Tug Hill Marcellus LLC v. BKV Chelsea LLC

2021 COA 17, 486 P.3d 461

• Court: Colorado Court of Appeals
• Decided: February 11, 2021
• Docket: 19CA2234
• Status: Published

Opinion

The summaries of the Colorado Court of Appeals published opinions constitute no part of the opinion of the division but have been prepared by the division for the convenience of the reader. The summaries may not be cited or relied upon as they are not the official language of the division. Any discrepancy between the language in the summary and in the opinion should be resolved in favor of the language in the opinion.

SUMMARY February 11, 2021

2021COA17

No. 19CA2234, Tug Hill Marcellus LLC v. BKV Chelsea LLC —

Courts and Court Procedure — Colorado Uniform Arbitration

Act — Appeals

A division of the court of appeals considers for the first time

whether the court has jurisdiction to hear an appeal of an order

denying a motion to consolidate arbitration proceedings under

section 13-22-228(1), C.R.S. 2020, of the Colorado Revised Uniform

Arbitration Act. The division concludes that, because an order

denying a motion to consolidate arbitration proceedings is neither

one of the pre-arbitration orders listed in section 13-22-228(1)(a)

and (b), nor a “final judgment” under section 13-22-228(1)(f), the

court lacks jurisdiction over the appeal. COLORADO COURT OF APPEALS 2021COA17

Court of Appeals No. 19CA2234 City and County of Denver District Court No. 19CV33147 Honorable Morris B. Hoffman, Judge

Tug Hill Marcellus LLC, Radler 2000 LP, and Chief Exploration & Development LLC,

Petitioners-Appellants,

v.

BKV Chelsea LLC,

Respondent-Appellee.

APPEAL DISMISSED

Division VI Opinion by JUDGE LIPINSKY Richman and Pawar, JJ., concur

Announced February 11, 2021

Lewis Roca Rothgerber Christie LLP, Douglas B. Tumminello, Denver, Colorado; Sidley Austin LLP, Angela C. Zambrano, Barret V. Armbruster, Dallas, Texas, for Petitioners-Appellants Tug Hill Marcellus LLC and Radler 2000 LLP

Hayes and Boone, LLP, Lee F. Jonston, Kate Repko, Kelli Bills, Denver, Colorado, for Petitioner-Appellant Chief Exploration & Development LLC

Fox Rothschild LLP, Patrick J. Casey, Spencer L. Sears, Esther H. Lee, Denver, Colorado, for Respondent-Appellee ¶1 Appellants Tug Hill Marcellus LLC, Radler 2000 LP, and Chief

Exploration & Development LLC (collectively, Sellers), appeal the

district court’s order denying their petition to consolidate appellee

BKV Chelsea LLC’s three separate arbitration proceedings against

them. Because orders denying petitions to consolidate arbitration

proceedings are not one of the two pre-award court orders that may

be appealed under the Colorado Revised Uniform Arbitration Act

(the Act), we lack jurisdiction over this matter and dismiss Sellers’

appeal.

I. Background

¶2 Sellers entered into substantially similar agreements with BKV

for the sale of interests in oil, gas, and mineral leases and related

assets. The agreements included identical arbitration provisions.

BKV alleged that Sellers breached their agreements and served the

individual Sellers with a demand for arbitration. BKV requested a

separate arbitration proceeding against each of the Sellers.

¶3 Sellers proposed that the arbitration proceedings be

consolidated, but BKV refused. Sellers petitioned the district court

to consolidate the three arbitration proceedings. The district court

entered an order denying Sellers’ petition on the grounds that the

1 arbitration provisions in the agreements did not indicate that BKV

had consented in advance to consolidate the separate arbitration

proceedings.

¶4 Sellers appealed the district court’s order. Sellers assert that

this court has jurisdiction over this appeal under section

13-22-228(1)(f), C.R.S. 2020, and C.A.R. 1(a)(1). BKV moved to

dismiss the appeal on jurisdictional grounds. A motions division of

this court deferred a decision on BKV’s motion until Sellers and

BKV had fully briefed the issue.

II. Discussion

A. An Order Denying a Motion to Consolidate Arbitration Proceedings Is Not One of the Two Pre-Award Arbitration Orders Appealable Pursuant to Section 13-22-228(1)

¶5 Although section 13-4-102, C.R.S. 2020, and C.A.R. 1(a)(1)

grant this court jurisdiction over the “final judgments” of district

courts, section 13-22-228(1) of the Act narrowly circumscribes our

jurisdiction to hear appeals of arbitration-related orders.

