2007 Ct. Sup. 6901, 43 CLR 398
No. CV 06 5001154 SConnecticut Superior Court Judicial District of Stamford-Norwalk at Stamford
May 7, 2007
MEMORANDUM OF DECISION RE MOTION TO DISMISS (#107.00)
TAGGART D. ADAMS, Judge.
FACTS
On April 19, 2006 the plaintiffs, Jan and Catherine Voigts, filed a five-count complaint arising from the plaintiffs’ purchase of a home in Greenwich, Connecticut. The fourth count alleges negligent performance of a contract against the defendants, Michael Colvecchio, a licensed home inspector, and Cronus, LLC, Colvecchio’s employer.[1] The plaintiffs allege that the defendants failed to identify existing violations of the local building code and/or failed to make such violations known to the plaintiffs and proper authorities, and also that the defendants failed to follow the requisite standard of care for a licensed home inspector.
On June 16, 2006, the defendants filed a motion to dismiss the plaintiffs’ fourth count on the ground that the parties’ agreement requires arbitration of their dispute. The defendants’ motion was accompanied by a supporting memorandum of law. On July 25, 2006, the plaintiffs filed an objection to the defendants’ motion, also accompanied by a memorandum of law. For some reason the matter was not heard until the short calendar on February 19, 2007.
DISCUSSION
“Pursuant to the rules of practice, a motion to dismiss is the appropriate motion for raising a lack of subject matter jurisdiction.”St. George v. Gordon, 264 Conn. 538, 545, 825 A.2d 90 (2003). “When a . . . court decides a jurisdictional question raised by a pretrial motion to dismiss, it must consider the allegations of the complaint in their most favorable light . . . In this regard, a court must take the facts to be those alleged in the complaint, including those facts necessarily implied from the allegations, construing them in a manner most favorable to the pleader.” (Internal quotation marks omitted.)Cox v. Aiken, 278 Conn. 204, 211, 897 A.2d 71 (2006). “[T]he plaintiff CT Page 6902 bears the burden of proving subject matter jurisdiction, whenever and however raised.” (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 265 Conn. 423, 430 n. 12, 829 A.2d 801 (2003). No action can be brought on a contract when parties have agreed to arbitrate their dispute as a condition precedent to court action Multi-Service Contractors, Inc. v. Vernon, 181 Conn. 445, 447-48, 435 A.2d 983 (1980).
The defendants argue that the arbitration clause contained in the parties’ home inspection agreement evidences their intent that arbitration serve as a condition precedent to any court action. They argue that the plaintiffs’ claim is covered by the arbitration agreement and that the court thus lacks subject matter jurisdiction over the present action. In addition, the defendants argue that the Federal Arbitration Act (FAA) similarly requires arbitration because the controversy involves commerce and the FAA requires a court to compel arbitration whenever parties enter a valid arbitration contract. The plaintiffs object by arguing that the arbitration language contained in the agreement does not stipulate, expressly or by implication, that arbitration is a condition precedent to court action. The plaintiffs further argue that the FAA is inapplicable to the present case because there are no issues of interstate commerce.
“Where a contract contains a stipulation that the decision of arbitrators on certain questions shall be a condition precedent to the right of action on the contract itself such a stipulation will be enforced and, until arbitration has been pursued or some sufficient reason given for not pursuing it, no action can be brought on the contract . . . Whether an agreement makes arbitration a condition precedent to an action in court depends on the language of the arbitration clause. While it is true that in the absence of express language a provision for arbitration may be construed, by implication, to be a condition precedent to suit that implication must be so plain that a contrary intention cannot be supposed. It must be a necessary implication. The mere agreement to arbitrate, standing alone, does not give rise to the necessary implication that arbitration is a condition precedent to an action in court. For arbitration to be a condition precedent, the agreement to arbitrate must expressly so stipulate, or it must necessarily be implied from the language used.” (Citation omitted.)Multi-Service Contractors, Inc. v. Vernon, supra, 181 Conn. 447-48. I Multi-Service, the arbitration clause contained in the contract provided: “[A]ll claims, disputes and other matters in question between the contractor and owner arising out of, or relating to, the Contract Documents or the breach thereof . . . shall be decided by arbitration . . .” (Emphasis added; internal quotation marks omitted.) Id., 446. The CT Page 6903 court held that this arbitration clause did not “require, either by express language or by necessary implication, arbitration as a condition precedent to court action.” Id., 449.
