Court Opinion

ID: 9788925
Source: CourtListenerOpinion
Date Created: 2023-08-31 01:22:27.039692+00
Date Added: 2024-06-11T07:37:17.601353
License: Public Domain

JUSTICE HOBBS,
dissenting.
I agree with the majority that Colorado's Uniform Arbitration Act assigns to the district court the authority to determine whether an enforceable arbitration agreement ex*131ists in this case. Section 13-22-207(@2), C.R.S. (2006) provides that:
On the motion of a person alleging that an arbitration proceeding has been initiated or threatened but that there is mot an agreement to arbitrate, the court shall proceed summarily to decide the issue. If the court finds that there is an enforceable agreement to arbitrate, it shall order the parties to arbitrate.
(Emphasis added).
However, I respectfully dissent from the court's judgment because, pursuant to this statutory section, the district court found that there was an enforceable agreement to arbitrate and, consequently, ordered the parties to arbitration. The district court's order compelling arbitration of this subcontractor-prime contractor payment dispute states that the court:
FINDS that the arbitration provisions incorporated into the Subcontract Agreement between the Plaintiff and Defendant Cambria Corporation through the General Conditions of the prime construction project are enforceable and valid in accordance with the Uniform Arbitration Act, CRS. § 13-22-201, et seq. It is therefore,
ORDERED that the Motion to Compel Arbitration is GRANTED. It is further ORDERED that the Motion to Stay Further Proceedings in this action is GRANTED pending completion of arbitration between the Plaintiff J.A. Walker Company, Inc. and Defendant Cambria Corporation. As part of the stay of proceedings entered into this action, none of the remaining parties named in this action shall be required to respond or otherwise participate in this action until receiving further notice from this Court and/or the Plaintiff.
Whether an agreement to arbitrate exists is a matter of law that we review de novo. Lane v. Urgitus, 145 P.3d 672, 677 (Colo.2006) (citations omitted). Written contracts that are complete and free from ambiguity will be found to express the intention of the parties and will be enforced according to their plain language. USI Props. E., Inc. v. Simpson, 938 P.2d 168, 173 (Colo.1997) (citation omitted). Extraneous evidence is only admissible to prove intent where there is an ambiguity in the terms of the contract; absent such ambiguity, we will not look beyond the four corners of the agreement in order to determine the meaning intended by the parties. Id.
We defer to the trial court's findings of fact in a contract case, if the record supports them; and we review the trial court's conclusions of law de novo. Albright v. McDermond, 14 P.3d 318, 322 (Colo.2000) (citations omitted). When the issue of enforcement of a contractual provision requires factual findings, it is a mixed question of law and fact, which we may review de novo. Edge Telecom, Inc. v. Sterling Bank, 148 P.3d 1155, 1159 (Colo.App.2006) (citing In re Vought, 76 P.3d 906, 913 (Colo.2003); Pub. Highway Auth. v. 455 Co., 3 P.3d 18, 22-23 (Colo.2000).
In the context of construction projects, multiple parties are often involved. Prime contractors and subcontractors are presumed to be sophisticated business persons who can bargain with each other. In the construction business, the practice is to rely on a network of contracts to allocate rights, duties, risks, and remedies. Standard contracts are often used, and the parties are capable of customizing the contract to particular cireumstances when they may choose. Accordingly, we have held subcontractors to be bound to the claims procedures and remedies contained in the prime contract when the provisions of the applicable contracts are interrelated. See BRW, Inc. v. Dufficy & Sons, Inc., 99 P.3d 66 (Colo.2004).
The two applicable contracts in this case are plainly interrelated, according to their terms. The prime contract utilizes a standard industry form, AIA Document Allli-1997, that contains the following arbitration clause:
4.6 ARBITRATION
4.6.1. -Any Claim arising out of or related to the Contract, except Claims relating to aesthetic effect and exeept those waived as provided for in Sections 4.3.10, 9.104, and 9.10.5, shall, after decision by the Architect or 30 days after submission of the Claim to the Architect, be subject to arbitration. *132Prior to arbitration, the parties shall endeavor to resolve disputes by mediation in accordance with the provisions of Section 4.5.
4.6.2 Claims not resolved by mediation shall be decided by arbitration which, unless the parties mutually agree otherwise, shall be in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association currently in effect. The demand for arbitration shall be filed in writing with the other party to the Contract and with the American Arbitration Association, and a copy shall be filed with the Architect.
In turn, the executed subcontract provides that:
SECTION 14. CLAIMS RESOLUTION
Any claims resolution procedure incorporated in the prime contract shall be deemed incorporated in this Agreement, and shall apply to any disputes arising hereunder. In the absence of a claims resolution procedure in the prime contract, the parties hereto shall not be obligated to utilize arbitration or any other non-judicial method of dispute resolution. In any dispute resolution proceeding between the parties to this Subcontract, the prevailing party shall be entitled to recover its attorneys' fees.
This subcontract also provides that the executed written agreement between the parties supersedes any prior written or oral representations:
SECTION 4. ENTIRE AGREEMENT
This Agreement represents the entire agreement between Contractor and the Subcontractor and superseded any prior written or oral representations. Subcontractor and his subcontractors are bound by the prime contract and any contract documents incorporated therein insofar as they relate in any way, directly or indirectly, to the work covered by this Agreement.
