Court Opinion

ID: 4159759
Source: CourtListenerOpinion
Date Created: 2017-04-12 16:07:04.489819+00
Date Added: 2024-06-11T14:23:31.221912
License: Public Domain

COLORADO COURT OF APPEALS                                        2017COA45

Court of Appeals No. 16CA0029
El Paso County District Court No. 13DR30542
Honorable Gilbert A. Martinez, Judge

In re the Marriage of

Michelle J. Roth,

Appellant,

and

Robert M. Roth,

Appellee.

                    JUDGMENT VACATED, ORDER REVERSED,
                    AND CASE REMANDED WITH DIRECTIONS

                                   Division I
                         Opinion by JUDGE TAUBMAN
                        Graham and Navarro, JJ., concur

                           Announced April 6, 2017

Davide C. Migliaccio, Attorney at Law, Davide C. Migliaccio, Colorado Springs,
Colorado, for Appellant

Stinar, Zendejas & Gaithe, LLC, M. James Zendejas, Colorado Springs,
Colorado, for Appellee
¶1      This dissolution of marriage case between Michelle J. Roth

 (wife) and Robert M. Roth (husband) presents a novel issue

 involving the interplay of subject matter jurisdiction between the

 district court and an arbitrator when the arbitrator dies while a

 request to modify or correct an arbitration award is pending before

 him.

¶2      The appeal arises from the district court’s judgment

 confirming an arbitration award dividing the parties’ marital estate.

 Wife contends that the district court lacked subject matter

 jurisdiction to confirm the award when both parties had timely

 requested the arbitrator to modify or correct it but the arbitrator

 died before he could rule on those requests. She argues that, at

 that point, the court only had jurisdiction to appoint a replacement

 arbitrator to complete the arbitration proceedings. Husband

 responds that the court properly confirmed the award because wife

 had not alleged proper grounds under the Colorado Uniform

 Arbitration Act (CUAA), §§ 13-22-201 to -230, C.R.S. 2016, to

 modify or correct it.

¶3      We conclude that the district court exceeded its jurisdiction in

 confirming the award and that it erred in denying wife’s motion to

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 appoint a replacement arbitrator. Thus, we vacate the judgment

 confirming the award, reverse the order denying wife’s motion, and

 remand the case to the district court to appoint a replacement

 arbitrator to complete the arbitration proceedings.

                             I. Background

¶4    After husband petitioned in 2013 to end the parties’ three-year

 marriage, the parties agreed to arbitrate the permanent orders

 issues and requested that the district court transfer jurisdiction of

 the case to their chosen arbitrator, a retired district court judge.

 The court granted their request.

¶5    The parties’ arbitration agreement provided in relevant part

 that all dissolution issues would be submitted to arbitration; the

 CUAA would govern the proceedings; after issuing an award, the

 arbitrator would reserve jurisdiction for twenty days to enable the

 parties to seek clarification, correction, or modification of the

 award; and if jurisdiction was reserved on an issue, the arbitrator

 would hear it unless he was unavailable.

¶6    Arbitration proceedings were conducted pursuant to the

 parties’ agreement, and the arbitrator issued an award on March

 10, 2015. In relevant part, the award divided the parties’ property

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 by giving seventy-five percent to husband and twenty-five percent to

 wife based on the short duration of the marriage and husband’s

 greater contributions to acquiring the property. It further provided

 that the resulting equalization payment due from husband to wife

 would be paid in quarterly installments, based on one percent of

 the gross profits of husband’s business, plus statutory interest.

 The award also provided, consistent with the parties’ arbitration

 agreement and the CUAA, that the parties would have twenty days

 to request a correction, modification, or clarification of the award

 from the arbitrator. See § 13-22-220(1)-(2), C.R.S. 2016.

