Petition for Writ of Certiorari — Hartford Steam Boiler Inspection & Insurance v. Underwriters at Lloyd's & Companies Collective

Supreme Court brief2005

Ask Donna

What actually matters in this document.

Text

rr. 2

No. OFFICE OF THE CLERK

In The

Supreme Court of the Anited States

-¢

HARTFORD STEAM BOILER

INSPECTION AND INSURANCE COMPANY,

Petitioner,

UNDERWRITERS AT LLOYD’S AND

F COMPANIES COLLECTIVE, et ai.,

Respondents.

On Petition For Writ Of Certiorari

To The Supreme Court Of Connecticut

PETITION FOR WRIT OF CERTIORARI

THOMAS E. BIRSIC

. ROBERT L. BYER (Counsel of Record)

PAUL K. STOCKMAN

KIRKPATRICK & LOCKHART NICHOLSON GRAHAM LLP

Henry W. Oliver Building

535 Smithfield Street

Pittsburgh, Pennsylvania 15222

(412) 355-6500

MAURICE T. FITZMAURICE

REID AND RIEGE, P.C.

One Financial Plaza, 21st Floor

Hartford, Connecticut 06103

(860) 240-1027

Attorneys for Petitioner Hartford Steam

Boiler Inspection and Insurance Company

COCKLE LAW BRIEF PRINTING CO. (800) 225-6964

OR CALL COLLECT (402) 342-2831

QUESTION PRESENTED

When arbitrators in rendering their award fail to

comply with the parties’ arbitration agreement, and the

agreed-upon time for rendering the award has expired,

may the court remand the matter to the arbitrators for a

post hoc corrective effort, even though Section 10(b) of the

Federal Arbitration Act, 9 U.S.C. §10(b), clearly and

unambiguously permits rehearing only when the time for

rendering the award has not expired?

PARTIES TO THE PROCEEDING

The Petitioner is Hartford Steam Boiler Inspection

and Insurance Company.

The Respondents are Underwriters at Lloyd’s and

Companies Collective, National Union Fire Insurance

Company, International Fire Insurance Company, Aetna

Casualty and Surety Company, Home Insurance Company,

and Zurich Insurance Company.

RULE 29.6

CORPORATE DISCLOSURE STATEMENT

Petitioner Hartford Steam Boiler Inspection and

Insurance Company is a wholly-owned subsidiary of the

American International Group, Inc., a publicly-traded

company.

TABLE OF CONTENTS

_ Page

INE Tr OIE inincccnccccncdacsececccssstncsnonccoetatibichiies i

Parties to the Proceeding «.....0...0.ccccccccccsescccceccssascoeees ii

Rule 29.6 Corporate Disclosure Statement ............... ii

I iia ol oc sna esehaeanngibaianenibaieninmhe iii

Table of Authorities.......... Sidueketite aban eee v

SIL TIT ssiinnuniisscnececsnonpesbesssacvcesccphiisbusubenstane 1

aN aisha ids ccebsangtnbhennberbeeanedeninnsesansadaehadtient 1

Se I a5 sind os ebcwisnepebtabsunseneneebeenienabianieniies 1

NIE CN MINIT i sccccnceccichiccebcsacisusdunsunsaneccsnvania 2

iis) UII 6 55d. siicdnehebnbeed Qebmcdpsdaceionabanteinadbudebige 2

II. The Underlying Arbitration Proceedings........ 3

ids... SEEN IDIIIIOD asiinacnccodecccchsandentcoevimanebasenpene 7

Reasons for Granting the Wit ...................ccccceeeeeeeees 11

I. The Decision Below, by Ignoring the Plain

Language of the Federal Arbitration Act, Refuses

to Follow This Court’s Commands Concerning

the Interpretation of Federal Statutes................ 12

II. The Decision Below Conflicts with a Decision

of the United States Court of Appeals for the

Ninth Circuit, and Reflects a General Disar-

ray in the Decisions of the Federal Courts of

Appeals and Federal District Courts.............. 18

III. Judicial Displacement of the FAA’s Express

Provisions with Implied Common Law Reme-

dies Undermines Predictability and Threatens

the Utility of Commercial Arbitration .............. 22

TEESE AL RT TSN FES ON PPE Te 27

TABLE OF CONTENTS -— Continued

Page

APPENDIX:

Decision of the Supreme Court of Connecticut....App. 1

Decision of the Superior Court of Connecticut ....App. 28

TABLE OF AUTHORITIES

Page

CASEs:

Aetna Life & Cas. Co. v. Bulaong, 218 Conn. 51, 588

PDE COD sinicscsicictionsittincsiasieanuets (ad. 10

Barnhart v. Sigmon Coal Co., 534 U.S. 438 (2002).......... 17

Caminetti v. United States, 242 U.S. 470 Se Pieler 16

Chmielewski v. Aetna Cas. & Sur. Co., 218 Conn.

OG, SPE AA TOS I iii St 10

Colonial Penn Ins. Co. v. Omaha Indem. Co., 943

Wome Ol COR Che, SORE il ea 15, 21

Commissioner v. Gordon, 391 U.S. 83 OU tikacickadtat. 17

Connecticut Nat. Bank v. Germain, 503 U.S. 249

(RODD a ssnessccstinnisanakideiasinthhedcusteabdaii tiie scee et i ate 17

Continental Ins. Co. v. Acadia Ins. Co., 974 F. Supp.

371 (D. Vt. SIP E ) siisiinniinvanctminassinilih aia scile es el tae Mice ees 4

Cooper Indus., Inc. v. Aviall Serus., Inc., __ US.

sees AMMO ES. Bs BIT CGY oss ngs ales oe oss 17

Cox Broadcasting Corp. v. Cohn, 420 U.S. 469

CLOT GD saisksnsononaiinnensseseeibissich ell lif chan. ees 11

Dean Witter Reynolds v. Byrd, 470 U.S. 213 (1985)....... 13, 24

Director, Office of Workers’ Comp. Programs v.

Newport News Shipbuilding & Dry Dock Co., 514

UB. UBB NN hs ee 17

EEOC v. Waffle House, Inc., 534 U.S. 279 (2002)... 13, 24, 25

First Options of Chicago, Inc. v. Kaplan, 514 U.S.

POD CET iscsi invcsnivacchincaninuncc ce ere 13, 23, 25

Galt v. Libbey-Owens-Ford Glass Co., 397 F.2d 439

(7 CO: BOD ici cissictinrtimtae cae ae 20

TABLE OF AUTHORITIES — Continued

Green v. Ameritech Corp., 200 F.3d 967 (6th Cir.

GED cacvcococacesnscvonnseneiianntnntaininiiniaiuenieipiasiiiainiiinaliaie 15, 20

Hartford Underwriters Ins. Co. v. Union Planters

Bank, N.A., 530 U.S. 1 (2000) ..........ccccccssscccccessssssccrsees 16

Hoffman v. Cargill, Inc., 59 F. Supp. 2d 861 (N.D.

Iowa 1999), rev'd on other grounds, 236 F.3d 458

(Bide Cian SIGE wicccciececcnsiicnsctcskatcansectbillanbisivcbinsiaiaitcidiiied 21

International Bhd. of Teamsters, Local 631 v. Silver

State Disposal Service, Inc., 109 F.3d 1409 (9th

Gh BBG) ccercecesteserseincichiadethtecntaiasaadaes 15, 21

Lamie v. United States Trustee, 540 U.S. 526 (2004) ....... 16

La Vale Plaza, Inc. v. R.S. Noonan, Inc., 378 F.2d

BOD GO Gils, BE? accecccitecncsttntgcainmetatictnntiaiiiaas 15, 21

M&C Corp. v. Erwin Behr GMBH & Co., 326 F.3d

772 (6th Cir. 2003)................ wescenscenescececsecssnceseensesess 15, 21

Mastrobuono v. Shearson Lehman Hutton, Inc., 514

CT, BD CID wreccecncscnecessnenceusbinsinachasdniacanaanenainiess 24

Middlesex County Sewerage Auth. v. National Sea

Clammers Ass’n, 453 U.S. 1 (1981) ....................cccceceseee 18

Mitsubishi Motors Corp. v. Soler Chrysler-

Plymouth, Inc., 473 U.S. 614 (1985).........ccccccseesseseeeeees 12

Office & Prof’! Employees Int'l Union, Local 471 v.

Brownsville Gen. Hosp., 186 F.3d 326 (3d Cir.

ROBE ccncrcesccvescentsnnetionesinuinianiniicniainsineaanee 15, 21

Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388

CD, Fe Cree cccccassesestainstcctcstacsmaisenaneanl 25

Southland Corp. v. Keating, 465 U.S. 1 (1984)..............04. 1l

State v. Curcio, 191 Conn. 27, 463 A.2d 566 (1983).......... 10

Vii

TABLE OF AUTHORITIES — Continued

5 Page

Sterling China Co. v. Glass, Molders, Pottery,

GR GI Bop ei iccnssciccovsensictoiscubivttuntinmdibesiaeaekiate ae eT

Stone Container Corp. v. Hartford Steam Boiler

Insp. & Ins. Co., 165 F.3d 1157 (7th Cir. 1999)............... 4

Transamerica Mortgage Advisors v. Lewis, 444 U.S.

Bb CORTON cncnnccacncnainitidinlincnbieidandiesiiaitacaitiaitidh acted ulti de 18

United States v. Ron Pair Enterprises, 489 U.S. 235

CED scniinkiisidincntahnicuslnsshepihdilitimedpiibapsibamleiile So secitil dae 16

United Steelworkers of America v. Warrior & Gulf

Navigation Co., 363 U.S. 574 (1960)........... hodetneakions 13, 23

Volt Information Sciences, Inc. v. Board of Trustees

of Leland Stanford Junior University, 489 U.S.

RF Ca secentcesesaenvistanemtninisadens A hae 13, 14, 24, 25

Western Employers Ins. Co. v. Jefferies & Co., 958

F.2d 258 (9th Cir. 1992) .....................000000. 8, 14, 18, 19, 20

STATUTES:

DU We vviaiecknicisistadeartindnteicabinddsRecaci te 1, 7, 23

CUM. 6 io ecvsitccce e 1,15

FP RAais UID aicanicctenmnscdendanscddolaenisbelisiakdenatinins taeel 14

9 U.S.C. § 10(a)(3) ......... easininaiaciasinaaniiadiataiaiiabasatiidseetihesiaaala 14

DF URed © SUID Sesssccsthenncntncassincincatiaediadiaienseuees 2, 14, 19

Ait Yi 3”. * SaRiRbRrrinetemt avai es passim

BO TRIBAL. & BID scesessarseacaetseciniisevntichnngiaiineniacaemianat 1

TABLE OF AUTHORITIES — Continued

Page

COREE, GE SI: GS a ila icsetctinccinsaeiticcsinnintenseniniinss 7, 23

CONN. GEN. STAT. § 52-418(D) ..........:scccsssceesseeesseeesseeeeneeeees 9

CE, CE Bee i icennancnstanstencccntcasszinsstensascninsions 10

OTHER AUTHORITIES:

17A AM. JUR. 2D Contracts § 371 (2004) .........::esccceseseeeeees 22

Ian Ayres & Robert Gertner, Filling Gaps in In-

complete Contracts: An Economic Analysis of

Default Rules, 99 YALE L.J. 87 (1989) ........ceecececeseseeeees 23

17A C.J.S. Contracts § 348 (1999)............ccccssccccsssscccreeeees 22

Jane Massey Draper, Annotation, Coverage Under

“All Risks” Insurance, 30 A.L.R.5TH 170 (1995).............. 4

2 E. Allan Farnsworth, FARNSWORTH ON CONTRACTS

OD FB a i Be ccciacetitstetaintsnsiedshitanntisiiidbenphieliteiadasiai 23

Stephen L. Hayford, Law in Disarray: Judicial

Standards for Vacatur of Commercial Arbitration

Awards, 30 GA. L. REV. 731 (1996)................sssssscsssseeees 14

11 Samuel Williston & Richard A. Lord, A TREATISE

ON THE LAW OF CONTRACTS § 30.19 (4th ed. 1999)........ 22

PETITION FOR A WRIT OF CERTIORARI

Petitioner Hartford Steam Boiler Inspection and

Insurance Company (“HSB”) respectfully prays that the

Court grant a writ of certiorari to review the decision of

the Supreme Court of Connecticut in Hartford Steam

Boiler Inspection and Insurance Company v. Underwriter’s

at Lloyd’s and Companies Collective, et al.

OPINIONS BELOW

The opinion of the Connecticut Supreme Court in this

matter, Appendix (“App.”) 1-27, is reported at 271 Conn.

474 and at 857 A.2d 893. The opinion of the Connecticut

Superior Court in this matter, App. 28-43, is reported at 32

Conn. L. Rptr. 659, and is available electronically at 2002

WL 31001841 and at 2002 Conn. Super. LEXIS 2634.

~ JURISDICTION

The Connecticut Supreme Court officially released its

decision in this matter on October 12, 2004. App. 1. No

party to the proceeding sought rehearing or reconsidera- .

tion. The jurisdiction of this Court is invoked pursuant to

28 U.S.C. § 1257(a).

STATUTES INVOLVED

9 U.S.C. § 10. Same [Award of arbitrators]; vacation;

grounds; rehearing

(a) In any of the following cases the United

States court in and for the district wherein the

award was made may make an order vacating

the award upon the application of any party to

the arbitration —

(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.

(b) If an award is vacated and the time

within which the agreement required the award

to be made has not expired, the court may, in its

discretion, direct a rehearing by the arbitrators.

STATEMENT OF THE CASE

I. Introduction.

This case involves a recurring and unsettled question

of federal arbitration law, on which the Connecticut

Supreme Court and the United States Court of Appeals for

the Ninth Circuit have disagreed: what is the proper

remedy when an arbitration award fails to comply with

requirements set forth in the parties’ arbitration agree-

ment? The Federal Arbitration Act (“FAA”) plainly and

unambiguously gives reviewing courts two options: they

may either vacate the award, on the grounds that the

arbitrators “exceeded their powers,” 9 U.S.C. § 10(a)(4), or

they may (in their discretion) vacate and remand the

matter to the arbitrators for rehearing, in order to correct

any deficiency in the award, but only if “the time within

which the agreement required the award to be made has

not expired,” 9 U.S.C. § 10(b).

Some courts have faithfully applied these statutory

commands, but many — including the courts below in this

case — have permitted (even encouraged) a remand with-

out regard to whether the arbitrators’ appointment has

expired under the parties’ agreement. Such a result is

flatly inconsistent with FAA’s plain terms. As such, it is

also flatly inconsistent with this Court’s commands re-

garding the proper interpretation of federal statutes.

