A Better Way Wholesale Autos, Inc. v. Saint Paul ( 2019 )

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A BETTER WAY WHOLESALE AUTOS, INC. v. SAINT PAUL—DISSENT
LAVERY, J., with whom SHELDON, J., joins, dis-
senting. I respectfully dissent from the majority’s con-
clusion that the thirty day limitation period set forth
in General Statutes § 52-420,1 rather than the parties’
contractual agreement to follow the three month period
contained in the Federal Arbitration Act (FAA), 9 U.S.C.
§ 12 (2012),2 controls the time frame within which the
plaintiff, A Better Way Wholesale Autos, Inc., may file
its application to vacate the arbitration award issued
in favor of the defendants, James Saint Paul and Julie
J. Saint Paul. Such a conclusion is contrary to the terms
set forth in the parties’ privately agreed upon arbitration
clause in the parties’ automobile financing agreement.
Because I would hold that the terms of the parties’
arbitration agreement govern, I respectfully dissent. See
Doctor’s Associates, Inc. v. Searl, 179 Conn. App. 577,
585–86, 180 A.3d 996 (2018) (in accordance with parties’
contractually agreed upon terms, FAA governed time
period for filing motion to vacate arbitration award).
The facts are undisputed and aptly stated by the
majority. I emphasize, however, that the parties’ financ-
ing agreement contains a choice of law provision speci-
fying that ‘‘[a]ny arbitration . . . shall be governed by
the [FAA] (9 U.S.C. § 1 et seq. [2012]) and not . . .
any state law concerning arbitration.’’ Despite the clear
language of the parties’ contract, the trial court applied,
and the majority affirms, the thirty day limit to file a
motion to vacate, pursuant to state law.3
Moreover, the parties agreed to be bound by the FAA
in its entirety. Namely, the parties’ agreement includes
§ 2 of the FAA, which binds state courts to render agree-
ments to arbitrate ‘‘valid, irrevocable, and enforce-
able.’’4 9 U.S.C. § 2 (2012); see also Vaden v. Discover
Bank, 556 U.S. 49, 71, 129 S. Ct. 1262, 173 L. Ed. 2d 206
(2009) (in accordance with § 2 of FAA, both state and
federal courts are obligated to honor and enforce agree-
ments to arbitrate), superseded by statute in part on
other grounds as stated in Vermont v. MPHJ Technology
Investments, LLC, 803 F.3d 635, 643–44 (Fed. Cir. 2015),
cert. denied, U.S. , 136 S. Ct. 1658, 194 L. Ed.
2d 766 (2016), and cert. denied, MPHJ Technology
Investments, LLC v. Vermont, U.S. , 136 S. Ct.
1660, 194 L. Ed. 2d 766 (2016). The majority’s decision
undercuts the arbitration terms as agreed upon by
the parties.
The United States Supreme Court has recognized that
it is incumbent upon states to honor the terms that the
parties set forth in their arbitration agreement. See, e.g.,
Moses H. Cone Memorial Hospital v. Mercury Con-
struction Corp., 460 U.S. 1, 22 n.27, 103 S. Ct. 927, 74
L. Ed. 2d 765 (1983). In Volt Information Sciences,
Inc. v. Board of Trustees of Leland Stanford Junior
University, 489 U.S. 468, 109 S. Ct. 1248, 103 L. Ed. 2d
488 (1989), the United States Supreme court concluded
that the FAA preempts application of state laws that
render arbitration agreements unenforceable. The court
determined that arbitration is strictly a matter of con-
tract and, therefore, parties should be ‘‘at liberty to
choose the terms under which they will arbitrate.’’
(Internal quotation marks omitted.) Id., 472. ‘‘Arbitra-
tion under the [FAA] is a matter of consent, not coer-
cion, and parties are generally free to structure their
arbitration agreements as they see fit. Just as they may
limit by contract the issues which they will arbitrate
. . . so too may they specify by contract the rules under
which that arbitration will be conducted.’’ (Citation
omitted.) Id., 479. The court, in essence, emphasized
that the overarching national policy goal behind the
FAA was not just to enforce the parties’ contractual
right to arbitrate, but, moreover, was to uphold the
enforcement of stipulated obligations in the parties’
arbitration agreement itself.