¶7    Both parties submitted timely requests to the arbitrator for

 modification and clarification of the award. Wife raised multiple

 issues in her request, including the equity of the seventy-five

 percent/twenty-five percent marital estate division, the valuation of

 husband’s business interests, the distribution of the parties’ tax

 refund, and the equalization payment terms. Husband requested

 that the arbitrator clarify the award concerning the tax refund and

 tax debt, reconsider the valuation finding for one of his businesses,

 and reduce the equalization payments to wife accordingly.

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¶8    On April 12, 2015, while the parties were in the process of

 submitting their responses and replies to the arbitrator concerning

 their requests for modification or clarification, the arbitrator died.

 Five days later, wife moved in district court to appoint a

 replacement arbitrator under section 13-22-215(5), C.R.S. 2016,

 which provides that “[i]f an arbitrator ceases or is unable to act

 during the arbitration proceeding, a replacement arbitrator shall be

 appointed . . . to continue the proceeding and to resolve the

 controversy.” A week later, husband moved that the district court

 confirm the arbitrator’s award under section 13-22-222, C.R.S.

 2016. A status conference was set to address the parties’ motions.

¶9    At the conference, wife argued that the arbitrator had greater

 power under the CUAA to modify the award than the court did, and

 therefore, the court could not confirm the award when the parties’

 requests to the arbitrator to modify and clarify it were still pending,

 but must instead appoint a replacement arbitrator to consider those

 requests. Husband argued that under the CUAA, even the

 arbitrator cannot alter the merits of the award, and therefore, the

 parties’ arbitrator, even if still alive, would have lacked authority to

 modify the award on the grounds wife alleged. Wife responded that

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  a replacement arbitrator, and not the court, must determine which

  issues fall within the statutory modification criteria and which do

  not. She further argued that she was confident the arbitrator

  would have corrected the award concerning one issue she raised —

  that under the equalization payment terms, more in interest will

  accrue on the equalization amount than is paid out to her

  quarterly.

¶ 10   The district court found that wife was essentially seeking to

  relitigate the permanent orders and it denied her motion for a

  replacement arbitrator and granted husband’s motion to confirm

  the award. It then entered a dissolution decree incorporating the

  award.

               II. Husband’s Request to Dismiss the Appeal

¶ 11   Initially, we deny husband’s request to dismiss the appeal as

  untimely under C.A.R. 4. Wife’s notice of appeal was filed on the

  forty-ninth day after the order denying her motion for C.R.C.P. 59

  relief. Accordingly, the appeal is timely under C.A.R. 4(a), which

  requires that a notice of appeal be filed within forty-nine days of

  such an order.

                     III. Subject Matter Jurisdiction

                                     5
¶ 12   Wife contends that under the CUAA, the district court lacked

  subject matter jurisdiction to confirm the arbitration award while

  the parties’ requests to modify or correct it were pending before the

  arbitrator. She argues that when the arbitrator died before ruling

  on the parties’ requests, the court had subject matter jurisdiction

  only to appoint a replacement arbitrator. We agree and therefore

  vacate the district court’s judgment confirming the award.

                             A. Legal Standards

¶ 13   We review de novo the legal issue of whether the district court

  has subject matter jurisdiction. Egelhoff v. Taylor, 2013 COA 137,

  ¶ 23, 312 P.3d 270, 274.

¶ 14   “A court has subject matter jurisdiction where it has been

  empowered to entertain the type of case before it by the sovereign

  from which the court derives its authority.” Wood v. People, 255
P.3d 1136, 1140 (Colo. 2011); see In re Marriage of Stroud, 631 P.2d
168, 170-71 (Colo. 1981). Whether a court has subject matter

  jurisdiction is determined by the nature of the claim and the relief

  sought. Stroud, 631 P.2d at 171. Statutory limits on a court’s

  subject matter jurisdiction must be explicit. Wood, 255 P.3d at

                                    6
  1140. A judgment rendered without subject matter jurisdiction is

  void. Stroud, 631 P.2d at 170.

