Construction Law in Colorado

The finality of arbitration cuts both ways

One reason that parties include arbitration provisions in their contracts is the belief that arbitration is less expensive than litigation.  This is only partially true.  Discovery is typically the most expensive part of any lawuit, and discovery has become common in arbitration.  In fact, under the Colorado Uniform Arbitration Act, arbitrators have authority to permit discovery.  C.R.S. § 13-22-217(3).  Additionally, everyone's tax dollars have already paid for our Judges, whereas the parties to an arbitration have to pay for the arbitration panel's time.

But arbitration can theoretically be less expensive in that an arbitraton panel's decision is almost bullet proof.  And because it is so difficult to challenge an arbitration decision, there is less liklihood of an appeal following arbitration.  This can cut both ways.

Arbitrator Decides Whether Conditions Precedent To Arbitrating Have Been Satisfied

BRM Construction v. Marais Gaylord (Colo. App. 2007)

The Colorado Court of Appeals held that the arbitrator gets to decide whether or not the claimant has satisfied the required conditions precedent to initiating arbitration. The defendant argued that the plaintiff was required to first submit the claim to the architect for consideration, and that plaintiff was untimely in demanding arbitration. The district court and the Court of Appeals both decided that these issues were for the arbitrator to resolve, and the arbitrator's decision on the issues was not subject to review. "[A]n arbitrator’s resolution of [issues concerning compliance with procedural conditions precedent to arbitration], even if erroneous, is not a ground for vacating or refusing to confirm the award."

Read slip opinion

No More Intertwining Doctrine In Colorado

Ingold v. AIMCO (Colo. 2007)

The Colorado Supreme Court does away with the intertwining doctrine. Arbitrable claims go forward in arbitration, and the trial court can consider whether or not to stay the non-arbitrable claims.

Read slip opinion

Arbitration Clause In Expired Contract Still Enforceable

Shams v. Howard (Colo. App. 2007)

The Court of Appeals held that an arbitration clause was still enforceable even though the contract that it was contained in had expired. Also, although the claims brought sounded only in tort (such as negligent construction of a home), the arbitration clause in the expired contract still applied.

An Agreement To Arbitrate Need Not Be Explicit

Lane v. Urgitus (Colo. 2006)

The Colorado Supreme Court held that an agreement to arbitrate can be implied. The dispute concerned who, among various brokers, was entitled to referral fees. The brokers were all members of a trade association, a condition of which was that the members agree to arbitrate disputes with other members. The brokers later entered into an agreement among themselves concerning referral fees. This later agreement did not contain an arbitration provision. A dispute arose concerning referral fees. The Court held that the duty to arbitrate disputes in the trade association membership agreement was an implied duty in the brokers' agreement amongst themselves.