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The Colorado Court of Appeals has followed the majority rule and held that an arbitrator, not the court, must decide whether a party has complied with conditions precedent to arbitration. This issue would not arise under the current version of the Colorado Uniform Arbitration Act because the current version expressly delegates the question to the arbitrator.
In BRM Construction, Inc. v. Marais Gaylord, L.L.C., No. 06CA0559, 2007 WL 1839799 (Colo. Ct. App. June 28, 2007), BRM Construction (BRM) and Marais Gaylord (Marais) entered into a contract whereby BRM would construct a condominium project on land owned by Marias. The contract contained an arbitration clause.
When a payment dispute arose, BRM sued to foreclose a mechanic’s lien and simultaneously filed a motion to stay the action pending arbitration. In opposing the stay, Marais argued that BRM failed to comply with two conditions precedent to arbitration: (1) that a claim must first be submitted to the project architect; and (2) that a claim must be submitted within 21 days of the underlying incident. The court issued an order staying the action pending arbitration.
The arbitrator awarded BRM $423,577.63. Marais filed a motion to vacate the award, arguing that the arbitrator exceeded his powers and that there was no agreement to arbitrate the dispute. The trial court rejected those arguments and confirmed the award.
On appeal, the Court held that BRM’s compliance with conditions precedent to arbitration was an issue for the arbitrator to resolve. The Court gave two separate reasons for reaching this holding.
First, the Court found that the arbitration agreement gave the arbitrator authority to decide questions of arbitrability because it required the arbitration of any “claim” and defined “claim” to include “a demand or assertion . . . seeking . . . interpretation of Contract terms.” In support of this finding, the Court explained that questions of arbitrability naturally depend on the interpretation of contract terms.
Second, even if the parties had not delegated questions of arbitrability to the arbitrator, BRM’s compliance with conditions precedent to arbitration would still be a question for the arbitrator because the question relates to “procedural defenses for arbitration” rather than “the factual underpinnings of the claim for relief.”
In support of this finding the Court explained that under the majority rule, compliance with conditions precedent to arbitration is regarded as a question for the arbitrator. The Court adopted the majority rule with respect to the former version of the Colorado Uniform Arbitration Act (CUAA), which was the statute in effect when BRM and Marais entered into their arbitration agreement. As the Court noted, the current version of the CUAA expressly provides that an arbitrator shall decide whether a party has complied with conditions precedent to arbitration. See Colo. Rev. Stat. § 13-22-206(3).
A clever litigant may attempt to circumvent the majority rule by arguing that noncompliance with conditions precedent constitutes a waiver of the right to arbitrate, which is ordinarily a question for the court. However, this argument is doomed to fail because waiver of the right to arbitrate presents a question for the court only if the alleged waiver is premised on litigation-related conduct. See, e.g., Boateng v. General Dynamics Corp., 473 F.Supp.2d 241, 251-52 (D. Mass. 2007).
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