The arbitration clause in the present case provides: “Disputes. If we have any disagreements, Cronus, LLC has the right to reinspect. If we are unable to reach a resolution, you agree to submit any and all of your disputes to arbitration pursuant to the rules of the American Arbitration Association (‘AAA’) within six (6) months of the date of the report provided to you by Cronus, LLC. You also agree to limit your damages to what you have actually paid Cronus, LLC, whether they are direct, consequential, indirect or punitive damages, less fees Cronus, LLC must pay to the `AAA’ and its arbitrators.” (Emphasis added.) This language does not expressly provide that arbitration is a condition precedent to litigation. The determination in the present case therefore hinges on whether the language necessarily implies that arbitration is a condition precedent to litigation.
To support their argument, the defendants cite Homonnay v. Nusbaum, Superior Court, judicial district of Fairfield, Docket No. CV 05 4011886 (May 3, 2006, Arnold, J.), where the court determined that arbitration was a condition precedent to litigation when the contract language provided that both parties “agree[d] to submit any and all disputes to binding arbitration before the American Arbitration Association . . .” The defendants argue that the language of the arbitration clause in the present case is “strikingly similar” to that in Homonnay, and that the court should similarly require the plaintiffs in the present case to arbitrate their dispute.
In response, the plaintiffs cite McLevy Builders v. Kavanagh, Superior Court, judicial district of Stamford-Norwalk, Docket No. CV 98 0169122 (April 3, 2001, Tobin, J.), where the court determined that arbitration was not a condition precedent to litigation when the contract language provided that “[a]ny controversy of Claim arising out of or related to the Contract, or breach thereof, shall be settled by arbitration in accordance with the . . . American Arbitration Association . . .” Citin Multi-Service, the court in McLevy determined that “the language in the arbitration clause does not expressly provide or necessarily imply that arbitration is a condition precedent to any court action.” Id.
The cases cited by the parties in the present case are illustrative of the divergent opinions rendered by our Superior Courts in the years since Multi-Service. These cases are instructive, though not binding, for the purposes of determining whether the arbitration clause serves as an implied condition precedent to litigation in the present case.[2]
CT Page 6904 In 2002, the Appellate Court considered an arbitration clause and noted that arbitration would be “binding . . . pursuant to the terms of [the parties’] lease agreement.” Aldin Associates Ltd. Partnership v. Healey, 72 Conn.App. 334, 336, 804 A.2d 1049 (2002).[3] Though the court in Aldin did not specifically consider whether arbitration was a condition precedent to litigation, the court’s observation that the arbitration clause required the parties to submit their dispute to arbitration is instructive to the analysis in the present case.
The arbitration clause in Aldin can be distinguished from the clause in the present case because it specifically provides fo binding arbitration. Significantly, unlike the language present i Aldin and in many of the cases in which Superior Courts have determined that arbitration is an implied condition precedent to litigation, the arbitration clause in the present case does not provide that the arbitrator’s decision is final or binding.[4] It also lacks the specificity regarding process found in many cases where arbitration was found to be a condition precedent to litigation. Instead, the language of the arbitration clause in the present case is closely analogous to the Multi-Service arbitration clause, as well as to those clauses in many of the Superior Court cases that have determined that arbitration was not a condition precedent.
Furthermore, the defendants’ argument that the FAA compels arbitration in the present case is unpersuasive. As the plaintiffs argue, the FAA is inapplicable to the present case because the contract at issue does not involve interstate commerce. See 9 U.S.C. § 1 (” `commerce,’ as herein defined, means commerce among the several States or with foreign nations, or in any Territory of the United States or in the District of Columbia, or between any such Territory and another, or between any such Territory and any State or foreign nation, or between the District of Columbia and any State or Territory or foreign nation . . .”).
The foregoing examination leads to the conclusion that the arbitration clause in the present case lacks language to support the defendants’ argument that arbitration is a necessarily implied condition precedent to litigation. Because there is no meaningful distinction between the language of the Multi-Service arbitration clause and that in the present case, this court determines that arbitration is not a condition precedent to litigation in this case. Thus, the court denies the defendants’ motion to dismiss the plaintiffs’ fourth count.
The motion before the court is a motion to dismiss. The defendants make a passing reference to staying the action at the tail-end of the last sentence of the motion and supporting memorandum, but the issue of CT Page 6905 a stay is not properly raised or briefed. The defendants may pursue a motion for stay pursuant to General Statutes § 52-409.[5] Se Success Centers, Inc. v. Huntington Learning Centers, Inc., 223 Conn. 761, 767-69, 613 A.2d 1320 (1992); KND Corp. v. Hartcom, Inc., 5 Conn.App. 333, 336-37, 497 A.2d 1038 (1985). However, whether such a motion is timely and whether arbitration has been waived, will have to be decided another day.
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