JPMorgan v. Graham

• Court: Colorado Court of Appeals
• Decided: February 27, 2025
• Docket: 24CA1080
• Status: Unpublished

Opinion

24CA1080 JPMorgan v Graham 02-27-2025

COLORADO COURT OF APPEALS

Court of Appeals No. 24CA1080 Jefferson County District Court No. 23CV30396 Honorable Christopher Blake Rhamey, Judge

JPMorgan Chase Bank, N.A.,

Plaintiff-Appellant,

v.

Jared Graham,

Defendant-Appellee.

JUDGMENT REVERSED

Division VII Opinion by JUDGE LIPINSKY Johnson and Moultrie, JJ., concur

NOT PUBLISHED PURSUANT TO C.A.R. 35(e) Announced February 27, 2025

The Moore Law Group, Heather L. Cannon, Nicholas Bullock, Karlie D. Schafer, Santa Ana, California, for Plaintiff-Appellant

No Appearance for Defendant-Appellee ¶1 Plaintiff, JPMorgan Chase Bank, N.A., appeals the district

court’s order dismissing its claim against defendant, Jared Graham,

with prejudice. We reverse.

I. Background Facts and Procedural History

¶2 On March 27, 2023, JPMorgan filed suit against Graham to

collect on a past due credit card account. Graham, appearing pro

se, filed a motion to compel arbitration (the motion to arbitrate) on

May 26, 2023, citing the arbitration provision in his JPMorgan

credit card agreement (the agreement).

¶3 In its response to the motion to arbitrate, JPMorgan advised

the court that it did “not object to [Graham] initiating arbitration”

and noted that, pursuant to section 13-22-207(6), C.R.S. 2024, the

court “shall stay any judicial proceeding that involves a claim

alleged to be subject to the arbitration until the ordering court

renders a final decision under this section.” JPMorgan specifically

asked the court to stay the case for sixty calendar days “to allow

[Graham] to commence arbitration.”

¶4 On July 10, 2023, the court granted the motion to arbitrate.

It stayed the case for sixty days “to allow [Graham] to commence

arbitration.”

1 ¶5 Sixty days later, on September 8, 2023, the court entered a

delay reduction order in which it directed the parties to “file a

Stipulation to Dismiss the Case with Prejudice” if “the matter ha[d]

been resolved through arbitration,” and if “the matter ha[d] not

been resolved, or arbitration ha[d] not occurred,” it ordered

JPMorgan “to show cause in writing why the case should not be

dismissed.” The court further ordered that, “[i]f the parties fail to

do so within 35 days, the Court shall deem this matter abandoned

and dismiss the case pursuant to C.R.C.P. 121(c) Sec. 1-10.”

¶6 In a status report filed on September 15, 2023, JPMorgan

reported that its counsel had received an official arbitration demand

from the American Arbitration Association (AAA) on September 14,

2023 (after the stay expired); said that the matter had been

assigned to the AAA case management center; and asked the court

to “grant an additional stay of proceedings to allow completion of

¶7 On September 25, 2023, the court entered an order in which,

as relevant to this appeal, it stayed the case for ninety days “or until

arbitration has occurred and the arbiters [sic] decisions [sic] is

provided to the parties; whichever comes first.” (Emphasis added.)

2 In addition, the court ordered JPMorgan to provide “an arbitration

status report within 7-days after receipt of the arbiters [sic] decision

detailing if any legal disputes remain” and said that, “[i]f no

disputes remain, [JPMorgan] is further ordered to file a joint

dismissal of [its] claim with prejudice within 14-days of receipt of

the arbiters [sic] decision.”

¶8 Nearly four months later, the court entered an order noting

that the ninety-day stay had expired on December 26, 2023, and

ordered JPMorgan “to file a status update regarding arbitration and

the further need for this case’s prosecution within 14-days.” The

court warned that, “[i]f no report is received, the Case will be

dismissed without prejudice.”

¶9 After JPMorgan failed to file a status report within fourteen

days, on February 12, 2024, the court entered an order noting that

“[n]o action has occurred in the case since September of 2023” and

dismissing the case without prejudice for failure to prosecute in

violation of C.R.C.P. 121, section 1-10.

¶ 10 The February 12 order caught JPMorgan’s attention. On

February 21, 2024, it filed a motion to set aside the dismissal order

and to reopen the case. In its motion, JPMorgan advised the court

3 that the parties were “currently participating in the proceedings

initiated with the AAA” and said its attorneys “had mistakenly

missed the [court’s] deadline to file a Status Report.”