Such an ad hoc remedy is not merely wrong; engraft-

ing such “common law” remedies onto a clear statutory

regime effectively eliminates parties’ ability to predict or

define ex ante the circumstances under which they may

resolve their disputes, in a way that is inconsistent with

the Congressional policies underlying the FAA. The

disarray in the courts on this issue compounds this prob-

lem, further threatening the predictable enforcement of

arbitration agreements in transactions involving inter-

state commerce. As a result, Petitioner HSB respectfully

requests that the Court grant certiorari, and resolve

definitively the circumstances under which the FAA

permits courts to remand matters to arbitrators for clarifi-

cation or supplementation.

II. The Underlying Arbitration Proceedings.

HSB and Respondents have stipulated to the essential

facts. See App. 39-43.

On August 11, 1993, there was a catastrophic explo-

sion at Independence Steam Electric Station Unit Two

(“ISES Unit Two”), a coal-fired power plant located near

Newark, Arkansas, causing in excess of $28 million in

damage. App. 40. The owners of ISES Unit Two promptly

made claims for this loss under two insurance programs:

a boiler and machinery insurance policy issued by Peti-

tioner HSB,’ and “all-risks” property insurance coverage

underwritten by Respondents.’ App. 39-40.

After investigating the loss, both HSB and Respon-

dents denied coverage under their respective policies. App.

40. When faced with these reciprocal denials, the insureds

invoked parallel “Loss Adjustment Endorsements” found

in both policies, pursuant to which the policyholders were

made whole. App. 40-41.

Under the terms of the Loss Adjustment Endorse-

ments, the coverage dispute between HSB and Respon-

dents was then submitted to a panel of three arbitrators.

App. 41. An initial arbitration hearing focused on the

causes and progress of the explosion and on certain factual

* Boiler and machinery insurance is “insurance of a specified,

particular, definite and restricted kind.” Continental Ins. Co. v. Acadia

Ins. Co., 974 F.Supp. 371, 374 (D. Vt. 1997) (internal quotation

omitted). It “gives a manufacturer or other user of a narrow range of

equipment in which [the B&M insurer] specializes additional protection

for accidents involving the enumerated items, which besides moving or

rotating machinery consists of steam boilers and closely related,

specifically enumerated types of equipment.” Stone Container Corp. v.

Hartford Steam Boiler Insp. & Ins. Co., 165 F.3d 1157, 1161 (7th Cir.

1999) (Posner, J.).

* Respondents’ coverage is extremely broad, protecting the

insureds against “all risks of direct physical loss or damage to the

insured property,” unless specifically excluded. See generally Jane

Massey Draper, Annotation, Coverage Under “All Risks” Insurance, 30

A.L.R.5TH 170 (1995) (“All-risks insurance . . . generally allows recovery

for all fortuitous losses unless the policy contains a specific exclusion

expressly excluding the loss from coverage.”).

questions relating to the application of policy language to

technical design aspects of ISES Unit Two. App. 41.

As a result of the panel’s resolution of these questions,

it was clear that part of the loss fell within the coverage of

Respondents’ “all risks” policies, and part of the loss fell

within the coverage of HSB’s boiler and machinery insur-

ance. App. 42. The award did not make it clear, however,

how repair and restoration costs were to be allocated to

each policy, and in the absence of such guidance, the

parties were unable to agree on such an allocation among

themselves. App. 42. Accordingly, HSB and Respondents

re-submitted the matter to the arbitral panel for resolu-

tion. App. 42.

In connection with this submission, the parties and

arbitrators agreed upon a set of “Revised Procedures to

Govern the Phase II Arbitration Re: Allocation Issues.”

App. 42. This contract defined the issues to be resolved in

the second arbitration and established the duties of the

arbitral panel. In essence, the arbitral panel was directed

to allocate repair costs into five categories, and then was

to “resolve all liability and allocation issues with respect to

each category of costs ... , including, without limitation,

all coverage issues.” App. 3. These agreed-upon procedures

also provided that the panel was to render its award

within thirty days after submission of the parties’ post-

hearing briefs. Further, and of particular relevance to this

case, these procedures required that “[t]he arbitration

award shall be in writing and shall contain findings of fact

and conclusions regarding the interpretation of the insur-

ance policies that are the subject of this arbitration as

necessary to support the award.” App. 4, 34 (emphasis -

added).

This second-phase arbitration hearing took place on

June 28 and 29, 2001 in Connecticut. App. 42. The panel

rendered its award on January 24, 2002. App. 43.°

™ The panel concluded that $8,131,139.62 in

costs were directly attributable to collapse.

m™ The panel concluded that $7,563,239.90 in

costs were directly attributable to excessive

pressure within the furnace enclosure.

= #86 The panel concluded, reiterating the parties’

agreement during the adjustment process,

that $948,102.27 in costs were the sole

3s responsibility of Respondents, and that

$1,012.80 in costs were the sole responsibil-

ity of HSB.

m@ The panel concluded that a total of

$11,539,066.54 in costs were general project

expenses that could not be attributable spe-

cifically to collapse or overpressurization.

See App. 4 n.3.

The panel’s application of these factual conclusions to

the matter at hand — the apportionment of the sum in

dispute (as paid by HSB and Respondents) — reads in full

as follows:

b. The allocation of $21,182,461.13 paid under

the Joint Loss Agreement has been resolved in

accordance with policy coverages as follows:

* Although the award would have been due by October 28, 2001, on

October 24 — with four days remaining — this period was tolled at the

panel’s request, in order for the arbitrators to consult an accountant.

— Boiler & Machinery - $14,489,833.52

All Risk - $7,375,012.59

Total - $21,864,846.11

App 4.

The award did not contain-any explanation as to how

the arbitrators reached this conclusion, and had no expla-

nation of how its interpretation of the language of the

relevant policies led to this result. In consequence, HSB

was denied the process it bargained for: an arbitration

award that was the result of, and reflected, a disciplined

and analytical adjudication, and that expressly took

account of the relevant facts and the language of the two

insurance policies at issue.

Ill. Proceedings Below.

Accordingly, HSB filed a petition with the Connecticut

Superior Court, seeking vacatur of the January 24, 2002

award. App. 28, 31. Respondents asked the court to deny

HSB’s motion and cross-moved to confirm the award. As

an alternative, Respondents requested a remand to the

arbitrators for clarification. App. 28, 31. In both instances,

Respondents urged the Court to apply not the Connecticut

Arbitration Act, CONN. GEN. STAT. § 52-418, but the essen-

tially-identical terms of the FAA, 9 U.S.C. §10. The

Superior Court held that both the Connecticut and Federal

Arbitration Acts applied, App. 33, and concluded that

under either statute the arbitrators had exceeded their

authority by failing to comply with the requirements of the

submission:

Although the Panel in its Decision of Arbitrators

dated January 24, 2002 recited the scope of

the arbitration ... , there is no explanation or

resolution of coverage issues. Further, there are

no facts that support the figures in paragraphs a

and b on the last page of the Decision of Arbitra-

tors. There are no supporting facts or allocation

of liability or the reasons for the numbers that

have been awarded as well as to which party li-

ability should attach for each of these figures.

Further in paragraph b there are neither sup-

porting facts to adequately interpret the num-

bers assigned to Boiler & Machinery nor the

numbers assigned to All Risk. The findings are

not sufficiently specific or comprehensive to com-

ply with the requirement that all liability and al-

location issues and all coverage issues be

resolved, nor do the findings contain sufficient

findings of fact and conclusions regarding the in-

terpretation of the insurance polices that are the

subject of this arbitration as necessary to support

the award.

App. 36-37. The court relied principally on Western

Employers Insurance Co. v. Jefferies & Co., 958 F.2d 258

(9th Cir. 1992), which held that arbitrators exceed their

authority where they fail to provide findings of fact and

conclusions of law as required by the terms of the submis-

sion. App. 34.*

Even though the Superior Court agreed with HSB

about the sufficiency of the award, the Court declined to

vacate the award, as HSB requested, and as had been

done in the Western Employers case. Instead, the court

remanded the matter to the arbitral panel, nominally

‘ The Superior Court also rejected Respondents’ contention that

HSB had, through statements of counsel at the arbitration hearing,

waived its right to findings of fact and conclusions of law. App. 32.

pursuant to Section 52-418(b) of the Connecticut General

Statutes, which provides that “If an award is vacated and

the time within which the award is required to be ren-

dered has not expired, the court or judge may direct a

rehearing by the arbitrators.” App. 37-39. The court did so

even though it found that “the time within which the

award is required to be rendered” had already expired,

declining to enforce that statutory limitation. App. 37-38.

HSB appealed this determination, believing that a

post hoc “backfill” of findings and reasoning to justify a

predetermined conclusion was not ‘what it bargained for.

In its appeal, HSB contended that both the plain language

of the Connecticut Arbitration Act and the FAA’s identical

provisions permitted remand only where the time to

render an award had not passed. The Connecticut Su-

preme Court, exercising its statutory authority, trans-

ferred the appeal from the Court of Appeals to itself. App.

5. Respondents moved to dismiss the appeal, contending

that appeals could lie only from orders “vacating” the

award; they characterized the opinion below — even though

it applied a statutory provision nominally requiring

vacatur before remand — as a “simple remand” to the

arbitrators for clarification, rather than a vacatur and

remand.’ Consideration of the jurisdictional issue was

postponed for resolution together with the merits of the

appeal.

* Respondents also cross-appealed, challenging the Superior

Court’s finding that HSB had not waived its right to findings and

conclusions.

The Connecticut Supreme Court agreed with Respon-

dents. First, the court held that the FAA, and not the

Connecticut Arbitration Act, governed the proceedings.

App. 10-11. The court then ruled that “federal precedent

... informs us that a court may remand without vacating

a case to an arbitrator for clarification of a final award,

pursuant to the [Federal Arbitration Act].” App. 12-13.°

“Having determined that the trial court had the

authority to remand the case to the arbitration panel,” the

court considered whether HSB “may appeal the remand

order at this time.” App. 23. The court concluded that HSB

could not, because “the trial court did not vacate the

award, or otherwise confirm, modify or correct it.” App. 24

(paraphrasing CONN. GEN. STAT. § 52-423). The court also

held that Connecticut’s analogue to the “collateral order”

doctrine did not permit interlocutory review of the Supe-

rior Court’s order. App. 24-26 (relying on State v. Curcio,

191 Conn. 27, 31, 463 A.2d 566, 569-70 (1983), and its

progeny). Accordingly — despite having ruled on the merits

of the very question presented by HSB’s appeal, App. 5, 11-

23, and despite agreeing with HSB and the Superior Court

that the award did not conform to the parties’ arbitration

agreement, App. 27 — the Connecticut Supreme Court

* In essence, the Court reached out to decide the issue as a matter

of federal law, in order to avoid overruling two of its own precedents.

Had the Court applied the Connecticut Arbitration Act, it would have

been required to confront those decisions, both of which held — consis-

tent with the statutory language — that courts could not remand

matters to arbitrators where the time to render the award had expired.

See Chmielewski v. Aetna Cas. & Sur. Co., 218 Conn. 646, 680, 591 A.2d

101, 118 (1991); Aetna Life & Cas. Co. v. Bulaong, 218 Conn. 51, 64 &

n.11, 588 A.2d 138, 145 & n.11 (1991). Because of these precedents,

there is no alternative state law ground that can support the holding

here.

dismissed the appeal. App. 1, 27. HSB seeks review of this

decision.’ .

REASONS FOR GRANTING THE WRIT

As noted, the Connecticut Supreme Court’s decision is

flatly inconsistent with the unambiguous language of the

Federal Arbitration Act, which expressly permits a remand

to the arbitrators only where the award has first been

vacated, and only when “the time within which the agree-

ment required the award to be made has not expired,” 9

" Although further proceedings are contemplated, this matter

nonetheless is final and ripe for review by this Court. First, as a

practical matter, “the federal issue, finally decided by the highest court

in the State,” inevitably “will survive and require decision regardless of

the outcome of future state-court proceedings.” Cox Broadcasting Corp.

v. Cohn, 420 U.S. 469, 480 (1975). This is because the Connecticut

Supreme Court has precluded the arbitrators from altering the

ultimate result of the arbitration, App. 13-14, leaving HSB aggrieved

regardless of the outcome. Even if HSB is able, following the arbitra-

tor’s supplemental findings, to obtain vacatur of the award on some

ground not presently revealed in the record — a possibility that candidly

appears far-fetched at present — this issue would remain as an alterna-

tive ground justifying vacatur of the award in Respondents’ inevitable

appeal.

Second, “reversal of the state court on the federal issue would be

preclusive of any further litigation on the relevant cause of action,” and

“a refusal immediately to review the state court decision might

seriously erode federal policy.” Cox, 420 U.S. at 482-83 (1975); accord

Southland Corp. v. Keating, 465 U.S. 1, 6-7 (1984). Here, as in Cox, the

Connecticut Supreme Court’s judgment “is plainly final on the federal

issue and is not subject to further review in the state courts,” 420 U.S.

at 485, and, if the Court rules in HSB’s favor on the issue presented in

this petition, “this litigation ends,” id. at 486. Further, the Court has

previously held that the Federal Arbitration Act and its underlying

policies effectuate a compelling federal policy and therefore justify

immediate appellate review. See Southland, 465 U.S. at 7-8.

U.S.C. § 10(b). The decision below — relying on misguided

decisions from other courts — effectively added a third

extra-statutory option, permitting remand without regard

to Section 10(b)’s limitations. Whatever merit this might

conceivably have as a matter of policy, it is impossible to

reconcile with the commands this Court has given regard-

ing the construction of federal statutes.

Compounding this error is the fact that it in turn

manifests and aggravates an existing disarray in applica-

ble case law. In particular, the decision below is impossible

to square with a conflicting decision, on almost-identical

facts, from the United States Court of Appeals for the

Ninth Circuit. This confusion is not only troubling as an

abstract matter: more practically, it effectively eliminates

parties’ ability to predict or define ex ante the circum-

stances under which they may resolve their disputes, in a

way that is inconsistent with the Congressional policies

underlying the FAA.

Accordingly, this Court’s review is needed to give

effect to the plain language of the FAA, and to vindicate

the Act’s basic policy, which is “at bottom ... the enforce-

ment of private contractual arrangements.” Mitsubishi

Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S.

614, 625 (1985).

I. The Decision Below, by Ignoring the Plain

Language of the Federal Arbitration Act, Re-

fuses to Follow This Court’s Commands Con-

cerning the Interpretation of Federal Statutes.

This Court often has observed that the FAA’s essential

purpose is to promote freedom of contract by guaranteeing

that contracts are enforced according to their terms.

See, e.g., EEOC v. Waffle House, Inc., 534 U.S. 279, 289

(2002) (“The FAA ... ensures the enforceability of private

agreements to arbitrate. ... ”); Volt Information Sciences,

Inc. v. Board of Trustees of Leland Stanford Junior Uni-

versity, 489 U.S. 468, 476 (1989) (“the federal policy is

simply to ensure the enforceability, according to their

terms, of private agreements to arbitrate”); Dean Witter

Reynolds v. Byrd, 470 U.S. 213, 221 (1985) (“The preemi-

nent concern of Congress in passing the Act was to enforce

private agreements into which parties had entered. .. . ”).

