Case 2:
Gordon v. Amica Mutual Insurance Company , 2004 Conn. Super LEXIS 3409 (2004)
This was an arbitration in which the “party arbitrator” system was used (see Chapter 7) and resulted in a procedural impropriety which resulted in the court vacating the arbitration award.
The plaintiffs’ home in Glastonbury, which lies on the banks of the Connecticut river, was accidentally flooded in March of 2002. When the parties failed to agree on an appraisal amount for the damages, the appraisal arbitration clause of the insurance policy kicked in. The clause read as follows:
“If you and we fail to agree on the amount of the loss…each party will choose a competent appraiser…. The two appraisers will choose an umpire. If they cannot agree upon an umpire within 15 days, . . . The appraisers will separately set the amount of the loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will set the amount of the loss.” Gordon at 2.
In the Fall of 2003 the appraisers selected by each party inspected the property but could not agree on the amount of loss. Mr. Martin Woods was then selected by the two appraisers to act as umpire.
It is the conduct of the umpire, Woods, which was fatal to the ultimate arbitration award. According to the court, the insurance company’s adjuster spoke with Woods prior to Woods being selected as the umpire, and the fact that this conversation took place was not disclosed until the court case following the arbitration. In addition, Woods conducted his own investigation into the damages, which is not itself extraordinary. The fact that he did not disclose these actions, however, was unusual, as the party appraisers would usually be told by the neutral of any additional investigation undertaken.
The court did not find that Woods was necessarily biased as an umpire, and actually wrote in the decision that this was “a fairly close case.” Gordon at 12. The court did ultimately find, however, that the ex parte conversations were adequate to constitute misconduct such that the award must be set aside, despite the fact that the nature of the conversations themselves were not shown to be prejudicial.
The judge in Gordon cited the Connecticut arbitration statute, which closely follows the UAA as discussed in Chapter 7. Conn. Gen. Stat. § 52-418 (2004) (a) (3) orders a court to vacate an arbitration award “if the arbitrators have been guilty of misconduct in… any other action by which the rights of any party have been prejudiced.” It is this catch-all provision which allowed the judge to hand down the decision in favor of the plaintiff in this case.
In reading Gordon, is there enough evidence of “misconduct” on Woods' part to warrant the triggering of the catch-all provision and vacating the arbitration award? The provision does hold that there must be misconduct “by which the rights of any party have been prejudiced.” Were the Gordons’ rights shown to have been prejudiced here, or is it there mere possibility of such, upon which the court relies in its decision?