JA Walker Co., Inc. v. Cambria Corp.

159 P.3d 126, 2007 Colo. LEXIS 447, 2007 WL 1532137
CourtSupreme Court of Colorado
DecidedMay 29, 2007
Docket06SA272
StatusPublished
Cited by189 cases

This text of 159 P.3d 126 (JA Walker Co., Inc. v. Cambria Corp.) 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
JA Walker Co., Inc. v. Cambria Corp., 159 P.3d 126, 2007 Colo. LEXIS 447, 2007 WL 1532137 (Colo. 2007).

Opinions

Justice EID

delivered the Opinion of the Court.

This opinion is a companion to our decision announced today in Ingold v. AIMCO/Bluffs, L.L.C., Apartments, No. 06SA240, 159 P.3d 116, 2007 WL 1532155 (Colo. May 29, 2007). In Ingold, we held that the former version of the Colorado Uniform Arbitration Act distinguishes between two types of allegations of fraudulent inducement. Allegations of fraudulent inducement specifically directed to an arbitration agreement, including an arbitration provision in a contract, must be resolved by the trial court. Fraudulent inducement allegations directed more broadly to a contract as a whole, of which an arbitration agreement is only a part, must be resolved in arbitration.

In this case, we hold that the current version of the Colorado Uniform Arbitration Act, sections 13-22-201 to -230, C.R.S. (2006) (the "CUAA"), recognizes the same distinction between fraudulent inducement allegations. Thus the trial court-not an arbitrator-must resolve allegations that a party was fraudulently induced specifically into entering an arbitration agreement. Here, Petitioner J.A. Walker Company, Inc. ("Walker") directs its fraudulent inducement allegations specifically to the arbitration agreement relied upon by Respondent Cambria Corporation ("Cambria"), not to the parties' contract as a whole. The trial court ordered the parties to arbitrate their dispute, but the arbitration order is unclear whether the trial court resolved Walker's fraudulent inducement challenge to the arbitration agreement. We therefore make the rule to show cause absolute so that the trial court can "proceed summarily to decide," pursuant to section 13-22-207(1)(b), Walker's fraudulent inducement challenge directed specifically to the agreement to arbitrate.

I.

We accept Walker's factual allegations as true for purposes of this proceeding. See Rosenthal v. Dean Witter Reynolds, Inc., 908 P.2d 1095, 1099 (Colo.1995). In April 2004, 450 Seventeenth, LLC ("450") entered into a construction contract (the "Prime Contract") with Cambria for improvements to property [128]*128owned by 450 in downtown Denver. Cam-bria executed a separate contract (the "Subcontract") in May 2005 with Walker, a subcontractor, for the placement and finish of structural concrete at the project site.

While the Subcontract itself does not contain an explicit arbitration provision, it incorporates by reference the dispute resolution procedure detailed in the Prime Contract. The Prime Contract incorporates by reference a document known as the General Conditions of the Contract for Construction (the "General Conditions"). The General Conditions provides that "[alny Claim arising out of or related to the Contract ... shall ... be subject to arbitration."

Walker alleges that it requested but never received a copy of either the Prime Contract or the General Conditions. Walker further alleges that when it asked Cambria whether arbitration was required by the Prime Contract, Cambria assured Walker that it was not. Walker alleges that it relied on those representations when it executed the Subcontract with Cambria.

Walker subsequently filed suit seeking both payment for work that it allegedly performed and foreclosure on its mechanics liens. In its answer to Walker's complaint, Cambria asserted that the trial court lacked jurisdiction because Walker's claims were subject to the mandatory arbitration provision of the General Conditions, incorporated by reference into the Prime Contract and applicable to Cambria by operation of the Subcontract. On similar grounds, 450 moved to compel arbitration. Walker objected, claiming it was not bound by the arbitration provision because Cambria fraudulently induced it into entering the Subcontract with assurances that the dispute resolution procedure did not include arbitration. Walker submitted several affidavits in support of its fraudulent inducement challenge.

The trial court compelled arbitration and stayed the remainder of the case. In its order, which was based on the parties' briefing and "the file in this matter," the trial court made no mention of Walker's allegations that it was fraudulently induced into agreeing to arbitrate its dispute with Cam-bria. Instead, the trial court held 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, C.RS. § 18-22-201, et seq." We issued a rule to show cause to consider the trial court's order compelling arbitration.1

IL.

Walker argues that the trial court erred in compelling arbitration because it has alleged that it was fraudulently induced into agreeing to arbitrate. We hold that section 18-22-206 requires the trial court to resolve allegations of fraudulent inducement, like Walker's, that are directed specifically to an agreement to arbitrate. Because it is unclear from the trial court's order whether it resolved this issue, we make our rule to show cause absolute and remand the case to the trial court for its determination of whether the parties' arbitration agreement was fraudulently induced.

A.

Colorado law favors the resolution of disputes through arbitration. See Huizar v. Allstate Ins. Co., 952 P.2d 342, 346 (Colo.1998). To this end, the General Assembly enacted the CUAA, sections 18-22-2201 to -223, C.R.S. (2003). The CUAA has since been revised and reenacted in its current form. See §§ 13-22-201 to -230, C.R.S. (2006). The current version of the CUAA applies to agreements, like the Subcontract, entered into after August 4, 2004. See § 13-22-203(1).

Interpreting the former version of the CUAA, we held in Ingold that the arbi-trability of an allegation of fraudulent inducement depends upon whether the allegation is directed specifically to the agreement to arbitrate or more broadly to the contract containing the arbitration agreement. See In-[129]*129gold, slip op. at 12-18, 159 P.3d at 121. A fraudulent inducement claim directed specifically to the arbitration agreement is a challenge to "the existence of the agreement to arbitrate," § 183-22-204(1), C.R.S. (2008), and therefore must be resolved by the trial court under the statute. See id. at 9-10, 159 P.3d at 120. A fraudulent inducement claim directed to a contract as a whole-of which the arbitration agreement is only a part-is to be decided by the arbitrator, not the trial court. See id. at 9, 159 P.8d at 120. As explained in Ingold, the United States Supreme Court drew the same distinction between fraudulent inducement claims under the Federal Arbitration Act in Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 895, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967). See id. at 9-10, 159 P.3d at 120.

Cambria argues that the current version of the CUAA does not distinguish between fraudulent inducement allegations in the way we recognized in Ingold.

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Bluebook (online)
159 P.3d 126, 2007 Colo. LEXIS 447, 2007 WL 1532137, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ja-walker-co-inc-v-cambria-corp-colo-2007.