As a necessary corollary to this fundamental Congres-

sional purpose, this Court has long made it clear that

“{ajrbitration under the Act is a matter of consent, not

coercion, and parties are generally free to structure their

arbitration agreements as they see fit.” See Volt, 489 U.S.

at 479. Accordingly, the parties “may limit by contract the

issues they will arbitrate,” Volt, 489 U.S. at 479, “may

specify by contract the rules under which that arbitration

will be conducted,” id., and “cannot be required to submit

to arbitration any dispute which [they have] not agreed so

to submit,” United Steelworkers of America v. Warrior &

Gulf Navigation Co., 363 U.S. 574, 582 (1960).

Accordingly, although the grounds for avoiding an

unfavorable arbitration result are few and narrow, and

courts will set aside arbitration awards “only in very

unusual circumstances,” First Options of Chicago, Inc. v.

Kaplan, 514 U.S. 938, 942 (1995), the FAA requires courts

to invalidate arbitration awards where, inter alia, “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)(4).*

One such circumstance, courts and commentators

agree, is when the arbitrators’ award fails to conform to

the requirements set out in the parties’ arbitration agree-

ment. See, e.g., Western Employers Ins. Company v. Jeffer-

ies & Co., 958 F.2d 258, 262 (9th Cir. 1992) (where

arbitrators “failed to arbitrate the dispute according to the

terms of the arbitration agreement, they “exceeded their

authority under” 9 U.S.C. § 10(a)(4), because “arbitrators

can ... ‘exceed their powers’ ... when they fail to meet

their obligations, as specified in a given contract, to the -

parties”); Stephen L. Hayford, Law in Disarray: Judicial

Standards for Vacatur of Commercial Arbitration Awards,

30 Ga. L. REV. 731, 753-54 (1996) (“If an arbitrator fails to

comply with an express requirement set forth in the

arbitration agreement as to the form, nature or content

of the arbitration award, the award will be vacated.”).

Indeed, if the courts were to enforce arbitration awards

that are inconsistent with the parties’ agreement to

arbitrate, it would be — in this Court’s apt words in an

analogous context — “quite inimical to the FAA’s primary

purpose of ensuring that agreements to arbitrate are

enforced according to their terms.” Volt, 489 U.S. at 479.

* This is the only express ground for vacatur of an award that

relates to the substance of the arbitration award itself. The remaining

grounds for vacatur are directed to the integrity of the arbitral process

itself, requiring remand, for example, “where the award was procured

by corruption, fraud, or undue means,” 9 U.S.C. § 10(aX(1); or “where

there was evident partiality or corruption in the arbitrators,” 9 U.S.C.

§ 10(aX2); or “where the arbitrators were guilty of misconduct” in

conducting the arbitration hearing, 9 U.S.C. § 10(a)(3).

When there is such a defective award, the FAA by its

terms offers the reviewing court only two options. First,

the court may vacate the award. 9 U.S.C. § 10(a). Second,

the court “in its discretion,” may “direct a rehearing by the

arbitrators,” but only if it vacates the award and “the time

within which the agreement required the award to be

made has not expired.” 9 U.S.C. § 10(b).

To this exclusive list of options, the Connecticut

Supreme Court — adopting the suggestion of other courts —

added a third: it affirmed an order remanding the award,

without vacating it, and without regard to any temporal

limitation upon the arbitrators’ ability to act (as set forth

in the arbitration agreement). App. 11-23. It did so by

looking to Court of Appeals cases — principally from the

Third and Sixth Circuits — which have held that remand is

appropriate to clarify an ambiguous award. App. 11-23

(citing, inter alia, Sterling China Co. v. Glass, Molders,

Pottery, Plastics & Allied Workers, Local 24, 357 F.3d 546

(6th Cir. 2004); M&C Corp. v. Erwin Behr GMBH & Co.,

326 F.3d 772 (6th Cir. 2003); Green v. Ameritech Corp., 200

F.3d 967 (6th Cir. 2000); Office & Prof’ Employees Int'l

Union, Local 471 v. Brownsville Gen. Hosp., 186 F.3d 326,

331 (3d Cir. 1999); International Bhd. of Teamsters, Local

631 v. Silver State Disposal Service, Inc., 109 F.3d 1409

(9th Cir. 1997); Colonial Penn Ins. Co. v. Omaha Indem.

Co., 943 F.2d 327 (3d Cir. 1991); La Vale Plaza, Inc. v. R.S.

Noonan, Inc., 378 F.2d 569 (3d Cir. 1967)).

The court did so even though it recognized that “there

is no explicit provision in the [FAA] for such a remand,”

App. 13 (quoting Colonial Penn v. Omaha Indemnity, 943

F.2d at 333-34). Further, the court expressly disregarded

the temporal limitations in 9 U.S.C. § 10(b): because “the

trial court remanded but did not vacate the award,” the

court reasoned, “any time limitation contained in § 10(b)”

was rendered “inapplicable.” App. 21 n.16. Even so, the

court approved such a “common law” remedy without

hesitation, purportedly because it “is consistent with, and

furthers, the federal and state policies “voring arbitration

as a means for expedient resolution of disputes,” and

(posited the court) will give the parties “an arbitration

award in accordance with the terms agreed to in their

governing procedures.” App. 21-23.” -

By effectively rewriting the FAA in such a fashion, to

insert an additional remedy for defective awards that

bears none of the constraints otherwise imposed by the

FAA’s express terms, the Connecticut courts (as well as

other courts sanctioning remand outside the strictures of 9

U.S.C. § 10(b)) have fundamentally violated this Court’s

directions for the proper construction of federal statutes.

After all, as this Court has said time and again, when a

statute’s language is plain — as it is in the case of 9 U.S.C.

§ 10(b) — the “‘sole function of the . . . courts is to enforce it

according to its terms.’” Lamie v. United States Trustee,

540 U.S. 526, 534 (2004) (quoting Hartford Underwriters

Ins. Co. v. Union Planters Bank, N.A., 530 U.S. 1, 6 (2000),

in turn quoting United States v. Ron Pair Enterprises, 489

U.S. 235, 241 (1989), in turn quoting Caminetti v. United

States, 242 U.S. 470, 485 (1917)). In that case, “‘courts

must presume that a legislature says in a statute what

it means and means in a statute what it says there.’”

* HSB disagrees: as noted above, see supra at 5, 7, it bargained for

a principled arbitration award that was derived from and accompanied

by findings and conclusions, not merely a set of post hoc justifications

intended to support a predetermined conclusion. That is more appro-

priately a matter for consideration on the merits, however.

Barnhart v. Sigmon Coal Co., 534 U.S. 438, 461-62 (2002)

(quoting Connecticut Nat. Bank v. Germain, 503 U.S. 249,

253-54 (1992)). A court may not “add features” to a statu-

tory scheme simply because it believes that those features

“will achieve the statutory ‘purposes’ more effectively.” See

Director, Office of Workers’ Comp. Programs v. Newport

News Shipbuilding & Dry Dock Co., 514 U.S. 122, 136

(1995). Nor may a court “disregard requirements simply

because it considers them redundant or unsuited to

achieving the [statute’s] general purpose in a particular

case.” Commissioner v. Gordon, 391 U.S. 83, 93 (1968).

Furthermore, if courts may freely remand arbitration

awards that are incomplete, ambiguous, or otherwise

facially defective, without vacatur as a condition precedent

and without regard to whether an arbitrator’s tenure has

otherwise expired, that “common law” arbitration rule will

swallow the more-restrictive provisions of 9 U.S.C. § 10(b).

Why would courts rely on Section 10(b), with its limita-

tions, when instead they can simply remand awards for

clarification? As a result, the decision below contradicts

another of this Court’s directions on statutory construc-

tion, most recently reiterated just three weeks ago: the

admonition that courts must, wherever possible, construe

statutes to “give every word some operative effect,” and

that courts conversely should not read a statute in a

manner that would render part of it “entirely superfluous.”

Cooper Indus., Inc. v. Aviall Servs., Inc., ___ U.S. __, 125

S. Ct. 577, 583-84 (2004).

The implication of “common law” remedies is particu-

larly inadvisable where, as here, there is a comprehensive

statutory scheme, with an existing menu of remedial

options for defective arbitration awards. “‘[I]t is an ele-

mental canon of statutory construction that where a statute

Bn ey

expressly provides a particular remedy or remedies, a court

must be chary of reading others into it.’” Middlesex County

Sewerage Auth. v. National Sea Clammers Ass’n, 453 U.S.

1, 14-15 (1981) (quoting Transamerica Mortgage Advisors

v. Lewis, 444 U.S. 11, 19 (1979)). In such situations, this

Court advises that we are “compelled to conclude that

Congress provided precisely the remedies it considered

appropriate.” Jd. at 15.

Simply put, it was not the Connecticut Supreme

Court’s job to rewrite a federal statute simply because it

believed that an additional remedy may be useful or

generally consistent with the law’s overall thrust. Such an

effort contravenes this Court’s commands, and merits this

Court’s intervention. :

II. The Decision Below Conflicts with a Decision

of the United States Court of Appeals for the

Ninth Circuit, and Reflects a General Disar-

ray in the Decisions of the Federal Courts of

Appeals and Federal District Courts Law.

Such an ad hoc remedy, though troubling, might

perhaps be tolerable if courts were uniform in applying it.

That is not the case, however: the Connecticut Supreme

Court’s decision is squarely inconsistent with the Ninth

Circuit’s decision in Western Employers Insurance Co. v.

Jefferies & Co., 958 F.2d 258 (9th Cir. 1992), a case that is

for all practical purposes indistinguishable.

In that case, involving an arbitration dispute arising

out of a securities trading agreement, the parties’ arbitra-

tion agreement required that the award be accompanied

by “findings of fact and conclusions of law.” 958 F.2d at

259. When the award was rendered without such findings

or conclusions, Western Employers filed a motion to vacate

the award. Although the district court denied the motion,

the Ninth Circuit disagreed, and directed the district court

to vacate the award:

We... believe that the circumstances underlying

the dispute between Western and Jefferies impli-

cate traditional principles of contract law, which

are recognized in the Federal Arbitration Act.

Under these traditional principles, Western had

a right-to receive what it bargained for — arbitra-

tion according to the terms of its contract with

Jefferies. By failing to abide by the contract from

which NASD derived its power to hear the dis-

pute, the arbitrators exceeded their powers un-

der [9 U.S.C. § 10(a)(4)] of the Act.

Id. at 260.

This case is no different: the arbitration agreement ~

here required “findings of fact and conclusions regarding

the interpretation of the insurance policies” at issue, App.

4, 34, and no such findings or conclusions are present, as

the Connecticut Superior Court and Supreme Court both

held, App. 27, 36-37.

Although the court below attempted to distinguish

Western Employers, its efforts are unpersuasive. It

grounded its refusal to follow Western Employers upon the

fact that there was evidence in that case that the arbitra-

tors had affirmatively refused to provide findings. App. 20-

21 n.15. Here, by contrast, there is nothing in the record to

shed light on whether the arbitrators’ failure was a delib-

erate refusal to abide by the arbitration agreement or was

instead simply a negligent oversight. That is, however, a

distinction without a difference: nothing in the text of the

FAA conditions the remedy for a defective award on

whether the defect was the result of intentional miscon-

duct or inadvertent mistake. In either case, the parties did

not receive the benefit of their bargain, and in either case

the FAA’s express terms provide that the appropriate

remedy is vacatur, followed in appropriate cases by rehear-

ing if (and only if) the arbitrator’s time to render an award

has not expired.

In reaching its decision, the Connecticut Supreme

Court created directly a conflict that had previously arisen

in principle in 2000, when the Sixth Circuit decided Green

v. Ameritech. In that case, the arbitration agreement

required that the award “explain” the arbitrator’s decision.

200 F.3d at 970. One of the litigants sought vacatur of the

award on the ground that it did not conform to this re-

quirement. The court held as an initial matter that the

award did “explain” the arbitrator’s decision (albeit not as

completely as the appellant had hoped), and distinguished

Western Employers on that ground. Id. at 974-76. In

dictum, however, the court suggested that the proper

remedy for a defective award would not have been vacatur,

but rather would have been a remand for “clarification.”

Id. at 976-78. The court reached that ruling without citing

Section 10(b). The court’s oversight in that respect was -

essential to its reasoning, since the 21-day time limit

within which the award was to have been rendered, see id.

at 970 (quoting the arbitration agreement), had long

expired.

More broadly, the law remains in considerable disar-

ray on this point. Some cases — too few, in light of the

statute’s clarity — are faithful to the dictates of Section

10(b), either applying it in the course of directing remand

or declining to remand because the time for rendering the

award has lapsed. See, e.g., Galt v. Libbey-Owens-Ford

Glass Co., 397 F.2d 489, 442 (7th Cir. 1968); Hoffman v.

Cargill, Inc., 59 F. Supp. 2d 861, 896 (N.D. Iowa 1999),

rev'd on other grounds, 236 F.3d 458 (8th Cir. 2001). Most

courts fail to cite Section 10(b) at all in the course of

discussing remands to arbitrators. See, e.g., Sterling China

Co. v. Glass, Molders, Pottery, Plastics & Allied Workers,

Local 24, 357 F.3d 546 (6th Cir. 2004); M&C Corp. v.

Erwin Behr GMBH & Co., 326 F.3d 772 (6th Cir. 2003);

Office & Prof’ Employees Intl Union, Local 471 v.

Brownsville Gen. Hosp., 186 F.3d 326, 331 (3d Cir. 1999);

International Bhd. of Teamsters, Local 631 v. Silver State

Disposal Service, Inc., 109 F.3d 1409 (9th Cir. 1997). In

those instances, any. compliance with Section 10(b)’s

temporal limitation is purely accidental. One decision,

Colonial Penn Insurance Co. v. Omaha Indemnity Co., 943

F.2d 327 (3d Cir. 1991), went so far as to cite and discuss

Section 10(b) — “we note that the Act itself provides for a

remand to the arbitrators for purposes of rehearing in

certain circumstances,” id. at 334 — yet inexplicably failed

to apply it to the matter at bar.

As a result, there now are at least two divergent lines

of precedent as to the proper result when an arbitration

award fails to comply with the parties’ agreement. Some

courts will remand for “clarification,” on an ad hoc basis,

without regard for the provisions of 9 U.S.C. § 10(b), while

others are more faithful to the statutory text (whether

deliberately or accidentally) and will vacate the award on

* Many of these rely on (or vite cases that in turn rely on) the

Third Circuit’s decision in La Vale Plaza, Inc. v. R.S. Noonan, Inc., 378

F.2d 569 (3d Cir. 1967). That case, however, never had occasion to

consider the FAA at all; instead, it was ruling on the availability of a

remand for clarification as a matter of Pennsylvania common law

(which, the court determined, governed the arbitration at issue there).

- a

the grounds that the arbitrators exceeded their powers. In

order to resolve this direct conflict, and to ensure that the

FAA’s language is given full effect by courts reviewing

arbitration awards, this Court’s assistance is needed.

