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Nussbaum v. Kimberly Timbers9/14/2004
The plaintiffs, Martin Nussbaum and Kathleen Nussbaum, appeal from the judgment of the trial court denying their application for an order to stay arbitration proceedings instituted by the defendant contractor, Kimberly Timbers, Ltd. The defendant commenced arbitration following the plaintiffs' failure to pay the balance allegedly due on a contract between the parties for the construction of a new home in Greenwich. On appeal, the plaintiffs claim, first, that the issue of whether the contract is unenforceable because it is contrary to public policy is not an issue within the scope of the arbitration clause contained in the contract, to be decided initially by the arbitrator, and, second, that the trial court improperly determined that the contract and the arbitration clause are enforceable despite the defendant's failure to comply with all of the provisions of General Statutes § 20-417d pertaining to new home construction contractors. We conclude that the trial court had jurisdiction to determine whether the arbitration clause is enforceable, that the arbitration clause is, in fact, enforceable, and, therefore, that the issue of whether the contract is unenforceable because it violated public policy was one for the arbitrator to decide in the first instance.
The following facts and procedural history guide our resolution of this appeal. In 1999, Public Acts 1999, No. 99-246, otherwise known as the New Home Construction Contractors Act (act), was enacted to regulate the activities of new home construction contractors. The act became effective on October 1, 1999, and is codified at General Statutes § 20-417a et seq. Prior to 1999, there was no requirement in Connecticut that a new home construction contractor be licensed. The defendant, an experienced contractor who had constructed nearly forty homes in the Greenwich area, obtained a license pursuant to the newly adopted statutory scheme on April 14, 2000.
The plaintiffs and the defendant entered into negotiations to construct a new home before the defendant obtained a license. At some point in the negotiations, a contract dated March 10, 2000, and a contract rider dated May, 2000, were drafted, but the parties did not execute and sign the contract and rider until May, 2000. The contract included an arbitration provision.
After the contract was fully performed, a dispute arose as to the remaining amount of money that the plaintiffs owed to the defendant. In accordance with the contract's arbitration provision, the defendant filed a demand for arbitration with the American Arbitration Association seeking to recover the amount allegedly due, which consisted of the final 10 percent of the contract price. Thereafter, the plaintiffs filed an application for an order to stay the arbitration proceedings and an order to show cause on the ground that the defendant had failed to comply with General Statutes § 20-417d and that the contract, therefore, was void and unenforceable. The plaintiffs specifically alleged that the defendant had (1) held itself out as a new home contractor without a license while the parties were engaged in negotiations, and (2) failed to comply with the mandatory notice provisions of § 20-417d. In response, the defendant filed a motion to compel arbitration.
On January 13, 2003, the trial court held a hearing on the defendant's motion to compel and the plaintiffs' application to stay. Following the hearing, the court issued a ruling from the bench denying the plaintiffs' application to stay the arbitration proceedings and directed the parties to resume arbitration. Although the court found that the contract did not contain the notice provisions described in § 20-417d, it rejected the plaintiffs' c
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