W. J. Megin, Inc. v. State

• Decision Date: 27 May 1980
• Citation: 181 Conn. 47,434 A.2d 306
• Court: Connecticut Supreme Court
• Parties: W. J. MEGIN, INC. v. The STATE of Connecticut et al.

Page 306

434 A.2d 306

181 Conn. 47

W. J. MEGIN, INC. v. The STATE of Connecticut et al.

Supreme Court of Connecticut.

Argued March 7, 1980.

Decided May 27, 1980.

Louis R. Pepe, Hartford, for appellant-appellee (plaintiff).

William J. White, Asst. Atty. Gen., with whom, on the brief, was Carl R. Ajello, Atty. Gen., for appellee-appellant (named defendant).

Richard W. Tomc, Middletown, for appellee (defendant Scolite International Corporation).

Before COTTER, C. J., and LOISELLE, BOGDANSKI, PETERS and HEALEY, JJ.

PETERS, Associate Justice.

The dispositive issue on this appeal is the authority of the trial court to consolidate separate arbitration proceedings arising out of a single design change in a construction project. The plaintiff, W. J. Megin, Inc., a general contractor, brought the present action to compel the consolidation of two separate pending arbitration proceedings, one with the defendant Scolite International Corporation, a project subcontractor, and one with the defendant state of Connecticut, the project owner. Each defendant objected to the proposed consolidation on the ground that there had been no express agreement to engage in multiparty arbitration; the defendant state of Connecticut further raised other defenses including the defense of sovereign immunity. The trial court, O'Sullivan, J., initially ruled that, in the absence of appropriate contract provisions, the court lacked the power to order consolidation. Subsequently, upon amendment of the plaintiff's complaint, the court concluded that it might have the power to order consolidation but that such a power would at best be discretionary with the court and should not be exercised in the instant case. From the subsequent rendition of a judgment in favor of each of the defendants, the plaintiff Megin has appealed. The state of Connecticut has cross appealed.

In the posture of this appeal, the following facts are undisputed: The plaintiff Megin and the defendant state of Connecticut entered into a general contract on June 26, 1975, for the construction of a project known as the Graduate Library Facilities at the University of Connecticut at Storrs. Several days later, on July 2, 1975, Megin entered into a separate contract with the defendant Scolite to furnish concrete insulating fill on the roofs of the buildings in this project; this contract bound Scolite to the same terms that bound Megin to the state of Connecticut. Some fifteen months later, in an effort to reduce the overall project cost, the state's architect revised the project design to eliminate the concrete insulating fill that was to have been provided by Scolite. Megin issued a credit order to Scolite, cancelling its subcontract, on October 14, 1976.

Scolite initiated judicial proceedings on April 7, 1977, seeking lost profits for the alleged breach of its subcontract. These proceedings were stayed for arbitration, and Scolite thereupon duly made a demand for arbitration against Megin. Upon receipt of this demand, Megin made a demand for arbitration against the state of Connecticut. A few days later, on August 22, 1977, Megin moved for voluntary consolidation of the two arbitrations. When neither of the two defendants would agree to consolidation, Megin brought the present action applying, pursuant to General Statutes § 52-410, ¹ for an order to consolidate.

Since, as we have frequently held, authority for arbitration must be derived from the agreement of the parties; Gary Excavating, Inc. v. North Haven, 164 Conn. 119, 122, 318 A.2d 84 (1972); Gores v. Rosenthal, 150 Conn. 554, 557, 192 A.2d 210 (1963); Connecticut Union of Telephone Workers v. Southern New England Telephone Co., 148 Conn. 192, 197, 169 A.2d 646 (1961); Amalgamated Ass'n v. Connecticut Co., 142 Conn. 186, 191, 112 A.2d 501 (1955); and the relevant provisions of applicable statutory directives; cf. Oliva v. Aetna Casualty & Surety Co., 181 Conn. 37, --- A.2d ---- (1980); it is important to be clear what arbitral provisions the contracts in question contained. In accordance with the mandate of General Statutes § 4-126c, ² the contract between Megin and the state of Connecticut provided, in article 12, that "(a)ny dispute arising out of the awarding of the contract for this project ... or performance thereunder shall be submitted to arbitration under the rules of the American Arbitration Association." This provision was incorporated by reference into the subcontract between Megin and Scolite. The rules of the American Arbitration Association contain no explicit provision either for or against compulsory consolidation of separately initiated arbitrations. In the past, it has been the policy of the American Arbitration Association, as the trial court concluded, to permit consolidation only with the consent of all of the parties involved. This conclusion is amply supported by the record. ³