III. Judicial Displacement of the FAA’s Express

Provisions with Implied Common Law Reme-

dies Undermines Predictability and Threat-

ens the Utility of Commercial Arbitration.

_ More broadly, this disarray in the law, as exemplified

by the decision below, threatens to undermine one of the

great values of arbitration — the predictability of non-

judicial dispute resolution mechanisms — and is inconsis-

tent with the federal policies underlying the FAA.

It is, after all, an elementary principle underlying the

law of contracts that private agreements should be en-

forced according to their terms.” It is an equally elemen-

tary principle of law that the parties’ contract terms are

deemed to incorporate existing principles of law: “it is

presumed that parties contract with knowledge of, or in

reliance on, existing law; accordingly it is presumed that

the parties had such law in contemplation when the

contract was made.” 17A C.J.S. Contracts § 348 (1999);

accord 11 Samuel Williston & Richard A. Lord, A TREATISE

ON THE LAW OF CONTRACTS § 30.19, at 351-52 (4th ed.

1999); 17A AM. JUR. 2D Contracts § 371 (2004). These rules

provide a predictability that is necessary for stable com-

mercial relations: parties can be confident that their

contractual rights will be enforced and can, when existing

" As noted, see supra at 12-14, this is itself the core principle

underlying the FAA.

“off the shelf” principles of law are inconsistent with their

intention, negotiate around them (so long as their bargain

does not offend other principles of public policy). See

generally, e.g., 2 E. Allan Farnsworth, FARNSWORTH ON

CONTRACTS § 7.16, at 351-52 (3d ed. 2004); Ian Ayres &

Robert Gertner, Filling Gaps in Incomplete Contracts: An

Economic Analysis of Default Rules, 99 YALE LJ. 87

(1989). Accordingly, the law necessarily discourages courts

from implying additional contract terms or remedies,

beyond those provided by the parties themselves or by

well-defined principles of law.

These principles apply with equal vigor to arbitration,

a matter that is, as the Court has noted, “simply a matter

of contract between the parties.” First Options of Chicago,

Inc. v. Kaplan, 514 U.S. 938, 943 (1995); accord United

Steelworkers of America v. Warrior & Gulf Navigation Co.,

363 U.S. 574, 582 (1960). If parties entering into an

agreement providing for arbitration cannot determine,

before a dispute arises, the manner in which the arbitra-

tion will proceed and the circumstances under which an

award will stand or fall - whether provided by the FAA, or

other potentially-applicable statute,” or by the agreement

itself — it may discourage the parties from resorting to

arbitration. After all, one of the primary purposes of

arbitration is to resolve disputes before capable arbitrators

* As an aside, under the Connecticut Supreme Court’s reasoning,

it is difficult to envision a circumstance under which a state arbitration

act could continue to apply to a dispute. The Connecticut Arbitration

Act as placed in issue here in no way can be said to be inconsistent with

the FAA (the operative provisions relevant here are essentially identi-

cal, compare 9 U.S.C. § 10 with CONN. GEN. Stat. § 52-418), yet the

Connecticut court disregarded completely its own state statute (and its

own precedents construing that statute).

in a manner that is more efficient and predictable than the

vagaries of litigation before lay juries.

The existing confusion in the law aggravates this

concern. If extra-statutory remedies are applied inconsis-

tently, the parties not only cannot rely on the unambigu-

ous language of the relevant statute, but also lack even

the ability to forecast the course of their arbitration using

clearly-defined principles of common law.

Admittedly, the creation of such ad hoc remedies is

tempting, in order to clear judicial dockets and further the

“federal policy favoring arbitration,” Volt, 489 U.S. at 476.

The court below explicitly succumbed to this temptation,

believing that it would “further[] ... policies favoring

arbitration as a means for expedient resolution of dis-

putes.” App. 21-22.

Nevertheless, as this Court has often counseled,

courts must not allow themselves to be seduced by such

considerations. “[W]e must not ... allow the fortuitous

impact of the Act on efficient dispute resolution to over-

shadow the underlying motivation,” i.e., the “desire to

enforce agreements into which parties had entered.” Dean

Witter Reynolds v. Byrd, 470 U.S. 213, 220 (1985). See also

EEOC v. Waffle House, Inc., 534 U.S. 279, 294 (2002) (“we

do not override the clear intent of the parties, or reach a

result inconsistent with the plain text of the contract,

simply because the policy favoring arbitration is impli-

cated”); id. at 293 n.9 (noting that the Court’s precedents

“direct courts to respect the terms of the agreement

without regard to the federal policy favoring arbitration”).

Put otherwise, “the FAA’s proarbitration policy does not

operate without regard to the wishes of the contracting

parties.” Mastrobuono v. Shearson Lehman Hutton, Inc.,

514 U.S. 52, 57 (1995). Or, more bluntly, the FAA was

designed “to make arbitration agreements as enforceable

as other contracts, but not more so.” Prima Paint Corp. v.

Flood & Conklin Mfg. Co., 388 U.S. 395, 404 n.12 (1967)

(emphasis added).

As a result, this Court’s precedents direct lower courts

to abide by the parties’ agreement, even when it seems to

the court to be inconsistent with its conception of the best

way to proceed.” As this Court has observed, “we do not

_ override the clear intent of the parties, or reach a result

inconsistent with the plain text of the contract, simply

because the policy favoring arbitration is implicated.”

EEOC v. Waffle House, 534 U.S. at 293. Or, stated other-

wise, “the basic objective in this area is not to resolve

disputes in the quickest manner possible, no matter what

the parties’ wishes, but to ersure that commercial arbitra-

tion agreements, like other contracts, are enforced accord-

ing to their terms, and according to the intentions of the

parties.” First Options v. Kaplan, 514 U.S. at 947 (cita-

tions and internal quotation omitted).

A clear understanding that remands to arbitrators are

governed exclusively by Section 10(b) of the FAA, 9 U.S.C.

§ 10(b), with its limitations, will better enable parties to

effectuate their contractual intentions in entering into

- arbitration. That is because it will permit the parties to

define for themselves the circumstances under which

arbitrators will be permitted to revisit its award (by

accepting the default statutory rule, or by expressly

* Cf. Volt, 489 U.S. at 479 (holding that enforcement of the rules

agreed upon by the parties, “is fully consistent with the goals of the

FAA, even if the result is that arbitration is stayed where the Act would

otherwise permit it to go forward”).

providing such a right). (In the alternative, should Con-

gress determine as a matter of policy that Section 10(b) is

too restrictive, it may amend the law.)

In sum, the existing disorder in the law — by causing

uncertainty as to whether or how facially-defective

arbitration awards can be remanded back to arbitrators

for “clarification” — threatens the predictable enforcement

of private arbitration contracts, in violation of the core

policies undergirding the FAA. Therefore, this Court

should step in and clarify that Section 10(b), 9 U.S.C.

§ 10(b), means what it says, and permits remand only if an

award is first vacated, and only if the time in which the

arbitrators are to act has not expired.

CONCLUSION

For the foregoing reasons, this Court should grant a

writ of certiorari to the Supreme Court of Connecticut.

Respectfully submitted,

THOMAS E. BIRSIC

ROBERT L. BYER

(Counsel of Record)

PAUL K. STOCKMAN

KIRKPATRICK & LOCKHART

NICHOLSON GRAHAM LLP

Henry W. Oliver Building

535 Smithfield Street

Pittsburgh, Pennsylvania 15222

(412) 355-6500

MAURICE T. FITZMAURICE

REID AND RIEGE, PC.

One Financial Plaza, 21st Floor

Hartford, Connecticut 06103

(860) 240-1027

Counsel for Petitioner

Hartford Steam Boiler Inspection

and Insurance Company

App. 1

857 A.2d 893

Supreme Court of Connecticut.

HARTFORD STEAM BOILER INSPECTION

AND INSURANCE COMPANY

: v.

UNDERWRITERS AT LLOYD’S AND

COMPANIES COLLECTIVE et al.

No. 17024.

Argued March 22, 2004.

Decided Oct. 12, 2004.

Thomas E. Birsic, pro hac vice, with whom were Paul

K. Stockman, pro hac vice, and Maurice T. Fitz-Maurice,

Hartford, for the appellant-appellee (plaintiff).

Linda L. Morkan, with whom were Clayton H. Farn-

ham, pro hac vice, and, on the brief, Patrick J. Sweeney,

Hartford, for the appellees-appellants (defendants).

SULLIVAN, C.J., and BORDEN, NORCOTT,

PALMER and ZARELLA, Js.

ZARELLA, J.

The determinative issue in this appeal is whether the

judgment of the trial court directing a rehearing by the

arbitration panel to clarify the award constitutes a final

judgment or an otherwise appealable interlocutory order,

thereby implicating our subject matter jurisdiction. We

determine that the trial court’s remand order does not

constitute a final judgment or an appealable interlocutory

order and, therefore, that we lack subject matter jurisdic-

tion to review the merits of the claims of the plaintiff, Hart-

ford Steam Boiler’ Inspection and Insurance Company

(Hartford Steam Boiler), on its appeal and of the defendants,

App. 2

Underwriters at Lloyd’s and Companies Collective et al.’

(underwriters), in their cross appeal.

The following facts are relevant to this case. On

August 11, 1993, a catastrophic explosion at an electrical

generating facility near Newark, Arkansas, caused more

than $28 million in damage. The owners of the facility,

Arkansas Power and Light Company and others (collec-

tively referred to as the insureds), submitted claims to two

insurance providers, Hartford Steam Boiler, which pro-

vided boiler and machinery insurance, and the underwrit-

ers, which provided “all risks” property insurance. After

investigating the losses, however, both providers denied

coverage for the claims, determining that their respective

policies did not cover such losses.

Thereafter, the insureds invoked the “Loss Adjust-

ment Endorsements” provisions contained in both policies.

These provisions enabled the insureds to recover the total

losses caused by the explosion by collecting one half of the

amount in dispute from each insurance company. As a

result, Hartford Steam Boiler paid $10,933,435.86 to the

insureds and the underwriters paid $11,880,525.33. The

loss adjustment endorsements also contained a provision

enabling Hartford Steam Boiler and the underwriters,

after payment to the insureds, to submit any dispute as to

respective liability to arbitration, which they did.

The initial arbitration, referred to by the parties as

phase I, commenced in Memphis, Tennessee, in 1996, and

* In addition to Underwriters at Lloyd’s and Companies Collective,

the defendants include National Union Fire Insurance Company,

International Fire Insurance Company, Aetna Casualty and Surety

Company, Home Insurance Company and Zurich Insurance Company.

App. 3

was governed by procedures agreed to by Hartford Steam

Boiler and the underwriters. On January 9, 1997, the

arbitration panel issued an interim award and, thereafter,

it issued a supplemental clarified decision in response to

the parties’ questions as to the meaning of the initial

award. As a result of these decisions, Hartford Steam

Boiler and the underwriters agreed that each of their

policies covered a portion of the losses but they did not

agree as to the apportionment of their respective liability.

Because of this disagreement as to the allocation of

the losses, Hartford Steam Boiler and the underwriters

resubmitted the matter to the arbitration panel, thereby

commencing phase II of the arbitration. The parties

stipulated to a statement of issues, which was limited to a

determination of: “1. which costs are directly attributable

to the collapse of the coutant support structure (i.e., the

‘bottom’ costs); 2. which costs are directly attributable to

explosion and/or overpressurization associated with Unit

Two (i.e., the ‘top’ costs); 3. which costs are directly attrib-

utable to fire, firefighting, or the explosion in D Mill; 4.

which costs are common or general project costs that are

not allocable into categories (a), (b) or (c); and 5. any costs

whose purpose or allocation cannot be determined from

available evidence, or that do not otherwise fall within

categories (a), (b) or (c).” The statement of issues also

called upon the panel to “resolve alli liability and allocation

issues with respect to each category of costs identified in

Paragraph 1, including, without limitation, all coverage

issues.”” Hartford Steam Boiler and the underwriters also

agreed to a revised set of general procedures that would

* The statement of issues also set forth a procedural time line for

the arbitration.

App. 4

govern phase II of the arbitration. Among these proce-

dures, the parties agreed that “[t]he arbitration award

shall be in writing and shall contain findings of fact and

conclusions regarding the interpretation of the insurance

policies that are the subject of this arbitration as neces-

sary to support the award.”

After a hearing on the allocation issue in Windsor

Locks, Connecticut, on June 28 and 29, 2001, the arbitra-

tion panel issued a decision on January 24, 2002, in which

it responded to each question set forth in the parties’ joint

statement of issues. With respect to the first five issues,

the panel presented dollar amounts reflecting the alloca-

tion of costs corresponding to each question.’ The panel

also determined that “[t]he allocation of $21,182,561.13

paid under the Joint Loss Agreement has been resolved in

accordance with policy coverages as follows: Boiler &

Machinery — $14,489,833.52; All Risk — $7,375,012.59;

Total $21,864,846.11.”

Subsequently, on February 22, 2002, Hartford Steam

Boiler moved to vacate the award, and the underwriters

moved to confirm the award or, alternatively, to remand the

case to the panel for clarification. After a hearing on May 22,

2002, the trial court found in favor of the underwriters and

* The panel determined the costs as follows:

“[1.) $ 8,131,139.62

“[2.) $ 7,563,239.90

“(3.] $ 948,102.27 Agreed property loss for [the underwriters]

(D Mill $95,829.14 not included)

$ 1,012.80 Agreed Boiler loss

“[4.) $ 11,539,066.54

“(5.] None

7 $ 28,182,561.13 Total without D Mill”

App. 5

remanded the case to the arbitration panel for a rehearing

to clarify the award, so that the arbitrators’ decision would

include findings of fact and interpretations of the policies,

as required by the governing procedures.

Hartford Steam Boiler appealed from the judgment of

the trial court and the underwriters cross appealed.* We

transferred the appeal to this court pursuant to General

Statutes § 51-199(c) and Practice Book § 65-1. We will set

forth additional facts as necessary.

Hartford Steam Boiler claims that the trial court

improperly remanded the award to the panel after the

expiration of the applicable time period set forth in Gen-

eral Statutes § 52-418(b),° and relies on our holdings in

Aetna Life & Casualty Co. v. Bulaong, 218 Conn. 51, 588

A.2d 138 (1991), and Chmielewski v. Aetna Casualty &

Surety Co., 218 Conn. 646, 591 A.2d 101 (1991), to support

this proposition. In addition, Hartford Steam Boiler claims

that we have subject matter jurisdiction to review the

‘ In its cross appeal, the underwriters seek confirmation of the

arbitrators’ award, claiming that the trial court improperly determined

that Hartford Steam Boiler did not waive its right to contest the

sufficiency of the arbitrators’ award. Specifically, the underwriters

contend that Hartford Steam Boiler’s statement at the arbitration

hearing that it sought a decision reflecting merely “a statement that

someone pays someone and how much they pay,” constituted a waiver of

Hartford Steam Boiler’s right to challenge the award on any basis other

than the dollar amount allocated to each party.