¶6 Under section 13-22-228(1), a party may only appeal two types

of arbitration-related court orders entered before an arbitrator

enters an award — an order denying a motion to compel arbitration

and an order granting a motion to stay arbitration.

2 § 13-22-228(1)(a) & (b). (Section 13-22-228(1) also authorizes

appeals of orders confirming or denying confirmation of an award,

modifying or correcting an award, vacating an award without

directing a rehearing, and a final judgment entered pursuant to the

Act. § 13-22-228(1)(c), (d), (e) & (f).) A division of this court

explained that “[t]he specific language of the Act reveals a legislative

intent to limit appeals to the listed circumstances.” Gergel v. High

View Homes, L.L.C., 58 P.3d 1132, 1134 (Colo. App. 2002).

¶7 Section 13-22-228(1)’s limited grant of appellate jurisdiction is

consistent with the state’s policy of favoring arbitration “as a

convenient and efficient alternative to resolving disputes by

litigation.” Vallagio at Inverness Residential Condo. Ass’n v. Metro.

Homes, Inc., 2015 COA 65, ¶ 13, 412 P.3d 709, 713, aff’d, 2017 CO

69, ¶ 13, 395 P.3d 788. “In Colorado, arbitration is a favored

method of dispute resolution. Our constitution, our statutes, and

our case law all support agreements to arbitrate disputes.” Lane v.

Urgitus, 145 P.3d 672, 678 (Colo. 2006) (citations omitted). The

General Assembly adopted the Act “to provide a uniform statutory

framework for arbitration and to encourage settlement of disputes

3 through the arbitration process.” Sopko v. Clear Channel Satellite

Servs., Inc., 151 P.3d 663, 666 (Colo. App. 2006).

¶8 The Act expressly authorizes parties to file specified

arbitration-related motions in district court, even though the court’s

rulings on those motions may not be appealable. (We interpret

Sellers’ “petition” as a motion.) “Not all orders entered by a trial

court respecting arbitration proceedings are appealable.” Thomas v.

Farmers Ins. Exch., 857 P.2d 532, 534 (Colo. App. 1993).

¶9 For example, one of the permissible arbitration-related

motions is a motion for the “consolidation of separate arbitration

proceedings.” § 13-22-210(1), C.R.S. 2020. The district court “may

order consolidation . . . as to all or some of the claims if all parties

in the arbitration proceedings consent” and the court finds that the

criteria listed in the statute are met. Id.

¶ 10 But an order denying a motion to consolidate separate

arbitration proceedings is not appealable because it is not one of

the pre-award orders listed in section 13-22-228(1). Such orders

are neither orders denying a motion to compel arbitration nor

orders granting a motion to stay arbitration, which are appealable

4 under section 13-22-228(1)(a) and (b). (And, as explained in Part

II.B below, they are also not appealable “final judgments.”)

¶ 11 “[W]hen the legislature speaks with exactitude, [courts] must

construe the statute to mean that the inclusion or specification of a

particular set of conditions necessarily excludes others.” Lunsford

v. W. States Life Ins., 908 P.2d 79, 84 (Colo. 1995). The precise

language of section 13-22-228(1) “leaves no room for permitting

appeals other than those specifically enumerated.” J.P. Meyer

Trucking & Constr., Inc. v. Colo. Sch. Dists. Self Ins. Pool, 18 P.3d

198, 202 (Colo. 2001). The omission of orders denying motions to

consolidate arbitration proceedings from section 13-22-228(1)

indicates that “the legislature could not have intended” to allow

appeals of such orders. Beeghly v. Mack, 20 P.3d 610, 613 (Colo.

2001) (“Under the rule of interpretation expressio unius [est] exclusio

alterius, the inclusion of certain items implies the exclusion of

others.”).

¶ 12 Our conclusion is consistent with the case law addressing the

appealability of other types of pre-award orders not listed in section

13-22-228(1). For example, “an order compelling arbitration is not

appealable because it is not denominated as such by the Act.”

5 Gergel, 58 P.3d at 1135; see Frontier Materials, Inc. v. City of

Boulder, 663 P.2d 1065, 1066 (Colo. App. 1983) (“Conspicuously

absent from that list [in the substantially similar predecessor

statute to 13-22-228(1)] is an order by the court compelling the

parties to arbitrate.”).

¶ 13 Courts in other states that have adopted statutes identical to

section 13-22-228(1) have reached the same conclusion. In St.

