Doctor's Associates, Inc. v. Windham
146 Conn. App. 768
Conn. App. Ct.2013Background
- Windham operated two Subway franchises (#11581 and #6109); disputes over required "decor upgrades" led Subway to seek arbitration and termination of the franchises.
- Arbitrator ruled for Windham in the #11581 arbitration; a separate arbitration for #6109 proceeded on July 14, 2010, without Windham or his counsel present; the arbitrator found Windham had received notice and awarded Subway relief, terminating the #6109 franchise.
- Windham moved in superior court to vacate the #6109 award, alleging Subway’s counsel (Allen) failed to disclose material facts in an ex parte proceeding (invoking Rule 3.3(d)) and thus procured the award by "undue means." Trial court denied vacatur and confirmed the award.
- After confirmation, Subway sought a prejudgment remedy to secure its judgment; Windham moved to dismiss that application for lack of subject matter jurisdiction and improper service. The trial court denied dismissal and granted the prejudgment remedy.
- Windham appealed both the denial of vacatur/confirmation and the denial of dismissal of the prejudgment remedy; the appellate court affirmed both judgments.
Issues
| Issue | Plaintiff's Argument (Windham) | Defendant's Argument (Subway) | Held |
|---|---|---|---|
| Whether the arbitration award should be vacated as procured by "corruption, fraud, or undue means" due to counsel's nondisclosure in an ex parte proceeding | Allen violated Rule 3.3(d) and his omission of material facts (prior favorable arbitration, retained counsel, ongoing negotiations, defenses) constituted "undue means" | No evidence of intentional misconduct or bad faith by Allen; nondisclosure did not amount to "undue means" under § 52-418(a)(1) | Affirmed denial of vacatur; "undue means" requires intentional, nefarious conduct and Windham failed to prove it |
| Whether Rule 3.3(d) violation alone warrants vacatur of an arbitration award | A Rule 3.3(d) breach is conclusive evidence of procuring an award by undue means | Professional-conduct rules alone do not create a private cause of action or automatically invalidate awards; must show misconduct rising to statutory grounds | Rejected; Rule 3.3 violations do not automatically satisfy § 52-418(a)(1) without evidence of intentional misconduct |
| Whether the trial court had subject matter jurisdiction to entertain Subway’s prejudgment remedy application after confirming the arbitration award | Prejudgment remedy statutes apply only in a "civil action," and confirmation proceedings are not a civil action, so court lacked jurisdiction | Judgment confirming the arbitration award is docketed and treated as a civil judgment under § 52-421(b), so prejudgment remedy may be pursued to secure that judgment | Affirmed denial of dismissal; § 52-421(b) makes the confirmation judgment subject to law applicable to civil judgments, permitting prejudgment remedy |
| Whether service of the prejudgment remedy application complied with statutory requirements | Service was defective under the prejudgment remedy statutes and Practice Book rules; strict compliance is required | Statutory scheme requires clerk to fix hearing and return originals for service; court ordered service by Oct 18 and Subway complied with that order and statutes | Affirmed denial of dismissal for improper service; court found Subway followed statutory procedure and Windham failed to show prejudice |
Key Cases Cited
- O & G/O’Connell Joint Venture v. Chase Family Ltd. P’ship No. 3, 203 Conn. 133 (1987) (explains limited judicial review of arbitration awards and burden to invalidate an award)
- Schwarzschild v. Martin, 191 Conn. 316 (1983) (courts make every reasonable presumption in favor of arbitrators’ acts)
- Von Langendorff v. Riordan, 147 Conn. 524 (1960) (award cannot be set aside simply because a court would decide differently)
- Biller Assocs. v. Peterken, 269 Conn. 716 (2004) (professional-conduct rules do not create civil causes of action or automatic civil remedies)
- PaineWebber Group, Inc. v. Zinsmeyer Trusts P’ship, 187 F.3d 988 (8th Cir. 1999) ("undue means" requires proof of intentional misconduct under FAA § 10(a)(1))
- National Casualty Co. v. First State Ins. Group, 430 F.3d 492 (1st Cir. 2005) ("undue means" denotes underhanded or conniving conduct similar to fraud or corruption)
- MCI Constructors, LLC v. Greensboro, 610 F.3d 849 (4th Cir. 2010) (interpreting "undue means" as akin to fraud/corruption in FAA context)