* General Statutes § 52-418(b) provides: “If an award is vacated

and the time within which the award is required to be rendered has not

expired, the court or judge may direct a rehearing by the arbitrators.

Notwithstanding the time within which the award is required to be

rendered, if an award issued pursuant to a grievance taken under a

collective bargaining agreement is vacated the court or judge shall

direct a rehearing unless either party affirmatively pleads and the

court or judge determines that there is no issue in dispute.”

App. 6

merits of this case pursuant to General Statutes § 52-423°

because the trial court, in relying on § 52-418(b), “neces-

sarily vacated the underlying award, in the course of

directing a rehearing before the arbitrators.” Hartford

Steam Boiler further argues that we have jurisdiction over

this matter under our holding in State v. Curcio, 191

Conn. 27, 30-31, 463 A.2d 566 (1983), and that its claim is

appealable because “if the Superior Court’s order remand-

ing the case is read not to embody an implicit vacatur,

then it is clear that the court exceeded its statutory

authority under [§] 52-418(b)’s express terms (which of

course require vacatur as a condition precedent to re-

mand).” Hartford Steam Boiler also contends that § 52-

418(b) represents the sole means by which a court may

remand an arbitration award for a rehearing.

The underwriters claim that the trial court’s order

remanding the award to the arbitration panel for rehear-

ing does not constitute an appealable final judgment or

interlocutory order, and, therefore, that we lack jurisdic-

tion to entertain Hartford Steam Boiler’s appeal. Specifi-

cally, the underwriters urge that: “(1) the appeal is not

authorized by [§] 52-423 which covers appeals from arbi-

tration decisions; and (2) the Superior Court order from

which [Hartford Steam Boiler] seeks relief has only

returned the case to the arbitrators for additional informa-

tion, and therefore is not yet appealable.” They maintain

that the language of § 52-423 does not include remands for

rehearings within the class of appealable judgments, and

* General Statutes § 52-423 provides: “An appeal may be taken

from an order confirming, vacating, modifying or correcting an award,

or from a judgment or decree upon an award, as in ordinary civil

actions.”

App. 7

that the remand does not qualify as an appealable inter-

locutory order pursuant to State v. Curcio, supra, 191

Conn. 27, 463 A.2d 566. We agree with the underwriters.

In order to determine whether we have jurisdiction to

review the merits of this appeal, we first must ascertain

whether the trial court rendered a final judgment or an

otherwise appealable interlocutory order, or whether the

court issued a nonappealable remand order. Thus, we

must decide initially whether, in its memorandum of

decision, the court intended to vacate the award and direct

a rehearing pursuant to § 52-418(b) or whether it intended

to remand the arbitrators’ award to the panel for clarifica-

tion.

In its memorandum of decision, the trial court deter-

mined, and the parties do not dispute, that both the

Federal Arbitration Act (arbitration act), 9 U.S.C. §1 et

seq., and § 52-418, applied, noting that “[t]he language is

essentially the same, and the criteria applied to the

application to vacate is the same [and provides that an

award may be vacated] ... ‘if the arbitrators have ex-

ceeded their powers or so imperfectly executed them that a

mutual, final and definite award upon the subject matter

submitted was not made.’” The court determined that the

arbitrators’ award failed to conform with the submission of

the parties because the arbitrators did not specify the

factual basis for the award.’ The court stated: “There are

no supporting facts or allocation of liability or the reasons

for the numbers that have been awarded as well as to

which party liability should attach for each of these

” The trial court also determined that Hartford Steam Boiler had

~ not waived its right to assert its claims.

App. 8

figures.... The findings are not sufficiently specific or

comprehensive to comply with the requirement that all

liability and allocation issues and all coverage issues be

resolved, nor do the findings contain sufficient findings of

fact and conclusions regarding the interpretation of the

insurance policies that are the subject of this arbitration

as necessary to support the award.” The trial court also

concluded that “these submissions were not unrestricted

submissions because the arbitrators were required to

follow [certain] aforementioned requirements.”

Cognizant of the lengthy history of the arbitration

proceedings between the parties, the trial court stated that

it was “reluctant to vacate the award because that would

mean starting over again, and the parties would lose all

the work, effort, etc. that covered six years of this arbitra-

tion. In the interest of economy of the parties, the panel

and judicial economy, it would appear that a remand to the

arbitrators would be more practical and a better remedy

than vacating the awards.”

The court recognized that it “must have authority to

[remand],” and, citing to § 52-418(b), stated that “(t]he

pertinent part of the applicable statute is: ‘If an award is

vacated and the time within which the award is required

to be rendered has not expired, the court or judge may

direct a rehearing by the arbitrators.’” The court then

determined that “the award was rendered within the

thirty day time limit.” In addressing Hartford Steam

Boiler’s claim that “the time for making the award [had]

expired because if the court [directed] a rehearing or a

remand to the arbitrators it would be doing so beyond the

January 24, 2002 deadline,” the court determined that “it

would be impossible for the court to direct a rehearing by

the arbitrators before the time for the award has expired.

App. 9

If the award were made on the [twenty-eighth] day from

submission of briefs, then the court would have only two

days in which to make a decision for a remand assuming

that the application to vacate could be filed and presented

to a judge within the thirty day time limit. The law does

not contemplate permitting something that is impossible

to perform. ... Accordingly, the court finds that the time

limit for making the award was fulfilled, but the time limit

for the court to act was and is an impossibility, and there-

fore, not applicable.” The court then “remandl[ed the case]

to the arbitration panel for a rehearing by the panel and/or

for a clarification of its awards so that it [would comply]

with the requirements of the submissions and so that

there [would] be a sufficient finding of facts and interpre-

tations of the policies so as to fully comply with the sub-

missions.”*

Although the trial court cited to § 52-418(b), which

requires a vacatur as a condition precedent for a rehearing

within the necessary time period, we believe that the trial

court’s memorandum of decision makes clear that the

court intended only to remand the award to the panel for

clarification, and did not intend to vacate the award. We

need not discuss the legal basis for the remand because we

conclude that the court had the legal authority to remand

* The court also ordered the parties “for the benefit of the panel, to

submit written interrogatories to the panel so that if answered, the

parties will be satisfied that there are sufficient findings of fact and

interpretations of the policies. The parties are further ordered to submit

to the panel, for its benefit, proposed findings of facts and interpreta-

tions of policies.... Upon the rehearing and submission of the inter-

rogatories and proposed findings, the panel is ordered to clarify its

decisions as stated above... .”

App. 10

without vacating the arbitration decision under the

arbitration act.

The United States Supreme Court expressly has held

that Congress “intended [the arbitration act] to apply in

state and federal courts,” pursuant to the exercise of its

commerce clause powers. Southland Corp. v. Keating, 465

U.S. 1, 15, 104 S.Ct. 852, 79 L.Ed.2d 1 (1984); accord

Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 271-

72, 277, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995); Hottle v.

BDO Seidman, LLP, 268 Conn. 694, 702, 846 A.2d 862

(2004) (discussing applicability of arbitration act to states

as set forth in United States Supreme Court precedent).

Thus, where parties have entered into “a contract evidenc-

ing a transaction involving commerce to settle by arbitra-

tion a controversy thereafter arising out of such contract

or transaction”; 9 U.S.C. § 2; the arbitration act applies.

See Southland Corp. v. Keating, supra, at 14, 104 S.Ct.

852; Hottle v. BDO Seidman, LLP, supra, at 702, 846 A.2d

862.

In its memorandum of decision, the trial court ex-

pressly determined that the arbitration act applies to the

present matter. Hartford Steam Boiler effectively has

conceded that the arbitration act applies in this case by

noting in its reply brief that “[t]he provision in the [arbi-

tration act] authorizing a remand; 9 U.S.C. §10(b); is

virtually identical to [§] 52-418(b).” Thus, Hartford Steam

Boiler does not challenge the trial court’s finding that the

arbitration act applies, but argues instead that “both

under Connecticut and federal law, a court reviewing an

arbitration award may only remand a matter to the

arbitrators when the time for rendering the award .. . has

not expired.” (Emphasis added.) We also note that the

contract between the parties, which authorizes the parties

App. 11

to institute arbitration proceedings in the event of a

dispute, arises from a transaction involving commerce.

Thus, we determine that the arbitration act applies to the

present matter. We now turn to an examination of relevant

federal precedent.

Federal courts consistently have acknowledged that

“[als a general rule, once an arbitration panel renders a

decision regarding the issues submitted, it becomes

functus officio” and lacks any power to reexamine that

decision.” Colonial Penn Ins. Co. v. Omaha Indemnity

Co., 943 F.2d 327, 331 (3d Cir.1991); accord Legion Ins. Co.

v. VCW, Inc., 198 F.3d 718, 719 (8th Cir.1999) (“[t]he

doctrine of functus officio prevents arbitrators from revis-

iting a final award after the final award has been issued”);

Hyle v. Doctor’s Associates, Inc., 198 F.3d 368, 370 (2d

Cir.1999). Courts also have recognized, however, that the

doctrine has limitations and contains three exceptions that

* “Functus officio” has been defined as “having fulfilled the

function, discharged the office, or accomplished the purpose, and

therefore of no further force of authority.” (Internal quotation marks

omitted.) Sterling China Co. v. Glass Workers Local No. 24, 357 F.3d

546, 553 (6th Cir.2004), quoting Green v. Ameritech Corp., 200 F.3d 967,

976 (6th Cir.2000). As one court has observed: “The policy which lies

behind this [doctrine] is an unwillingness to permit one who is not a

judicial officer and who acts informally and sporadically, to re-examine

a final decision which he has already rendered, because of the potential

evil of outside communication and unilateral influence which might

affect a new conclusion.” (Internal quotation marks omitted.) Green v.

Ameritech Corp., supra, at 976-77, quoting La Vale Plaza, Inc. v. R.S.

Noonan, Inc., 378 F.2d 569, 572 (3d Cir.1967).

° We note that “[dlespite certain distinctions between common law

and statutory arbitrations ... the functus officio doctrine has been

routinely applied in federal cases brought pursuant to the [arbitration

act], 9 U.S.C. § 1 et seq.” (Citation omitted.) Colonial Penn Ins. Co. v.

Omaha Indemnity Co., 943 F.2d 327, 331 (3d Cir.1991).

App. 12

allow an arbitrator’s review of a final award.” Sterling

China Co. v. Glass Workers Local No. 24, 357 F.3d 546, 554

(6th Cir.2004); accord Green v. Ameritech Corp., 200 F.3d

967, 977 (6th Cir.2000); Office & Professional Employees

International Union, Local No. 471 v. Brownsville General

Hospital, 186 F.3d 326, 331 (3d Cir.1999); International

Brotherhood of Teamsters v. Silver State Disposal Service,

Inc., 109 F.3d 1409, 1411 (9th Cir.1997). The three excep-

tions to the rule of functus officio include: “(1) [where] an

arbitrator can correct a mistake which is apparent on the

face of his award”; (internal quotation marks omitted)

Office & Professional Employees International Union,

Local No. 471 v. Brownsville General Hospital, supra, at

331; such as “clerical mistakes or obvious errors in arith-

metic computation”; Colonial Penn Ins. Co. v. Omaha

Indemnity Co., supra, at 332; “(2) where the award does

not adjudicate an issue which has been submitted, then as

to such issue the arbitrator has not exhausted his function

and it remains open to him for subsequent determination;

and (3) [w]here the award, although seemingly complete,

leaves doubt whether the submission has been fully

executed, an ambiguity arises which the arbitrator is

entitled to clarify.” (Internal quotation marks omitted.)

Office & Professional Employees International Union,

Local No. 471 v. Brownsville General Hospital, supra, at

331.

With these exceptions in mind, federal precedent also

informs us that a court may remand without vacating a

case to an arbitrator for clarification of a final award,

" The doctrine of functus officio serves as a default rule, and it

applies only in the absence of an agreement between the parties to the

contrary. Hyle v. Doctor’s Associates, Inc., supra, 198 F.3d at 370.

aS ss ee —"_C=| a = -

App. 13

pursuant to the arbitration act. “It is generally recognized

that there are circumstances, albeit limited, under which a

district. court can remand a case to the arbitrators for

clarification.” Colonial Penn Ins. Co. v. Omaha Indemnity

Co., supra, 943 F.2d at 333. “[MJany appellate courts have

stated that an arbitration award under the [arbitration

act] may be remanded for clarification if the award is

ambiguous or incomplete”; Lanier v. Old Republic Ins. Co.,

936 F.Supp. 839, 845 (M.D.Ala.1996); and it is clear that

“the functus officio doctrine does not preclude a motion for

remand for clarification under the [arbitration act].” Id., at

848; see Colonial Penn Ins. Co. v. Omaha Indemnity Co.,

supra, at 333-34 (“[a]lthough there is no explicit provision

in the [arbitration act] for such a remand, courts have

uniformly stated that a remand to the arbitration panel is

appropriate in cases where the award is ambiguous”); see

also M & C Corp. v. Erwin Behr GmbH & Co., 326 F.3d

772, 782 (6th Cir.2003) (“‘[a] remand is proper, both at

common law and under the federal law of arbitration

contracts, to clarify an ambiguous award or to require the

arbitrator to address an issue submitted to him but not

resolved by the award’ ”).

Moreover, we note that when a court remands an

arbitration award for clarification, “[t]he resolution of

such an ambiguity is not within the policy which forbids

an arbitrator to redetermine an issue which he has

already decided, for there is no opportunity for redeter-

-mination on the merits of what has already been de-

cided.” La Vale Plaza, Inc. v..R.S. Noonan, Inc., 378 F.2d

569, 573 (3d Cir.1967). On remand, “the arbitrator is

limited in his review to the specific matter remanded for

clarification and may not rehear and redetermine those

matters not in question.” Paperhandlers Union No. 1,

App. 14

International Printing Pressmen & Assistants Union, AFL-

CIO v. U.S. Trucking Corp., 441 F.Supp. 469, 474

(S.D.N.Y.1977). In such a circumstance, “the arbitrators

will act only to remove the cloud of doubt . . . and will in no

way reopen the merits of the controversy.” La Vale Plaza,

Inc. v. R.S. Noonan, Inc., supra, at 573. Thus, “[blecause of

the limited purpose of such a remand, which serves the

practical need for the ... court to ascertain the intention

of the arbitrators so that the award can be enforced, there

is not even a theoretical inconsistency with the functus

officio doctrine.” Colonial Penn Ins. Co. v. Omaha Indem-

nity Co., supra, 943 F.2d at 334.” ‘

Bearing in mind these principles, we believe that the

rationale employed by the United States Court of Appeals

for the Sixth Circuit in Green v. Ameritech Corp., supra,

200 F.3d at 976-78, and the United States Court of Appeals

for the Ninth Circuit in International Brotherhood of

Teamsters v. Silver State Disposal Service, Inc., supra, 109

F.3d at 1411, are particularly instructive in the matter

before us. In Green, the defendant employers challenged

the judgment of the District Court, vacating an arbitration

award in favor of the defendants and remanding the case

to a new arbitrator. Green v. Ameritech Corp., supra, at

* Although courts have recognized that “remand for clarification is

a disfavored procedure ... [wJhen possible ... a court should avoid

remanding a decision to the arbitrator because of the interest in prompt

and final arbitration.” (Internal quotation marks omitted.) Tri-State

Business Machines v. Lanier Worldwide, 221 F.3d 1015, 1017 (7th

Cir.2000), quoting Teamsters Local No. 579 v. B & M Transit, Inc., 882

F.2d 274, 278 (7th Cir.1989). “[I]f an award is unclear, it should be sent

back to the arbitrator for clarification.” (Internal quotation marks

omitted.) Tri-State Business Machines v. Lanier Worldwide, supra, at

1017, quoting Flender Corp. v. Techna-Quip Co., 953 F.2d 273, 279-80

(7th Cir.1992).

