Stack v. Hartford Distributors, Inc. ( 2017 )

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GERARD STACK v. HARTFORD DISTRIBUTORS, INC.
(AC 39160)
Alvord, Bright and Mihalakos, Js.
Syllabus
The plaintiff, whose employment with the defendant company was termi-
nated, filed an application seeking an order to proceed with arbitration
on the basis of an arbitration clause contained in the parties’ employment
agreement. The trial court granted the plaintiff’s application and ren-
dered judgment thereon, from which the defendant appealed to this
court. On appeal, the defendant claimed that the court erred in ordering
the parties to proceed with arbitration because the parties’ dispute did
not arise out of the employment agreement. Specifically, the defendant
claimed that a supplier agreement, read in conjunction with its bylaws
and our corporate governance statutes, provided an independent basis
for the termination of the plaintiff’s employment outside of the employ-
ment agreement and, thus, that there was nothing to arbitrate under
that agreement. Held that the trial court properly rendered judgment
ordering the parties to proceed to arbitration; the plaintiff’s application
for an order to proceed with arbitration was brought on the basis of
his claim that his employment was terminated in violation of the parties’
employment agreement, pursuant to which the parties had agreed to
arbitrate any disputes regarding the interpretation or enforcement of
the agreement or any provision thereof, there was no dispute that the
defendant terminated the plaintiff’s employment or as to the existence
of the arbitration clause in the employment agreement, and although
the defendant claimed that the employment agreement was void and
unenforceable, it challenged the validity of the entire employment con-
tract, not the arbitration provision, and our Supreme Court has deter-
mined previously that an arbitration provision is severable from the
remainder of the contract and that, unless the challenge is to the arbitra-
tion clause itself, the issue of the contract’s validity should be considered
by the arbitrator in the first instance.
Argued November 14—officially released December 26, 2017
Procedural History
Application for an order to proceed with arbitration,
brought to the Superior Court in the judicial district of
Hartford, where the court, Elgo, J., rendered judgment
granting the application, from which the defendant
appealed to this court. Affirmed.
Matthew T. Wax-Krell, with whom, on the brief, was
Andrew W. Krevolin, for the appellant (defendant).
Andrew L. Houlding, for the appellee (plaintiff).
Opinion
BRIGHT, J. The defendant, Hartford Distributors, Inc.
(Hartford Distributors), appeals from the judgment of
the trial court granting the application, filed by the
plaintiff, Gerard Stack, for an order to proceed with
arbitration pursuant to the parties’ employment
agreement. On appeal, Hartford Distributors claims that
the court erred in ordering the parties to proceed with
arbitration because the parties’ dispute did not arise
out of the parties’ employment agreement. We disagree
and, accordingly, affirm the judgment of the trial court.
The following facts and procedural history, as set
forth by the trial court or as otherwise contained in the
record, inform our review. The parties initiated in the
Superior Court two related matters. In the present mat-
ter, Stack, on July 27, 2015, made application to the
court for an order to proceed with arbitration on the
basis of the arbitration clause contained in the parties’
November 2, 2010 employment agreement. In the
related matter, Hartford Distributors, Inc. v. Stack,
Superior Court, judicial district of Hartford, Docket No.
CV-15-6061301-S, Hartford Distributors filed a declara-
tory judgment action seeking a finding that the parties’
employment agreement is invalid, void and of no effect;
Hartford Distributors also requested a finding that
Stack’s employment had been terminated in a lawful
manner. Stack sought, inter alia, a stay of the declara-
tory judgment action pending the resolution of the arbi-
tration in the present action. The court heard argument
on both matters in a joint hearing.
In its memorandum of decision, the court explained
the parties’ dispute as follows: ‘‘As a distributor of
Anheuser-Busch, Inc. [Anheuser-Busch], products,
Hartford Distributors is subject to its Wholesaler Equity
Agreement (supplier agreement) with Anheuser-Busch.
The supplier agreement authorizes Ross Hollander,
Hartford Distributors’ Chief Executive Officer and Man-
ager for purposes of the supplier agreement . . . to
hire and terminate [the employment of] all other
employees responsible for the promoting, marketing,
pricing, selling, advertising, merchandising, delivering
and servicing of Anheuser-Busch products. Hartford
Distributors claims that the supplier agreement, and
the rights and responsibilities of . . . Hollander, sur-
vived a subsequent merger between itself and Franklin
Distributors (Franklin), by virtue of the merger
agreement and [the] Amended and Restated Bylaws of
Hartford Distributors, which became effective upon the
merger. Stack, as director and shareholder of Franklin,
authorized the merger, which also included execution
of the employment agreement between Stack and Hart-
ford Distributors. One of the terms at the closing of the
merger also included the execution of a shareholders
agreement, in which the board of directors of the surviv-
ing entity, Hartford Distributors, would be two former
shareholders of Franklin (Stack Family Group), two
former shareholders of Hartford Distributors prior to
the merger (Hollander Family Group), and one indepen-
dent member. At the same time, Stack was elected as
Vice President of Sales by the new board of directors,
with responsibilities for promoting, marketing, selling,
advertising and merchandising of Anheuser-Busch
products. Contradicting the terms of the supplier
agreement, the employment agreement between Stack
and Hartford Distributors requires a vote of at least
two thirds of the members of the board of directors,
including the vote of a director elected by the Stack
Family Group, in order to involuntarily terminate [the
employment of] Stack.