¶ 11 Together with its motion to set aside the dismissal motion and

to reopen the case, JPMorgan filed a motion to stay the proceedings

for an additional ninety days “to allow completion of [a]rbitration.”

In support of its request for an additional ninety-day stay,

JPMorgan quoted section 13-22-207(6) and (7):

If a party files a motion with the court to order arbitration, the court on just terms shall stay any judicial proceeding that involves a claim alleged to be subject to the arbitration until the ordering court renders a final decision under this section.

If the court orders arbitration, the court on just terms shall stay any judicial proceeding that involves a claim subject to the arbitration. If a claim subject to the arbitration is severable, the court may limit the stay to that claim.

¶ 12 The court issued an order on March 20, 2024, directing

JPMorgan to show cause in writing within thirty-five days why

arbitration had not been completed and noting that a lawyer’s

“mistakenly miss[ing]” a deadline is not excusable neglect for

purposes of setting aside a judgment under C.R.C.P. 60(b)(1) and

4 60(b)(5). The court quoted Messler v. Phillips, 867 P.2d 128, 136

(Colo. App. 1993): “[E]xcusable neglect involves unforeseen

occurrences which would cause a reasonably prudent person to

overlook a required act in the performance of some responsibility.

Failure to act because of carelessness and negligence is not

excusable neglect.”

¶ 13 In addition, the court said in the March 20 order that, if it

were to exercise its discretion to re-open the case, it would

“immediately have to confront the question of why, after 150 days of

official stay for arbitration and a subsequent unofficial stay for an

additional 84 days (from expiration of December 26th to the date of

this Order) arbitration has not been completed.” The court

explained that, for this reason, it could not consider reopening the

case “until clarity is provided.”

¶ 14 The court ordered JPMorgan to “show cause in writing within

35-days of this order why arbitration has not been completed” and

“state with particularity the precise number of days [it] expects

necessary for the requested third stay to reach final resolution of

this matter.” The March 20 order put JPMorgan on notice that, if it

failed to show cause within thirty-five days, the court would deny

5 its motion to set aside the dismissal order and to reopen the case

“without further opportunity to be heard.”

¶ 15 Despite the unequivocal language of the March 20 order,

JPMorgan failed to show cause by the specified deadline.

Accordingly, on May 1, 2024, the court entered an order dismissing

the case with prejudice. The court observed that, although it had

“provided a path” for JPMorgan to cure the dismissal by showing

cause why “arbitration had not occurred within the time allotted,”

JPMorgan failed to do so. In addition, the court said that, if

JPMorgan “made a minimal showing that they were diligently

prosecuting the case through arbitration, the Court would not hold

an apparent calendaring error against them.”

¶ 16 But, the court noted, JPMorgan “continued to fail to

meaningfully engage in the diligent prosecution of this case by

failing to meet the deadline to show cause.” The court explained

that “[t]his continuous failure to meet deadlines creates meaningful

prejudice to the defendant[] through undue delay in the

proceedings, wastes court resources, and is irreconcilable with the

legal and professional duties [JPMorgan] and their counsel are

under.” The court continued that JPMorgan “sought to utilize the

6 Court’s authority to achieve [its] legal goals in this case, but has

continuously failed to satisfy reasonable and valid Court orders

necessary to achieve those ends.” Because “[t]he Court cannot

reconcile this behavior with any appropriate course of conduct and

cannot sanction the same to continue [to] Defendant[’s] prejudice,”

the court “convert[ed] its dismissal for failure to prosecute” under

C.R.C.P. 121, section 1-10 to “a DISMISSAL WITH PREJUDICE.”

¶ 17 JPMorgan appeals the May 1 dismissal order.

II. Analysis

¶ 18 JPMorgan contends on appeal that the court erred by

dismissing the case with prejudice and by not staying the

proceedings until the parties’ arbitration concluded. We hold that

the court lacked subject matter jurisdiction over the case during the

pendency of the arbitration and, therefore, we reverse the May 1

dismissal order.

A. Standard of Review

¶ 19 “Subject matter jurisdiction concerns the court’s authority to

decide a particular matter.” Dunafon v. Krupa, 2020 COA 149, ¶ 7,

477 P.3d 785, 788 (quoting In re Support of E.K., 2013 COA 99, ¶ 8,

410 P.3d 480, 482). “The court’s authority must be properly

7 invoked before it can act, and a judgment rendered without subject

matter jurisdiction is void.” Id. (quoting E.K., ¶ 8, 410 P.3d at 482).

“Whether a court has subject matter jurisdiction is determined by

the nature of the claim and the relief sought.” In re Marriage of

Roth, 2017 COA 45, ¶ 14, 395 P.3d 1226, 1230.