This subcontract contains nine handwritten changes that are initialed by the parties, thereby demonstrating that conscientious bargaining between the parties produced the executed subcontract. None of these inter-lineations alter the provisions of the subcontract that incorporate the prime contract's mediation and arbitration provisions. Thus, it is clear on the face of the prime contract and the subcontract that an arbitration agreement exists in this case.
In an effort to avoid the arbitration agreement, the subcontractor submitted three affidavits and invoked two theories in the district court: that the executed subcontract was modified by an oral agreement, and that the arbitration provision was fraudulently induced. The district court made its decision based on the written contracts and an evaluation of these affidavits In my view, the district court's decision that an arbitration agreement exists in this case is fully supported by the written agreements.
Here, the executed subcontract provides that the written agreement is entire and negates any prior representation. Further, a sufficient allegation of fraudulent inducement would require the subcontractor to advance facts demonstrating each of the following elements: (1) the prime contractor's misrepresentation of a material fact, (2) the subcontractor's reliance on that misrepresentation, (8) the subcontractor's reliance on the misrepresentation was justifiable, and (4) justifiable reliance resulted in damage to the subcontractor. M.D.C./Wood, Inc. v. Mortimer, 866 P.2d 1380, 1382 (Colo.1994).
Reliance is not justifiable if another person of similar intelligence, education, or experience would not have relied on the alleged representation. Id. at 1888. Numerous hand written interlineations on the final executed subcontract attest the sophistication of the subcontractor in this case. Plainly, the subcontractor could have protected itself by writing in a specific provision that arbitration did not apply to the subcontract.
In addition, the artful phrasing of the affidavits and their lack of facts essential to a fraudulent inducement claim support the conclusion that the trial court did not find the affidavits to be credible or sufficient to properly raise a claim of fraudulent inducement. A trial court may determine the appropriate weight to accord attorney-drafted affidavits. Greenemeier v. Spencer, 719 P.2d 710, 717 (Colo.1986).
*133Here, the affidavits are short on facts demonstrating either reliance or reasonable reliance on an alleged conversation that an arbitration agreement did not exist in the prime contract. Significantly, the affidavit of James A. Walker, Sr., president of the subcontracting company who signed the final executed contract with the interlineated hand written changes, does not recite that (1) he asked for a copy of the prime contract before signing the subcontract that incorporated the arbitration agreement, or that (2) the parties orally modified the contract at the time of its signing, dispensing with the arbitration requirement otherwise incorporated by the subcontract on its face.
The allegation of an oral modification appears in two affidavits of subcontractor employees, Michael Gorham and Derrick Walker, who recite identically in their affidavits that:
The Subcontract Agreement was orally modified when executed on May 26, 2005 to require judicial resolution of disputes under Section 14, by the mutual agreement and understanding of Richard Ritter and Michael Gorham that the Prime Contract did not require arbitration.
Gorham's affidavit recites that he was told by an employee of the prime contractor, Rit-ter, sometime before execution of the subcontract, that the prime contract did not contain an arbitration provision. But neither Gor-ham's affidavit nor president James Walker's affidavit recites that Gorham ever related his alleged conversation with Ritter to Walker. Based upon the evidence, the district court could have concluded that any reasonable person in the subcontractor's business would ask to see the prime contract before executing the subcontract. Yet, Walker's affidavit does not state that he asked to see the prime contract in negotiating the final version of the subcontract and signing it.
In any event, as shown by the numerous interlineations made to the subcontract leading up to its execution, the subcontractor could have insisted on a provision negating arbitration had it wished to perch the entire proposition of obtaining the job on the principle of no arbitration, only litigation, in the event of a claims dispute. Walker's affidavit is totally silent on any facts demonstrating that he raised the arbitration issue at any time when acting on behalf of the subcontractor as its signatory on the contract.
We have held that "valid contractual duties can arise out of a network of agreements involving commercially sophisticated parties who are able to bargain for an allocation of risks, duties, and remedies." Lane, 145 P.3d at 681; BRW, 99 P.3d at 73. Such a cireum-stance was before the district court when it reviewed the evidence in this case.
In the event of a dispute between the parties over the existence of an agreement to arbitrate, section 183-22-207(1)(b) provides, "the court shall proceed summarily to decide the issue and order the parties to arbitrate unless it finds there is no enforceable agreement to arbitrate."
In this case, we have a trial court order containing a mixed finding of fact and conclusion of law. Where the evidence is documentary in nature, as it is here, we have authority to reach our own conclusion. Lane, 145 P.3d at 680 (citing Winslow Constr. Co. v. City & County of Denver, 960 P.2d 685, 692 (Colo.1998); M.D.C./Wood, Inc., 866 P.2d at 1382; Archangel Diamond Corp. v. Lukoil, 123 P.3d 1187, 1195 (Colo.2005)).
In my view, the district court conducted the required proceeding and found that an enforeeable arbitration agreement exists between the parties. In viewing all the evidence before it, including the prime contract, the subcontract, and the affidavits, the district court found that there was a valid agreement to arbitrate in this case. In my view, under the applicable law and facts of this case, our judgment should uphold the district court's order compelling arbitration.
Accordingly, I respectfully dissent.
I am authorized to state that CHIEF JUSTICE MULLARKEY joins in this dissent.