Mbna America Bank, N.A. v. Boata

• Decision Date: 31 July 2007
• Docket Number: No. 17668.,17668.
• Citation: 283 Conn. 381,926 A.2d 1035
• Court: Connecticut Supreme Court
• Parties: MBNA AMERICA BANK, N.A. v. Teofil BOATA.

926 A.2d 1035

283 Conn. 381

MBNA AMERICA BANK, N.A. v. Teofil BOATA.

No. 17668.

Supreme Court of Connecticut.

Argued February 13, 2007.

Decided July 31, 2007.

Jeanine M. Dumont, East Hartford, for the appellant (plaintiff).

Daniel S. Blinn, with whom, on the brief, was Andrew G. Pizor, Rocky Hill, for the appellee (defendant).

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

ZARELLA, J.

The plaintiff, MBNA America Bank, N.A., appeals, following our grant of certification,¹ from the judgment of the Appellate Court reversing the trial court's judgment confirming an arbitration award in the plaintiff's favor. The determinative issue in this certified appeal is whether the trial court properly declined to consider whether an agreement to arbitrate existed between the parties because the defendant, Teofil Boata, had failed to raise the issue in a timely application or motion to vacate pursuant to General Statutes § 52-418.² On appeal to the Appellate Court, that court determined that the defendant was entitled to a hearing on the issue of whether an agreement to arbitrate existed and, therefore, reversed the trial court's judgment. We agree with the Appellate Court.

The following facts and procedural history are relevant to our disposition of this appeal. In 1996, the plaintiff issued a credit card to the defendant. The plaintiff contends that a cardholder agreement accompanied the issuance of the credit card and that, by using the credit card, the defendant acceded to the terms of the agreement. Although this initial cardholder agreement did not include an arbitration provision, the plaintiff claims to have issued a notice of an amendment to the cardholder agreement in 1999. This amendment provided that any and all claims arising under the cardholder agreement would be submitted to binding arbitration. The amendment included a provision that allowed the defendant to opt out of the arbitration provision by providing the plaintiff with written notice of his decision to opt out within forty-five days. The plaintiff contends that it never received written notice of the defendant's decision to opt out and that, consequently, he acceded to the arbitration provision by continuing to use the credit card pursuant to the terms of the amended cardholder agreement. The defendant contends that he never received notice of the amendment providing for binding arbitration.

The plaintiff alleges that, in April, 2003, the defendant defaulted on his obligation to make payments on the credit card. At the time of the default, the defendant had an outstanding balance of approximately $45,000. Pursuant to the arbitration provision of the amended cardholder agreement, the plaintiff initiated an arbitration proceeding with the National Arbitration Forum in an effort to recover the allegedly overdue sum. The defendant, representing himself pro se, responded to the plaintiff by claiming, inter alia, that he "was never informed that there [was] an [a]rbitration [c]lause," and that he "never agreed under any contractual relationship to arbitrate his disputes with [the plaintiff] . . . [and] is not bound by the [arbitration] [a]greement presented by the [plaintiff]...." Accordingly, the defendant requested that the arbitrator dismiss the plaintiff's claim.

On March 19, 2004, the arbitrator issued a notice of award. The arbitrator found that (1) the plaintiff had issued the defendant a credit card in 1996 pursuant to the terms enumerated in the cardholder agreement, (2) the cardholder agreement provided that the signing and use of the card obligated the user to pay for the credit used, (3) the defendant had, in fact, utilized credit and obtained cash advances from the plaintiff, and (4) the defendant had affirmed his obligation to pay for such credit by making timely payments to the plaintiff and failing to object in a timely fashion to any outstanding balances. On the basis of these findings, the arbitrator issued an award of $57,486.66 in favor of the plaintiff. The arbitrator did not address the defendant's claim that he had not agreed to binding arbitration or his related request for dismissal of the plaintiff's claim.