App. 15

969. The underlying matter that led to arbitration in-

volved a claim by the plaintiff, a former employee named

Daniel Green, and other former employees,” that the

defendants had engaged in race and age discrimination

and retaliation in violation of state antidiscrimination

laws. Id. Prior to trial, the parties had agreed to submit

the matter to arbitration, which proceeded pursuant to the

following relevant terms of the arbitration agreement:

“The arbitrator’s award shall be accompanied by an

opinion which explains the arbitrator’s decision with

respect to each theory advanced by each [plaintiff and the

arbitrator’s calculation of the types of damages, if any,

awarded to each [p]laintiff. ... Any challenge to the award

shall be made only for the reasons enumerated in section

10 of the [arbitration act] ... 9 U.S.C. §10.... This

Agreement is made pursuant to and is governed by the

[arbitration act], 9 U.S.C. § 1 et seq.” (Internal quotation

marks omitted.) Id., at 970.

In his decision in favor of the defendants, the arbitra-

tor found that “[clonsidering all the evidence, the

[aJrbitrator finds that [the plaintiff] has not met his

burden of proof that the decision to terminate his employ-

ment ... constituted age discrimination in violation [of

the] Elliott-Larsen Civil Rights Act.” (Internal quotation

marks omitted.) Id., at 971. The arbitrator employed

identical language in determining that the plaintiff had

* After the arbitration commenced, all of the former employees,

except Green, settled their claims. Green v. Ameritech Corp., supra, 200

F.3d at 970.

“* Although the case had originated in state court, the defendants

removed the case to federal court. Green v. Ameritech Corp., supra, 200

F.3d at 970.

App. 16

failed to meet his burden of proof with respect to his race

discrimination claim. Id. In resolving the retaliation

allegation, the arbitrator found that “[c]onsidering all the

evidence, the [a]rbitrator finds that [the plaintiff] has not

met his burden of proving, in accordance with the stan-

dards set under the Elliott-Larsen Civil Rights Act, that

retaliation for protected activity was a fector which made

a difference in the decision to terminate his employ-

ment. ... The [a]rbitrator finds no evidence to support the

[pliaintiff’s position that retaliation was, in any way, a

factor in the [plaintiff’s] termination.” (Internal quotation

marks omitted.) Id.

Thereafter, the plaintiff filed an appeal in the District

Court, asking the court to vacate the award pursuant to

the arbitration act, 9 U.S.C. § 10(a)(3) and (4). Id. Among

his claims, the plaintiff contended that the arbitrator had

violated the terms of the arbitration agreement by failing

to explain the decision with respect to each of the plain-

tiff’s theories. Id., at 972. Finding that the arbitrator had

“exceeded his authority by failing to explain his decision,”

the District Court vacated the award and remanded it to a

new arbitrator. Id. In its memorandum of decision, the

District Court reasoned that “[h]ere, the arbitrator did not

explain his decision with respect to each one of [the]

plaintiff’s theories, as the term explain is commonly

understood. Rather, the arbitrator merely announced his

decision with respect to each one of [the] plaintiff’s theo-

ries. The arbitrator’s opinion is totally conclusory and

insufficient according to the terms of the Arbitration

Agreement.” (Emphasis in original; internal quotation

marks omitted.) Id. The court rejected the defendants’

suggestion that it should remand the case to the arbitrator

App. 17

for clarification of his award, concluding that the award

was not ambiguous. Id. a

On appeal to the Sixth Circuit, the defendants

claimed, among other things, that the District Court

improperly had refused to remand the case to the arbitra-

tor for supplementation and clarification instead of vacat-

ing the award. Id., at 976. In addressing this claim, the

Court of Appeals noted that “[iJn its analysis, the district

court misconstrued the governing law. The district court

believed that remand to [the original arbitrator] was not

an option; it stated that ‘[rlemand is available when an

arbitration award is “ambiguous.” ... Finding that [the

arbitrator’s] award was not ambiguous, the district court

concluded that it could not remand for an explanation. As

both parties noted in their briefs, the district court must

have based its conclusion that it lacked the authority to

remand to the original arbitrator on the doctrine of func-

tus officio.” Id.

After explicating the functus officio doctrine, its

underlying policies and three recognized exceptions, the

Court of Appeals propounded that “‘[a] remand is proper,

both at common law and under the federal law of labor

arbitration contracts, to clarify an ambiguous award or to

require the arbitrator to address an issue submitted to

him but not resolved by the award.’” Id., at 977, quoting

Industrial Mutual Assn., Inc. v. Amalgamated Workers,

Local No. 383, 725 F.2d 406, 412 n. 3 (6th Cir.1984). The

court determined that “[iJn the instant case, the district

court concluded, incorrectly in our view, that [the arbitra-

tor] breached the arbitration agreement because he failed

fully to execute his obligation to explain his award, and it

refused to remand. Courts usually remand to the original

arbitrator for clarification of an ambiguous award when

App. 18

the award fails to address a contingency that later arises

or when the award is susceptible to more than one inter-

pretation. ... While a failure fully to explain an award

does not leave such an interpretive gap, we believe that it

would nevertheless authorize a remand based on this third

exception to the functus officio doctrine. The purpose of

this exception is to permit the arbitrator to complete an

assigned task, and in this case the district court adjudged

the arbitrator’s task incompletely executed.” (Citations

omitted; emphasis added.) Green v. Ameritech Corp.,

supra, 200 F.3d at 977. The Court of Appeals further

determined that “[rlemanding to [the original arbitrator]

under these circumstances would not implicate any of the

concerns underlying the functus officio doctrine, as he

would simply be completing his duties by clarifying his

reasoning, not reopening the merits of the case.” Id., at

977-78. Thus, even “if the district court were correct in its

conclusion that [the arbitrator] failed to explain his award

[within the terms of the arbitration agreement], the proper

remedy would have been a remand to the same arbitrator

for clarification.” (Emphasis added.) Id., at 978.

We find equally persuasive the Ninth Circuit’s deter-

mination in International Brotherhood of Teamsters uv.

Silver State Disposal Service, Inc., supra, 109 F.3d at 1410.

In that case, the defendant employer, Silver State Disposal

Service, Inc., appealed from the judgment of the District

Court, which had confirmed an amended arbitration

award and rendered summary judgment in favor of the

plaintiff union. Id. The defendant had discharged a mem-

ber of the union, and the union filed a grievance on his

behalf, claiming that the defendant had failed to comply

with the terms of the collective bargaining agreement. Id.

The parties submitted the grievance to arbitration, and

App. 19

the arbitrator determined that the defendant had dis-

charged the employee without just cause. Id. The defen-

dant reinstated the employee, but a dispute arose as to

whether the arbitration award entitled the employee to

receive back pay. Id. Over the defendant’s objection, the

union requested that the arbitrator clarify its decision. Id.

In a letter to the parties, the arbitrator acknowledged that

“my award was not clear in regard to the reinstatement of

[the grievant]. ... In my award, I intended for [the griev-

ant] to receive back pay from the date of termination until

the date of reinstatement except for the period of the three

day suspension.” Id. The union petitioned the District

Court to confirm the award as amended, and the defen-

dant filed a counterclaim, seeking enforcement of the

initial award. Id. After both parties filed motions for

summary judgment, the District Court confirmed the

amended award and rendered summary judgment in favor

of the union. Id.

On appeal to the Ninth Circuit, the defendant claimed

that it was entitled to judgment as a matter of law because

the arbitrator lacked the authority to clarify the award,

pursuant to the rule of functus officio. Id. The court

disagreed and determined that the doctrine of functus

officio did not preclude the amendment because the

arbitrator’s initial decision had not been complete. Id. The

court noted that it previously had recognized that “an

arbitrator can ... complete an arbitration if the award is

not complete,” and stated further that “[t]he completion

exception to the doctrine of functus officio applies when an

arbitration award fails to resolve an issue... .” (Internal

quotation marks omitted.) Id., at 1411, quoting McClatchy

Newspapers v. Central Valley Typographical Union No. 46,

686 F.2d 731, 734 n. 1 (9th Cir.1982). In the case before it,

App. 20

the Court of Appeals concluded that “the arbitrator’s

- clarification was permissible because it completed the

award. The arbitrator explained that she had intended to

award back pay, but had failed to address the issue.”

International Brotherhood of Teamsters v. Silver State

Disposal Service, Inc., supra, 109 F.3d at 1411. Moreover,

the court noted that the defendant “offered no evidence to

refute the arbitrator’s explanation of her state of mind at

the time she executed the initial award.” Id. The Court of

Appeals concluded, therefore, that “[t]he district court did

not err in affirming the arbitrator’s amended award

because it is clear that the arbitrator’s award was incom-

plete.” Id., at 1412.

In the present case, as in Green, we believe that the

trial court had the authority to remand the case pursuant

to the arbitration act and federal precedent, without

offending principles of functus officio. We also conclude,

pursuant to International Brotherhood of Teamsters v.

Silver State Disposal Service, Inc., supra, 109 F.3d at 1410,

that the arbitration panel may, on remand, complete what

we believe constitutes an incomplete award.” As the trial

* Hartford Steam Boiler claims that the Ninth Circuit’s decision in

Western Employers Ins. Co. v. Jefferies & Co., 958 F.2d 258 (9th

Cir.1992), should control. We conclude, however, that Green and

International Brotherhood of Teamsters are more persuasive. In

distinguishing Western Employers Ins. Co., wherein the Ninth Circuit

vacated an arbitration award when the arbitrators had failed to include

requisite findings of fact and conclusions of law, the Green court found

significant that “the arbitration panel in Western Employers [Ins. Co.]

actually refused to make the requisite findings and conclusions, instead

questioning whether they were bound by the parties’ agreement. ... ”

(Emphasis in original.) Green v. Ameritech Corp. supra, 200 F.3d at 975.

In the present matter, unlike in Western Employers Ins. Co., there is no

evidence of wilfulness on behalf of the arbitration panel to ignore or

(Continued on following page)

App. 21

court found in the present matter, the arbitration panel’s

only task on remand is to clarify the factual basis for its

allocation of the sums representing each party’s liability;

there is no question pertaining to Hartford Steam Boiler’s

and the underwriters’ respective liability and the sums to

be paid under the award because the arbitrators already

have determined the dollar amounts representing the

parties’ respective liability. Because the “third exception to

the functus officio doctrine ... permit{s] the arbitrator to

complete an assigned task”; Green v. Ameritech Corp.,

supra, 200 F.3d at 977; we believe that this exception, as

well as federal precedent permitting a court to direct a

clarifying remand, enabled the trial court to order a

rehearing for clarification purposes without vacating the

award.”*

We note, moreover, that our determination that the

trial court had the authority to remand this matter to the

‘panel is consistent with, and furthers, the federal and

otherwise subvert the terms of arbitration agreement, and we therefore

reject Hartford Steam Boiler’s reliance on Western Employers Ins. Co.

District Court to remand an award to the arbitrator are inapposite in

the present matter because the cases do not “consider the temporal

limitation on the court’s authority to remand set out in 9 U.S.C.

§ 10(b),” which provides that “[i]f an award is vacated and the time

within which the agreement required the award to be made has not

expired, the court may, in its discretion, direct a rehearing by the

arbitrators.” 9 U.S.C. § 10(b) (formerly codified at 9 U.S.C. § 10[a][5)).

We note that our determination that the trial court remanded but did

not vacate the award renders inapplicable any time limitation con-

tained in § 10(b). See Hoffman v. Cargill, Inc., 59 F. Sup.2d 861, 874 n.

7 (N.D.Iowa 1999) (noting that 9 U.S.C. § 10[a][5], now codified at 9

U.S.C. § 10[b], “will become pertinent here only if this court vacates the

arbitration award in question here”), rev'd on other grounds, 236 F.3d

458 (8th Cir.2001).

App. 22

state policies favoring arbitration as a means for expedient

resolution of disputes. M & C Corp. v. Erwin Behr GmbH

& Co., supra, 326 F.3d at 782; Bell v. Cendant Corp., 293

F.3d 563, 566 (2d Cir.2002) (“[t]here is a strong federal

policy favoring arbitration as an alternative means of

dispute resolution”); State v. New England Health Care

Employees Union, District 1199, AFL-CIO, 265 Conn. 771,

777, 830 A.2d 729 (2003) (“‘[blecause we favor arbitration

as a means of settling private disputes, we undertake

judicial review of arbitration awards in a manner designed

to minimize interference with an efficient and economical

system of alternative dispute resolution’”). “By its very

purpose, arbitration is designed to result in a speedy and

final resolution of controversies”; Thompson v. Tega-Rand

International, 740 F.2d 762, 764 (9th Cir.1984) (per cu-

riam); Diapulse Corp. of America v. Carba, Ltd., 626 F.2d

1108, 1110 (2d Cir.1980) (“[t]he purpose of arbitration is to

permit a relatively quick and inexpensive resolution of

contractual disputes”); and, with this principle in mind, we

are reluctant to erase the work surrounding this belabored

arbitration proceeding, causing further delay, more time,

and more resources to be expended, when a deficiency may

be corrected by a simple clarification from the panel. Cf.

Iowa Mold Tooling Co. v. Teamsters Local Union No. 828,

847 F.Supp. 125, 128 (S.D.Iowa 1993) (“[clourts are reluc-

tant to reverse arbitration awards”).

In addition, our conclusion likewise ensures that

“private agreements to arbitrate are enforced according to

their terms.” (Internal quotation marks omitted.) Doctor’s

Associates, Inc. v. Casarotto, 517 U.S. 681, 688, 116 S.Ct.

1652, 134 L.Ed.2d 902 (1996), quoting Volt Information

Sciences, Inc. v. Board of Trustees of Leland Stanford

Junior University, 489 U.S. 468, 479, 109 S.Ct. 1248, 103

App. 23

L.Ed.2d 488 (1989). By allowing the arbitration panel to

clarify its decision and to complete its assigned task, both

Hartford Steam Boiler and the underwriters will receive

an arbitration award in accordance with the terms agreed

to in their governing procedures.

