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****************************************************** The ``officially released'' date that appears near the beginning of each opinion is the date the opinion will be published in the Connecticut Law Journal or the date it was released as a slip opinion. The operative date for the beginning of all time periods for filing postopinion motions and petitions for certification is the ``officially released'' date appearing in the opinion. In no event will any such motions be accepted before the ``officially released'' date. All opinions are subject to modification and technical correction prior to official publication in the Connecticut Reports and Connecticut Appellate Reports. In the event of discrepancies between the electronic version of an opinion and the print version appearing in the Connecticut Law Journal and subsequently in the Connecticut Reports or Connecticut Appellate Reports, the latest print version is to be considered authoritative. The syllabus and procedural history accompanying the opinion as it appears on the Commission on Official Legal Publications Electronic Bulletin Board Service and in the Connecticut Law Journal and bound volumes of official reports are copyrighted by the Secretary of the State, State of Connecticut, and may not be reproduced and distributed without the express written permission of the Commission on Official Legal Publications, Judicial Branch, State of Connecticut. ****************************************************** DONALD L. FRANCO v. EAST SHORE DEVELOPMENT, INC., ET AL. EAST SHORE DEVELOPMENT, INC. v. DONALD L. FRANCO (AC 19208) (AC 19305) (AC 19567)
Schaller, Hennessy and Zarella, Js. Argued April 5--officially released July 25, 2000 Counsel

Louis R. Pepe, with whom were Jennifer A. Osowiecki, and, on the brief, Joseph P. Yamin, for the appellants (defendants in the first case, plaintiff in the second case). Kenneth A. Votre, with whom, was Tara J. Galbo, for the appellee (plaintiff in the first case, defendant in the second case).
Opinion

SCHALLER, J. East Shore Development, Inc. (East Shore), a defendant in the first case and the plaintiff in the second case, and Peter Santino and Herman Dostie,

defendants in the first case, appeal from the trial court's judgments in favor of Donald L. Franco, the plaintiff in the first case and the defendant in the second case, granting his application to confirm an arbitration award in the first case and denying East Shore's application to vacate the arbitration award in the second case. East Shore, Santino and Dostie claim that the court improperly denied East Shore's application to vacate the arbitration award because the arbitrators, in determining the price of shares that Franco had the option to purchase pursuant to an agreement between the parties, improperly (1) used appraisal values as of a date different from that expressly required by the agreement and (2) failed to use alternate valuation procedures as expressly provided by the agreement. We affirm the judgments of the trial court. The following facts and procedural history are relevant to our disposition of this appeal. On September 24, 1992, Santino and Dostie collectively owned 100 percent of the stock in East Shore, the corporate owner of a certificate of need to construct a 120 bed nursing facility in the town of East Haven. On September 24, 1992, Santino and Dostie, individually and on behalf of East Shore, entered into a written option agreement (agreement) with Franco granting him the option to purchase 80 percent of the shares of the East Shore stock. Section 3 of the agreement provides in relevant part: ``The purchase price for the Optioned Shares shall be calculated at the time Franco exercises the Option to Purchase and shall be determined in accordance with the following formula: The Fair Market Value (as hereinafter defined) x 80% = The purchase price. . . . `Fair Market Value' shall mean: (i) the fair market value of the Facility and the land upon which it is located . . . as determined by the Appraiser (as hereinafter defined) in accordance with the guidelines for appraisals established by the Department of Housing and Urban Development (`HUD'); less (ii) . . . indebtedness . . . . `Appraiser' shall mean: (A) an appraiser mutually selected by Franco and the Shareholders; or (B) if Franco and the Shareholders do not agree . . . upon an appraiser . . . then Franco and the Shareholders shall each have the right to designate an appraiser . . . . If such two appraisers . . . shall have made their determinations and if the difference between the amounts so determined shall not exceed ten percent (10%) of the lesser of such amounts, then the appraisal shall be the average of the sum of the amounts so determined. If said difference is greater than ten percent (10%) of the lesser of such amounts, then such two appraisers shall . . . appoint a third (3rd) appraiser . . . but if such appraisers fail to do so, then either party may request the American Arbitration Association . . . to appoint [an] appraiser and both parties shall be bound by any appointment so made . . . . Any such third appraiser shall be instructed to determine the fair

market value of the Premises . . . . All three appraisals shall then be averaged and the result shall be deemed to be the `Appraisal.' ``Notwithstanding Section 20 of this Agreement, the foregoing provisions for determination of the Fair Market Value of the Premises by appraisal shall be specifically enforceable and any such determination hereunder shall be final and binding upon the parties. . . . ``The foregoing notwithstanding, if the Appraisal is less than $10,250,000, the Corporation shall have the right to either (i) offer to sell to Franco at the Purchase Price as determined herein using the Appraisal . . . or (ii) offer to sell to Franco at the Purchase Price as determined herein using the sum of $10,250,000 as the Appraisal in which instance Franco shall have the right to terminate the Option Agreement . . . .'' Section 20 of the agreement, entitled ``Arbitration,'' provides in relevant part: ``Any disagreement between the parties with respect to the interpretation or application of the obligations of the parties (including without limitation, the determination of the Purchase Price) shall be determined by arbitration . . . which arbitration shall be binding on the parties hereto. Such arbitration shall be conducted upon the request of either Franco or the Shareholders, before three (3) arbitrators designated by the American Arbitration Association and in accordance with the rules of such Association. The arbitrators designated and acting under this Agreement shall make their award in strict conformity with such rules.'' East Shore constructed the nursing facility and Franco thereafter gave notice of his intent to exercise his option on May 7, 1997. Because the parties could not agree on a single appraiser, they retained separate appraisers to determine the fair market value of the facility and the land. The two appraisers' valuations differed by more than 10 percent, and, thus, pursuant to the agreement, Franco demanded arbitration and sought specific performance. In March, 1998, the arbitrators issued an interim award appointing a third appraiser. The interim award further provided that all appraisers were to conduct appraisals using a valuation date of May 8, 1997, ``based upon the real estate value of the land as improved by the existing 120 bed facility, using the HUD guidelines introduced into evidence.'' The appraisers submitted their appraisals and the arbitrators issued their final award in August, 1998. The final award determined the purchase price to be $10,250,000, less certain corporate debts to be calculated on the closing date, and set a closing date of August 31, 1998. On August 17, 1998, Franco filed an application with the trial court to confirm the award pursuant to General Statutes

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