CHARLES HENRY III ET AL.
GREGORY IMBRUCE ET AL. STARBOARD RESOURCES, INC.
CHARLES HENRY III ET AL.
September 18, 2017
Richard S. Gora, for the appellants (defendants).
M. Harrington, with whom, on the brief, were Jonathan P.
Whitcomb and Bridgitte E. Mott, for the appellees
DiPentima, C. J., and Sheldon and Mullins, Js.
DIPENTIMA, C. J.
defendants appeal from the judgments of the trial
court confirming an arbitration award in favor of the
plaintiffs. On appeal, the defendants claim that the
court erred in denying their motion to vacate the award and
in granting the plaintiffs' motion to confirm the award
because the arbitrator failed to disclose a conflict of
interest, failed to order production of certain evidence and
exceeded her powers under the arbitration agreements. We
disagree. Accordingly, we affirm the judgments of the trial
following facts, as set forth by the trial court in its April
11, 2016 memorandum of decision, and procedural history are
relevant to this appeal. ‘‘These consolidated
cases arise out of the plaintiffs'
investment in three limited partnerships: Giddings Oil &
Gas, L.P. (Giddings, L.P.), Hunton Oil Partners, L.P.
(Hunton, L.P.), and ASYM Energy Fund III, L.P. (ASYM, L.P.).
The plaintiffs are investors and limited partners in each of
these limited partnerships. Each of the limited partnerships
had a general partner which is a limited liability company:
Giddings Genpar, LLC (Giddings Genpar), Hunton Oil Genpar,
LLC (Hunton Genpar), and ASYM [Capital] III, LLC (ASYM
of the limited liability companies that served as a general
partner of a limited partnership had a manager; the manager
of Giddings Genpar was Giddings Investments, LLC, the manager
of Hunton Genpar was Glenrose Holdings, LLC, and the manager
of ASYM Genpar was ASYM Energy Investments, LLC. The
plaintiffs in their complaint alleged that the individual
defendant Gregory Imbruce . . . exercised complete control
over the managers and therefore over the general partners and
over the limited partnerships. The various companies which
acted as general partners and/ or managers, as well as
Imbruce individually, will be collectively referred to as the
. . . defendants. The plaintiffs brought this action
individually and derivatively on behalf of the three limited
their second amended complaint (in docket number
CV-12-6014987-S) the plaintiffs alleged various fact patterns
pursuant to which they asserted that the . . . defendants
have made misrepresentations in the marketing of the
investments, that the . . . defendants have violated the
provisions of the Connecticut Uniform Securities Act (CUSA),
[General Statutes § 36b-2 et seq.], and that the . . .
defendants have wrongfully diverted assets of the various
limited partnerships to their own purposes or accounts. The
second amended complaint sounds in [eleven] counts which seek
both injunctive relief and monetary damages, alleging counts
that sound in fraud, breach of fiduciary duty, conversion,
civil theft, and violation of the Connecticut Unfair Trade
Practices Act (CUTPA), General Statutes § 42- 110b et
seq., among other theories of relief. The prayer for relief
in the second amended complaint seeks both equitable relief
and monetary damages.
case of Starboard Resources, Inc. v. Henry, Superior
Court, judicial district of Stamford, Docket No.
CV-12-6015112-S (Starboard case), is an interpleader action
in which Starboard Resources, Inc. (Starboard), seeks, inter
alia, an order of the court authorizing it to deposit the
disputed shares in court and a judicial determination
regarding the relative rights of the parties to those shares.
July 11, 2014, the court granted the motion of the . . .
defendants to stay these actions pending completion of
arbitration proceedings, some of which had already begun. . .
. Consistent with the court order staying this action, the
parties proceeded to arbitration and by subsequent agreement
broadened the arbitration beyond that which they had
previously agreed to in their limited partnership
agreements. The parties proceeded with the arbitration
before a single arbitrator.
