243 F. Supp. 3d 208
D. Conn.2017Background
- Plaintiffs Liebman and Campbell purchased a 2006 Subaru from A Better Way Wholesale Autos in Connecticut on March 30, 2015; the retail order showed the car sold “AS IS.”
- Plaintiffs allege they were told the dealer performed and complied with Connecticut safety-inspection requirements and represented the vehicle was fit for legal operation; they paid ~$7,812 plus shipping to California.
- Upon delivery in California plaintiffs experienced noises/vibration; inspections revealed multiple safety defects and that the vehicle was unsafe to operate—defects that, plaintiffs contend, preexisted shipment and would have been found by a Connecticut safety inspection.
- Plaintiffs submitted claims under Conn. Gen. Stat. § 14-62(g) (dealer safety inspection/K-208 form), express warranties/representations, and CUTPA; arbitration before AAA resulted in an award finding violations of § 14-62(g) and CUTPA and awarding $13,016 (repairs, loss of use, punitive damages, fees).
- Defendant moved to vacate the arbitration award arguing the arbitrator exceeded his powers and manifestly disregarded law by effectively nullifying the “as is” sale; plaintiffs moved for judgment confirming the award.
- The district court denied vacatur and confirmed the award, holding the arbitrator acted within his authority and correctly applied Connecticut law (including § 42-224(c) preserving express warranties/representations despite an “as is” sale).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the arbitration award should be vacated under the FAA | The arbitrator properly decided issues submitted and award should be confirmed | Award should be vacated because arbitrator exceeded authority and manifestly disregarded law | Denied vacatur; award confirmed |
| Whether an “as is” sale bars recovery for defects/representations | “As is” waives implied warranties but does not waive express warranties or dealer representations relied on | “As is” sale absolves dealer of liability for repair costs, loss of use, punitive damages, fees | Court: Connecticut law (§ 42-224(c)) preserves express warranties/representations despite “as is”; award permissible |
| Whether the arbitrator exceeded his powers by imposing post-sale warranties or new contract terms | Plaintiffs: arbitrator based decision on statute § 14-62(g) and representations, not creation of new contract | Dealer: arbitrator effectively created warranties after sale and made dealer insurer of car after shipment | Court: Arbitrator limited his findings to vehicle condition at time of sale and compliance with § 14-62(g); no excess of authority |
| Whether the arbitrator manifestly disregarded applicable law (contract law/CUTPA) | Arbitrator applied governing statutes and CUTPA per DCP regulations making statutory violations per se CUTPA violations | Dealer: award reflects manifest disregard of contract law and “as is” clause | Court: No manifest disregard—governing law was applied and arbitrator’s interpretation is binding absent narrow FAA grounds |
Key Cases Cited
- Duferco Int’l Steel Trading v. T. Klaveness Shipping A/S, 333 F.3d 383 (2d Cir. 2003) (party seeking vacatur bears heavy burden)
- Jock v. Sterling Jewelers Inc., 646 F.3d 113 (2d Cir. 2011) (arbitrator exceeds powers by deciding issues outside submission or prohibited by law)
- Banco de Seguros del Estado v. Mutual Marine Office, Inc., 344 F.3d 255 (2d Cir. 2003) (court asks only whether arbitrator had power to decide issue, not correctness)
- Matter of Andros Compania Maritima, S.A. (Marc Rich & Co., AG), 579 F.2d 691 (2d Cir. 1978) (narrow reading of FAA vacatur grounds)
- Goldman v. Architectural Iron Co., 306 F.3d 1214 (2d Cir. 2002) (vacatur for manifest disregard requires clearly applicable law)
- Westerbeke Corp. v. Daihatsu Motor Co., Ltd., 304 F.3d 200 (2d Cir. 2002) (clarifies manifest-disregard standard and deference to arbitrator fact-findings)
- Schwartz v. Merrill Lynch & Co., 665 F.3d 444 (2d Cir. 2011) (award may be vacated for manifest disregard of contract terms; arbitrator given deference)
- Ambrogio v. Beaver Rd. Assocs., 267 Conn. 148 (Conn. 2003) (consequential damages arise naturally from breach and may be recoverable)