DEPARTMENT OF TRANSPORTATION v. WHITE OAK CORPORATION,

SC 19165

Judicial District of Hartford

 

      Sovereign Immunity; Whether Arbitration Panel Lacked Subject Matter Jurisdiction Over Contractor’s Liquidated Damages Claim Against the State.  The Department of Transportation (department) and White Oak Corporation (White Oak) entered into a public works construction contract.  The project was plagued by delays, and the department assigned the contract to another contractor.  White Oak subsequently filed a notice of claim and a demand for arbitration pursuant to General Statutes § 4-61, claiming that the department wrongfully terminated the contract.  Section 4-61 waives the state’s sovereign immunity with respect to certain claims arising out of public works projects.  The department brought an action to enjoin White Oak from prosecuting the arbitration matter, alleging that it failed to comply with the notice requirements of § 4-61.  The trial court denied the department’s claim, concluding that White Oak sufficiently informed the department of its wrongful termination claim.  An arbitration panel later determined that although White Oak failed to prove its claim of wrongful termination, it successfully established a separate claim for liquidated damages.  The department filed an application to vacate the arbitration award, arguing that the arbitration panel lacked subject matter jurisdiction over the liquidated damages claim due to White Oak’s failure to provide proper notice of that claim.  The trial court denied the application to vacate and confirmed the award.  On appeal, the department argued that the arbitration panel lacked subject matter jurisdiction to consider White Oak’s liquidated damages claim.  The Appellate Court (141 Conn. App. 738) agreed, finding that the panel’s determination of the scope of its own jurisdiction under § 4-61 directly contradicted a decision concerning a different construction project involving the same parties, Dept. of Transportation v. White Oak Corp., 287 Conn. 1, 7-8 n.8 (2008), in which the Supreme Court concluded that the question of whether an arbitration proceeding is barred by the doctrine of sovereign immunity pursuant to § 4-61 should be decided by a court, not an arbitration panel.  The Appellate Court also determined that the panel’s decision contradicted the judgment in the injunction action, in which the trial court concluded that the demand for arbitration contained a single claim for wrongful termination and that the arbitration could therefore proceed only on the claim that the contract was wrongfully terminated.  The Appellate Court also emphasized that in the injunction proceeding, White Oak had repeatedly asserted that its demand for arbitration only included a wrongful termination claim.  Based on the foregoing, the Appellate Court concluded that the panel lacked jurisdiction to award White Oak liquidated damages after it determined that no wrongful termination had occurred.  In this appeal, the Supreme Court will determine whether the Appellate Court properly reversed the trial court’s decision confirming the arbitration award.