Harper Hofer & Assocs., LLC v. Nw. Direct Mktg., Inc.

412 P.3d 659
CourtColorado Court of Appeals
DecidedNovember 6, 2014
DocketCourt of Appeals No. 13CA1844
StatusPublished
Cited by1 cases

This text of 412 P.3d 659 (Harper Hofer & Assocs., LLC v. Nw. Direct Mktg., Inc.) is published on Counsel Stack Legal Research, covering Colorado Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Harper Hofer & Assocs., LLC v. Nw. Direct Mktg., Inc., 412 P.3d 659 (Colo. Ct. App. 2014).

Opinion

Opinion by JUDGE GRAHAM

¶ 1 As a matter of first impression in Colorado, we must determine whether participation in an arbitration waives a party's *661objection to the existence of a contract that contains an arbitration clause. We conclude that it does. Defendants, Northwest Direct Marketing, Inc., Northwest Direct Marketing of Oregon, Inc., and Northwest Direct Teleservices, Inc., appeal the trial court's judgment in favor of plaintiff, Harper Hofer & Associates, LLC, affirming an arbitration award in favor of plaintiff and assessing additional collection costs and attorney fees. We conclude that under the Colorado Uniform Arbitration Act (CUAA), sections 13-22-201 to - 230, C.R.S. 2014, 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. Accordingly, we affirm and remand with directions.

I. Background

¶ 2 Defendants engaged plaintiff to provide expert reports and possible testimony in an unrelated legal matter. The parties exchanged various engagement letters which all contained the following arbitration clause:

Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by binding arbitration, in Denver, Colorado, in accordance with the Commercial Arbitration Rules of the American Arbitration Association in place at the time of the filing of any demand (Arbitration Proceeding). Any such demand will be sent to the address (mail or email) used for billing, and the demand will be deemed to be served upon attempted delivery to that address. Judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction hereof. It is agreed that, in the event of arbitration, the parties will keep the proceedings and results confidential, except as required by law or reasonable business necessity.
In the event that either party institutes legal proceedings (not including Arbitration Proceeding) with respect to this Agreement, the prevailing party shall be entitled to recover, in addition to any other relief to which it is entitled, its costs and expenses incurred in connection with such legal proceedings, including reasonable attorney's fees.

While the arbitration clause was never objected to by either party, there were numerous revisions made between the parties regarding, among other things, the maximum cost of services and the retainer to be provided plaintiff. One engagement letter sent by plaintiff and dated August 3, 2011, was signed by defendants' representative on August 31, 2011.1 This letter contains no clear alterations.

¶ 3 Another engagement letter sent by plaintiff and dated August 3, 2011, was signed by defendants' representative on September 29, 2011, and contained alterations to the August 3 letter. In an email dated October 4, 2011, plaintiff objected to defendants' revisions to the engagement letter. The record contains no further communications between the parties regarding the completion of the engagement.

¶ 4 In 2012, plaintiff initiated arbitration proceedings against defendants for the fees and costs associated with the work it performed in 2011. Defendants, via e-mail to the arbitrator, requested that a court determine whether the parties ever executed a valid contract (and, thereby, agreed to arbitration).2 However, defendants also requested the arbitrator make a determination that no contract between the parties existed and, after receiving an unfavorable ruling on that *662issue, participated in the arbitration proceedings. Defendants never sought independent judicial relief pursuant to C.R.C.P. 57 on the question of whether the parties had a valid agreement to arbitrate. Ultimately, the arbitrator found in favor of plaintiff and against defendants, and ordered defendants to pay plaintiff $27,982.24.

¶ 5 On April 5, 2013, plaintiff filed a petition to convert the arbitration award to a civil judgment in Denver County District Court. In its petition, plaintiff sought the original $27,982.24 award plus costs of collection, fees, and interest for a total of $42,830.03. Defendants responded and requested that the district court vacate the arbitration award.

¶ 6 In seeking to vacate the arbitration award, defendants raised three arguments: (1) only the district court could determine the existence of a contract between the parties and, therefore, the arbitrator's determination that the parties executed a valid contract containing an arbitration clause was in error; (2) the arbitrator exceeded his powers by awarding plaintiff's attorney fees when the arbitration provision expressly excluded such fees; and (3) the arbitrator refused to consider evidence and counterclaims material to the controversy when he denied defendants the opportunity to examine two witnesses and struck their counterclaims as untimely.

¶ 7 The district court granted plaintiff's motion to convert the arbitration award and denied defendants' motion to vacate. The court concluded that the doctrine of separateness prevented it from delving into the existence of a contract because a court is limited to determining whether an arbitration provision itself is enforceable, and questions of the enforceability of an entire contract are left to arbitrators. See Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967). The district court ruled: "In short, in determining whether the parties have agreed to arbitrate, the Court is limited to an examination of the arbitration provision within the agreement. Considerations regarding the agreement (or lack thereof) as a whole are impermissible...." The district court reasoned that "the arbitration provision is enforceable" because neither party objected to it. The court also denied defendants' remaining claims as outside the review provisions of the CUAA. See § 13-22-223(1), C.R.S. 2014 (listing the reasons a district court shall vacate an arbitration award).

¶ 8 The district court held a hearing on the collection costs and fees requested by plaintiff and ultimately affirmed the award for a total of $39,010.37.

II. Colorado Uniform Arbitration Act

¶ 9 On appeal, defendants raise a single contention: "Did the trial court err when it converted an arbitration award to a civil judgment over [defendants'] objections at both the arbitration and district court stages, when [defendants] never accepted an offer to arbitrate disputes?" In response, plaintiff argues that defendants waived their objection to the arbitrator's authority to determine the existence of a valid contract when they consented to the arbitrator making a determination as to arbitrability. For the reasons explained below, we agree in principle with plaintiff.

A. Standard of Review

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Cite This Page — Counsel Stack

Bluebook (online)
412 P.3d 659, Counsel Stack Legal Research, https://law.counselstack.com/opinion/harper-hofer-assocs-llc-v-nw-direct-mktg-inc-coloctapp-2014.