C. R. Klewin Northeast, LLC v. City of Bridgeport; City of Bridgeport v. C. R. Klewin Northeast, LLC, 282 Conn. 54

Summary

The Connecticut Supreme Court reviewed consolidated appeals concerning an arbitration award arising from a municipal public works contract for a sports arena project. The court held that a challenge alleging that the underlying contract was illegally procured and void ab initio was for the arbitration panel to consider in the first instance, unless the challenge specifically targeted the arbitration clause. The court further held that the city waived its illegality and related public-policy arguments by failing to timely raise them during arbitration, and affirmed confirmation of the award.

Holdings

1. A challenge to the validity or legality of the entire underlying contract, rather than a challenge specifically directed at the arbitration clause, is for the arbitrator to decide in the first instance.
2. The City waived its contract-illegality defense by waiting until twenty hearing days had occurred, despite having notice of the factual basis for the defense, and by failing to pursue the panel's later offer to consider the claim.
3. The panel's incorrect statement that it lacked jurisdiction over the illegality defense did not require vacatur because the City had waived the defense and the panel had separately determined that the defense was untimely.
4. When a public-policy challenge to an arbitration award is functionally identical to a contract-illegality defense that the party waived before the panel, the party cannot raise the issue in the confirmation or vacatur proceeding because the courts lack the necessary arbitral factual findings.
5. The arbitration panel properly continued with two arbitrators after one member became unavailable because the agreement incorporated the AAA commercial rules and did not specifically require that all subsequent proceedings be conducted before three arbitrators.
6. The court declined to decide whether Klewin was entitled to offer-of-judgment interest under Conn. Gen. Stat. § 52-192a because the trial court did not rule on the issue and the record was inadequate for review.

Questions Presented

1. Whether a challenge that the entire municipal contract containing an arbitration clause was illegally procured and void ab initio must initially be decided by the court or the arbitration panel.
2. Whether the City waived its contract-illegality defense by delaying its assertion during the arbitration and participating in the proceedings.
3. Whether the panel's failure to decide the illegality defense rendered the award incomplete, defective, or nonfinal.
4. Whether the City could relabel its waived contract-illegality defense as a public-policy challenge to vacatur of the arbitration award.
5. Whether the trial court was required to conduct an evidentiary hearing on the alleged illegal procurement and whether it abused its discretion in denying reargument.
6. Whether the arbitration panel properly continued with two arbitrators after a vacancy when the agreement incorporated the American Arbitration Association's commercial rules and did not specifically require three arbitrators.
7. Whether Klewin was entitled to offer-of-judgment interest under Conn. Gen. Stat. § 52-192a.

Disposition

affirmed