‘‘Hartford Distributors alleges [in the declaratory
judgment action] that prior to the termination [of
Stack’s employment], Stack had engaged in serious mis-
conduct in breach of the employment agreement . . . .
Following Hollander’s termination of [Stack’s employ-
ment] as a result of these alleged violations, Stack Fam-
ily Group members of the Board moved to suspend the
termination [of Stack’s employment] . . . which failed
2 [to] 2, with the Stack Family [Group] aligning to sus-
pend the termination, and the Hollander Family Group
aligning against suspension. Because Hartford Distribu-
tors also represents that members of the Stack Family
Group have indicated that [they] would never vote to
terminate the employment of a Stack Family Group
member, Hartford Distributors claims that the employ-
ment agreement is an invalid lifetime employment con-
tract, effectively disabling it from terminating Stack
Family Group employees even when there is a breach
of fiduciary duty.
‘‘For his part, Stack claims [in his application for
order] that the employment agreement is enforceable
and its terms require arbitration of any dispute arising
from the interpretation or enforcement of the
agreement.’’ (Internal quotation marks omitted.)
Hartford Distributors objected to the application for
order to proceed with arbitration on the ground that the
dispute did not arise from the employment agreement
because: ‘‘(1) [it] had the right to terminate [Stack’s
employment] regardless of the terms of his employment
agreement; (2) the employment agreement was, and is,
an invalid lifetime employment contract in that Hartford
Distributors is disabled from terminating as a result of
fiduciary breaches of the [Stack Family Group] elected
board members who refuse to vote to terminate his
employment; and (3) . . . Stack fraudulently induced
Hartford Distributors to enter into the employment
agreement and, therefore, it is invalid, void, and of
no effect.’’
On the basis of these facts and its application of the
law, the court granted Stack’s application for order to
proceed with arbitration, and, in the related declaratory
judgment matter, it issued a stay. Hartford Distributors,
thereafter, filed a motion for reconsideration, arguing
that the court’s decision did not properly address the
issue raised regarding Hartford Distributors’ alleged
right to terminate Stack’s employment independent of
the employment agreement, which had been alleged in
count one of the declaratory judgment action. The court
denied the motion to reargue, reaffirming its holding
that arbitration was required, but noting that Hartford
Distributors ‘‘acknowledges that it will still proceed
with count one [of the declaratory judgment action]
even if it does not prevail at arbitration.’’
Hartford Distributors now appeals from the judgment
of the trial court granting the application for order to
proceed with arbitration.
On appeal, Hartford Distributors claims that the court
erred in ordering the parties to proceed with arbitration
because the parties’ dispute did not arise out of the
employment agreement. Hartford Distributors argues
that the termination of Stack’s employment did not
involve ‘‘a dispute arising out of the interpretation or
enforcement of the [parties’] employment agreement,
and, therefore, the arbitration provision [contained in
that agreement] is not applicable. . . . The trial court
erroneously held that this dispute is subject to arbitra-
tion [on the basis of General Statutes §§ 52-410 and 52-
409]1 and on C. R. Klewin Northeast, LLC v. Bridgeport,
282 Conn. 54, [919 A.2d 1002] (2007).’’ (Footnote added.)
In particular, although Hartford Distributors appears to
concede that the arbitrator should decide its contention
that the employment contract is void and unenforce-
able, it argues, nonetheless, that the supplier agreement,
read in conjunction with Hartford Distributors’ bylaws
and our corporate governance statutes, provides an
independent basis for termination of Stack’s employ-
ment outside of the employment agreement. Conse-
quently, it argues that there is nothing to arbitrate under
the employment agreement. Not surprisingly, Stack
argues that the terms of his employment, including how
and when his employment can be terminated, expressly
are governed by the parties’ employment agreement,
which requires arbitration of any disputes arising there-
under. We agree with Stack that he is entitled to have an
arbitrator decide whether he was terminated properly
under the employment agreement.