Following Volt Information Sciences, Inc., the United
States Supreme Court continually has recognized con-
tractual freedom as the FAA’s bedrock principle. See
Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79,
84–85, 123 S. Ct. 588, 154 L. Ed. 2d 491 (2002) (parties’
arbitration agreement contractual provisions govern
which entity, court or arbitrator, shall decide whether
condition precedent to arbitration has been fulfilled);
First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938,
943, 115 S. Ct. 1920, 131 L. Ed. 2d 985 (1995) (question
of whether court or arbitrator has primary ability to
decide arbitrability is determined by contractual agree-
ment); Mastrobuono v. Shearson Lehman Hutton, Inc.,
514 U.S. 52, 115 S. Ct. 1212, 131 L. Ed. 2d 76 (1995)
(contract between securities brokerage firm and cus-
tomers permitted arbitration panel to award punitive
damages to customers when arbitration clause was gov-
erned by rules of National Association of Securities
Dealers, which permitted such award, despite agree-
ment that New York law, prohibiting award of punitive
damages, otherwise governed contract). Parties, there-
fore, generally are free to tailor their arbitration con-
tract as they see fit. This court’s decision in Doctor’s
Associates, Inc. v. Searl, supra, 179 Conn. App. 577,
was consistent with that principle.5
Accordingly, I would not hold that state law governs
the arbitration agreement unless the parties express ‘‘a
clear intent to incorporate state law rules for arbitra-
tion.’’ (Internal quotation marks omitted.) Fidelity Fed-
eral Bank, FSB v. Durga Ma Corp., 386 F.3d 1306, 1311
(9th Cir. 2004); see also Martis v. Dish Network Service,
L.L.C., 597 Fed. Appx. 301, 304 (6th Cir. 2015) (whether
FAA or Michigan law applied resolved in favor of federal
standard even though Michigan law governed arbitra-
tor’s substantive decision); Johnson v. Gruma Corp.,
614 F.3d 1062, 1067 (9th Cir. 2010) (‘‘where the FAA’s
rules control arbitration proceedings, a reviewing court
must also apply the FAA standard for vacatur’’); see
Kim-C1, LLC v. Valent Biosciences Corp., 756 F. Supp.
2d 1258, 1261–62 (E.D. Cal. 2010); New England Utili-
ties v. Hydro-Quebec, 10 F. Supp. 2d 53, 60–61 (D.
Mass. 1998).
I do not mean to say that the FAA preempts the
General Statutes regarding arbitration. That would be
contrary to clear United States Supreme Court prece-
dent. See Volt Information Sciences, Inc. v. Board of
Trustees of Leland Stanford Junior University, supra,
489 U.S. 477. The parties, however, chose the FAA as
the governing law. Because an ‘‘arbitration provision
in an agreement is effectively an agreement that is sepa-
rate and distinct from the broader contract’’; MBNA
America Bank, N.A. v. Boata, 283 Conn. 381, 386, 926
A.2d 1035 (2007); and we must give effect to the parties’
intent; Levine v. Advest, Inc., 244 Conn. 732, 745–46,
714 A.2d 649 (1998); I cannot see how we would not
enforce the parties’ agreement that § 12 of the FAA
governs the time limit to file a motion to vacate.
The majority, however, declines to enforce § 12 of
the FAA, reasoning that our state courts must follow
state procedural rules. Although acknowledging that
the substantive law of the FAA applies in both state
and federal court; see Vaden v. Discover Bank, supra,
556 U.S. 59; the majority maintains that the FAA does
not preempt state procedural rules. Reasoning that our
courts have considered § 52-420 (b) to be procedural
and subject matter jurisdictional, the majority con-
cludes that the thirty day limitation period set forth
therein is not preempted by the FAA.