Francis Xavier Hospital v. Ruscon/Abco, the South Carolina Court of

Appeals refused to hear the appeal of an order denying the

consolidation of arbitration proceedings because the language of

that state’s analogue to section 13-22-228(1) “does not expressly

allow an appeal from an order denying an application to consolidate

pending arbitration proceedings.” 330 S.E.2d 548, 550 (S.C. Ct.

App. 1985). The Washington Court of Appeals similarly noted that,

while the statute “designates specific orders in arbitration actions

from which an appeal may be taken, . . . an order of consolidation is

not one of them.” Cummings v. Budget Tank Removal & Env’t Servs.

LLC, 260 P.3d 220, 224 (Wash. Ct. App. 2011).

¶ 14 Our reading of section 13-22-228(1) is also consistent with the

policy underlying the Act — to provide a convenient and efficient

6 alternative to litigation. See Vallagio at Inverness Residential

Condo. Ass’n, ¶ 13, 412 P.3d at 713. Appeals of district court

orders denying motions to consolidate separate arbitration

proceedings would delay the arbitration process and increase the

parties’ legal expenses. Notably, the only pre-award orders that are

appealable under section 13-22-228(1) are orders blocking or

hindering the arbitration process. See § 13-22-228(1)(a) & (b)

(authorizing appeals of orders denying motions to compel

arbitration and orders staying arbitration). An order denying a

motion to consolidate separate arbitration proceedings neither

blocks nor hinders the arbitration process. Rather, it allows the

arbitration process to proceed.

¶ 15 For these reasons, we conclude that we lack jurisdiction to

hear appeals from orders denying a motion to consolidate separate

arbitration proceedings. “Because this court’s jurisdiction is

conferred by statute, we cannot expand its scope beyond [its]

legislative grant,” Wilson v. Kennedy, 2020 COA 122, ¶ 6, ___ P.3d

___, ___, and, therefore, we may not exercise jurisdiction in this

case.

7 B. An Order Denying a Motion to Consolidate Arbitration Proceedings Is Not a “Final Judgment”

¶ 16 Sellers seek to circumvent the omission of orders denying

motions to consolidate separate arbitration proceedings from

section 13-22-228(1) by arguing that the district court’s order is an

appealable “final judgment” under section 13-22-228(1)(f) and

C.A.R. 1(a)(1). As noted above, subsections 13-22-228(1)(a) and (b)

describe with specificity the pre-award orders that may be appealed,

and an order denying a motion to consolidate separate arbitration

proceedings is not one of them.

¶ 17 More fundamentally, an order denying a motion to consolidate

separate arbitration proceedings is not the equivalent of a “final

judgment.” “[I]n determining whether a trial court’s order is subject

to review, the appellate court must consider the substance and not

the form of the order.” Gergel, 58 P.3d at 1136. Gergel concerned

an attempt to appeal an order compelling the parties to arbitrate.

The appellants contended that their motion to stay the arbitration

proceedings, which the district court denied, was substantively a

motion for a temporary injunction, as they had labeled it. Id. at

1135-36. The grant or denial of a temporary injunction is an

8 appealable order. Id. at 1135. But because the parties’ motion

“requested neither temporary relief nor preservation of the status

quo,” the division of this court concluded that the district court’s

denial of the motion was the functional equivalent of an order

directing arbitration. Id. at 1136. Such an order is not listed in

section 13-22-228(1) and, thus, is not appealable. Id.

¶ 18 In contrast to the form and substance of the court’s order

denying Sellers’ motion to consolidate BKV’s arbitration

proceedings, an order entering a “final judgment” “finally disposes

of the particular action and prevents further proceedings . . . .”

State ex rel. Suthers v. CB Servs. Corp., 252 P.3d 7, 10 (Colo. App.

2010) (quoting Levine v. Empire Savings & Loan Ass’n, 192 Colo.

188, 190, 557 P.2d 386, 387 (1976)). In civil cases, our supreme

court has “consistently held that a ‘final judgment is one which

ends the particular action in which it is entered, leaving nothing

further for the court pronouncing it to do in order to completely

determine the rights of the parties involved in the proceeding.’”

Scott v. Scott, 136 P.3d 892, 895 (Colo. 2006) (quoting Harding

Glass Co. v. Jones, 640 P.2d 1123, 1125 n.2 (Colo. 1982)).

9 ¶ 19 Here, although Sellers’ motion to consolidate was the only

filing in the underlying case, the district court’s order denying it did

not “finally dispose[] of the . . . action and prevent[] further

proceedings.” See Suthers, 252 P.3d at 10. The parties may return

to the district court before, during, or after the arbitrations by filing

one of the arbitration-related motions authorized under the Act.