Having determined that the trial court had the

authority to remand the case to the arbitration panel, we

turn to the issue of whether Hartford Steam Boiler may

appeal the remand order at this time. At the outset we

note that “[t]he [arbitration act] has not been held to

supersede state procedural laws”; (internal quotation

marks omitted) Hottle v. BDO Seidman, LLP, supra, 268

Conn. at 697-98 n. 5, 846 A.2d 862, quoting Hottle v. BDO

Seidman, LLP. 74 Conn.App. 271, 274 n. 4, 811 A.2d 745

(2002); and, therefore, we apply Connecticut law to deter-

mine whether we have jurisdiction to review the claims

presented in this appeal. Hartford Steam Boiler claims

that the judgment of the trial court was a final judgment

for the purposes of appeal, pursuant to § 52-423 and State

v. Curcio, supra, 191 Conn. 27, 463 A.2d 566.” We do not

agree.

Our law relating to final judgments and interlocutory

orders is well established. We previously have noted that

“It]he right of appeal is purely statutory. It is accorded

only if the conditions fixed by statute and the rules of

" We previously have applied both § 52-423 and the Curcio test in

the context of arbitration appeals. See Success Centers, Inc. v. Hunting-

ton Learning Centers, Inc., 223 Conn. 761, 766, 774, 613 A.2d 1320

(1992); Daginella v. Foremost Ins. Co., 197 Conn. 26, 30, 495 A.2d 709

(1985); see also Travelers Ins. Co. v. General Electric Co., 230 Conn. 106,

644 A.2d 346 (1994) (applying Curcio factors and holding that trial

court’s denial of stay pursuant to General Statutes § 52-409 was not

appealable order).

App. 24

court for taking and prosecuting the appeal are met.”

(Internal quotation marks omitted.) Rivera v. Veterans

Memorial Medical Center, 262 Conn. 730, 733, 818 A.2d

731 (2003), quoting State v. Curcio, supra, 191 Conn. at

30-31, 463 A.2d 566. Moreover, “[t]he statutory right to

appeal is limited to appeals by aggrieved parties from final

judgments”; (internal quotation marks omitted) Rivera uv.

Veterans Memorial Medical Center, supra, at 733, 818 A.2d

731, quoting State v. Curcio, supra, at 30, 463 A.2d 566;

and we have observed that “[llimiting appeals to judg-

ments that are final serves the important public policy of

minimizing interference with and delay in the resolution

of trial court proceedings.” (Internal quotation marks

omitted.) Lisee v. Commission on Human Rights & Oppor-

tunities, 258 Conn. 529, 541, 782 A.2d 670 (2001), quoting

Madigan v. Madigan, 224 Conn. 749, 752-53, 620 A.2d

1276 (1993). “Because our jurisdiction over appeals ... is

prescribed by statute, we must always determine the

threshold question of whether the appeal is taken from a

final judgment before considering the merits of the claim.”

(Internal quotation marks omitted.) Rivera v. Veterans

Memorial Medical Center, supra, at 733-34, 818 A.2d 731,

quoting State v. Curcio, supra, at 30-31, 463 A.2d 566.

Hartford Steam Boiler’s assertion that § 52-423

provides us with jurisdiction to review its claims is prem-

ised upon its argument that the trial court vacated the

award. Because we have determined that the trial court

did not vacate the award, or otherwise confirm, modify or

correct it, the judgment does not constitute an appealable

final judgment pursuant to the statute.

The failure of the judgment to fall within the terms of

§ 52-423, however, does not end our inquiry. “In both

criminal and civil cases ... we have determined certain

App. 25 |

interlocutory orders and rulings of the Superior Court to

be final judgments for purposes of appeal. An otherwise

interlocutory order is appealable in two circumstances: (1)

where the order or action terminates a separate and

distinct proceeding, or (2) where the order or action so

concludes the rights of the parties that further proceedings

cannot affect them.” (Internal quotation marks omitted.)

Rivera v. Veterans Memorial Medical Center, supra, 262

Conn. at 734, 818 A.2d 731, quoting State v. Curcio, supra,

191 Conn. at 30-31, 463 A.2d 566. “The first prong of the

Curcio test . . . requires that the order being appealed from

be severable from the central cause of action so that the

main action can proceed independent of the ancillary

proceeding.” (Internal quotation marks omitted.) Burger &

Burger, Inc. v. Murren, 202 Conn. 660, 664, 522 A.2d 812

(1987), quoting State v. Parker, 194 Conn. 650, 654, 485

A.2d 139 (1984). “If the interlocutory ruling is merely a

step along the road to final judgment then it does not

satisfy” the first prong of Curcio. State v. Parker, supra, at

653, 485 A.2d 139. Similarly, “[a] judgment by a trial court

ordering further administrative proceedings cannot meet

the first prong of the Curcio test, because, whatever its

merits, the trial court’s order has not terminate[d] a

separate and distinct proceeding.” (Internal quotation

marks omitted.) Doe v. Connecticut Bar Examining Com-

mittee, 263 Conn. 39, 46, 818 A.2d 14 2003), quoting

Schieffelin & Co. v. Dept. of Liquor. Control, 202 Conn. 405,

409-10, 521 A.2d 566 (1987).

The trial court’s remand for a rehearing to clarify the

panel’s allocation award does not satisfy the first prong of

the Curcio test. The very essence of the trial court’s order

seeking clarification of the award “so that the court will

know exactly what it is being asked to enforce”; Ottley v.

App. 26

Schwartzberg, 819 F.2d 373, 376 (2d Cir.1987); is indica-

tive of the ongoing and unfinished nature of the process

leading to a final judgment by the court.

Turning to the second prong of the Curcio test, we

have recognized that it “focuses on the nature of the right

involved. It requires the parties seeking to appeal to

establish that the trial court’s order threatens the preser-

vation of a right already secured to them and that that

right will be irretrievably lost and the [party] irreparably

harmed unless they may immediately appeal.” (Internal

quotation marks omitted.) Rivera v. Veterans Memorial

Medical Center, supra, 262 Conn. at 734, 818 A.2d 731. “An

essential predicate to the applicability of this prong is the

identification of jeopardy to [either] a statutory or consti-

tutional right that the interlocutory appeal seeks to

vindicate.” (Internal quotation marks omitted.) Cheryl

Terry Enterprises, Ltd. v. Hartford, 262 Conn. 240, 247,

811 A.2d 1272 (2002), quoting Daginella v. Foremost Ins.

Co., 197 Conn. 26, 31, 495 A.2d 709 (1985). “Unless the

appeal is authorized under the Curcio criteria, absence of

a final judgment is a jurisdictional defect that [necessar-

ily] results in a dismissal of the appeal.” (Internal quota-

tion marks omitted.) Rivera v. Veterans Memorial Medical

Center, supra, at 734, 818 A.2d 731, quoting State v.

Malcolm, 257 Conn. 653, 667, 778 A.2d 134 (2001).

The trial court’s remand similarly does not satisfy

Curcio’s second prong because the order does not implicate

any statutory or constitutional right. After the trial court’s

review of the arbitration panel’s clarifying decision,

wherein it will confirm, modify, vacate or correct the

award, both Hartford Steam Boiler and the underwriters

will be free to appeal any adverse final decision by the

court.

App. 27

With respect to the underwriters’ cross appeal; see

footnote 3 of this opinion; we note that the arbitrator did

not, as the trial court found, fully comply with that portion

of the submission requiring “findings of fact and conclu-

sions regarding the interpretation of the insurance policies

that are the subject of this arbitration as necessary to

support the award.” Because we have determined that the

trial did not confirm, vacate, correct or modify the award,

pursuant to § 52-423, we lack jurisdiction to review this

claim under the statute. Similarly, in applying the Curcio

factors, we conclude that the trial court’s order neither

terminated a separate and distinct proceeding nor threat-

ened the preservation of a right that “will be irretrievably

lost and the [party] irreparably harmed unless they may

immediately appeal.” (Internal quotation marks omitted.)

Rivera v. Veterans Memorial Medical Center, supra, 262

Conn. at 734, 818 A.2d 731. Accordingly, we are precluded

from reviewing the underwriters’ claim at this time.

Because we conclude that the trial court’s order for a

rehearing to clarify the arbitrators’ allocation award does

not constitute a final judgment, and does not satisfy either

prong of the Curcio test, we lack subject matter jurisdic-

tion to review the merits of this case.

The appeal is dismissed.

In this opinion the other justices concurred.

App. 28

2002 WL 31001841 (Conn.Super.), 32 Conn. L. Rptr. 659

UNPUBLISHED OPINION

Superior Court of Connecticut.

HARTFORD STEAM BOILER INSPECTION

AND INSURANCE COMPANY,

UNDERWRITERS AT LLOYD'S et al.

No. CV020814620S.

July 31, 2002.

RITTENBAND, JTR.

This case involves two claims. The plaintiff seeks to

have the Court vacate an Arbitration Award and the

defendants seek to confirm the award or in the alternative

have the Court remand the case to the arbitrators for a

rehearing and/or additional findings.

FACTS

The parties have agreed to a Stipulation of Facts

dated on or about May 15, 2002 which Stipulation without

exhibits is attached hereto and incorporated herein as

Schedule A. In summary, however, the Court finds, in

addition to the Stipulation of Facts, the following facts.

1. The plaintiff underwrote a policy of boiler and

machinery insurance for Entergy Corporation and other

named insureds to cover a coal-fired electrical generating

facility located near Newark, Arkansas. Defendants

underwrote a program of “all risks” property insurance for

Entergy Corporation and other insureds.

2. On August 11, 1993, there was a catastrophic loss

event at Independent Steam Electric Station Unit Two

App. 29

(“ISES Unit Two”) which occurred at the facility located

near Newark, Arkansas aforementioned. The owners of

ISES Unit Two, Arkansas Power & Light Company and

others promptly made claims against both the plaintiffs’

and the defendants’ policies, which claims were subse-

quently denied.

3. Plaintiff contended that the cause of the loss was

an explosion of gas or unconsumed fuel, a peril excluded

from its coverage and covered under the defendants’ policy.

4. Defendants contended that the loss was the

“breakdown of a fired vessel” excluded from the coverage

provided by the defendants’ insurance and that the event

did not involve a combustion explosion that would other-

wise render it (in whole or in part) a covered loss.

5. The insureds invoked parallel “Loss Adjustment

Endorsements” found in the plaintiff’s policy and the

defendants’ policy.

6. Pursuant to the policies plaintiff paid $10,933,435.86,

and defendants paid $11,880,525.33. The difference is

attributable to certain amounts that the parties agreed

were within their respective coverages: $948,102.27 in

costs that defendants admitted were covered by their

policy and $1,012.80 in expenses that plaintiff admitted

were its responsibility.

7. The coverage dispute between the plaintiff and

defendants was then submitted to a panel of three arbitra-

tors, namely Edwin W. Whitmore, Larry E. Gordon and

Frank W. Ockerby as the third arbitrator and umpire.

8. The arbitration was conducted pursuant to the

agreed March 1996 “Procedures to Govern the Arbitra-

tion.”

App. 30

9. The initial arbitration hearing was conducted in

Memphis, Tennessee. The parties stipulated to an October

25, 1996 “Joint Statement of Issues.”

10. On January 9, 1997 the Panel issued an interim

Award on the factual questions set forth in the Joint

Statement of Issues entitled “Decision of Arbitrators.”

11. In response to questions by the parties as to the

meaning of the Award, on September 22, 1997 the arbitra-

tors issued a “Supplemental and Clarified Decision to the

Answer of Issue iv of the January 9, 1997 Decision of

Arbitrators.”

12. As a result of the Panel’s resolution of these

questions the parties agreed that part of the loss fell

within the coverage of the defendants and part of the loss

fell within the coverage of the plaintiff.

13. The parties were unable to agree on the manner

in which repair and restoration costs were to be allocated

to each policy.

14. Plaintiff and defendants then iesubmitted the

matter to the Arbitration Panel for resolution subject to a

July 19, 1999 stipulated “Statement of Issues and Proce-

dural Time Line for Entergy Arbitration.” The parties and

arbitrators also agreed upon a set of “Revised Procedures

to Govern the Phase II Arbitration Re: Allocation Issues.”

15. This second phase of the arbitration hearing took

place in Windsor Locks, Connecticut on June 28 and 29,

2001.

16. The Panel rendered an award entitled “Decision

of Arbitrators” on January 24, 2002.

App. 31

17. The award was in favor of the defendants, and on

February 22, 2002 the plaintiff submitted an “Application

to Vacate Arbitration Award.” Defendants filed an “Appli-

cation to Confirm the Arbitration Award, or, in the alterna-

tive, to refer to arbitrators for clarification.”

18. A hearing was held on May 22, 2002 before this

Court on the two applications even though the defendants’

Application to Confirm Arbitration Award etc. does not

appear to be in the file. However, it is addressed by both

parties in the respective briefs and supplemental briefs

the parties filed prior to May 22, 2002 and subsequent

thereto.

STANDARD OF REVIEW

Plaintiff contends the arbitrators violated C.G.S. § 52-

418(a)(4) in that “... the arbitrators have exceeded their

powers or so imperfectly executed them that a mutual,

final and definite award upon the subject matter submit-

ted was not made.”

The determination of the issues before this Court has

to be based upon the evidence submitted to it with the

briefs of the parties. Further, it is plaintiff’s burden to

produce sufficient evidence to invalidate the award.

Awards based upon consensual arbitration are subject to

only minimal judicial intervention. See Metropolitan

District Commission v. AFSCME, 37 Conn.App. 1 (1995).

Every reasonable presumption and intendment must be

indulged in favor of the award. Cashman v. Sullivan &

Donegan P.C., 23 Conn.App. 24 (1990). Unless the submis-

sion provides otherwise, an Arbitrator has authority to

decide factual and legal questions, and courts will not review

the evidence, or where the submission is unrestricted, the

App. 32

Arbitrator’s determination of legal questions. O & G/

O’Connell Joint Venture v. Chase Family Limited Partner-

ship, 203 Conn. 133 (1987). “When the scope of the sub-

mission award is unrestricted, the resulting award is not

subject to de novo review even for errors of law so strong

as the award conforms to the submission.” SCRRA uv.

American Re-Fuel Co. of Southeastern Connecticut, 44

Conn.Sup. 482, 484, 485 (1997), affirmed, 44 Conn.App.

728 (1997). “The authority of an arbitrator to adjudicate

the controversy is limited only if the agreement contains

express language restricting the breadth of the issues,

reserving explicit rights, or conditioning the award on

court review.” Id. at 485.

ISSUES

1. Was there a waiver of the present claims of the

plaintiff by the plaintiff?

