Court: Supreme Court of Connecticut; July 10, 1990; Connecticut; State Supreme Court
On June 3, 1986, A. Dubreuil and Sons, Inc., a general contractor, contracted with the town of Lisbon to execute alterations at Lisbon Central School. The plaintiff sought compensation for additional work by filing for arbitration with the American Arbitration Association (AAA) on November 7, 1988. The town contested the arbitration, asserting the contract did not mandate arbitration and subsequently notified the AAA to hold the case in abeyance pending a court order. In response, the plaintiff filed a complaint on January 7, 1989, in Superior Court to compel arbitration based on their interpretation of the agreement. The trial court denied the plaintiff's motion for arbitration and a subsequent motion to reconsider. The plaintiff then appealed to the Appellate Court, which transferred the case to the current court.
The arbitration agreement is derived from the American Institute of Architects (AIA) standard contract, specifically sections 7.9.1, 7.9.2, and 7.9.3 of document A201. Originally, section 7.9.1 mandated arbitration ("shall"), but was amended to allow arbitration at the discretion of the parties ("may"). The trial court articulated its reasoning for denying the arbitration motion, asserting that if one party could unilaterally compel arbitration, the amendment from "shall" to "may" would be rendered meaningless. The court emphasized that arbitration is a contractual arrangement, intended to facilitate dispute resolution outside of litigation, and is legally favored.
A party can only be compelled to arbitrate a dispute if they have explicitly agreed to do so, with the extent and manner of that agreement being critical. The determination of whether parties have agreed to arbitration is based on their intentions, which is a factual question. Modifications in contract language, such as changing "shall" to "may" in an arbitration clause, can indicate a shift from mandatory to consensual arbitration, and whether this reflects the parties' intent is a question of fact. A trial court's finding on this issue is not reversible unless it is deemed unreasonable. For an appeal to succeed, the appellant must show that the trial court's interpretation of the amended contract was clearly erroneous. The core principle in contract interpretation is to ascertain the parties' intent, which is also a factual determination that is only reversible under certain conditions.
Intent is crucial in determining the enforceability of contractual provisions, as established in several case precedents. The trial court evaluated a contract that initially mandated arbitration through the term "shall," indicating a compulsory directive. However, the contract was amended to replace "shall" with "may," suggesting a shift to permissive arbitration, which indicates that the parties intended for arbitration to be consensual rather than obligatory. The term "may" generally implies discretion and is not typically a command. The court's determination that this modification reflected the parties' intention was not deemed clearly erroneous. Furthermore, when alterations are made to a printed contract, those changes are considered to take precedence, reinforcing the idea that the amendment transformed the arbitration clause. The trial court's interpretation that the change from "shall" to "may" was significant and not mere surplusage was supported by the need for meaningful contractual language.
The plaintiff contends that despite the modification of the arbitration clause in the contract from "shall" to "may," other sections (7.9.1, 7.9.2, and 7.9.3) imply that arbitration remains compulsory. This perceived ambiguity, the plaintiff argues, should be interpreted against the defendant, who made the amendment. The plaintiff references legal precedents indicating that typed provisions take precedence over printed language. The trial court's ruling that arbitration requires mutual consent from both parties under the revised contract was upheld, with the justices concurring.
Sections 7.9.1 to 7.9.3 outline that all claims and disputes between the Contractor and Owner will be resolved through arbitration, with exceptions noted. It stipulates that arbitration cannot involve the Architect or other parties unless there is mutual written consent. The arbitration agreement is enforceable under prevailing arbitration law, with final awards subject to judicial enforcement. Additionally, a written notice of arbitration must be filed with the other party and the American Arbitration Association within specified time limits, ensuring no claims are made after the statute of limitations expires.
The Contractor is required to continue work and maintain progress during arbitration proceedings unless a written agreement states otherwise. Payments to the Contractor will proceed as outlined in the Contract Documents. Article 7 of the supplemental conditions, titled "Miscellaneous Provisions," includes a modification where the word "may" in relation to arbitration decisions is specified to be interpreted under certain subparagraphs. The plaintiff references federal and state cases asserting that "may" implies a mandatory arbitration requirement upon request by one party; however, these cases are not directly applicable due to the unique context of changing "shall" to "may" in the contract's arbitration clause. The absence of this specific modification could have led to a different outcome, as illustrated by precedent cases. The Connecticut cases cited by the plaintiff do not support their argument in this particular context.
