A Better Way Wholesale Autos, Inc. v. Gause

Citations: 195 A.3d 747; 184 Conn. App. 643Docket: AC40033

Court: Connecticut Appellate Court; September 11, 2018; Connecticut; State Appellate Court

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In A BETTER WAY WHOLESALE AUTOS, INC. v. SHANNON GAUSE (AC 40033), a used car dealer sought to vacate an arbitration award favoring the defendant, who claimed the dealer failed to disclose the vehicle’s status as a manufacturer buyback. The defendant alleged violations of state and federal laws, leading to an unrestricted arbitration submission. The arbitrator found that the dealer did not properly disclose the vehicle’s buyback status, violating the Connecticut Unfair Trade Practices Act (CUTPA), and awarded the defendant compensatory and punitive damages, along with attorney’s fees and costs. The dealer subsequently attempted to vacate the award, but the trial court denied this request and confirmed the award, stating there was no manifest disregard of the law. On appeal, the court ruled that the appeal was not moot despite the defendant's claims, as the plaintiff could still obtain relief if the appeal reversed the denial of the application to vacate.

The plaintiff, A Better Way Wholesale Autos, Inc., appealed a trial court's judgment that denied its application to vacate an arbitration award and granted the defendant, Shannon Gause, a motion to confirm the award. The plaintiff argued that the arbitrator's punitive damages award constituted a manifest disregard of the law under General Statutes § 52-418 (a)(4). The arbitrator found that the plaintiff failed to prominently display the manufacturer buyback disclosure on the vehicle and in the purchase order, which constituted a per se violation of the Connecticut Unfair Trade Practices Act (CUTPA). The arbitrator also identified additional violations, including preventing the defendant from inspecting the vehicle and attempting to deliver a vehicle that did not meet safety standards, concluding these actions demonstrated a reckless indifference to the defendant’s rights warranting punitive damages.

The court affirmed the arbitrator’s decision, stating that the arbitrator acted within his discretion by crediting the defendant's evidence against the plaintiff's lack of rebuttal evidence. The court determined that the arbitrator's conclusions did not reflect an extraordinary lack of fidelity to established legal principles, thus negating the basis for second-guessing the award. The arbitration arose from the defendant's purchase of a 2004 Cadillac SRX, which was later revealed to be a manufacturer buyback, leading to the arbitration claim filed by the defendant. The total award amounted to $17,096.02, including $1,279 in compensatory damages, $5,000 in punitive damages, and $10,817.02 in attorney’s fees and costs.

The plaintiff filed an application to vacate an arbitration award, while the defendant moved to confirm it in the Superior Court. On December 30, 2016, the court upheld the award, finding that the defendant's assertions in her arbitration submission were supported by factual and legal grounds. The court ruled that the arbitrator's decision did not exhibit gross misconduct or irrationality, concluding there was no manifest disregard of the law. Consequently, the court granted the defendant's motion to confirm the award and denied the plaintiff's application to vacate. The plaintiff appealed, and the court rejected the defendant's argument that the appeal was moot due to the plaintiff's lack of opposition to the confirmation motion. The court emphasized that an actual controversy must exist for appellate jurisdiction, and practical relief could be obtained through reversing the decision denying the application to vacate.

The plaintiff contended that the award of punitive damages showed a manifest disregard of the law under General Statutes § 52-418(a)(4). The arbitration was an unrestricted submission, and the plaintiff claimed the award violated statutory prohibitions outlined in § 52-418. The court noted two ways to establish that arbitrators exceeded their powers: either the award did not conform to the submission or the arbitrators disregarded the law. The court's review of a decision to vacate an award is de novo, and to vacate on the grounds of manifest disregard of the law, three criteria must be met: the error must be obvious, the arbitration panel must have recognized a governing legal principle but ignored it, and the governing law must be clearly defined and applicable.

The court found no manifest disregard of the law in awarding punitive damages under the Connecticut Unfair Trade Practices Act (CUTPA). The arbitrator determined that the plaintiff violated CUTPA by failing to prominently disclose the manufacturer buyback on the vehicle and in the purchase order, which the plaintiff admitted constituted a statutory violation. The arbitrator also noted the plaintiff's actions, including preventing the defendant from inspecting the vehicle and attempting to deliver a substandard vehicle, demonstrated reckless indifference to the defendant's rights, justifying punitive damages. The court emphasized that the arbitrator acted within his discretion by favoring the defendant's evidence regarding CUTPA violations over the plaintiff's lack of rebuttal evidence. The court confirmed the arbitration award, stating that it would not second-guess the arbitrator's factual findings in unrestricted arbitration. The plaintiff's claim that the punitive to compensatory damages ratio was excessive was deemed unpreserved for appellate review, as it was not raised in the trial court. The court noted the award consisted of $5,000 in punitive damages and $1,279 in compensatory damages, close to the 4 to 1 ratio claimed by the plaintiff. The court also addressed the defendant's argument regarding the preservation of the claim on punitive damages, finding the plaintiff had adequately preserved it.

The review is confined to the record, excluding matters not addressed by the trial court. While the plaintiff did not raise the issue of punitive damages in their memorandum, it was mentioned during oral arguments, thereby making it part of the record. The court can consider this argument as it is linked to the claim that the arbitrator’s award exhibited a manifest disregard of the law. Although the plaintiff introduced new theories in the writ, these are related to the overarching legal claim and share substantial overlap under existing case law, thus properly preserved for appeal. However, the court finds that the plaintiff's "ratio claim," based on constitutional due process, is distinct and not intertwined with the punitive damages claim under General Statutes § 52-418. The excerpt further explains that an "unrestricted submission" in arbitration refers to an agreement without limitations on the issues to be arbitrated. Finally, General Statutes § 42-110g (a) allows individuals to seek recovery for ascertainable losses due to prohibited practices, with the court having discretion to award punitive damages and equitable relief.