Success Centers, Inc. v. Huntington Learning Centers, Inc.

• Decision Date: 01 September 1992
• Docket Number: No. 14406,14406
• Citation: 223 Conn. 761,613 A.2d 1320
• Court: Connecticut Supreme Court
• Parties: SUCCESS CENTERS, INC. v. HUNTINGTON LEARNING CENTERS, INC., et al.

Page 1320

613 A.2d 1320

223 Conn. 761

SUCCESS CENTERS, INC. v. HUNTINGTON LEARNING CENTERS, INC., et al.

No. 14406.

Supreme Court of Connecticut.

Argued June 4, 1992.

Decided Sept. 1, 1992.

Berdon, J., dissented and filed opinion.

Gregory T. D'Auria, with whom was Bruce G. MacDermid, Hartford, for appellant (plaintiff).

Charles F. Stelljes, Danbury, for appellees (defendants).

Before CALLAHAN, GLASS, BORDEN, BERDON and FRANCIS X. HENNESSY, JJ.

GLASS, Associate Justice.

The sole issue in this certified appeal is whether the Appellate Court properly dismissed the plaintiff's appeal on the ground that it was not from a final judgment. The plaintiff, Success Centers, Inc., commenced this action in the Superior Court against the named defendant, Huntington Learning Centers, Inc., and others, ¹ alleging a violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq., ² and seeking damages and temporary injunctive relief to prevent the enforcement of certain franchise agreements between the parties. Upon motion of the defendants pursuant to General Statutes § 52-409, ³ the trial court ordered the parties to proceed with arbitration, as provided in their franchise agreements. The plaintiff appealed to the Appellate Court, which, upon motion of the defendants, dismissed the appeal for lack of a final judgment. We granted certification of the plaintiff's appeal and now affirm the judgment of the Appellate Court.

The facts relevant to the disposition of this appeal are as follows. The plaintiff alleged in its complaint that, in 1988, it entered into franchise agreements with the defendants for the purchase of franchised learning centers in Glastonbury and Farmington. The plaintiff alleged further that, "[s]ubsequent to entering into said franchise agreements, [it] ascertained that the methods employed by the defendants are invalid and improper in that inter alia they prescribe remedial reading services for each and every student who is administered the diagnostic tests irrespective of whether such student actually requires such remedial reading." The plaintiff asserted that the alleged practices violate CUTPA and Connecticut public policy.

Prior to the commencement of this action, the defendants had demanded arbitration pursuant to the provisions of the franchise agreements in order to collect royalties that they claimed the plaintiff owed them for the operation of the franchises. The parties had selected an arbitrator and had scheduled an arbitration hearing. The defendants, in their answer and special defense to the plaintiff's complaint, requested that the trial court enter an order pursuant to General Statutes § 52-410, ⁴ directing the plaintiff to proceed with arbitration. ⁵ The defendants separately moved the trial court, pursuant to § 52-409, for an order to stay the pending action and to proceed with arbitration. The trial court held a hearing on the defendants' motion and, thereafter, ordered the parties to proceed with arbitration, as provided in their contract. In its ruling on the defendants' § 52-409 motion, the trial court also denied the plaintiff's motion for a temporary injunction. ⁶

The plaintiff appealed to the Appellate Court. The defendants moved to dismiss the appeal for lack of a final judgment, claiming that the trial court's order merely postponed the disposition of the underlying action. The Appellate Court granted the defendants' motion to dismiss the plaintiff's appeal. We granted the plaintiff's petition for certification to appeal limited to the following question: "Did the Appellate Court properly dismiss for lack of a final judgment the plaintiff's appeal from the trial court's order compelling arbitration?" Success Centers, Inc. v. Huntington Learning Centers, Inc., 220 Conn. 930, 599 A.2d 383 (1991). We conclude that the Appellate Court's judgment dismissing the plaintiff's appeal was proper.

The plaintiff claims that the Appellate Court improperly dismissed its appeal for lack of a final judgment. Although the plaintiff concedes that the trial court's § 52-409 order was interlocutory, the plaintiff urges this court to analyze the appealability of a § 52-409 order under the test set forth in State v. Curcio, 191 Conn. 27, 31, 463 A.2d 566 (1983). The plaintiff contends that the trial court's interlocutory order under § 52-409 terminates a separate and distinct proceeding and, thus, is immediately appealable. Id. Alternatively, the plaintiff argues that the trial court's order meets the second test under Curcio, in that it "so concludes the rights of the parties that further proceedings cannot affect them." Id. We are persuaded that the trial court's order does not meet either exception set forth in Curcio, and, therefore, that the plaintiff must await completion of the arbitration proceedings before it is entitled to appellate review of its claim that the issues raised in its complaint are not arbitrable. ⁷