¶ 15   In construing the CUAA, “we undertake de novo review and

  look first to the plain language, always striving to give effect to the

  General Assembly’s intent and chosen legislative scheme.” Sooper

  Credit Union v. Sholar Grp. Architects, P.C., 113 P.3d 768, 771 (Colo.

  2005).

           1. The District Court’s Subject Matter Jurisdiction

¶ 16   “In Colorado, arbitration is a favored method of dispute

  resolution.” Lane v. Urgitus, 145 P.3d 672, 678 (Colo. 2006). Thus,

  under the CUAA, a valid and enforceable arbitration agreement

  “divests” the district court of jurisdiction over all questions

  submitted to arbitration, “pending the conclusion of arbitration.”

  Id. at 679; see Braata, Inc. v. Oneida Cold Storage Co., 251 P.3d
584, 588 (Colo. App. 2010); see also § 13-22-206(1), C.R.S. 2016

  (agreement to arbitrate is “valid, enforceable, and irrevocable”).

  Accordingly, if an enforceable agreement requires arbitration of a

  particular claim, “a court lacks subject matter jurisdiction to

  consider that issue.” McCord v. Affinity Ins. Grp., Inc., 13 P.3d
1224, 1231 (Colo. App. 2000); see Guthrie v. Barda, 188 Colo. 124,

                                      7
  126-27, 533 P.2d 487, 488 (1975) (upholding district court order

  dismissing action for lack of subject matter jurisdiction based on

  valid agreement to arbitrate).

¶ 17   Under section 13-22-222(1), when a motion to confirm an

  arbitration award is made to the district court, “the court shall

  issue a confirming order unless the award is modified or corrected

  [by the arbitrator] pursuant to section 13-22-220,” or by the court

  pursuant to section 13-22-224, C.R.S. 2016, or the award is

  vacated by the court pursuant to section 13-22-223, C.R.S. 2016.

  See Applehans v. Farmers Ins. Exch., 68 P.3d 594, 599 (Colo. App.

  2003) (concluding that district court correctly denied motion to

  confirm arbitration award when party’s application to modify or

  correct it was pending with arbitrator).

             2. The Arbitrator’s Subject Matter Jurisdiction

¶ 18   Under the common law doctrine of functus officio, the

  arbitration proceedings concluded and the arbitrator lost subject

  matter jurisdiction after delivering an award to the parties. Osborn

  v. Packard, 117 P.3d 77, 80 (Colo. App. 2004). The CUAA was

  intended to alter that doctrine, however, by giving arbitrators some

  specified power to modify or correct awards even after they have

                                    8
  been delivered to the parties. Id.; Applehans, 68 P.3d at 597; 5A

  Stephen A. Hess, Colorado Practice Series, Handbook on Civil

  Litigation § 1:17 (2016 ed.); compare § 13-22-220 (statute governing

  modification of arbitration awards), and Sooper Credit Union, 113
P.3d at 769, 772-73 (permitting arbitrator to modify or correct

  confusing awards for clarity), with 9 U.S.C. §§ 9-11 (2012) (federal

  arbitration act (FAA) provisions governing modification of

  arbitration awards), and Fradella v. Petricca, 183 F.3d 17, 20 n.4

  (1st Cir. 1999) (noting that FAA does not give arbitrators power to

  modify or correct awards after they are delivered).

¶ 19   Under the CUAA, on a party’s motion to the arbitrator within

  twenty days of notice of the award, the arbitrator may modify or

  correct an award (1) if there is an evident mathematical

  miscalculation or evident mistake in the description of a person,

  thing, or property referred to in the award; (2) if the award is

  imperfect in a matter of form not affecting the merits of the

  decision; (3) if the arbitrator did not issue a final and definite award

  on a claim submitted; or (4) to clarify the award. § 13-22-220(1);

  see § 13-22-224(1)(a), (1)(c); see also Rocha v. Fin. Indem. Corp., 155
P.3d 602, 604 (Colo. App. 2006).

