Harty v. CANTOR FITZGERALD AND CO., No. 17201.

Decision Date16 August 2005
Docket NumberNo. 17201.
Citation881 A.2d 139,275 Conn. 72
PartiesEmmett J. HARTY v. CANTOR FITZGERALD AND COMPANY.
CourtConnecticut Supreme Court

Aaron S. Bayer, New London, with whom were Suzanne E. Wachsstock and, on the brief, Christian Turner, for the appellant (defendant).

Edward V. O'Hanlan, Stamford, with whom was Thomas J. Donlon, for the appellee (plaintiff).

BORDEN, NORCOTT, KATZ, PALMER and ZARELLA, Js.

KATZ, J.

The defendant, Cantor Fitzgerald and Company, appeals from the judgment of the trial court denying the defendant's application to vacate in part an arbitration award rendered in favor of the defendant's former employee, the plaintiff, Emmett J. Harty, and granting the plaintiff's application to confirm the award. The trial court concluded that the arbitration panel had not manifestly disregarded the law in awarding to the plaintiff compensatory damages for the defendant's failure to pay the plaintiff a 1999 annual bonus and, pursuant to the wage collection statute, General Statutes § 31-72,1 double damages, attorney's fees and costs for the defendant's failure to pay his 1998 and 1999 annual bonuses. With respect to the award under § 31-72, the defendant's principal contention is that the trial court improperly failed to apply de novo review to its claim that the arbitrators had exceeded their authority by awarding double damages, attorney's fees and costs and that, under that standard, the award must be vacated because the submission expressly barred an award of punitive damages, exemplary damages or damages in the nature of punitive or exemplary damages. With respect to the award of compensatory damages for the 1999 bonus, the defendant claims that the trial court improperly determined that the arbitrators had not manifestly disregarded the law in determining that the bonus was a "wage" within the meaning of § 31-72 and that the plaintiff was entitled to the bonus. We conclude that the trial court improperly failed to vacate the award with respect to attorney's fees and costs only. Accordingly, we affirm in part and reverse in part the judgment of the trial court.

The record reveals the following undisputed facts and procedural history. The defendant is a New York corporation doing business in Connecticut. The parties executed an employment agreement (agreement) under which the plaintiff was to serve as a managing director of one of the defendant's divisions for a term beginning on June 28, 1996, and ending on December 31, 1999. The agreement thereafter automatically would extend for successive one year periods unless either party notified the other of its intention not to renew the agreement within a prescribed time period, at which point the plaintiff would become an employee at will. Under the terms of the agreement, the plaintiff was to receive annual bonuses in addition to a base salary. The agreement also contained an arbitration provision providing in relevant part that, "any disputes, differences or controversies arising under this [a]greement shall be settled and finally determined by arbitration .... However, it is understood and agreed that the arbitrators are not authorized or entitled to include as part of any award rendered by them, special, exemplary or punitive damages or amounts in the nature of special, exemplary or punitive damages regardless of the nature or form of the claim or grievance that has been submitted to arbitration . . . ."

During the plaintiff's term of employment, certain disputes arose between the parties. One of these disputes concerned the plaintiff's 1996 and 1997 bonuses. The parties ultimately executed an agreement under which the defendant would pay the plaintiff approximately $150,000 as bonus compensation in exchange for his release of claims, including any claim under § 31-72, against the defendant arising from the dispute.

As a result of a subsequent dispute, in December, 1998, the parties exchanged letters notifying the other of their intention not to renew the agreement and that, as a result, the agreement would terminate on December 31, 1999. By letter dated December 31, 1998, the defendant ordered the plaintiff to remain on home leave until further notice and not to have any contact with the defendant's employees or clients. One year later, by letter dated December 31, 1999, the defendant notified the plaintiff that it had terminated his employment. The defendant paid the plaintiff his salary during the year he remained on home leave, but did not pay him annual bonuses for 1998 and 1999.

Thereafter, the plaintiff filed a claim for arbitration asserting that the defendant had breached the employment agreement and seeking, inter alia, compensatory damages for his 1998 and 1999 bonuses and, pursuant to § 31-72, additional damages, attorney's fees and costs. After seventeen days of hearings, a panel of three arbitrators rendered an award in favor of the plaintiff of compensatory damages in the amount of $1,157,393.22, plus interest, and pursuant to § 31-72, additional damages in the amount of $1,157,393.22, attorney's fees of $382,556 and costs of $39,107.88. The arbitrators did not issue a memorandum of decision setting forth factual findings and legal conclusions supporting the award.

