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Derose v. Jason Robert's, Inc.

Court of Appeals of Connecticut

August 13, 2019


          Argued January 31, 2019

         Procedural History

         Application to confirm an arbitration award, brought to the Superior Court in the judicial district of Ansonia-Milford, where the defendants filed a motion to vacate the award; thereafter, the matter was tried to the court, Hon. Arthur A. Hiller, judge trial referee; judgment granting the application to confirm and denying the motion to vacate, from which the defendants appealed to this court; subsequently, the court issued an articulation of its decision. Affirmed.

          Lori Welch-Rubin, for the appellants (defendants).

          Thomas J. Weihing, for the appellee (plaintiff).

          Keller, Prescott and Harper, Js.


          PRESCOTT, J.

         The defendants, Jason Robert's, Inc., and Robert D. Hartmann, Sr., appeal from the judgment of the trial court denying their motion to vacate an arbitration award and granting an application to confirm the award filed by the plaintiff, Michael DeRose. On appeal, the defendants claim that the court improperly (1) found that the arbitrator effectively had defaulted the defendants for failing to appear at the final arbitration hearing, and that this allegedly erroneous factual finding colored the court's decision-making process with respect to the motion to vacate; (2) failed to provide the defendants with an evidentiary hearing before ruling on the motion to vacate; (3) granted a motion to quash a subpoena duces tecum directed at the arbitrator and his files; (4) failed to vacate the arbitration award on the ground that the arbitrator had not addressed the entirety of the submission; (5) confirmed an award that violated public policy; and (6) confirmed an award made in manifest disregard of the law in violation of General Statutes § 52-418 (a) (4).[1] We disagree and, accordingly, affirm the judgment of the trial court.

         The facts underlying the parties' long-standing dispute are set forth in our decision in Jason Robert's, Inc. v. Administrator, Unemployment Compensation Act, 127 Conn.App. 780, 782-85, 15 A.3d 1145 (2011). Additional facts and procedural history are set forth in the arbitrator's award and in the trial court's oral decision and subsequent articulation. ‘‘[Jason Robert's, Inc., ] is a concrete business. During the years 1998, 1999 and 2000, [it] employed [DeRose] as a concrete artisan. While [DeRose] was working for [Jason Robert's, Inc.] as an employee, he asked for a raise in salary. In order to give [DeRose] the potential to earn more money, [Jason Robert's, Inc., ] directed [DeRose] to set up a business so that he could enter into an agreement with [it] as a licensed dealer. In or about 2001, after [DeRose] had set up his own business, [Jason Robert's, Inc., ] presented him with a licensed dealer authorization (agreement), and, on May 4, 2001, [DeRose] signed the agreement and became a licensed dealer for [Jason Robert's, Inc.]

         ‘‘[DeRose] was a licensed dealer of [Jason Robert's, Inc., ] during the years 2001 and 2002. During those years, [Jason Robert's, Inc., ] classified [DeRose] as an independent contractor. At the end of 2002, [DeRose] terminated the agreement because the arrangement had become unprofitable for him. After terminating the agreement, [DeRose] filed a claim for benefits under the Unemployment Compensation Act (act), General Statutes § 31-222 et seq. This claim for benefits caused . . . the administrator of the act [administrator] to issue a missing wage assignment. . . . On April 25, 2003 . . . [a field auditor of the employment security division of the state department of labor] issued [a] written report, wherein he concluded that [DeRose] was an employee [of Jason Robert's, Inc., ] during the years 2001 and 2002. In a letter dated April 29, 2003, the [administrator] informed [Jason Robert's, Inc., ] of this determination and that there would be an assessment for the contributions due in the amount of $4366.03 plus interest. On May 16, 2003, [Jason Robert's, Inc., ] appealed this determination to the appeals division . . . . On September 12, 2007 . . . the appeals referee affirmed the determination. In its decision, the appeals referee applied § 31-222 (a) (1) (B) (ii), more commonly known as the ‘ABC test,' . . . and concluded that [DeRose] was an employee of [Jason Robert's, Inc.] The referee reached this conclusion after having determined that [Jason Robert's, Inc., ] failed to satisfy any of the three prongs of the ABC test.'' (Footnote omitted.) Id., 782-84.

         Both the Worker's Compensation Review Board (board) and the Superior Court subsequently affirmed the decision of the appeals referee. Id., 784-85. Jason Robert's, Inc., then appealed to this court claiming that, in determining whether DeRose was an employee, the board should have applied General Statutes § 42-133e (b), rather than the ‘‘ABC test'' to the underlying facts. Id., 785. We disagreed and affirmed the judgment of the trial court. Id.

         In 2007, during the pendency of the worker's compensation appeal, DeRose filed a civil action against the defendants.[2] The operative complaint contained seven counts in which DeRose alleged that the defendants (1) breached their agreement with him by failing to compensate him for various jobs, (2) breached the implied covenant of good faith and fair dealing, (3) made negligent misrepresentations, (4) made fraudulent misrepresentations, (5) violated several state labor statutes, (6) committed unfair trade practices, and (7) negligently inflicted emotional distress. In May, 2011, the defendants filed an amended answer to the complaint raising a number of special defenses.[3] Jason Robert's, Inc., also filed a counterclaim against DeRose, alleging that he had breached the parties' agreement by failing to complete work or utilizing poor workmanship, and committed statutory theft by retaining funds belonging to Jason Robert's, Inc.

