Norwalk Med. Grp., P.C. v. Yee

• Decision Date: 21 July 2020
• Docket Number: AC 42511
• Citation: 235 A.3d 540,199 Conn.App. 208
• Parties: The NORWALK MEDICAL GROUP, P.C., et al. v. Arthur YEE
• Court: Connecticut Court of Appeals

199 Conn.App. 208

235 A.3d 540

The NORWALK MEDICAL GROUP, P.C., et al.

v.Arthur YEE

AC 42511

Appellate Court of Connecticut.

Argued February 11, 2020

Officially released July 21, 2020

James C. Riley, with whom, on the brief, was Thomas P. O'Connor, Greenwich, for the appellants (plaintiffs).

Anita D. Di Gioia, for the appellee (defendant).

DiPentima, C. J., and Alvord and Pellegrino, Js.

DiPENTIMA, C. J.

Our courts "undertake judicial review of arbitration awards in a manner designed to minimize interference with an efficient and economical system of alternative dispute resolution. ... Such a limited scope of judicial review is warranted given the fact that the parties voluntarily bargained for the decision of the arbitrator and, as such, the parties are presumed to have assumed the risk of and waived objection to that decision." (Citations omitted; internal quotation

marks omitted.) Industrial Risk Insurers v. Hartford Steam Boiler Inspection & Ins. Co. , 258 Conn. 101, 110, 779 A.2d 737 (2001). Led by these overarching principles, we consider the present appeal challenging the propriety of an arbitration award rendered in favor of the defendant, Arthur Yee. The plaintiffs, The Norwalk Medical Group, P.C. (medical group), and thirteen individual physicians (physicians) who formerly were members of the medical group,¹ appeal from the judgment of the trial court denying their application to vacate an arbitration award and the judgment of the trial court granting the application to confirm the arbitration award filed by the defendant. On appeal, the plaintiffs claim that the court improperly confirmed the award because it was not mutual, final and definite due to the failure of the arbitrator to (1) allocate arbitration costs, expenses and compensation and (2) set forth a reasoned award with respect to the issue of attorney's fees. We disagree and, accordingly, affirm the judgments of the trial court.

The following facts, as found by the arbitrator or otherwise undisputed, and procedural history are necessary for our resolution of this appeal. The defendant, a physician licensed to practice medicine in the state of Connecticut, became an employee of the medical group on August 1, 1988, and, some twenty years later, executed a written shareholder employment agreement (agreement) with the medical group on or about July 7, 2008. Paragraph 30 of the agreement provided: "Any controversy, claim, or breach arising out of or relating to this [a]greement shall be submitted for resolution to the American Arbitration Association [ (AAA) ] before one arbitrator. Such arbitration shall be held in Norwalk, Connecticut, in accordance with the rules and practice of the [AAA] then pertaining, and the judgment upon the award rendered shall be final and determinative

and may be entered by consent in any court having jurisdiction thereof. The arbitrator shall have no authority to order punitive or exemplary damages but may award reasonable attorney's fees to the prevailing party."

On October 19, 2016, the defendant e-mailed the chief executive officer of the medical group regarding his intention to retire from the practice of medicine prior to the merger of the medical group with another medical practice. The defendant retired from the medical group on or about June 1, 2017.

On August 7, 2017, the defendant filed a demand for arbitration, claiming that the plaintiffs had breached the agreement and sought approximately $220,242 in damages, as well as attorney's fees and arbitration costs. The defendant claimed that, following his retirement, he was entitled to a buy-out from the medical group, pursuant to appendix II of the agreement, in the amount of $215,042. He also sought an additional $5000 for his 250 shares of the medical group.² The medical group denied any obligation to pay the defendant. The defendant's demand was directed to all the plaintiffs.

In a response dated August 29, 2017, the plaintiffs denied the defendant's material allegations and asserted that the physicians were not parties to the agreement and that the demand for arbitration had failed to state a claim against these individuals. The plaintiffs further asserted that the medical group had "ceased the active conduct of its business and [was] in the process of winding up its affairs and liquidating its assets. Thus, there is no obligation under the [agreement] on the part

of any of the [plaintiffs] to pay ‘retirement compensation’ to [the defendant]."

Following the selection of the arbitrator and an agreed upon schedule of the proceedings, the defendant filed a specification of claims on or about November 8, 2017. In count one, the defendant alleged that the medical group had breached the terms of the agreement in failing to pay him in accordance with appendix II. In count two, the defendant set forth various allegations against the physicians that, in his view, resulted in their personal liability to the defendant. In their answer and special defenses, dated November 27, 2017, the plaintiffs denied most of the defendant's allegations and repeated the special defenses set forth in the August 29, 2017 response.

