Firelock Inc. v. District Court in & for the 20th Judicial District of the State of Colorado

776 P.2d 1090, 13 Brief Times Rptr. 913, 58 U.S.L.W. 2074, 1989 Colo. LEXIS 261, 1989 WL 81049
CourtSupreme Court of Colorado
DecidedJuly 24, 1989
Docket88SA262
StatusPublished
Cited by59 cases

This text of 776 P.2d 1090 (Firelock Inc. v. District Court in & for the 20th Judicial District of the State of Colorado) is published on Counsel Stack Legal Research, covering Supreme Court of Colorado primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Firelock Inc. v. District Court in & for the 20th Judicial District of the State of Colorado, 776 P.2d 1090, 13 Brief Times Rptr. 913, 58 U.S.L.W. 2074, 1989 Colo. LEXIS 261, 1989 WL 81049 (Colo. 1989).

Opinions

ROVIRA, Justice.

This case requires us to determine whether the Colorado Mandatory Arbitration Act (Act), §§ 13-22-401 to 13-22-409, 6A C.R.S. (1987), violates the Colorado Constitution and the due process and equal protection clauses of the fourteenth amendment to the United States Constitution.

The Boulder County District Court held that the Act was constitutional and denied the petitioner’s request to refrain from assigning the case for arbitration. We issued a rule to show cause pursuant to C.A.R. 21, and we now discharge the rule.

I.

In 1988, McGhee Communications, Inc. (McGhee) commenced an action in the Boulder County District Court, which is located in the Twentieth Judicial District, against the petitioner, Firelock Incorporated (Fire-lock). McGhee claimed that it rendered advertising services to Firelock for which Firelock did not pay. In its complaint, McGhee certified that the probable recovery would not exceed $50,000, exclusive of interest and costs, and that the case was not exempt from mandatory arbitration. See C.R.C.P. 109.1.

Firelock filed an answer denying that the requested amount was owed, asserted several affirmative defenses, and demanded a jury trial. Firelock also filed a motion to refrain from assignment for mandatory arbitration under the Act. In support of its motion, Firelock claimed that the Act vio-láted article II, sections 3, 6, 23, and 25; article III; article VI, sections 1 and 9; and article XVIII, section 3, of the Colorado Constitution; the fourteenth amendment to the United States Constitution; and C.R. C.P. 38. McGhee resisted the motion and requested that the trial court find the Act constitutional and order arbitration to be commenced promptly.

The trial court denied the motion, and Firelock then filed a petition pursuant to C.A.R. 21. In its petition, Firelock requested that this court issue an order to show cause why the respondent district court should not be restrained from referring the case for arbitration. Firelock also requested that we make the rule absolute and declare the Act unconstitutional.

II.

The Act was approved on May 28, 1987, and became effective on January 1, 1988. The Act is scheduled to terminate on July 1, 1990. See § 13-22-402(1), 6A C.R.S. (1987). Beginning on January 1, 1989, and on each January 1 thereafter, the judicial department must submit to the General Assembly an annual report evaluating the mandatory arbitration pilot project. See § 13-22-408, 6A C.R.S. (1987).

The Act provides a framework of mandatory arbitration in eight pilot judicial districts of which the twentieth, where the Boulder District Court is located, is one. See § 13-22-402(1), 6A C.R.S. (1987). In these eight pilot districts, any civil action filed in any court of record except the county court and small claims court after January 1, 1988, and before July 1, 1990, [1093]*1093seeking money damages in the sum of $50,-000 or less, excluding costs and interest, is to be assigned to mandatory arbitration once the action is at issue. See § 13-22-402(2), 6A C.R.S. (1987).

Pursuant to the Act, the complaint and any applicable counterclaim or cross-claim governed by the Act must contain a certification that the probable amount of recovery exceeds or does not exceed $50,000, the limit imposed for mandatory arbitration. The Act establishes procedures for the selection and compensation of arbitrators, see § 13-22-403, and sets forth an outline of procedures for the arbitration hearing, see § 13-22-404. Arbitrators must be “qualified” and must file a consent to act as an arbitrator in the district in which the court is located, but an arbitrator need not be an attorney. See § 13-22-403(3). Section 13-22-405 provides for a trial de novo for any party dissatisfied with the decision of the arbitrators. The demand for a trial de novo must be filed with the court within thirty days after the filing of the arbitrators’ decision. See § 13-22-405(1). The Act also provides that, unless the trial de novo results in “an improvement of the position of the demanding party by more than ten percent,” the demanding party must pay the costs of the arbitration proceeding including arbitrator fees, but not exceeding $1,000. See § 13-22-405(3).

Section 13-22-406 provides that the supreme court, pursuant to its authority under article VI, section 21, of the Colorado Constitution, is empowered to promulgate rules governing the arbitration proceedings established in the Act. Pursuant to this authority, we adopted C.R.C.P. 109.1. C.R. C.P. 109.1 establishes the procedure for certification of the probable amount of recovery and the basis for any exemption from the Act, see C.R.C.P. 109.1(b), sets forth sanctions for failure to comply with the certification procedures, see C.R.C.P. 109.1(c), and provides for a detailed procedure for the selection of arbitrators, see C.R.C.P. 109.1(d). C.R.C.P. 109.1 also provides for the filing of a pre-arbitration “Disclosure Statement,” see C.R.C.P. 109.-1(h), sets forth limited rules for discovery, see C.R.C.P. 109.1(i), and establishes the details of the arbitration hearing and the powers of the arbitrators, see C.R.C.P. 109.1(1). C.R.C.P. 109.1(q) provides that if neither party demands a trial de novo within thirty days after the filing of the arbitrators’ award, then the award becomes final and the trial court must enter judgment on the award in accordance with C.R.C.P. 58(a).

III.

On appeal, Firelock presents several reasons for finding that the Act is unconstitutional. Firelock argues that the Act violates article III and article VI, sections 1 and 9, of the Colorado Constitution, which provide for the separation of powers; article II, sections 3 and 6, of the Colorado Constitution, which provide for the right of access to courts; article II, section 23, of the Colorado Constitution and C.R.C.P. 38, which provide for the right to trial by jury; article II, section 25, of the Colorado Constitution and the equal protection and due process clauses of the United States Constitution; and article XVIII, section 3, of the Colorado Constitution, which provides the General Assembly with authority over consensual arbitration. We will address each of these arguments in turn.

A.

Firelock asserts that the Act violates the separation of powers provision of the Colorado Constitution because section 13-22-402(2) requires “that the pilot district courts must refrain from exercising their general jurisdiction pending arbitration.” Firelock also asserts that the Act “is an unconstitutional delegation of judicial power to unqualified private citizens” because it allows arbitration to be “conducted by persons who are not only not members of the judiciary, but indeed who do not even have to be licensed attorneys.”

Article III of the Colorado Constitution provides:

The powers of the government of this state are divided into three distinct departments, — the legislative, executive and judicial; and no person or collection [1094]*1094of persons charged with the exercise of powers properly belonging to one of these departments shall exercise any power properly belonging to either of the others, except as in this constitution expressly directed or permitted.

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776 P.2d 1090, 13 Brief Times Rptr. 913, 58 U.S.L.W. 2074, 1989 Colo. LEXIS 261, 1989 WL 81049, Counsel Stack Legal Research, https://law.counselstack.com/opinion/firelock-inc-v-district-court-in-for-the-20th-judicial-district-of-the-colo-1989.