                                     9
                               B. Analysis

¶ 20   Under the terms of the parties’ arbitration agreement and

  pursuant to the CUAA, subject matter jurisdiction over the

  permanent orders issues was transferred to the arbitrator, thereby

  divesting the court of its jurisdiction to determine such issues. See

  Lane, 145 P.3d at 679; Braata, 251 P.3d at 588; see also § 13-22-

  206(1). Subject matter jurisdiction then remained with the

  arbitrator after the award was issued, again under both the CUAA

  and the parties’ agreement, because the parties timely requested

  that the arbitrator modify or correct the award. See § 13-22-220(1)-

  (2); see also Osborn, 117 P.3d at 80 (arbitrator did not exceed his

  jurisdiction by issuing a clarifying order on party’s timely request

  after the award was issued). Under these circumstances, the

  arbitration proceedings had not yet concluded and subject matter

  jurisdiction to confirm the award was not yet in the district court

  when the arbitrator died. See Lane, 145 P.3d at 679 (Courts are

  divested of jurisdiction “pending the conclusion of arbitration.”); see

  also § 13-22-222(1) (court shall confirm award unless it is modified

  or corrected by the arbitrator under section 13-22-220).

                                    10
¶ 21   Husband’s contention — asserted for the first time at oral

  argument — that the arbitrator had lost jurisdiction because he did

  not act on the parties’ requests to modify or correct the award

  within the twenty-day period provided in section 13-22-220(2) is

  unpersuasive. Husband provided no authority at oral argument to

  support this contention. Moreover, it conflicts with the plain

  language of the parties’ agreement and the CUAA. The agreement

  provides that the arbitrator reserves jurisdiction “[p]ursuant to

  statute” for twenty days “for the parties to seek clarification,

  correction, or modification of the award.” The CUAA provides that

  “[a] motion” to modify an award “shall be made . . . within twenty

  days after the movant receives notice of the award” and it permits

  an arbitrator to modify or clarify an award on such a motion. § 13-

  22-220(1), (2). Husband’s position conflicts with subsection (3) of

  section 13-22-220, which gives a party ten days to object to another

  party’s motion to modify or correct an award. Thus, under the

  statute, the arbitrator clearly retains authority to rule on a timely

  motion to modify even after the original twenty days have expired.

¶ 22   Husband’s argument that any error by the district court in

  confirming the award was harmless because wife did not raise

                                     11
  proper grounds under the CUAA for the arbitrator to have modified

  or corrected it is also unpersuasive. The parties contracted for

  arbitration, including for the arbitrator to determine any

  modification or clarification request made to him within twenty days

  of the award. Accordingly, only the arbitrator, and not the court,

  had subject matter jurisdiction to resolve such requests, including

  determining, in the first instance, whether proper grounds were

  alleged for modification or correction under section 13-22-220(1).

¶ 23   That the CUAA gives the arbitrator greater power to alter an

  award after it has been issued than it gives to the court supports

  our conclusion. Under the CUAA, an arbitrator has the power to

  clarify an award, even when the award is not patently ambiguous,

  but the court does not have that power. See Sooper Credit Union,
113 P.3d at 772; 5A Hess, Handbook on Civil Litigation § 1:17;

  compare § 13-22-220(1)(c) (giving arbitrator power to modify or

  correct award in order to clarify it), with § 13-22-224(1) (giving court

  power to modify or correct award only when there is an “evident”

  miscalculation or mistake in the award or it is imperfect in a matter

  of form).

                                    12
¶ 24   Additionally, a motion to an arbitrator to modify or correct an

  award tolls the time within which to move that the court do so

  under section 13-22-224(1) or to move that the court vacate the

  award under section 13-22-223. See Swan v. Am. Family Mut. Ins.