“(Clourts should ‘indulge every reasonable presump-

tion against waiver.’” Parker v. Wingo, 407 U.S. 514, 525

(1972). “Waiver presupposes a full knowledge of an exist-

ing right or a privilege and something done designedly or

knowingly to relinquish it” either directly or by reasonable

inference. (Emphasis added.) Reinke v. Greenwich Hospital

Assn., 175 Conn. 24, 27 (1978). Defendants have cited

statements made by the plaintiff’s counsel at the hearing

of June 28, 2001 before the arbitrators. Attorney Stockman

for the plaintiff stated on page 269 “The end point from

the Panel is a statement that someone pays someone and

how much they pay.” The Court considers that an offhand

remark which is not all inclusive and does not amount to a

waiver of “an existing right done designedly or knowingly

to relinquish it” either directly or by reasonable inference.

App. 33

(Emphasis added.) Defendants also claim that the submis-

sion by the plaintiff to the Panel of its Decision Matrix is

also a waiver by the plaintiff. This Court finds that the

submission of said Matrix is not a waiver of an existing

right or privilege and does not fit the category of “some-

thing done designedly or knowingly to relinquish it.”

Reinke, supra. There was no intent to relinquish any

rights either directly or by inference. Therefore, the

answer to the question posed above is “No.” The plaintiff

did not waive its present claims.

2. Did the Arbitrators’ award(s) or decision(s) con-

form to the submission(s)?

The Court, after reviewing the transcript of the

hearing before the Panel of June 28, 2001, Volume II, the

transcript of the hearing before this Court on May 22,

2002, the submissions and briefs of the parties including

exhibits and a review of the applicable law makes the

following findings.

(a) The Federal Arbitration Act, 9 U.S.C. § 1 et seq.

and the State Arbitration Act, Chapter 909 of the Con-

necticut General Statutes, specifically, C.G.S. § 52-418,

both apply to this case. The language is essentially the

same, and the criteria applied to the Application to Vacate

is the same: “ ... if the arbitrators have exceeded their

powers or so imperfectly executed them that a mutual,

final and definite award upon the subject matter submit-

ted was not made.”

(b) All of the proceedings regarding the arbitration is

one continuous arbitration. It contains different phases,

but is all the same arbitration. There is no “former”

App. 34

arbitration. The arbitration is in Phase I and Phase II.’

The submissions to the arbitrators for both the January 9,

1997 Decision of Arbitrators and the Decision of the

Arbitrators dated January 24, 2002 are the same. They

both include the followin language:

The arbitration award shall be in writing and

shall contain findings of fact and conclusions re-

garding the interpretation of the insurance poli-

cies that are the subject of this arbitration as

necessary to support the award. (Emphasis

added).

See Exhibit C attached to the Stipulation of Facts and

Exhibit H to the Stipulation of Facts. The Court interprets

the aforementioned language which states in pertinent

part: “ ... conclusions regarding the interpretation of the

insurance policies .. .” to be the same as the requirement

of “conclusions of law” as set forth in the case of Western

Employers Ins. v. Jefferies & Co., Inc. et al., 958 F.2d 258,

259 (9th Cir.1992). The interpretation of an insurance

contract is the same as a legal conclusion of the applicabil-

ity of an insurance policy. Courts interpret contracts which

are insurance policies all the time, and that is considered

an interpretation or a conclusion of law as to the policy.

Therefore, the standard in the case at bar and in the

Western Employers Ins. case, supra, are the same. The

Court concludes that these submissions were not unre-

stricted submissions because the arbitrators were required

to follow the aforementioned requirements. Counsel for

* The Stipulation of Facts includes both decisions and the events

leading thereto.

App. 35

both sides stated that nothing precludes the arbitrators

from ruling on the law. TT page 8.”

hearing of March 22, 2002 that the courts are not permit-

ted to vacate an award because of an alleged error in

contract interpretation. That may be true, but the claim

here is not that there was ercor in contract interpretation.

The claim here is that there was no contract interpretation

at all.

(ad) In the hearing of May 22, 2002 plaintiff claimed

that on issues of fact and interpretation, the arbitrators

should have been more specific, and the defendants believe

that the requirement is in general and does not have to be

as specific as the plaintiff claims.

(e) As of the First Joint Statement of Issues, Exhibit

D to the Stipulation of Facts, four issues were presented,

and in the Decision of Arbitrators, Exhibit E to the Stipu-

lation of Facts, it is clear that the Panel voted no as to

Issue 1, yes as to Issue 2 (both issues in No. 2), the finding

on Issue 3 was (ii), and as to Issue 4 the issue was “Was

the damage ... caused by (i) one or more explosions of

gasses or unconsumed fuel (as HSB argues); or (ii) over-

pressurization of the furnace enclosure due solely to the

load imparted by steam flashing from ruptured tube ends

(as the All-Risk Insurers argue)? The Panel found that

both (i) and (ii) were the cause. It did not explain why this

decision. was reached or how the costs were to be appor-

tioned.” (Emphasis added.)

2? TT refers to the trial transcript of May 22, 2002.

App. 36

(f) In the Supplemental and Clarified Decision of the

Arbitrators to the answer of Issue No. 4 of the January 9,

1997 Decision of Arbitrators, Exhibit F to the Stipulation

of Facts, the Panel expanded on its answer to the No. 4

Issue, but still did not apportion the liability between the

parties and turther stated that no evidence was presented

to the Panel to quantify the damages caused by steam or

by combustion explosion(s).

(g) The Court, therefore, finds that the facts as

announced by the Panel are not as specific and as compre-

hensive as was required. Further, the Court finds that

there was insufficient interpretation of the insurance

policies. However, this Court cannot totally fault the

arbitrators on this because the Joint Statement of Issues

merely mentioned the various sections of the policies

which would lead the Panel to merely say yes or no as to

the sections of the policies. The parties themselves to some

degree limited the findings by improperly limiting the

questions.

(h) The problem of lack of specificity is more appar-

ent in regard to the Decision of January 24, 2002, Exhibit

K to Stipulation of Facts. In the Submission of Issues,

Exhibit G to the Stipulation of Facts, the following lan-

guage was also included: “B. The Panel must resolve all

liability and allocation issues with respect to each category

of costs identified in paragraph 1, including, without

limitation, all coverage issues.” Although the Panel in its

Decision of Arbitrators dated January 24, 2002 recited the

scope of the arbitration including the aforementioned

paragraph B, there is no explanation or resolution of

coverage issues. Further, there are no facts that support

the figures in paragraphs a and b on the last page of the

Decision of Arbitrators. There are no supporting facts or

App. 37

allocation of liability or the reasons for the numbers that

have been awarded as well as to which party liability

should attach for each of these figures. Further in para-

graph b there are neither supporting facts to adequately

interpret the numbers assigned to Boiler & Machinery nor

the numbers assigned to All-Risk. The findings are not

sufficiently specific or comprehensive to comply with the

requirement that all liability and allocation issues and all

coverage issues be resolved, nor do the findings contain

sufficient findings of fact and conclusions regarding the

interpretation of the insurance policies that are the subject

of this arbitration as necessary to support the award.

REMEDY

The Court is reluctant to vacate the award because

that would mean starting over again, and the parties

would lose all the work, effort, etc. that covered six years

of this arbitration. In the interest of economy of the

parties, the Panel and judicial economy, it would appear

that a remand to the arbitrators would be more practical

and a better remedy than vacating the awards. However,

the Court must have authority to do so. The plaintiff

claims that there is no authority for a remand, and the

defendants claim that there is. The pertinent part of the

applicable statutes is: “If an award is vacated and the time

within which the award is required to be rendered has not

expired, the court or judge may direct a rehearing by the

arbitrators.”

The Court finds that the final briefs were submitted

on September 28, 2001 thereby setting a deadline (30

days) of October 28, 2001 for the award. On October 24,

2001 the Panel sought a delay in order to obtain advice

App. 38

from a Certified Public Accountant. The parties agreed to

a delay from October 24, 2001 until January 24, 2002.

Therefore, the thirty-day period was tolled from October

24 to January 24 as aforesaid and, therefore, the final

award was made within thirty days of October 28, 2001.

Accordingly, the Court finds that the award was rendered

within the thirty-day time limit. Plaintiff claims that the

time for making the award has now expired because if the

Court directs a rehearing or a remand to the arbitrators it

would be doing so beyond the January 24, 2002 deadline.

However, it would be impossible for the Court to direct a

rehearing by the arbitrators before the time for the award

has expired. If the award were made on the 28th day from

submission of briefs, then the Court would have only two

days in which to make a decision for a remand assuming

that the application to vacate could be filed and presented

to a judge within the thirty-day time limit. The law does

not contemplate permitting something that is impossible

to perform. In this particular case, because there was a

tolling of the time period, it would still be impossible for

the Court to even review an application to vacate and then

order a remand because the time period expired as soon as

the award was made on January 24, 2002. The time limit

would have been October 28, 2001 if there had not been an

agreed upon extension for tolling until the CPA gave his

advice which occurred on the same day the award was

made, January 24, 2002.

Accordingly, the Court finds that the time limit for

making the award was fulfilled, but the time limit for the

Court to act was and is an impossibility, and therefore, not

applicable.

The Court hereby remands to the Arbitration Panel

for a rehearing by the Panel and/or for a clarification of its

App. 39

awards so that it complies with the requirements of the

submissions and so that there be a sufficient finding of

facts and interpretations of the policies so as to fully

comply with the submissions. The parties are ordered, for

the benefit of the Panel, to submit written interrogatories

to the Panel so that if answered, the parties will be satis-

fied that there are sufficient findings of fact and interpre-

tations of the policies. The parties are further ordered to

submit to the Panel, for its benefit, proposed findings of

facts and interpretations of policies. The interrogatories

and proposed findings are to be submitted to the Panel

within sixty days of the date of this decision or at any

other date agreed upon by the parties. Upon the rehearing

and submission of the interrogatories and proposed find-

ings, the Panel is ordered to clarify its decisions as stated

above within sixty days of the hearing or receipt of the

interrogatories and proposed findings, whichever is later.

SCHEDULE A

STIPULATION OF FACTS

Plaintiff Hartford Steam Boiler Inspection and Insur-

ance Company (“HSB”) and Defendants Underwriters at

Lloyd’s and Companies Collective, National Union Fire

Insurance Company, International Fire Insurance Com-

pany, Aetna Casualty and Surety Company, Home Insur-

ance Company, and Zurich Insurance Company, stipulate

as follows:

1. HSB underwrote policy number BMI-SA-9225738-

13, a policy of boiler and machinery insurance, effective

from May 1, 1991 through May 1, 1994, for Entergy |

Corporation and other named insureds (the “HSB Policy”).

An accurate copy of relevant portions of the HSB Policy is

attached as Exhibit A.

App. 40

2. Defendants underwrote a program of “all risks”

property insurance for Entergy Corporation (and other

insureds), effective from June 1, 1993 to June 1, 1994 (the

“All-Risks Insurance”). An accurate copy of relevant

portions of Binder No. 2103, which the parties accepted as

a true and accurate copy of the language of the All-Risks

Insurance for purposes of the arbitration, is attached as

Exhibit B.

3. On August 11, 1993, there was a catastrophic loss

event at Independence Steam Electric Station Unit Two

(“ISES Unit Two”), a coal-fired electrical generating

facility located near Newark, Arkansas, causing in excess

of $28 million in 7amage.

4. The owners of ISES Unit Two, Arkansas Power &

Light Company and others, promptly made claims against

both the HSB Policy and the All-Risks Insurance.

5. After investigating the loss, both HSB and Defen-

dants denied coverage under their respective policies.

6. HSB contended that the cause of the loss was an

explosion of gas or unconsumed fuel, a peril excluded from

its coverage and covered under the All-Risks Insurance.

7. Defendants contended that the loss was the

“breakdown of a fired vessel,” excluded from the coverage

provided by the All-Risks Insurance, and that the event

did not involve a combustion explosion that would other-

wise render it (in whole or in part) a covered loss.

8. When faced with these reciprocal denials, the

insureds invoked parallel “Loss Adjustment Endorse-

ments” found in both the HSB Policy and the All-Risks

Insurance.

App. 41

9. Pursuant to the endorsements, HSB paid

$10,933,435.86 and Defendants paid $11,880,525.33. The

difference is attributable to certain amounts that the

parties agreed were within their respective coverages:

$948,102.27 in costs that Defendants admitted were

covered by the All-Risks Insurance, and $1,012.80 in

expenses that HSB admitted were its responsibility.

10. Under the terms of the Loss Adjustment En-

dorsements, the coverage dispute between HSB and

Defendants was submitted to a panel of three arbitrators.

11. Defendants appointed Edwin W. Whitmore to the

panel. HSB appointed Larry E. Gordon. Messrs. Whitmore

and Gordon jointly selected Frank W. Ockerby to serve as

the third arbitrator and umpire.

12. The arbitration was conducted pursuant to the

agreed March 1996 “Procedures to Govern the Arbitra-

tion,” attached as Exhibit C.

13. The initial arbitration hearing was conducted in

Memphis, Tennessee on October 21 through 25, 1996. This

hearing focused on the causes and progress of the August

11, 1993 loss, and on certain factual questions relating to

the application of certain policy language to certain

technical design aspects of ISES Unit Two.

14. Pursuant to the request of the arbitrators, the

parties stipulated to an October 25, 1996 “Joint Statement

of Issues,” attached as Exhibit D, to be addressed by the

arbitrators in their Award.

15. On January 9, 1997; the arbitral panel issued an

interim Award on the factual questions set forth in the

Joint Statement of Issues, entitled “Decision of Arbitra-

tors,” attached as Exhibit E.

App. 42

16. In response to questions by the parties as to the

meaning of the Award, on September 22, 1997 the arbitra-

tors issued a “Supplemental & Clarified Decision to the

Answer of Issue IV of the January 9, 1997 Decision of

Arbitrators,” attached as Exhibit F.

17. As a result of the panel’s resolution of these

questions, the parties agreed that part of the loss fell

within the coverage of the All-Risks Insurance, and part of

the loss fell within the coverage of the HSB Policy.

18. The parties were unable to agree on the manner

in which repair and restoration costs were to be allocated

to each policy.

19. Accordingly, HSB and Defendants resubmitted

the matter to the arbitral panel for resolution, subject to a

July 1999 stipulated “Statement of Issues and Procedural

Timeline for Entergy Arbitration,” attached as Exhibit G.

20. In connection with this submission, in August

1999 the parties and arbitrators agreed upon a set of

“Revised Procedures to Govern the Phase II Arbitration

Re: Allocation Issues.” An accurate copy of the “Revised

Procedures to Govern the Phase II Arbitration Re: Alloca-

tion Issues” is attached to HSB’s Application to Vacate

Arbitration Award as Exhibit A, and is attached hereto as

Exhibit H.

21. This second-phase arbitration hearing took place

on June 28 and 29, 2001 in Windsor Locks, Connecticut.

22. Following the hearing, the parties submitted

position statements advocating factual and legal positions.

Accurate copies of the final position statements submitted

by HSB and Defendants are attached as Exhibits I and J,

respectively.

App. 43

23. The panel rendered an award entitled “Decision

of Arbitrators” on January 24, 2002, attached to HSB’s

Application to Vacate Arbitration Award as Exhibit B, and

attached hereto as Exhibit K.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.