The plaintiff filed an application in the trial court to confirm the award pursuant to General Statutes § 52-417. The defendant filed an application to vacate the award in part pursuant to General Statutes § 52-418(a)(4),2 claiming that the arbitrators had manifestly disregarded the law and evidence by awarding to the plaintiff: (1) compensatory damages for the 1999 bonus; and (2) double damages, attorney's fees and costs pursuant to § 31-72 for both the 1998 and 1999 bonuses.3 At a hearing on the application to vacate, the defendant also argued that the submission was restricted because, under the terms of the employment agreement, the arbitrators could not award punitive, exemplary or special damages. Accordingly, the defendant contended that the arbitrators had exceeded their authority by awarding such damages.

The trial court first determined that, in the absence of clear authority to the contrary, the arbitrators properly had determined that the submission was unrestricted, despite its prohibition on an award of punitive damages, because the parties had agreed to submit to arbitration "any disputes" arising under their agreement. The court then concluded that the contested portions of the award must be reviewed under the manifest disregard of the law standard. Turning to the defendant's claim regarding the damages awarded under § 31-72, the trial court determined that neither the plain language of the statute, the statute's legislative history nor our case law supported the defendant's contention that the law was well-defined that double damages, fees and costs under the wage collection statute were punitive and, therefore, barred under the parties' agreement. Turning to the defendant's claim regarding the award of compensatory damages for its failure to pay the plaintiff his 1999 bonus, the court concluded that the arbitrators had not manifestly disregarded the law either as to whether the plaintiff's bonus was a "wage" under the statute or as to whether the plaintiff was entitled to receive the bonus under the terms of the employment agreement. Accordingly, the trial court denied the defendant's application to vacate part of the award and granted the plaintiff's application to confirm the award in its entirety. The defendant then appealed from the judgment of the trial court to the Appellate Court, and we transferred the appeal to this court. See General Statutes § 51-199(c) and Practice Book § 65-1.

The defendant challenges the trial court's conclusion that the defendant failed to meet its burden of proving that the arbitrators exceeded their authority by rendering the award under § 31-72 and the award of compensatory damages for the 1999 bonus. It first claims that the trial court improperly reviewed under the manifest disregard of the law standard, rather than de novo, its claim that the award of double damages, attorney's fees and costs under § 31-72 was outside the scope of the submission. The defendant contends that, under de novo review, the trial court should have determined that the arbitrators exceeded their authority because they were barred under the parties' agreements from awarding such damages. The defendant further contends that, even under the manifest disregard standard, the trial court improperly determined that the arbitrators had not exceeded their authority: (1) in light of the express limitations in the agreement; and (2) because the plaintiff's bonuses are not "wages" within the meaning of § 31-72. Finally, the defendant contends that the trial court improperly denied its application to vacate the award with respect to the compensatory damages for the 1999 bonus because the arbitrators had manifestly disregarded the law and evidence demonstrating that, under the terms of the agreement, the plaintiff was not entitled to the bonus.

Before addressing these claims, we set forth the well established principles that guide our analysis. "Judicial review of arbitral decisions is narrowly confined. . . . When the parties agree to arbitration and establish the authority of the arbitrator through the terms of their submission, the extent of our judicial review of the award is delineated by the scope of the parties' agreement. . . . When the scope of the submission is unrestricted, the resulting award is not subject to de novo review even for errors of law so long as the award conforms to the submission. . . . Because we favor arbitration as a means of settling private disputes, we undertake judicial review of arbitration awards in a manner designed to minimize interference with an efficient and economical system of alternative dispute resolution. . . .

"Where the submission does not...

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  • Blondeau v. Baltierra
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    ...is delineated by the scope of the parties’ [arbitration] agreement." (Internal quotation marks omitted.) Harty v. Cantor Fitzgerald & Co ., 275 Conn. 72, 80, 881 A.2d 139 (2005). This is because "[a]rbitration is a creature of contract and the parties themselves, by the terms of their submi......
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