On August 17, 2004, the plaintiff filed an application to confirm the arbitrator's award in the Superior Court pursuant to General Statutes § 52-417.³ On August 23, 2004, the defendant filed an objection to the application to confirm the award on the ground that the parties had not entered into a written agreement to arbitrate. The defendant claimed that the arbitrator lacked authority to consider the matter or to issue an award. The trial court concluded that it could not consider the defendant's objection, which it viewed as a motion to vacate, modify or correct brought pursuant to General Statutes §§ 52-418 and 52-419, because it was not filed within thirty days of the notice of the arbitration award. See General Statutes § 52-420(b).⁴ The trial court rendered judgment confirming the award, and the defendant appealed to the Appellate Court from the trial court's judgment, claiming that the trial court improperly had concluded that he had failed to assert his right to challenge the arbitrability of his claim in a timely manner. MBNA America Bank, N.A. v. Boata, 94 Conn.App. 559, 562-63, 893 A.2d 479 (2006). The Appellate Court reversed the judgment of the trial court and remanded the case for a determination of arbitrability; id., at 567, 893 A.2d 479; concluding that the issue of whether a valid agreement to arbitrate existed implicated the arbitrator's power to arbitrate the plaintiff's claim and could be raised at any time prior to confirmation of the award. See id., at 564-66, 893 A.2d 479. We affirm the judgment of the Appellate Court.

We begin our analysis with the applicable standard of review. Typically, judicial review of arbitration awards is narrow in scope because we favor arbitration as an alternative method of dispute resolution. See, e.g., Board of Education v. Wallingford Education Assn., 271 Conn. 634, 639, 858 A.2d 762 (2004). When questions of arbitrability implicating the existence of an agreement to arbitrate arise, however, we are presented with a question of law over which our review is de novo. See Welch Group, Inc. v. Creative Drywall, Inc., 215 Conn. 464, 467, 576 A.2d 153 (1990).

"It is well established that [a]rbitration is a creature of contract. . . . [A] person can be compelled to arbitrate a dispute only if, to the extent that, and in the manner which, he has agreed so to do." (Internal quotation marks omitted.) Nussbaum v. Kimberly Timbers, Ltd., 271 Conn. 65, 72, 856 A.2d 364 (2004). Because arbitration is based on a contractual relationship, a party who has not consented cannot not be forced to arbitrate a dispute. Id. Moreover, even if the parties to a dispute agree to arbitrate, "[i]t is the province of the parties to set the limits of the authority of the arbitrators, and the parties will be bound by the limits they have fixed." (Internal quotation marks omitted.) Id. Therefore, the arbitration provision in an agreement is effectively an agreement that is separate and distinct from the broader contract, and a court of law may enforce only those agreements that the parties actually make. Id. "Accordingly, because an arbitrator's jurisdiction is rooted in the agreement of the parties . . . a party who contests the making of a contract containing an arbitration provision cannot be compelled to arbitrate the threshold issue of the existence of an agreement to arbitrate." (Emphasis in original; internal quotation marks omitted.) Id., at 72-73, 856 A.2d 364.

In the present case, both the plaintiff and the defendant rely on our decision in Bennett v. Meader, 208 Conn. 352, 545 A.2d 553 (1988). On the one hand, the plaintiff claims that, "[i]f a defendant submits to arbitration without legitimately raising the issue of arbitrability, that party may be deemed to have waived his right to judicial review of the arbitrability issue." (Internal quotation marks omitted.) The plaintiff further contends that arbitrability claims implicating "subject matter jurisdiction [are] not [properly raised when] there is a written agreement to arbitrate." The plaintiff contends that the "[d]efendant failed to legitimately raise the issue [of subject matter jurisdiction] before the arbitrator" because, during the arbitration proceedings, he made no "supportable claim that he never agreed to arbitrate," whereas the plaintiff "[alleged that] there was a written agreement [to arbitrate]. . . ." The plaintiff concludes, therefore, that the defendant effectively "waived his right to judicial review of the arbitrability issue." (Internal quotation marks omitted.)

The defendant, on the other hand, claims that, "[b]ecause arbitration is a creature of contract, [an] arbitrator's authority to issue an award depends [on] the existence of an agreement to arbitrate. . . . Consequently, claims challenging the existence of an agreement to arbitrate question the arbitrator's subject matter jurisdiction"; (citation omitted); and, accordingly, the right to a judicial determination of the existence of that agreement "endures at least up until the time the award has been transmuted into a final judgment [confirming the award]. . . ." (Internal quotation marks omitted.) Within this rubric, the defendant claims that, because he sought to have the arbitration claim dismissed on the ground that no agreement to arbitrate existed, he is entitled to a judicial determination of the same issue at any time prior to the trial court's confirmation of the award.

The Appellate Court agreed with the defendant's reasoning, concluding that "the [trial] court had jurisdiction to entertain the defendant's claim that an agreement to arbitrate never existed [because] . . . the defendant was entitled to a [determination of] his claim . . . ." MBNA America Bank, N.A. v. Boata, supra, 94 Conn.App. at 566, 893 A.2d 479. The Appellate...