August 24, 2019

Colorado Court of Appeals: Participation in Mandatory Arbitration Affirmed Existence of Disputed Contract

The Colorado Court of Appeals issued its opinion in Harper Hofer & Associates, LLC v. Northwest Direct Marketing, Inc. on Thursday, November 6, 2014.

Contract—Arbitration—Waiver—Colorado Uniform Arbitration Act.

Defendants engaged plaintiff to provide expert reports and possible testimony in an unrelated legal matter. The parties exchanged various engagement letters, each containing an arbitration clause. Plaintiff later initiated arbitration proceedings against defendants for the fees and costs associated with the work it performed. Defendants, via e-mail to the arbitrator, requested that a court determine whether the parties had executed a valid contract (and, thereby, had agreed to arbitration). However, defendants also requested that the arbitrator make a determination that no contract between the parties existed and, after receiving an unfavorable ruling on that issue, participated in the arbitration proceedings. Ultimately, the arbitrator found in favor of plaintiff and against defendants, and ordered defendants to pay plaintiff $27,982.24. The district court granted plaintiff’s motion to convert the arbitration award to a civil judgment and denied defendants’ motion to vacate.

On appeal, defendants argued that the trial court erred when it converted the arbitration award to a civil judgment over defendants’ objections at both the arbitration and district court stages based on the nonexistence of a valid contract. Under the Colorado Uniform Arbitration Act, the court, not the arbiter, decides whether a controversy is subject to an agreement to arbitrate. However, defendants waived their objection to the validity of the agreement containing the arbitration clause by actively participating in the arbitration proceeding and not timely seeking judicial review. The judgment was affirmed and the case was remanded to the district court for determination of reasonable attorney fees.

Summary and full case available here, courtesy of  The Colorado Lawyer.

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