After the filing of various written submissions, including a motion to dismiss filed by the plaintiffs, prehearing memoranda, a stipulation of uncontested facts, posthearing briefs and proposed orders, and after a three day hearing, the arbitrator issued his decision and award on May 22, 2018. The arbitrator concluded that the medical group had breached its contractual obligation to pay the buy-out to the defendant, but that the individual physicians had no obligation to fund it. All the claims against the individual physicians were "denied and dismissed" by the arbitrator. The arbitrator awarded the defendant $220,242, 10 percent interest from July 27, 2017, the date of the breach, and reasonable attorney's fees. The arbitrator concluded his decision and award with the following statement: "This [a ]ward is in full settlement of all claims submitted to this [a ]rbitration. All claims not expressly granted herein are hereby denied ." (Emphasis added.) The defendant's counsel subsequently submitted a claim for $162,526 in attorney's fees.

In their June 11, 2018 motion to modify the decision and award of the arbitrator, the plaintiffs sought to have the arbitrator (1) assess arbitration fees, expenses and

compensation against the defendant regarding his claims against the individual physicians and (2) award attorney's fees to the physicians as "prevailing parties." Four days later, the arbitrator denied the plaintiffs’ motion to modify.³

On June 19, 2018, the plaintiffs filed an objection to the defendant's demand for attorney's fees. In part, they claimed that the defendant was not entitled to recover attorney's fees for his unsuccessful claims against the physicians and therefore the attorney's fees should only be $53,822.40. The defendant filed a response dated July 2, 2018.

One week later, the arbitrator issued an "amended decision" regarding the issue of attorney's fees. He awarded the defendant attorney's fees in the amount of $149,903, reducing the amount claimed by $12,623 for charges associated with the service of subpoenas and an "improper and unnecessary concurrent state court action ...." The arbitrator further determined that the May 22, 2018 decision and award would not be changed in any other aspect. On July 30, 2018, the arbitrator issued an "amended final decision" that "highlighted" the following "key award components": "The total award of contractual breach damages is $220,242. The interest on the damages from July 27, 2017, to June 5, 2018, at 10 [percent] is $18,886.51. The amended award of [attorney's] fees is $149,903. Total award–$389,031.51."

On August 8, 2018, the plaintiffs filed an application to vacate the arbitration award pursuant to

General Statutes § 52-418 and Practice Book § 23-1. Two days later, in a separate action, the defendant filed an application to confirm the arbitration award pursuant to General Statutes §§ 52-408 through 52-424. On October 3, 2018, the plaintiffs moved to consolidate the two actions pursuant to Practice Book § 9-5. On October 16, 2018, the court, Genuario, J. , granted the motion to consolidate.

The court, Hon. Taggart D. Adams , judge trial referee, held a hearing on October 22, 2018, on the parties’ concomitant applications. On January 3, 2019, the court issued a memorandum of decision denying the plaintiffs’ application to vacate and granting the defendant's application to confirm the arbitration award. Specifically, it rejected the plaintiffs’ argument that the arbitrator had failed to make a mutual, final and definite award by failing to allocate the arbitration fees, expenses and compensation as required by rule 39 (d) of the AAA. The court also was not persuaded by the plaintiffs’ contention that in not providing the rationale for the attorney's fees issues, the arbitrator had failed to issue a reasoned award.⁴ This appeal followed. Additional facts will be set forth as necessary.

As a preliminary matter, we set forth the legal principles and standard of review applicable to our discussion of the plaintiffs’ appellate claims and arguments. Generally, "courts favor arbitration as a means of settling private disputes, [and, therefore] we undertake judicial review of arbitration awards in a manner designed to minimize interference with an efficient and economical system of alternative dispute resolution." (Internal quotation marks omitted.) Asselin & Vieceli Partnership, LLC v. Washburn , 194 Conn. App. 519, 526, 221 A.3d 875 (2019), cert. denied,

334 Conn. 913, 221 A.3d 449 (2020) ; see also Benistar Employer Services Trust Co. v. Benincasa , 189 Conn. App. 304, 309, 207 A.3d 67 (Connecticut takes strongly affirmative view of consensual arbitration, as it is considered favored method to prevent litigation, promote tranquility and expedite equitable settlement of disputes), cert. denied, 331...