The issue before us is a narrow one. If the parties to two separate contracts have separately agreed that disputes arising out of the performance of their contracts shall be submitted to arbitration, but have not agreed, either in their contracts or at the time of the occurrence of a dispute, that arbitrations may be consolidated, does a court have the authority to compel consolidation? This is an issue of first impression for this court. Courts in other jurisdictions are divided. See annot., 64 A.L.R.3d 528 (1975). In our judgment, the better view, in light of our repeated emphasis on the central role played by the terms of a contract in determining the scope of arbitration, is that there is no judicial authority to enter such an order.

We have consistently held that the duty to arbitrate and the scope of that duty depend upon the terms of the agreement between the parties to a contract. Gary Excavating, Inc. v. North Haven, 164 Conn. 119, 122, 318 A.2d 84 (1972); Frager v. Pennsylvania General Ins. Co., 155 Conn 270, 274, 231 A.2d 531 (1967) (Frager I); Ginsberg v. Coating Products, Inc., 152 Conn. 592, 596, 210 A.2d 667 (1965). A party that has agreed to arbitrate certain matters cannot, for that reason alone, be compelled to arbitrate other matters that it has not agreed to submit to arbitration. Frager v. Pennsylvania General Ins. Co., supra; Batter Building Materials Co. v. Kirschner, 142 Conn. 1, 5, 110 A.2d 464 (1954).

We agree therefore with the view of those courts in other jurisdictions that deem improper a judicially-ordered consolidation of separate arbitral proceedings between different parties. See, e. g. Consolidated Pacific Engineering, Inc. v. Greater Anchorage, 563 P.2d 252, 255 (Alaska 1977); Atlas Plastering, Inc. v. Superior Court, 72 Cal.App.3d 63, 70-72, 140 Cal.Rptr. 59 (1977); Louisiana Stadium & Exposition District v. Huber, Hunt & Nichols, Inc., 349 So.2d 491, 493 (La.App.1977); Stop & Shop Companies, Inc. v. Gilbane Building Co., 364 Mass. 325, 329-30, 304 N.E.2d 429 (1973); J. Brodie & Son, Inc. v. George A. Fuller Co., 16 Mich.App. 137, 142, 167 N.W.2d 886 (1969); Hjelle v. Sornsin Construction Co., 173 N.W.2d 431, 439 (N.D.1969); contra, Grover-Dimond Associates v. American Arbitration Ass'n, 297 Minn. 324, 329-30, 211 N.W.2d 787 (1973); Exber, Inc. v. Sletten Construction Co., 92 Nev. 721, 732, 558 P.2d 517, 523 (1976); City Association of Supervisors & Administrators v. Board of Education, 168 N.J.Super. 184, 402 A.2d 262, 264 (1979); County of Sullivan v. Nezelek, 42 N.Y.2d 123, 127-28, 397 N.Y.S.2d 371, 366 N.E.2d 72 (1977). See generally, annot., 64 A.L.R.3d 528 (1975) and Domke, The Law and Practice of Commercial Arbitration § 27.02, p. --- (1968). At least some of the cases permitting nonconsensual consolidation are readily distinguishable. In Grover-Dimond Associates, supra, the court dealt with a situation in which all of the parties had previously agreed to use the same arbitrators. The New York cases have a special statutory history not replicated elsewhere. See Stop & Shop Companies, Inc. v. Gilbane...