In support of its conclusion that § 52-420 (b) is proce-
dural, the majority cites to a string of cases in which
our courts have understood § 52-420 in the context of
subject matter jurisdictional claims, but none of which
involved a choice of law claim or a dispute as to which
law governed the given arbitration agreement. See Wu
v. Chang, 264 Conn. 307, 308, 823 A.2d 1197 (2003)
(‘‘sole issue raised by this appeal is whether a claim of
fraud tolls the thirty day period within which a motion
to vacate an arbitration award must be filed pursuant
to General Statutes § 52-420 [b]’’); Vail v. American
Way Homes, Inc., 181 Conn. 449, 450, 435 A.2d 993
(1980) (sole issue was enforceability of arbitration
award ordering specific performance of construction
contract for private dwelling); Rosenthal Law Firm,
LLC v. Cohen, 165 Conn. App. 467, 470, 139 A.3d 774
(rejecting claims that court incorrectly concluded that
application to vacate was untimely under § 52-420 [b]
on basis of due process deprivation; allegation that arbi-
tration panel failed to consider defendant’s testimony
and evidence; erroneous factual findings; and award
was contrary to public policy), cert. denied, 322 Conn.
904, 138 A.3d 933 (2016); Petrucelli v. Travelers Prop-
erty Casualty Ins. Co., 146 Conn. App. 631, 633, 79
A.3d 895 (2013) (rejecting claim that court erred in
concluding that it lacked subject matter jurisdiction
under § 52-410), cert. denied, 311 Conn. 909, 83 A.3d
1164 (2014). Operating under the assumption that § 52-
420 is procedural, the majority then reasons that parties
cannot waive or otherwise contract around this statute.
I do not agree with the majority’s distinction between
procedure and substance.
The mere fact that § 52-420 sets a time limitation does
not compel the conclusion that it is procedural and,
therefore, subject matter jurisdictional. The United
States Supreme Court has characterized such provi-
sions differently. Namely, in Scarborough v. Principi,
541 U.S. 401, 413–14, 124 S. Ct. 1856, 158 L. Ed. 2d 674
(2004), the United States Supreme Court concluded that
the time bar for filing a fee application set forth under
the Equal Access to Justice Act, 28 U.S.C. § 2412 (d) (1)
(B) (2012), did not concern the federal courts’ subject
matter jurisdiction. The court reasoned that the time
limitation pertained to postjudgment proceedings auxil-
iary to a matter already within the court’s adjudicatory
authority. Scarborough v. Principi, supra, 414.
Following this rationale, at least one court has set
forth a compelling argument that the time limitation set
forth in § 12 of the FAA is substantive, not procedural
or jurisdictional. In Equitas Disability Advocates, LLC
v. Daley, Debofsky & Bryant, P.C., 177 F. Supp. 3d 197,
218 (D.D.C.), aff’d, 672 Fed. Appx. 13 (D.C. Cir. 2016),
the court considered, in relevant part, whether an appli-
cation to vacate was timely served under § 12 of the
FAA. In light of United States Supreme Court precedent
indicating that ‘‘time prescriptions, however emphatic,
are not properly typed jurisdictional in the sense of
restricting courts’ subject-matter jurisdiction,’’ the
court concluded that a question as to the timeliness for
filing the motion to vacate the arbitral award did not
concern the court’s jurisdiction. (Internal quotation
marks omitted.) Id., quoting Arbaugh v. Y & H Corp.,
546 U.S. 500, 510, 126 S. Ct. 1235, 163 L. Ed. 2d 1097
(2006); see also Craig v. Southwest Securities, Inc.,
Docket No. 05-16-01378-CV (BLG), 2017 WL 6503213,
*2 (Tex. App. December 18, 2017) (‘‘[s]ection 12 [of the
FAA] provides a substantive three-month limitations
period’’).
Additionally, Equitas Disability Advocates, LLC,
noted that Congress has not specifically qualified the
FAA as jurisdictional and, therefore, courts should treat
any restrictions as to timeliness set forth therein as
nonjurisdictional. Equitas Disability Advocates, LLC
v. Daley, Debofsky & Bryant, P.C., supra, 177 F. Supp.
3d 218; see also Arbaugh v. Y & H Corp., supra, 546
U.S. 516 (threshold number of employees set forth in
statute not jurisdictional in nature).
Applying these principles to § 52-420, I am not con-
vinced that this statute necessarily is procedural and,
therefore, subject matter jurisdictional. The majority
acknowledges that ‘‘[a]rbitration proceedings, includ-
ing court proceedings to compel arbitration are crea-
tures of statute in Connecticut and are not common law
actions’’; (internal quotation marks omitted) Bennett v.