  Co., 8 P.3d 546, 547-48 (Colo. App. 2000); but cf. Am. Numismatic

  Ass’n v. Cipoletti, 254 P.3d 1169, 1170-71 (Colo. App. 2011)

  (concluding that arbitration award dismissing case was final and

  time to move in district court to challenge it began running even

  though collateral request for attorney fees was still pending before

  arbitrator). As the Swan division noted, requiring a party seeking

  to modify or vacate an award to file duplicate motions with both the

  arbitrator and the court would be inconsistent with the legislative

  intent to make arbitration effective and efficient and would not

  promote judicial economy because it could lead to the anomalous

  result of an arbitrator modifying an award at the same time the

  court is vacating it. 8 P.3d at 548; cf. Fradella, 183 F.3d at 19-20 &

  n.4 (request to an arbitrator for modification or clarification does

  not toll time to file a motion in court under the FAA, which contains

  no provision allowing for such a request to an arbitrator).

                                    13
¶ 25   Accordingly, under CUAA’s framework, once subject matter

  jurisdiction has been transferred to an arbitrator, it is not then

  transferred back to the court to act on the award — whether to

  modify, vacate, or confirm it — until the arbitration proceedings are

  concluded, meaning that the arbitrator has resolved any timely

  section 13-22-220(1) requests to modify or correct the award. See

  § 13-22-222(1) (court shall confirm award unless it is modified or

  corrected by the arbitrator pursuant to section 13-22-220);

  Applehans, 68 P.3d at 599 (court properly refused to confirm award

  when application was pending before arbitrator to modify or correct

  it); see also Lane, 145 P.3d at 679 (court is divested of jurisdiction

  pending conclusion of arbitration).

¶ 26   We note that, as discussed at oral argument, the parties’

  agreement states that if jurisdiction is reserved by the arbitrator on

  any issue after the award is issued, the arbitrator will hear the

  issue “unless he is unavailable.” Although this provision of the

  agreement does not specify what happens if the arbitrator is

  unavailable, the agreement provides that the CUAA governs the

  proceedings. And section 13-22-215(5) requires the appointment of

  a replacement arbitrator when an arbitrator becomes unable to act

                                    14
  during the arbitration proceedings. Thus, when the arbitrator died

  before he could rule on the parties’ timely requests to modify or

  correct the award, the district court had subject matter jurisdiction

  under the CUAA only to appoint a replacement arbitrator to

  complete the arbitration proceedings. See § 13-22-215(5); see also

  Lane, 145 P.3d at 679.

¶ 27   That is not to say, however, that such a replacement arbitrator

  may go beyond the authority provided under section 13-22-220(1)

  in ruling on the parties’ pending modification requests. See Sooper

  Credit Union, 113 P.3d at 771 (“Once an arbitrator issues and

  delivers an award to the parties, modification or correction is

  permitted only under the ‘narrow circumstances’ provided by

  statute.” (quoting Applehans, 68 P.3d at 597)). Rather, the

  replacement arbitrator may act only pursuant to the statute and

  “may not redetermine the merits” of the award. Id. at 769; cf.

  Rocha, 155 P.3d at 604-05 (reversing order denying motion to

  vacate modified arbitration award that had changed the substance

  of the original award). However, the arbitrator, and not the court,

  must first rule on the parties’ pending requests for modification or

  correction under section 13-22-220. Only then will the arbitration

                                    15
  proceedings be concluded and subject matter jurisdiction returned

  to the district court for further proceedings to confirm the final

  award under section 13-22-222, to vacate it under section 13-22-

  223, or to modify it under section 13-22-224.

¶ 28   The Applehans case is illustrative. There, an arbitrator

  entered an award for the plaintiff for damages and, within ten days,

  the defendant insurance company filed a request for modification

  with the arbitrator to reduce the award to the amount of its policy

  limits. 68 P.3d at 596. Before the arbitrator could rule on that

  modification request, however, the plaintiff moved that the district

  court confirm the original award. Id. The court refused to do so

  because of the pending modification request before the arbitrator.

