In Connecticut, Agreements To Arbitrate Must Be Explicit To Be Enforceable And Oral Communications Are Irrelevant
October, 2011
In Farrell v. Twenty-First Century Ins. Co., 301 Conn. 657, 21 A.3d 816 (2011), Connecticut's Supreme Court was presented with an appeal from Connecticut's Appellate Court by Plaintiffs in an action to compel arbitration. The Supreme Court affirmed the Decisions of the Superior and Connecticut Appellate Courts in favor of Defendant/Insurer.
Catherine Farrell and Olivia Farrell ("Plaintiffs"), along with two other people were involved in a car accident with an insured of Defendant, Twenty-First Century Insurance Company ("21st Century"). Id. at 659. Plaintiffs and the others filed an action against 21st Century, seeking damages. Id. During a conference, the parties agreed to settle the claims of the two others and agreed, in principle, to arbitrate Plaintiffs' claims. Id. Extensive correspondence was exchanged after the agreement. Id.
Plaintiffs filed a new Complaint against 21st Century seeking an order to compel arbitration. Id. at 658. 21st Century moved for Summary Judgment, claiming that no written agreement to arbitrate existed and submitted an Affidavit attesting to same. Id. at 659-60. Plaintiffs opposed, arguing that the correspondence between the parties, cumulatively, constituted an enforceable agreement to arbitrate. Id. at 660. The trial court granted 21st Century's motion, concluding that there was never a clear manifestation of an agreement to arbitrate, as there was no express agreement on the terms under which arbitration would occur. The trial court found that no reasonable minds could differ and that there was no genuine issue of material fact. Id.
Plaintiffs appealed. Id. at 658. The Appellate Court concluded that the "correspondence, viewed in the light most favorable to the plaintiffs, indicates that the parties had an informal agreement to arbitrate, but they never agreed on any of the terms for arbitration, including the parameters for both plaintiffs' claims...." Id. quoting Farrell v. Twenty-First Century Ins. Co., 118 Conn. App. 757, 761, 985 A.2d 1076 (2010). The Appellate Court rejected Plaintiffs' claim that oral communications could supply any missing terms, as well as their claim that the court could compel unrestricted arbitration under the particular facts of the present case. Farrell, 118 Conn. App. at 761-62. The Appellate Court concluded, under the requirement that agreements to arbitrate be in writing, Plaintiffs had not met their "burden of providing concrete evidence that raises a genuine issue as to the existence of a written contract to arbitrate." Id. at 761.
On appeal to the Supreme Court, Plaintiffs claimed that, if the evidence were viewed in the light most favorable to them, a genuine issue of material fact remained when the trial court granted 21st Century's motion. Farrell, 301 Conn. at 660-61. Specifically, they claimed that a jury could have concluded that the correspondence between the parties cumulatively constituted a written agreement to arbitrate their injury claims. Id. at 661. Plaintiffs argued that such an agreement need only manifest their intent to arbitrate and not the specific terms of the arbitration. Additionally, they claimed either that the correspondence could be viewed to establish an unrestricted submission or that the correspondence viewed in conjunction with oral communications and potential terms of arbitration raised a genuine issue of material fact as to whether the parties had agreed to arbitrate. Id. 21st Century argued, even drawing all possible inferences in favor of Plaintiffs, no genuine issue of fact existed as to whether the parties had a written agreement to arbitrate. The Supreme Court agreed. Id.
A party can only be compelled to arbitrate a dispute to the extent and manner which he agreed. Id. citing John A. Errichetti Associates v. Boutin, 183 Conn. 481, 488, 439 A.2d 416 (1981). "[O]nly written arbitration agreements are enforceable and all others are void." Id. quoting Bennett v. Meader, 208 Conn. 352, 362 n.8, 545 A.2d 553 (1988). The intent that arbitration "be the exclusive method for the settlement of disputes arising under the contract must be clearly manifested. This express intent by both parties to enter into the arbitration agreement is essential to its existence.... An agreement to arbitrate must be clear and direct and not depend on implication." Id. at 662-63 quoting Jacob v. Seaboard, Inc., 28 Conn. App. 270, 273, 610 A.2d 189, cert. denied, 223 Conn. 923, 614 A.2d 822 (1992). For written agreements to be enforceable, the parties must agree to submit to the same arbitration. Id. at 663 citing Bridgeport Pipe Engineering Co. v. DeMatteo Construction Co., 159 Conn. 242, 249, 268 A.2d 391 (1970). "Under established principles of contract law, an agreement must be definite and certain as to its terms and requirements." Id. quoting Suffield Development Associates Ltd. Partnership v. Society for Savings, 243 Conn. 832, 843, 708 A.2d 1361 (1998). "The authority of an arbitrator to adjudicate the controversy is limited only if the agreement contains express language restricting the breadth of issues, reserving explicit rights, or conditioning the award on court review. In the absence of any such qualifications, an agreement is unrestricted." Id. quoting Garrity v. McCaskey, 223 Conn. 1, 5, 612 A.2d 742 (1992).
The Supreme Court analyzed the relevant correspondence. Id. It then turned to whether, drawing all possible inferences from this correspondence in favor of Plaintiffs, there was a genuine issue of material fact as to whether the parties' correspondence constituted an agreement to arbitrate. Id. at 665. The Supreme Court concluded that there was not. Id. Both parties sought a restricted arbitration agreement. Id. at 666. Neither party consented, in writing, to the possibility of an unrestricted arbitration. Id. If a genuine issue of material fact exists as to whether the parties had a written agreement to arbitrate, it must concern the issue of whether the parties reached a written agreement to submit to restricted arbitration. Id. Plaintiffs suggested many inferences could have been drawn from the timing and content of the correspondence. However, no inference could be drawn that could sustain a conclusion that it constituted a written agreement to arbitrate under the same parameters. Id. Thus, Plaintiffs failed to meet their burden to produce concrete evidence that could support a conclusion that the parties formed a valid and enforceable to arbitrate written agreement. Id. at 667.
Learning Point: Under Connecticut law, an agreement to arbitrate must be explicit, an informal agreement to arbitrate, where the parties never agree on any of the terms for arbitration is unenforceable. Further, oral communications between the parties cannot supply any of the missing terms necessary to compel arbitration.
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