursuant to General Statutes § 52-418, and the plaintiff filed an application for confirmation of the award pursuant to General Statutes § 52-417. ² Concluding that the arbitration panel had engaged in misconduct in violation of General Statutes § 52-418(a)(3), the trial court granted the defendants' application and denied the plaintiff's application. ³ The plaintiff has appealed from those judgments. We find error.

The parties stipulated to the following underlying facts. The plaintiff is a joint venture contractor comprised of O & G Industries, Inc. (O & G), and Daniel O'Connell's Sons, Inc. (O'Connell). The defendants, Chase Family Limited Partnership No. 3 and Olympia & York Hartford, Inc., are the owners of a multistory office building, known as One Commercial Plaza, in downtown Hartford. After negotiations that began in June, 1981, the parties entered into a written contract, dated March 8, 1983, but effective as of October 15, 1981, for the construction of that building. Subsequently, on January 5, 1984, while the building was under construction, the defendants notified the plaintiff of the termination of its employment.

Pursuant to an arbitration agreement providing for the arbitration of disputes in accordance with the Construction Industry Arbitration Rules of the AAA, ⁴ the plaintiff submitted to the AAA on January 12, 1984, an unrestricted demand for arbitration. ⁵ The demand alleged, inter alia, wrongful termination of the plaintiff's employment, and requested two types of relief, a declaration that the construction contract remained in full force and effect and damages "in an amount as yet undetermined." In response, the defendants filed an answer and an amended counterclaim. Between June, 1984 and June, 1985, a three member arbitration panel held fifty-two hearings, during which it heard extensive testimony and received voluminous documentary evidence. The panel rendered an award on October 10, 1985, providing the relief set forth above.

The defendants filed a timely application in the Superior Court to vacate the award of the arbitration panel. Among the issues that they raised was their claim that the plaintiff was not entitled to recover damages resulting from the lost business opportunity it had allegedly suffered in its capacity as a joint venturer. ⁶ General Statutes § 52-418. The defendants' application complained further that the arbitration panel was guilty of misconduct because it had declined to admit into evidence a copy of the joint venture agreement entered into by the two joint venturers, which the defendants had attempted to proffer after the completion of the arbitration hearings. Shortly thereafter, on November 29, 1985, the plaintiff filed an application for an order confirming the arbitration award. General Statutes § 52-417. The two applications were heard together in the trial court.

In the defendants' argument to the trial court concerning the applicability of § 52-418, they relied on a detailed history of the significance of the joint venture agreement and the circumstances surrounding their efforts to bring the agreement to the attention of the arbitration panel. This history is recited in the stipulation of facts.

The defendants explained that the joint venture agreement was significant because it negated the plaintiff's claim for lost opportunity damages which, according to the defendants, was not supported by evidence presented at the hearings and had been raised for the first time in the plaintiff's post-hearing brief to the arbitration panel. In that brief, the plaintiff asserted that the defendants' "wrongful and bad faith termination of the Contractor has effectively destroyed the Contractor's ability to bid projects as a joint venture." The plaintiff argued further that "[a]lthough the evidence is circumstantial, the Panel may rightfully--and conservatively--infer that but for the termination the Contractor would have been awarded at least two highrise jobs within the reasonable life-expectancy of the joint venture." Anticipating and responding to this claim in their brief, filed simultaneously with that of the plaintiff, the defendants asserted that "[t]he contractor has offered no convincing evidence that the termination will cause the O & G/O'Connell joint venture any economic harm...." ⁷ In their subsequent reply brief to the arbitrators, the defendants again maintained that the plaintiff had no viable claim for loss of business opportunity, because "[t]he reality is that this joint venture between O & G and O'Connell was formed specifically and only to construct One Commercial Plaza." ⁸ The defendants, nonetheless, argued to the court that the joint venture agreement was essential to show that the joint venture had no life expectancy beyond the construction project at issue here and that lost opportunity damages were therefore inappropriate.

In the arbitration proceedings, the defendants had proffered the document in the following manner. After the scheduled hearings had been completed in June, 1985, and both parties had submitted their initial post-hearing briefs, the defendants' counsel sent to the AAA on August 14, 1985, a letter addressed to the arbitrators, requesting permission to introduce a copy of the joint venture agreement into evidence. ⁹ The defendants' counsel did not, however, enclose with the letter a copy of the agreement itself. The letter explained that the document was being offered to negate the plaintiff's claim for lost opportunity damages, and that the defendants had not submitted it earlier because that claim had not been raised by the plaintiff at the hearings. Upon being telephonically advised by an AAA administrator of this request, the plaintiff's counsel informed the AAA by letter, dated August 16, 1985, that he had no objection to the admission of the agreement as part of the record. On August 19, 1985, the AAA sent each arbitrator a copy of the defendants' August 14 letter. The AAA did not send them a copy of the agreement itself, because it had never received a copy, and did not send to either the arbitrators or the defendants' counsel the August 16 letter from the plaintiff's counsel consenting to admission of the document.

At no time subsequent to his initial request did the defendants' counsel communicate with the arbitrators or the plaintiff's counsel to pursue his request for submission of the document. The arbitrators never responded to the request of the defendants' counsel and therefore never received a copy of the agreement. Subsequently, in a letter dated October 10, 1985, the arbitrators declared the hearings closed and enclosed therein a written arbitration award.

On the basis of these stipulated facts, the trial court concluded, in a written memorandum of decision, that the defendants' application to vacate should be granted, and the plaintiff's application for confirmation denied. The court found that $1,730,578.16 of the total sum of $1,877,084 awarded to the plaintiff represented compensation for "lost business opportunity." The court agreed with the defendants that the plaintiff had offered no evidence during the hearings to support its claim for lost opportunity damages and that the plaintiff had raised this claim for the first time in its post-hearing briefs. Finding that the panel had wrongfully "refused to receive" the joint venture agreement, the court concluded that it was "guilty of misconduct" under General Statutes § 52-418(a)(3) in "refusing to hear evidence pertinent and material to the controversy." It also determined that the panel had failed to comply with the "absolute mandate of Section 35 of the Construction Industry Arbitration Rules which requires that prior to closing the hearings [it] 'specifically inquire' whether the parties have any additional evidence."

In response to this adverse determination, the plaintiff filed with the trial court two timely motions to open and modify the judgment. The first of these motions sought to have the case remanded to the panel for a rehearing and for submission of the joint venture agreement. The second asked the trial court to set its judgment aside and to confirm the award.

The trial court filed a second memorandum of decision in explaining its denial of these motions. Clarifying its ruling...