Hottle v. BDO Seidman, LLP

811 A.2d 745, 74 Conn. App. 271, 2002 Conn. App. LEXIS 648
CourtConnecticut Appellate Court
DecidedDecember 24, 2002
DocketAC 22636; AC 22666
StatusPublished
Cited by6 cases

This text of 811 A.2d 745 (Hottle v. BDO Seidman, LLP) is published on Counsel Stack Legal Research, covering Connecticut Appellate Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hottle v. BDO Seidman, LLP, 811 A.2d 745, 74 Conn. App. 271, 2002 Conn. App. LEXIS 648 (Colo. Ct. App. 2002).

Opinion

[273]*273 Opinion

PETERS, J.

The Federal Arbitration Act (arbitration act), 9 U.S.C. § 1 et seq., establishes a federal policy favoring arbitration. These appeals raise the question of whether an arbitration panel is disqualified because of structural bias if the panel consists only of partners in the accounting firm. The trial court concluded that an arbitration agreement including such a description of eligible arbitrators was enforceable against a claimant who was a former member of the partnership. We agree.

These appeals arise out of a dispute over the payment of compensation between the plaintiff, Dean M. Hottle, a former partner, and the defendant partnership, BDO Seidman, LLP, an accounting firm. After his withdrawal from the firm, the plaintiff initiated judicial proceedings by filing an application for a prejudgment remedy. In response, the defendant filed a motion to stay the court proceedings and an independent action to compel arbitration1 under §§ 3 and 4 of the arbitration act.2 The [274]*274defendant argued that the plaintiff was obligated to arbitrate his claims pursuant to § 14.8 of the partnership agreement.* *3 The trial court agreed and rendered judgment in favor of the defendant. The plaintiff has appealed.4

In support of his appeals, the plaintiff argues that the arbitration provision is unenforceable because it does [275]*275not provide for a neutral third party decision maker.5 It is the defendant that controls the list of prospective arbitrators, all of whom are partners of the firm. For this reason, the plaintiff contends that the proceedings authorized by § 14.8 do not qualify as an arbitration agreement. The plaintiff therefore urges us to reverse the trial court’s ruling staying his court action and compelling arbitration.

The defendant argues, to the contrary, that the arbitration provision is not unenforceable simply because partners serve as arbitrators. The defendant also contends that the plaintiff knowingly signed the partnership agreement and cannot now claim to have been unaware of its terms. As long as the arbitral process affords a fundamental level of fairness, the defendant argues, the trial court properly compelled the parties to proceed to arbitration.

These appeals require us to construe the terms of the partnership agreement. The parties have stipulated that New York law governs the agreement.6 Under New York law, the interpretation of a contract is a question of law and, accordingly, our review is plenary. 805 Third Avenue Co. v. M. W. Realty Associates, 58 N.Y.2d 447, 451, 448 N.E.2d 445, 461 N.Y.S.2d 778 (1983).

I

The arbitration act creates a “body of federal substantive law of arbitrability, applicable to any arbitration agreement within the coverage of the Act.”7 Moses H. [276]*276Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24, 103 S. Ct. 927, 74 L. Ed. 2d 765 (1983). The act governs any arbitration agreement “involving commerce”; 9 U.S.C. § 2; whether the case arises in state court or in federal court. Southland Corp. v. Keating, 465 U.S. 1, 14-15, 104 S. Ct. 852, 79 L. Ed. 2d 1 (1984). Federal law has, however, looked to state law to provide basic contract principles to supplement the act. Doctor’s Associates, Inc. v. Casarotto, 517 U.S. 681, 686-87, 116 S. Ct. 1652, 134 L. Ed. 2d 902 (1996).

As a threshold matter, we must determine, therefore, whether the arbitration act applies to § 14.8 of the partnership agreement. Section 1 of the act defines “commerce” to include “commerce among the several States . ...” 9 U.S.C. § 1. The United States Supreme Court has construed § 1 broadly. The court has explained that “involving commerce” is the equivalent of “affecting commerce,” and accordingly, the term “signals an intent to exercise Congress’ commerce power to the full.” (Internal quotation marks omitted.) Allied-Bruce Ter-minix Cos. v. Dobson, 513 U.S. 265, 277, 115 S. Ct. 834, 130 L. Ed. 2d 753 (1995).

The defendant is a nationwide accounting firm with offices in several states. The plaintiff also had clients located both within and outside of the state of New York. We conclude that the partnership agreement “involves commerce” and is governed by the arbitration act. See id., 281-82.

Pursuant to the arbitration act, we must decide whether the court properly granted the motion to stay court proceedings and to compel arbitration. 9 U.S.C. §§ 3, 4. Under the circumstances of this case, the court [277]*277was required to resolve two issues. It had to determine (1) whether the parties agreed to arbitrate, and (2) whether the agreement was enforceable.

II

Before addressing the enforceability of the arbitration provision, we first note what these appeals do not involve. The parties do not dispute the existence of the partnership agreement under New York law. State law governs issues of formation. Doctor’s Associates, Inc. v. Casarotto, supra, 517 U.S. 686-87.

Similarly, the parties do not dispute that the plaintiff knowingly agreed to the arbitration clause in the partnership agreement and to the standard expectations associated with arbitration. Having signed the agreement, the plaintiff is presumed, under New York law, to have knowledge of its contents. Metzger v. Aetna Ins. Co., 227 N.Y. 411, 416, 125 N.E. 814 (1920). It is well established that the parties may define the arbitral process by contract. Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior University, 489 U.S. 468, 479, 109 S. Ct 1248, 103 L. Ed. 2d 488 (1989). We conclude, therefore, that the parties properly entered into an agreement to arbitrate.

Finally, the parties agree that their dispute falls within the scope of § 14.8 of the partnership agreement. According to the federal policy favoring arbitration, arbitration agreements should be construed as broadly as possible. Oldroyd v. Elmira Savings Bank, FSB, 134 F.3d 72, 76 (2d Cir. 1998). Any doubt concerning the scope of arbitrable issues is to be resolved in favor of arbitration. Moses H. Cone Memorial Hospital v.

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Bluebook (online)
811 A.2d 745, 74 Conn. App. 271, 2002 Conn. App. LEXIS 648, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hottle-v-bdo-seidman-llp-connappct-2002.