September 10, 2015, the arbitrator rendered an award in favor
of the plaintiffs herein, who as respondents in the
arbitration proceeding had filed a counterclaim, including
allegations similar in nature to the allegations of the
second amended complaint previously described. The award
consisted of declaratory awards, monetary damages, awards of
[attorney's] fees, interest, injunctive relief requiring
an accounting, post-judgment interest, as well as awards of
arbitration fees and costs.'' (Footnotes added and
September 14, 2015, the plaintiffs filed a motion in the
trial court to confirm the arbitration award. On October 13,
2015, the defendants filed an objection to the
plaintiffs' motion to confirm the award and a cross
motion to vacate the award accompanied by scores of exhibits.
A flurry of procedural and substantive filings followed,
until, on February 8, 2016, the court held a hearing on the
parties' respective motions. The court, after further
briefing, rendered judgments in accordance with the
arbitrator's decision on April 11, 2016, confirming the
arbitral award. This appeal followed. Additional facts and
procedural history will be set forth as necessary.
begin with applicable legal principles. The court found, and
the parties agree, that these cases, though brought in state
court, are governed by the federal Arbitration Act, 9 U.S.C.
§§ 1 through 16 (arbitration act), because the
underlying contracts involve interstate
commerce. ‘‘Arbitration is essentially a
creature of contract, a contract in which the parties
themselves charter a private tribunal for the resolution of
their disputes. . . . Arbitration agreements are contracts
and their meaning is to be determined . . . under accepted
rules of [state] contract law . . . .
construction of an arbitration agreement, however, is not
guided solely by the principles of relevant state contract
law. The arbitration act; 9 U.S.C. §§ 1 through 16;
governs written arbitration agreements that pertain to
contracts involving interstate commerce. . . . The
arbitration act creates a body of federal substantive law of
arbitrability, applicable to any arbitration agreement within
the coverage of the [a]ct . . . . As federal substantive law
. . . the arbitration act is to be applied by state courts as
well as by federal courts. . . .
purpose of the arbitration act is to ensure that private
agreements to arbitrate are enforced according to their
terms. . . . The arbitration act establishes a strong federal
policy favoring arbitration. . . . [W]hen Congress passed the
[a]rbitration [a]ct in 1925 . . . [i]t intended courts to
enforce [arbitration] agreements into which parties had
entered . . . and to place such agreements upon the same
footing as other contracts . . . .'' (Citations
omitted; footnote omitted; internal quotation marks omitted.)
Hottle v. BDO Seidman, LLP, 268 Conn. 694, 701-703,
846 A.2d 862 (2004).
the court's review of an arbitration award is
‘‘extremely limited.'' Burns
International Security Services, Inc. v. International Union,
United Plant Guard Workers of America (UPGWA) and its Local
537, 47 F.3d 14, 17 (2d Cir. 1995). Courts may vacate an
arbitrator's decision ‘‘only in very unusual
circumstances.'' First Options of Chicago, Inc.
v. Kaplan, 514 U.S. 938, 942, 115 S.Ct. 1920, 131
L.Ed.2d 985 (1995). ‘‘Following issuance of an
arbitration award, § 9 of the [arbitration act] provides
that a party may apply to a [trial] court ‘for an order
confirming the award, and thereupon the court must grant such
an order unless the award is vacated, modified, or corrected
as prescribed in sections 10 and 11 of this title.'
'' STMicroelectronics, N.V. v. Credit Suisse
Securities (USA), LLC, 648 F.3d 68, 74 (2d Cir. 2011).
‘‘Only a barely colorable justification for the
outcome reached by the arbitrators is necessary to confirm
the award.'' (Internal quotation marks omitted.)
D.H. Blair & Co. v. Gottdiener, 462 F.3d 95, 110
(2d Cir. 2006). Accordingly, ‘‘[a] party
petitioning a . . . court to vacate an arbitral award bears
the heavy burden of showing that the award falls within a
very narrow set of circumstances delineated by statute and
case law.'' Duferco International Steel Trading
v. T. Klaveness Shipping A/S, 333 F.3d 383, 388 (2d Cir.