For example, if one of the Sellers refused to arbitrate, BKV could file

a motion to compel arbitration under section 13-22-207(1), C.R.S.

2020, or, if a party found evidence that one of the arbitrators

engaged in misconduct in connection with the arbitration, that

party could file a motion to vacate the arbitrator’s award under

section 13-22-223(1)(b)(III), C.R.S. 2020. The district court’s order

denying Sellers’ motion to consolidate the arbitration proceedings

does not prevent any of these further proceedings.

¶ 20 In any event, a final and appealable judgment will be entered

in this case only if and when an arbitrator enters an award in one of

the arbitration proceedings and the district court enters a judgment

“in conformity therewith.” See § 13-22-225(1), C.R.S. 2020;

S. Wash. Assocs. v. Flanagan, 859 P.2d 217, 220 (Colo. App. 1992)

(“The ‘award’ of a panel of arbitrators . . . [was] not . . . a ‘final

10 judgment.’” Rather, the final judgment in the case was “the

stipulated order and judgment confirming the arbitration award

pursuant to the [Act].”); see Mountain Plains Constructors, Inc. v.

Torrez, 785 P.2d 928, 930-31 (Colo. 1990) (holding that “an order

denying a motion to compel arbitration may . . . be appealed after

final judgment”). The language of Mountain Plains Constructors

would make no sense if an order denying a motion to compel

arbitration could be appealed immediately after the district court

ruled on a different pre-award motion, such as a motion to

consolidate separate arbitration proceedings.

¶ 21 Sellers attempt to distinguish Marshwood Associates v.

Krumbhaar & Holt, Associated Architects, P.A., 451 A.2d 305 (Me.

1982), and St. Francis Xavier Hospital, the two out-of-state cases

BKV cites in support of its argument that an order denying

consolidation is not an appealable final judgment. Both cases held

that an order denying consolidation of arbitration proceedings does

not have the effect of a final judgment and is thus not appealable.

Marshwood Assocs., 451 A.2d at 307; St. Francis Xavier Hosp., 330

S.E.2d at 550. Sellers contend that these cases are distinguishable

11 because they interpreted versions of the Act that do not authorize

trial courts to consolidate arbitration proceedings.

¶ 22 But Sellers’ argument assumes, contrary to the Act, that every

ruling on a permitted arbitration-related motion is appealable. As

explained in Part II.A above, simply because a statute authorizes

the court to take an action does not make that action appealable.

¶ 23 Moreover, under Sellers’ reasoning, any pre-award order, even

if not listed in section 13-22-228(1), would be an appealable final

judgment. This argument cannot be squared with section

13-22-228(1)’s meticulous delineation of the only pre-award court

orders that may be appealed. See § 13-22-228(1)(a) & (b). If any

pre-award order were a “final judgment,” then section

13-22-228(1)(a) & (b) would be superfluous; there would be no need

to specify that an order denying a motion to compel arbitration and

an order granting a motion to stay arbitration are appealable. We

do not interpret statutes to render the language in a subsection

superfluous. People v. Burnett, 2019 CO 2, ¶ 21, 432 P.3d 617,

622.

¶ 24 It is significant that section 13-22-228(1) places the two

appealable pre-award orders in separate subsections from “final

12 judgments.” Because they are listed in different subsections from

“final judgments,” an order denying a motion to compel arbitration

and an order granting a motion to stay arbitration cannot be “final

judgments.” And it would make no sense to read section

13-22-228(1) to mean that, while these two pre-award orders are

not “final judgments,” all other types of pre-award orders may be

deemed “final judgments.”

¶ 25 In sum, we only have jurisdiction to “review interlocutory

orders where specifically authorized by statute or rule.” Gergel, 58

P.3d at 1134 (emphasis added). “We have ‘no authority to expand

[our] appellate jurisdiction’” beyond that granted by the General

Assembly and “cannot ‘modify the jurisdiction granted [us] by

statute.’” Wilson, ¶ 6, ___ P.3d at ___ (alterations in original)

(quoting People in Interest of L.R.B., 2019 COA 85, ¶ 15, ___ P.3d

___, ___). Under the plain language of section 13-22-228(1), we

have no jurisdiction to review an order denying a motion to

consolidate arbitration proceedings.

III. Conclusion

¶ 26 The appeal is dismissed.

JUDGE RICHMAN and JUDGE PAWAR concur.