         On June 6, 2012, the parties entered into an agreement to resolve their civil action through binding arbitration. DeRose subsequently withdrew his civil action from the Superior Court. The arbitration agreement contains a clause titled ‘‘Submission to Arbitration and Scope of Arbitration, '' which states as follows: ‘‘The controversy shall be submitted to a panel of one arbitrator (Attorney Daniel Portanova), who shall hear, settle and determine by arbitration the matters in controversy within the scope of the claim based upon the evidence and testimony presented. The arbitrator is permitted, but not required, to apply the rules of evidence in civil cases when considering the evidence presented. No party shall have the right or power to revoke the submission without the written consent of the other party except on the grounds asexist in law or equity for the rescission or revocation of any contract. All issues shall be submitted to and fully and finally adjudicated by the arbitrator including, but not limited to, the issue of coverage, liability, causation and damages. The arbitrator will apply the procedural and substantive law of Connecticut.''

         The arbitrator held hearings between July 1, 2012, and January 24, 2013, during which the parties submitted evidence, including testimony from DeRose and Hartmann. A period of inactivity then followed. By letter dated September 25, 2014, the arbitrator notified the parties as follows: ‘‘Please be advised that I am holding [$2, 100] in my trustee account regarding the above arbitration. I have attached my invoice showing that each respective party has paid [$4, 500]; therefore, each party is owed a refund of [$1, 050].''

         DeRose sent the arbitrator a letter dated May 15, 2015, attached to which were additional documents that DeRose sought tofile with the arbitrator ‘‘with the intention to restart the . . . arbitration matter.'' A copy of that letter and its attachments were also sent to the defendants' counsel. The defendants responded to DeRose by letter dated May 19, 2015. The defendants indicated that, because the last arbitration hearing had taken place on January 24, 2013, and DeRose, until he sent the May 15, 2015 letter, had not complied with the arbitrator's request ‘‘to submit everything, '' they considered the arbitration abandoned.[4] DeRose replied to the defendants by letter dated June 1, 2015. In the letter, he stated that the arbitration proceedings had never been closed, he had not abandoned the matter, and he intended to proceed to a final decision. He indicated that he had no more testimony or evidence to present and that, if the defendants failed to participate going forward, they did so at their own peril. A few days later, on June 4, 2015, DeRose sent a letter to the arbitrator stating: ‘‘It has come to my attention that [counsel for the defendants] will not file any more documents or bring any witnesses into arbitration. We therefore respectfully request that you declare the arbitration closed and issue a decision in this matter.''

         The arbitrator next met with the parties in March, 2016. He later sent notice to the parties by letter dated April 1, 2016, stating: ‘‘I have reviewed the file since our meeting of last week. This file will remain open for further consideration.'' The parties and the arbitrator met again in June, 2016. By that time, Hartmann had discharged the defendants' attorney and was proceeding as a self-represented party. Hartman made an oral motion to have the arbitration terminated, but the arbitrator denied the motion, continuing the matter until January 16, 2017.

         Despite the arbitrator's decision that the arbitration would go forward, the defendants, who were now represented by their present counsel, sent DeRose a letter dated January 13, 2017, asserting that they intended to treat the arbitration as abandoned ‘‘by virtue of laches.'' The defendants did not attend the final January 16, 2017 arbitration hearing, despite having been duly served with subpoenas.

         On February 1, 2017, the arbitrator issued a final award resolving the matter in favor of DeRose. Among other things, the arbitrator found that (1) DeRose was an employee of Jason Robert's, Inc., (2) DeRose never authorized the defendants to make deductions as was claimed by the defendants, and (3) Hartman was the individual who ultimately was responsible for the wage violations that had occurred. The arbitrator found that the defendants were liable to DeRose under General Statutes § 31-72, [5] and ordered them to pay DeRose damages, costs, and attorney's fees totaling $171, 938.20.[6]Notice of the arbitrator's award issued on February 3, 2017.

         On February 15, 2017, DeRose filed an application with the Superior Court for an order confirming the arbitration award. See General Statutes § 52-417.[7] On March 6, 2017, the defendants filed a motion to vacate the arbitration award pursuant to § 52-418. According to the defendants, the arbitrator's award violated clear public policy, as embodied in the equitable doctrine of laches, and contravened one or more of the statutory proscriptions set forth in § 52-418. The defendants also filed an objection to DeRose's application to confirm the arbitration award raising these same arguments. DeRose filed an objection to the motion to vacate the arbitration award, arguing that no legally cognizable reason existed to vacate the award.

         The defendants served a subpoena duces tecum on the arbitrator ordering him to appear in court on July 17, 2017, and to produce the entire arbitration file maintained by him in his capacity as arbitrator. The arbitrator filed a motion to quash the subpoena, arguing that the contents of the arbitration file, which included his research and personal notes, were not relevant to any of the theories the defendants had advanced in support of their motion to vacate the arbitration award.

         The parties argued the motion to quash before the court on July 17, 2017. After hearing from the parties, the court granted the arbitrator's motion to quash the subpoena. The court also denied the defendants' motion to vacate the arbitration award and granted the application to confirm the award. The court explained as follows on the record: ‘‘The court has heard the arguments. The court has read all the papers in this file that have been filed. The court will grant the motion to quash the subpoena. The court will find that any delay in this arbitration was caused because the arbitrator gave the defendants extra time to present their case. The court finds no prejudice. The court finds that any delay [that] may have occurred did not cause any prejudice to the defendants and that the delay, if anything, was to their benefit. . . .

         ‘‘The defendants were apprised of the final hearing date, and . . . Hartmann, both in his corporate and his personal capacity, [was] served by subpoenas on January 11, 2017. Hartmann and Jason Robert's, Inc., were in effect defaulted and failed to appear at the hearing. And as a result of their failure to appear at the hearing, Hartmann did not have another attorney filing an appearance on his behalf and he did not ask for a continuance and had a letter sent that the defendants were not coming to the hearing. . . . Hartmann, once again, did not appear at the final hearing, nor did any attorney representing him, and the arbitrator went forward after finding the ...

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