Meader, 208 Conn. 352, 357, 545 A.2d 553 (1988); and
that ‘‘[t]he right to review an arbitration award is wholly
encompassed within the parameters of [General Stat-
utes] § 52-418 . . . [which] goes beyond the common
law and provides additional grounds upon which to
vacate an award.’’ Id., 356–57. If we accept those prem-
ises, then the thirty day limitation could be considered
an element necessary to establish a right, and, therefore,
substantive in nature. See Baxter v. Sturm, Ruger &
Co., 230 Conn. 335, 340–41, 644 A.2d 1297 (1994); id.,
340 (‘‘[a] limitation period is considered ‘one of the
congeries of elements necessary to establish the right,’
and therefore characterized as substantive, only when
it applies to a new right created by statute’’); but see
Karp v. Urban Redevelopment Commission, 162 Conn.
525, 529, 294 A.2d 633 (1972) (‘‘the general rule [is] that
a time limitation on the enforcement of a right, created
by statute and not existing at common law, is a part of
the right and must be met in order to provide a court
with jurisdiction to hear the cause of action’’); see also
Ecker v. West Hartford, 205 Conn. 219, 233, 530 A.2d
1056 (1987) (deeming wrongful death action jurisdic-
tional under this general rule). Further, in Ekstrom v.
Value Health, Inc., 68 F.3d 1391, 1395 (D.C. Cir. 1995),
the court, citing to our state precedent, held that § 52-
420 is substantive because ‘‘[u]nder Connecticut law
. . . jurisdictional time limits are not subject to waiver
. . . .’’ It remains uncertain, therefore, that § 52-420 (b)
is procedural.
The majority, nonetheless, posits that the principle
of legislative acquiescence compels the conclusion that
§ 52-420 properly may be considered procedural. As
support, the majority cites Angersola v. Radiologic
Associates of Middletown, P.C., 330 Conn. 251, 193 A.3d
520 (2018). In Angersola, our Supreme Court directed
the parties to file supplemental briefs to address the
question, inter alia, of whether strong evidence existed
as to legislative intent to overcome the presumption
that the statutorily created rights under General Stat-
utes § 52-555 were jurisdictional in nature. Id., 266. The
court, in reaching its decision on this question, acknowl-
edged that tension exists ‘‘between a trial court’s juris-
diction and its authority to act under a particular stat-
ute.’’ (Internal quotation marks omitted.) Id., 267. In
accordance with the principle of legislative acquies-
cence, the court reasoned that ‘‘[o]nce an appropriate
interval to permit legislative reconsideration has passed
without corrective legislative action, the inference of
legislative acquiescence places a significant jurispru-
dential limitation on our own authority to reconsider the
merits of our earlier decision . . . .’’ (Citation omitted;
internal quotation marks omitted.) Id., 267–68. Noting
that the legislature had never, in thirty years, seen fit
to overrule the court’s conclusion that compliance with
the repose period is a jurisdictional requirement, the
court concluded that the legislature had acquiesced to
such characterization, and, therefore, the court con-
cluded that it was appropriate to consider § 52-555 as
a jurisdictional requirement. Id., 268.
The majority’s analysis, and that provided in
Angersola, presume that the legislature’s inactivity is
sufficient to establish legislative acquiescence. That
analysis, however, is incomplete. ‘‘[T]he legislative
acquiescence doctrine requires actual acquiescence on
the part of the legislature. [Thus] [i]n most of our prior
cases, we have employed the doctrine not simply
because of legislative inaction, but because the legisla-
ture affirmatively amended the statute subsequent to a
judicial or administrative interpretation, but chose not
to amend the specific provision of the statute at issue.
. . . In other words, [l]egislative concurrence is partic-
ularly strong [when] the legislature makes unrelated
amendments in the same statute.’’ (Citation omitted;
quotation marks omitted.) State v. Salamon, 287 Conn.
509, 525, 949 A.2d 1092 (2008); see also Berkley v. Gavin,
253 Conn. 761, 777 n.11, 756 A.2d 248 (2000) (legislative
acquiescence requires actual acquiescence by legisla-
ture), superseded by statute in part on other grounds as
stated in Estate of Brooks v. Commissioner of Revenue
Services, 325 Conn. 705, 716, 159 A.3d 1149 (2017).