The plaintiff asserts at the outset that the case law regarding the appealability of orders under §§ 52-409 and 52-410 is inconsistent, despite the fact that, under either statute, the trial court must decide the issue of arbitrability. The plaintiff criticizes this court's divergent treatment of § 52-409 and § 52-410 orders, claiming that it "has evolved on its own, leaving litigants and lower courts to guess at the distinguishing elements." In support of its criticism, the plaintiff refers to the conclusion of certain commentators that "[i]t is difficult to see why these statutes should be treated differently." W. Moller & W. Horton, Connecticut Practice, Practice Book Annotated, Supreme Court and Appellate Court Rules and Forms (1992) § 4000, p. 58. ⁸ We disagree with the plaintiff's premise that the disparate treatment of orders under the two statutes is without logical foundation. ⁹

Under § 52-409, when an action is brought in the trial court by a party to a written agreement that includes provisions for arbitration, and the trial court is satisfied that an issue involved in the action is arbitrable, the court, on motion of any party to the agreement, shall stay the action until arbitration has been had in compliance with the agreement. See footnote 3, supra. As a condition precedent to the issuance of a stay order by the trial court, the moving party must be ready and willing to proceed with arbitration. The authority of the court to stay a pending action under § 52-409 thus provides an incentive to participate to the party reluctant to engage in arbitration. On the other hand, the trial court's denial of a § 52-409 motion leaves the parties where the court found them, requiring them to proceed with the pending litigation.

The trial court's authority under § 52-410 is quite different from its authority under § 52-409. Section 52-410 creates an independent action that can be instituted only by a properly served writ of summons and complaint. See footnote 4, supra. No civil action need be pending between the parties for a § 52-410 action to be commenced. Cf. KND Corporation v. Hartcom, Inc., 5 Conn.App. 333, 336-37, 497 A.2d 1038 (1985) ("[i]t would make little sense to require a party being sued to initiate [a § 52-410] action"). Pursuant to § 52-410, a party to a written agreement for arbitration claiming the neglect or refusal of another to proceed with arbitration can apply to the trial court for an "order directing the parties to proceed with the arbitration in compliance with their agreement."

We are persuaded that §§ 52-409 and 52-410 serve distinct functions. Section 52-409 provides relief when a party to a contract that contains an arbitration clause desires arbitration of a dispute, and the other party, instead of proceeding with arbitration, institutes a civil action to resolve the dispute. The party desiring arbitration can then seek a stay of the civil action. In contrast, § 52-410 comes into play when no action is pending between the parties, the parties have a contract providing for arbitration, and the parties are unable to agree about the arbitrability of the dispute. In that case, one of the parties may apply to the trial court, in accordance with the distinct statutory procedure provided by § 52-410, for an order directing the parties to proceed with arbitration.

In either case, in granting or denying a stay under § 52-409, or in granting or denying an order directing the parties to proceed with arbitration under § 52-410, the trial court must determine whether the contract between the parties provides for arbitration. Because, however, a civil action must be pending for a § 52-409 order to be issued, we have held that such an order is interlocutory and, therefore, not appealable. Schwarzschild v. Martin, 191 Conn. 316, 323-24, 464 A.2d 774 (1983); Gores v. Rosenthal, 148 Conn. 218, 169 A.2d 639 (1961); see also KND Corporation v. Hartcom, Inc., supra, 5 Conn.App. at 337, 497 A.2d 1038. Section 52-410, on the other hand, allows a party to an arbitration agreement to commence an independent action in the Superior Court to compel arbitration when no civil action is pending between the parties. The trial court's decision in a § 52-410 action, therefore, terminates the action between the parties. Thus, we have construed a court order made pursuant to § 52-410 as a final order from which either party to the agreement may appeal. Dewart v. Northeastern Gas Transmission Co., 139 Conn. 512, 514-15, 95 A.2d 381 (1953); see also Quinn v. Middlesex Ins. Co., 16 Conn.App. 209, 211, 547 A.2d 95, cert. denied, 209 Conn. 817, 550 A.2d 1085 (1988).

The plaintiff properly treats the trial court's order in this case as having been issued pursuant to § 52-409 and concedes that, as such, it is an interlocutory order. The plaintiff argues, however, that the inquiry does not end there and that this court should analyze the trial court's § 52-409 order under the test established in State v. Curcio, 191 Conn. 27,...