  Id. The arbitrator then held a hearing and entered a modified

  award for the policy limit amount. Id. The plaintiff then moved for

  the court to vacate, modify, or correct the modified award, and the

  court denied that motion. Id.

¶ 29   On appeal, a division of this court reversed the district court’s

  order refusing to vacate the modified award, holding that the

  arbitrator had exceeded his authority under the CUAA by

  substantively changing the amount of the plaintiff’s recovery. Id. at

                                    16
  596-98. The division affirmed the court’s denial of the plaintiff’s

  motion to confirm the original award, however, finding that the

  court acted properly because the defendant’s request to the

  arbitrator to modify or correct the award was still pending when the

  court ruled. Id. at 599, 601.

¶ 30   In contrast, here, the district court erred and, we conclude,

  exceeded its subject matter jurisdiction by confirming the

  arbitration award while the parties’ timely requests to the arbitrator

  to modify or correct it were still pending. Under the CUAA and

  consistent with the parties’ arbitration agreement, the court should

  have instead appointed a replacement arbitrator to consider the

  pending requests. See § 13-22-215(5).

¶ 31   Last, husband’s argument that the district court had subject

  matter jurisdiction to confirm the award under section 13-22-220(4)

  is unpersuasive. This subsection permits a court in which a motion

  to confirm, modify, correct, or vacate an award is pending to submit

  the claim at issue to the arbitrator to resolve. See § 13-22-220(4).

  That is not what happened here. The court did not return an issue

  that was properly before it pursuant to one of these types of

  motions to the arbitrator to decide. Rather, it decided an issue that

                                    17
  was properly before the arbitrator under section 13-22-220(1), but

  that the arbitrator had not yet resolved. In doing so, it exceeded its

  subject matter jurisdiction under the CUAA.

                       IV. Replacement Arbitrator

¶ 32   Wife further contends that the district court erred by denying

  her motion to appoint a replacement arbitrator. We again agree and

  we reverse the court’s order and remand the case to appoint a

  replacement arbitrator to complete the arbitration proceedings.

¶ 33   The language of the CUAA is mandatory on this issue: if an

  arbitrator ceases or is unable to act, a replacement arbitrator “shall

  be appointed” to continue the proceedings and resolve the

  controversy. § 13-22-215(5); see also § 13-22-211(1), C.R.S. 2016.

  The word “shall” in a statute is presumed mandatory. People v.

  Bland, 884 P.2d 312, 316 (Colo. 1994); In re Marriage of Slowinski,

  199 P.3d 48, 52 (Colo. App. 2008). And, because under the CUAA,

  arbitration agreements are valid, enforceable, and irrevocable, see

  § 13-22-206(1), a mandatory meaning of “shall” applies here

  consistent with the overall statutory scheme and with the parties’

  agreement to submit all issues, including any timely modification or

  clarification requests, to the arbitrator. Cf. Slowinski, 199 P.3d at

                                    18
  52 (construing term “shall” in statute providing for emergency

  restrictions of parenting time as mandatory consistent with overall

  purpose of statute).

¶ 34   Accordingly, because it is undisputed that the parties’ chosen

  arbitrator could not act as of April 12, 2015, the district court was

  required to appoint a replacement arbitrator to continue and

  complete the arbitration proceedings.

           V. Husband’s Request for Appellate Attorney Fees

¶ 35   In light of the disposition, and because husband fails to state

  a legal basis for recovery of appellate attorney fees, we deny the

  request. See C.A.R. 39.1 (party requesting appellate fees must

  explain legal and factual basis for such an award).

                             VI. Conclusion

¶ 36   The district court’s judgment confirming the March 10, 2015,

  arbitration award is vacated, its order denying wife’s motion to

  appoint a replacement arbitrator is reversed, and the case is

  remanded to appoint a replacement arbitrator to complete the

  arbitration proceedings.

       JUDGE GRAHAM and JUDGE NAVARRO concur.

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