Here, there is no evidence in the record that the
legislature affirmatively has amended § 52-420 without
choosing to address whether it is jurisdictional or sub-
stantive in nature. Moreover, it is not clear that any
characterization of this statute as procedural and sub-
ject matter jurisdictional is accurate. I, therefore, would
not conclude that the legislature has acquiesced to any
language from the precedent the majority cites for the
proposition that the time limitation in § 52-420 is proce-
dural and subject matter jurisdictional.
In honoring the contractual freedom afforded to par-
ties under the FAA, I would enforce the terms set forth
in the parties’ arbitration agreement. I, therefore, would
hold that § 12 of the FAA, rather than § 52-420 of the
General Statutes, governs the parties’ motion to vacate
and that our precedent in Doctor’s Associates, Inc. v.
Searl, supra, 179 Conn. App. 577, be upheld.
Accordingly, I respectfully dissent.
1
General Statutes § 52-420 (b) provides: ‘‘No motion to vacate, modify or
correct an award may be made after thirty days from the notice of the award
to the party to the arbitration who makes the motion.’’
2
Section 12 of title 9 of the 2012 edition of the United States Code provides
in relevant part: ‘‘Notice of a motion to vacate, modify, or correct an award
must be served upon the adverse party or his attorney within three months
after the award is filed or delivered. . . .’’
3
In its memorandum of decision, the court incorrectly stated that § 12 of
the FAA did not apply because the plaintiff, pursuant to § 9 of the FAA,
‘‘was free to bring this application in the Connecticut federal district court
where the longer, three month limitation applies.’’ Section 9 of the FAA
provides in relevant part that ‘‘[i]f no court is specified in the agreement of
the parties, then such application may be made to the United States court
in and for the district within which such award was made. . . .’’ Section 9
of the FAA, however, does not confer subject matter jurisdiction in federal
courts but, instead, ‘‘provide[s] an additional procedure and remedy . . .
where jurisdiction already exists.’’ (Internal quotation marks omitted.) Metal
Products Workers Union, Local 1645, UAW-AFL-CIO v. Torrington Co., 242
F. Supp. 813, 819 (D. Conn. 1965), aff’d, 358 F.2d 103 (2d Cir. 1966).
On this point, the United States Supreme Court has characterized the
FAA as an ‘‘anomaly’’ in the area of federal jurisdiction, as ‘‘[the FAA] creates
a body of federal substantive law establishing and regulating the duty to
honor an agreement to arbitrate, yet it does not create any independent
federal-question jurisdiction . . . .’’ Moses H. Cone Memorial Hospital v.
Mercury Construction Corp., 460 U.S. 1, 25 n.32, 103 S. Ct. 927, 74 L. Ed.
2d 765 (1983). Accordingly, the court mistakenly referred to § 9 of the FAA
as the source of federal jurisdiction in the present case.
Instead, the parties had federal question jurisdiction by virtue of their
claim under the Federal Truth in Lending Act, 15 U.S.C. § 1601 et seq. (2012).
The parties otherwise did not have federal question or diversity jurisdiction.
Accordingly, if the parties did not have their Federal Truth in Lending Act
claim, then the court’s decision not to enforce their agreement to follow
§ 12 of the FAA would have left them without the option to bring a motion
to vacate after thirty days, despite their clearly agreed upon three month
time frame.
4
Section 2 of title 9 of the 2012 edition of the United States Code provides:
‘‘A written provision in any maritime transaction or a contract evidencing
a transaction involving commerce to settle by arbitration a controversy
thereafter arising out of such contract or transaction, or the refusal to
perform the whole or any part thereof, or an agreement in writing to submit
to arbitration an existing controversy arising out of such a contract, transac-
tion, or refusal, shall be valid, irrevocable, and enforceable, save upon such
grounds as exist at law or in equity for the revocation of any contract.’’
5
In Doctor’s Associates, Inc., the parties, in their contract, agreed that
the FAA governed disputes concerning the enforceability of the arbitration
clause therein. Doctor’s Associates, Inc. v. Searl, supra, 179 Conn. App. 585.
This court upheld the parties’ agreement to apply the FAA. Id., 585–86.