Marulli v. Wood Frame Const. Co., LLC, No. 30795.

• Decision Date: 19 October 2010
• Docket Number: No. 30795.
• Court: Connecticut Court of Appeals
• Parties: Alfred MARULLI et al. v. WOOD FRAME CONSTRUCTION COMPANY, LLC.

5 A.3d 957

124 Conn.App. 505

Alfred MARULLI et al.

v.WOOD FRAME CONSTRUCTION COMPANY, LLC.

No. 30795.

Appellate Court of Connecticut.

Argued May 25, 2010.

Decided Oct. 19, 2010.

Sean E. Donlan, Old Saybrook, for the appellant (defendant).

John J. Carta, Jr., Essex, for the appellees (plaintiffs).

GRUENDEL, BEACH and WEST, Js.

GRUENDEL, J.

The defendant, Wood Frame Construction Company, LLC, appeals from the judgment of the trial court vacating the arbitration award in favor of the defendant for breach of a construction contract (contract) by the plaintiffs, Alfred Marulli and Barbara Marulli.¹ On appeal, the defendant claims that the court improperly (1) determined that the arbitrator committed misconduct in summarily closing the arbitration proceedings without providing the plaintiffs an adequate opportunity to present their case and (2) vacated the arbitration award without remanding the case to the arbitrator to determine the threshold issue of whether the contract complied with the Home Improvement Act (act).² We reverse the judgment of the trial court.

In the summer of 2006, the defendant commenced arbitration proceedings pursuant to the contract against the plaintiffs before Michael F. Giordano, an arbitrator appointed by the American Arbitration Association. Of principal legal significance during the proceedings was whether the contract was valid under the act. Nevertheless, that issue often was overshadowed by disagreements between the plaintiffs and Giordano with respect to various aspects of the arbitration, such that in August, 2006, the plaintiffs moved to disqualify Giordano on grounds of partiality and impropriety.³

Despite the disagreements, the parties continued with arbitration into January, 2007, when a tentativesettlement was reached. Then, in July, 2007, the defendant requested a new arbitration hearing, to which the plaintiffs objected. On August 28, 2007, Giordano held a conference call with the parties to consider the plaintiffs' objection, after which he concluded that enough information had been presented to render a decision without the need for further proceedings of any kind. Subsequently, Giordano awarded the defendant $200,000 for breach of the contract.

In January, 2008, the plaintiffs filed an application to vacate the arbitration award, and the court initially denied that application, confirming the original award of $200,000. The plaintiffs then filed a motion to reargue, which the court granted on June 4, 2008. In so doing, the court vacated its previous order, ruling that Giordano had failed "to consider the enforceability of the contract in light of the alleged violations of the [act]" and therefore "failed to comply with the rule of Nussbaum v. Kimberly Timbers, Ltd., 271 Conn. 65, 856 A.2d 364 (2004)...." ⁴ Finally, on January 29, 2009, in a memorandum of decision, the court affirmed its June 4 ruling, granting the plaintiffs' application to vacate and adding that Giordano had "summarily closed the [arbitration] hearing ... without providing the plaintiffs a full and fair opportunity to question the defendant and present evidence of their own" in contravention of General Statutes § 52-418(a)(3). This appeal followed.

I

The defendant first claims that the court improperly vacated the arbitration award pursuant to § 52-418(a)(3)because the record was insufficient to permit a ruling as to the propriety of the arbitrator's decision to close the arbitration as of August 28, 2007. We agree.

We begin with the applicable legal principles and standard of review governing our analysis. Our Supreme Court has stated: "[F]or many years [we have] wholeheartedly endorsed arbitration as an effective alternative method of settling disputes intended to avoid the formalities, delay, expense and vexation of ordinary litigation.... When arbitration is created by contract, we recognize that its autonomy can only be preserved by minimal judicial intervention.... Because the parties themselves, by virtue of the submission, frame the issues to be resolved and define the scope of the arbitrator's powers, the parties are generally bound by the resulting award.... Since the parties consent to arbitration, and have full control over the issues to be arbitrated, a court will make every reasonable presumption in favor of the arbitration award and the arbitrator's acts and proceedings.... The party challenging the award bears the burden of producing evidence sufficient to invalidate or avoid it.... [W]e have ... recognized three grounds for vacating an [arbitrator's] award: (1) the award rules on the constitutionality of a statute ... (2) the award violates clear public policy ... or (3) the award contravenes one or more of the statutory proscriptions of § 52-418.... ⁵