‘‘Arbitration is a creature of contract. . . . It is
designed to avoid litigation and secure prompt settle-
ment of disputes and is favored by the law. . . . [A]
person can be compelled to arbitrate a dispute only if,
to the extent that, and in the manner which, he has
agreed to do so. . . . No one can be forced to arbitrate
a contract dispute who has not previously agreed to do
so. . . . Further, pursuant to Connecticut’s statutory
arbitration scheme, that agreement must be expressed
in a writing.’’ (Citations omitted; internal quotation
marks omitted.) Green v. Connecticut Disposal Service,
Inc., 62 Conn. App. 83, 86–87, 771 A.2d 137, cert. denied,
256 Conn. 912, 772 A.2d 1124 (2001); see also General
Statutes § 52-408.
‘‘Whether a particular dispute is arbitrable is a ques-
tion for the court . . . . The manifestation of arbitra-
bility may be by express provision to that effect or the
use of broad terms . . . and courts must look to the
plain language of the contract and construe the contract
as a whole when determining the intent of the parties.’’
(Internal quotation marks omitted.) Lussier v. Spin-
nato, 69 Conn. App. 136, 143, 794 A.2d 1008, cert. denied,
261 Conn. 910, 806 A.2d 49 (2002). ‘‘[T]he intent of the
parties is to be ascertained by a fair and reasonable
construction of the written words and . . . the lan-
guage used must be accorded its common, natural, and
ordinary meaning and usage where it can be sensibly
applied to the subject matter of the contract. . . .
Where the language of the contract is clear and unam-
biguous, the contract is to be given effect according to
its terms. . . . Although the intention of the parties
typically is a question of fact, if their intention is set
forth clearly and unambiguously, it is a question of law.’’
(Citation omitted; internal quotation marks omitted.)
State v. Philip Morris, Inc., 279 Conn. 785, 796–97, 905
A.2d 42 (2006).
Here, the application for order to proceed with arbi-
tration was brought on the basis of the parties’ employ-
ment agreement, which was attached as an exhibit to
the application. In that agreement, which was entered
into by the parties on November 2, 2010, the parties
agreed, specifically in paragraph 14, to arbitrate any
disputes ‘‘regarding the interpretation or enforcement
of this Agreement or any provision hereof’’ that could
not be settled by mediation administered by the Ameri-
can Arbitration Association. Additionally, paragraph 16
of the agreement provided in relevant part that ‘‘[t]his
Agreement shall constitute the entire Agreement
between [Hartford Distributors] and [Stack] with
respect to the subject matter hereof.’’
In his application for order to proceed with arbitra-
tion, Stack contended that his employment was termi-
nated in violation of the parties’ employment
agreement, and he requested that the Superior Court
order the parties to arbitration in accordance with the
arbitration clause contained in the parties’ employment
agreement. There is no dispute that Hartford Distribu-
tors terminated the employment of Stack. There also
is no dispute that there is an arbitration clause con-
tained in the parties’ employment agreement. As to
Hartford Distributors’ claims that the employment
agreement is void and unenforceable, our Supreme
Court in C. R. Klewin Northeast, LLC v. Bridgeport,
supra, 282 Conn. 75, concluded that ‘‘an arbitration pro-
vision is severable from the remainder of the contract
. . . [and], unless the challenge is to the arbitration
clause itself, the issue of the contract’s validity is con-
sidered by the arbitrator in the first instance.’’ (Internal
quotation marks omitted.) Here, Hartford Distributors
attempts to challenge the validity of the entire employ-
ment contract, not the arbitration provision. We con-
clude, on the basis of the foregoing, including the clear
holding in C. R. Klewin Northeast, LLC, that the court
properly rendered judgment ordering the parties to pro-
ceed to arbitration.
The judgment is affirmed.
In this opinion the other judges concurred.
1
General Statutes § 52-410 provides in relevant part: ‘‘(a) A party to a
written agreement for arbitration claiming the neglect or refusal of another
to proceed with an arbitration thereunder may make application to the
superior court for the judicial district in which one of the parties resides
. . . to any judge thereof, for an order directing the parties to proceed with
the arbitration in compliance with their agreement. . . .’’
General Statutes § 52-409 provides: ‘‘If any action for legal or equitable
relief or other proceeding is brought by any party to a written agreement
to arbitrate, the court in which the action or proceeding is pending, upon
being satisfied that any issue involved in the action or proceeding is referable
to arbitration under the agreement, shall, on motion of any party to the
arbitration agreement, stay the action or proceeding until an arbitration has
been had in compliance with the agreement, provided the person making
application for the stay shall be ready and willing to proceed with the arbi-
tration.’’