2003). Specifically, under the arbitration act, an
arbitration award may be vacated only ‘‘(1) where
the award was procured by corruption, fraud, or undue means;
(2) where there was evident partiality or corruption in the
arbitrators, or either of them; (3) where the arbitrators
were guilty of misconduct in refusing to postpone the
hearing, upon sufficient cause shown, or in refusing to hear
evidence pertinent and material to the controversy; or of any
other misbehavior by which the rights of any party have been
prejudiced; or (4) where the arbitrators exceeded their
powers, or so imperfectly executed them that a mutual, final,
and definite award upon the subject matter submitted was not
made.'' 9 U.S.C. § 10 (a) (2012).
these limitations on a court's review of the arbitration
award, ‘‘[w]e review a [trial] court's
decision to confirm or vacate an arbitration award de novo on
questions of law and for clear error on findings of
fact.'' National Football League Management
Council v. National Football League Players Assn., 820
F.3d 527, 536 (2d Cir. 2016); see also Kellogg v.
Middlesex Mutual Assurance Co., 326 Conn. 638, 645, 165
A.3d 1228 (2017) (reviewing trial court's vacatur de
novo). We turn now to the defendants' claims.
defendants first claim that the court should have vacated the
arbitration award because the arbitrator failed to disclose a
conflict of interest. Specifically, the defendants argue that
the arbitrator was required to disclose the fact that she had
arbitrated the personal divorce of an attorney, Kenneth
Votre, who represented Imbruce and Glenrose Holdings, LLC, in
a separate but related malpractice action. We do not agree.
arbitration award may be vacated ‘‘where there
was evident partiality or corruption in the arbitrators . . .
.'' 9 U.S.C. § 10 (a) (2) (2012).
‘‘Evident partiality may be found only where a
reasonable person would have to conclude that an arbitrator
was partial to one party to the arbitration. . . . Although a
party seeking vacatur must prove evident partiality by
showing something more than the mere appearance of bias . . .
[p]roof of actual bias is not required. . . . Rather,
partiality can be inferred from objective facts inconsistent
with impartiality. . . . A showing of evident partiality must
be direct and not speculative.'' (Citations omitted;
internal quotation marks omitted.) Kolel Beth Yechiel
Mechil of Tartikov, Inc. v. YLL Irrevocable Trust, 729
F.3d 99, 104 (2d Cir. 2013). The party seeking vacatur must
prove evident partiality by ‘‘clear and
convincing evidence.'' Id., 106.
‘‘[T]he evident-partiality standard [is] not
satisfied because the undisclosed relationship at issue was
too insubstantial to warrant vacating the award. . . .
[W]here an undisclosed matter is not suggestive of bias,
vacatur based upon that nondisclosure cannot be warranted
under an evident-partiality theory.'' (Citations
omitted; internal quotation marks omitted.) Scandinavian
Reinsurance Co. Ltd. v. Saint Paul Fire&Marine Ins.
Co., 668 F.3d 60, 72-73 (2d Cir. 2012). Indeed,
‘‘there is no duty to disclose if the
relationship is trivial.'' Uhl v. Komatsu
Forklift Co., Ltd., 512 F.3d 294, 307 (6th Cir. 2008).
Nevertheless, ‘‘arbitrators must take steps to
ensure that the parties are not misled into believing that no
nontrivial conflict exists. It therefore follows that where
an arbitrator has reason to believe that a nontrivial
conflict of interest might exist, he must (1) investigate the
conflict . . . or (2) disclose his reasons for believing
there might be a conflict and his intention not to
investigate. . . . [A] failure to either investigate or
disclose an intention not to investigate is indicative of
evident partiality.'' (Citations omitted.)
Applied Industrial Materials Corp. v. Ovalar Makine
Ticaret Ve Sanayi, A.S., 492 F.3d 132, 138 (2d Cir.
defendants argue that the purported conflict was nontrivial
and that the arbitrator misled them into believing that no
nontrivial conflict existed. Specifically, the defendants
contend that they were misled because the arbitrator's
initial disclosures at the start of the arbitration suggested
that she considered any prior arbitral relationships to be
per se nontrivial, but the arbitrator then failed to disclose
her arbitral relationship with Attorney Votre. We are not