[5 A.3d 961, 124 Conn.App. 510]

"[A]rbitrators are accorded substantial discretion in determining the admissibility of evidence, particularly in the case of an unrestricted submission, which relieve[s] the arbitrators of the obligation to follow strict rules of law and evidence in reaching their decision.... Indeed, it is within the broad discretion of arbitrators to decide whether additional evidence is required or would merely prolong the proceedings unnecessarily .... This relaxation of strict evidentiary rules is both necessary and desirable because arbitration is an informal proceeding designed, in part, to avoid the complexities of litigation. Moreover, arbitrators generally are laypersons who bring to these proceedings their technical expertise and professional skills, but who are not expected to have extensive knowledge of substantive law or the subtleties of evidentiary rules....

"A trial court's decision to vacate an arbitrator's award under § 52-418 involves questions of law and, thus, we review them de novo.... To establish that an evidentiary ruling, or lack thereof, rises to the level of misconduct prohibited by § 52-418(a)(3) requires more than a showing that an arbitrator committed an error of law.... Rather, a party challenging an arbitration award on the ground that the arbitrator refused to receive material evidence must prove that, by virtue of an evidentiary ruling, he was in fact deprived of a full and fair hearing before the [arbitrator]....

"[T]o vacate an arbitrator's award on the ground of misconduct under § 52-418(a)(3), the moving party must establish that it was substantially prejudiced by the improper ruling.... This requirement that the moving party establish substantial prejudice is consistent with the showing that this court requires to order a new trial when a trial court makes an improper evidentiary ruling in a civil trial.... In such cases, a new trial will be ordered only when the improper evidentiaryruling [likely] would [have] affect[ed] the result." (Citations omitted; emphasis added; internal quotation marks omitted.) Bridgeport v. Kasper Group, Inc., 278 Conn. 466, 473-77, 899 A.2d 523 (2006).

"Our inquiry, however, does not end here.... The concept of arbitral misconduct does not lend itself to a precise definition but is, instead, best illustrated by example.... Among the actions that have been found to constitute such misconduct on the part of an arbitrator as would warrant vacating an arbitration award are the following: participation in ex parte communications with a party or a witness, without the knowledge or consent of the other party ... ex parte receipt of evidence as to a material fact, without notice to a party ... holding hearings or conducting deliberations in the absence of a member of an arbitration panel, or rendering an award without consulting a panel member ... undertaking an independent investigation into a material matter after the close of hearings and without notice to the parties ... and accepting gifts or other hospitality from a party during the proceedings.... An award may likewise be set aside on the basis of procedural error by an [arbitrator] if, for instance, the [arbitrator] arbitrarily denies a reasonable request for postponement of a hearing ... or commits an egregious evidentiary error,such as refusing to hear material evidence or precluding a party's efforts to develop a full record.... Though not exhaustive, these examples of arbitral misconduct delineate the broad contours of conduct that is unacceptable and prohibited under § 52-418(a)(3). The presumptive validity of consensual arbitration awards depends upon the underlying integrity of the arbitration process. When that integrity is tainted either by actual impropriety or the appearance of impropriety, the arbitration award cannot be permitted to stand." (Internal quotation marks omitted.) Krassner v. Ansonia, 100 Conn.App. 203, 210-11, 917 A.2d 70 (2007).

On appeal, the defendant claims that the court improperly vacated the arbitration award because the record does not support a ruling that Giordano failed to consider adequately additional evidence from the plaintiffs following the August 28, 2007 conference call. Additionally, the defendant maintains that the court improperly ruled that "[t]he unrefuted facts in this case indicate that the arbitrator summarily closed the hearing...." (Internal quotation marks omitted.)

It is important to note that at the time Giordano held the August 28, 2007 conference call, the parties had been involved in arbitration for more than one year, with formal hearings having lasted from August, 2006, until January 24, 2007. Although the record does not reveal the substance and content of those hearings, or the extent to which the parties presented evidence in support of their claims, by counsel's own admission, the plaintiffs "[c]ould ... have insisted that the case proceed" after the conference call took place.⁶ Instead, the plaintiffs' counsel allowed the case to proceed to a final arbitration award. Nonetheless, in its memorandum of decision vacating the award, the court reasoned that Giordano "summarily closed the [arbitration hearings]," and thus departed from the...