¶ 20 “Whether the district court had subject matter jurisdiction is

an issue that can be raised at any time in a proceeding.” Zook v. El

Paso County, 2021 COA 72, ¶ 8, 494 P.3d 659, 662. Subject matter

jurisdiction is a legal question that we review de novo. Black v.

Black, 2020 COA 64M, ¶ 90, 482 P.3d 460, 480.

B. Arbitration and Subject Matter Jurisdiction

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

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

Fresquez v. Trinidad Inn, Inc., 2022 COA 96, ¶ 16, 521 P.3d 399,

404 (“As a general rule, Colorado favors arbitration agreements.”).

¶ 22 Under the Colorado Uniform Arbitration Act, §§ 13-22-201

to -230, C.R.S. 2024, “a valid, enforceable arbitration provision

divests trial courts of jurisdiction over all questions that are to be

submitted to arbitration, pending the conclusion of arbitration.”

Lane, 145 P.3d at 679. Thus, “[i]f an enforceable agreement

8 requires arbitration of a 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).

¶ 23 “If a party files a motion with the court to order arbitration,

the court on just terms shall stay any judicial proceeding that

involves a claim alleged to be subject to the arbitration until the

ordering court renders a final decision” on the motion.

§ 13-22-207(6). If the court grants the motion and orders

arbitration, it must, “on just terms,” stay “any judicial proceeding

that involves a claim subject to the arbitration.” § 13-22-207(7).

Accordingly, upon the issuance of an order compelling arbitration,

“the proper procedure is to stay the action pending completion of

the arbitration process.” Mountain Plains Constructors, Inc. v.

Torrez, 785 P.2d 928, 931 (Colo. 1990).

C. The District Court Lost Subject Matter Jurisdiction Over JPMorgan’s Claim During the Pendency of the Arbitration

¶ 24 The arbitration provision in the agreement specifies that all

disputes between Graham and JPMorgan must be submitted to

binding arbitration “whenever [either party] choose[s] to submit or

refer a dispute to arbitration.” The agreement says that disputes

9 “about or relating in any way to [Graham’s] account” are subject to

the arbitration provision. As noted, JPMorgan did not object to

submission of its claim against Graham to arbitration.

¶ 25 Once the court granted the motion to arbitrate on July 10,

2023, it lost subject matter jurisdiction over JPMorgan’s claim. See

Mountain Plains Constructors, Inc., 785 P.2d at 931; § 13-22-207(7).

It could not exercise subject matter jurisdiction over that claim

again until the parties’ arbitration had concluded. See Lane, 145

P.3d at 679.

¶ 26 The court knew from JPMorgan’s September 15, 2023, status

report that its “counsel [had] received an official arbitration demand

from the AAA” and the matter had been “assigned to the AAA case

management center.” Moreover, the court was aware from

JPMorgan’s motion to set aside the February 12 dismissal order

and to reopen the case that Graham had “filed his arbitration” with

the AAA “on or around 09/02/2023” and JPMorgan and Graham

were “currently participating in the proceedings initiated with the

AAA.” In addition, in its February 21 stay motion, JPMorgan noted

that, under section 13-22-207(7), “[i]f the court orders arbitration,

10 the court on just terms shall stay any judicial proceeding that

involves a claim subject to the arbitration.”

¶ 27 We agree with the court that JPMorgan’s counsel failed to

establish the excusable neglect necessary to set aside the court’s

order dismissing the case without prejudice. See Goodman Assocs.,

LLC v. WP Mountain Props., LLC, 222 P.3d 310, 322 (Colo. 2010)

(holding that “carelessness and neglect due to poor office

procedures and an apparently overwhelming workload” are not

excusable neglect); C.R.C.P. 60(b)(1). We are also aware that the

record does not reveal whether, and if so, when, the arbitration was

concluded.

¶ 28 But JPMorgan’s counsel’s lack of diligence cannot overcome

the black letter law that the court could not assert subject matter

jurisdiction over JPMorgan’s claim until the court received word

that the arbitration of the claim had concluded. Thus, the court

erred by dismissing the claim without prejudice and, later, by

dismissing it with prejudice.

¶ 29 For this reason, without in any way condoning the conduct of

JPMorgan’s counsel, we reverse the May 1 dismissal order and

remand the case to the district court. Given our conclusion that

11 the court lacked subject matter jurisdiction over JPMorgan’s claim

from the time the court granted the motion to arbitrate, we need not

address JPMorgan’s other appellate arguments.

III. Disposition

¶ 30 The judgment is reversed.

JUDGE JOHNSON and JUDGE MOULTRIE concur.