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According to the Supreme Court of Colorado, membership in a professional organization conditioned on agreeing to arbitrate disputes between members is binding on all subsequent business disputes between members, even if the dispute relates to a separate contract.
In Lane v. Urgitus, No. 06SA49, 2006 WL 3000111 (Colo. Oct. 23, 2006), Lane petitioned the court to compel arbitration of a dispute over real estate transaction referral fees between himself and Urgitus, another member of the Denver Metropolitan Commercial Association of Realtors (the Association). The trial court compelled arbitration, and Urgitus appealed.
Urgitus argued that the arbitration provision in his application form to join the Association was not binding on his subsequent contract with Lane for referral fees. The Association membership agreement included an arbitration manual and a provision specifying that members have a “duty to arbitrate business disputes” among members.
On appeal, the Court determined that one objective of the Association was to “facilitate the resolution of disputes through arbitration” and that “this duty to arbitrate [was] a condition of [Lane and Urgitus’] membership.” Thus, the Court concluded, the arbitration provision in the membership agreement becomes an implied condition of any subsequent agreements between members.
“[A]n agreement to arbitrate can take the form of previously-executed consents to arbitrate that become an implied condition of subsequent agreements the members of the professional organization make among themselves.”
Because both Lane and Urgitus were members of the Association and signed the application form requiring arbitration of disputes between members, their subsequent dispute over referral fees, even though resulting from a separate contract, was subject to arbitration.
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