Demise of the Intertwining Doctrine in Colorado - January 2008 - the Civil Litigator
| Jurisdiction | Colorado,United States |
| Citation | Vol. 37 No. 1 Pg. 21 |
| Pages | 21 |
| Publication year | 2008 |
2008, January, Pg. 21. Demise of the Intertwining Doctrine in Colorado - January 2008 - The Civil Litigator
January 2008
Vol. 37, No. 1 [Page 21]
The Civil Litigator
Demise of the Intertwining Doctrine in Colorado
by Jon F. Sands, Brad Ramming
The Civil Litigator articles address issues of importance and interest to litigators and trial lawyers practicing in Colorado courts. The Civil Litigator is published six times a year.
Article Editors:
Don Kelso, Denver, of Holme Roberts & Owen LLP - (303) 861-7000, donald.kelso@hro.com; Eric Bentley, Colorado Springs, of Holme Roberts & Owen LLP - (719) 473-3800, eric.bentley@hro.com
About the Authors:
Jon F. Sands and Brad Ramming are Shareholders with the law firm of Fisher, Sweetbaum, Levin & Sands, PC in Denver. The authors represented the defendants in Ingold v. AIMCO/Bluffs, L.L.C. Apartments.
Many disputes involve contracts containing arbitration clauses. In the past, courts have applied the intertwining doctrine to help them decide whether the arbitration clause can be enforced. That doctrine is no longer good law in Colorado.
Prior to the May 27, 2007 ruling of the Colorado Supreme Court in Ingold v. AIMCO/Bluffs, L.L.C. Apartments,(fn1) Colorado courts faced with a combination of arbitrable and nonarbitrable claims may have relied on the intertwining doctrine. That doctrine is no longer good law in Colorado following Ingold. This article provides a brief overview of the intertwining doctrine and discusses its treatment and status at the federal level and in Colorado.
Arbitration Agreements
Many contracts include mandatory, binding arbitration provisions. Lawsuits arising from or relating to the subject matter of contracts frequently contain multiple claims, including breach of contract, tort, and statutory claims. In addition, some lawsuits may include parties who were not signatories to the contracts. When a party in this type of action moves to compel arbitration, courts are faced with the task of determining which claims are (and which claims are not) subject to the arbitration provision. If all claims in the action are determined to be arbitrable, the civil action might be stayed pending the arbitration result. If some of the claims are determined to be arbitrable but others are not, the court might compel arbitration of the arbitrable claims and then determine how to dispose of the remaining claims. In the discretion of the court, the nonarbitrable claims might be stayed or might proceed to judicial resolution.
Colorado law provides some very general guidance for determining whether an arbitration provision encompasses a particular dispute. First, a court must determine whether the factual allegations underlying the claim are within the scope of the contractual arbitration clause, regardless of how the claim is characterized in the pleading. For example, the fact that a claim sounds in tort does not necessarily take it out of the scope of a clause requiring arbitration of a contract dispute. If that were the rule, parties could avoid arbitration or frustrate any agreement to arbitrate simply by framing their claims in tort.(fn2)
Colorado appellate courts favor broad construction of arbitration provisions. This has resulted in numerous decisions requiring arbitration, not only when there is a claim for breach of a contract that contains an arbitration provision, but also when the case presents claims arguably not controlled by the arbitration provision, such as a claim based in tort or statute.(fn3)
The Intertwining Doctrine Pre-Ingold
Even after identifying claims that are subject to the arbitration provision, prior to the Ingold decision,4 a court would have to determine the applicability of a contract's arbitration provision based on the common law creation known as the "intertwining doctrine." This rule has been described as follows:
The purpose of the intertwining doctrine is to prevent inconsistent determinations by different forums. If the factual and legal issues are inextricably intertwined, then the claims must not be severed because severance could result in an arbitrator infringing upon a court's duty to decide the non-arbitrable claim.(fn5)
If the court found that the doctrine applied, the result was the defeat of the arbitration provision, notwithstanding a finding that at least some of the claims were subject to arbitration. Under the intertwining doctrine, all claims that were indisputably the subject of the arbitration provision, including those for breach of the contract itself, would proceed to adversary proceedings in court. The intertwining doctrine therefore was used to escape mandatory, binding arbitration to which the parties had agreed.
The intertwining doctrine required courts to determine whether different legal claims arising from the same set of operative facts were subject to the reach of an arbitration provision and therefore arbitrable; at the same time, courts were required to determine whether the same claims were so "inextricably intertwined" that none of the claims was arbitrable. Because litigants could assert multiple claims and involve multiple parties, claims often were determined to be intertwined. The analysis often turned on whether claims that were "inextricably" intertwined could be disentangled from each other, such that they could be tried separately. The answer gave rise to inconsistent results and protracted preliminary litigation over the ultimate forum for resolution. As a result, the intertwining doctrine defeated a major expressed purpose of arbitration: saving litigants money and providing a quicker resolution of legal problems.
Compelling Arbitration
The intertwining doctrine never applied where all claims were within the scope of an arbitration clause.(fn6) However, in cases that present both arbitrable and nonarbitrable claims, the court may have to ascertain whether to compel arbitration.
To compel arbitration, a litigant must make proper application to the trial court.(fn7) If there is no objection to the application, the court must order that the claims be resolved through arbitration.(fn8) If there is an objection, the trial court must determine whether there is a valid arbitration agreement.(fn9) In certain circumstances, provisions of the arbitration agreement could require that an arbitrator make this determination.(fn10) Evidence that the parties intended the arbitrator to determine the validity of the agreement must be shown by clear and unmistakable evidence.(fn11) The granting of a motion to compel arbitration is interlocutory in nature and not immediately appealable.(fn12) On the other hand, an order denying a motion to compel arbitration is an appealable order.(fn13) However, an immediate appeal is permissive and not mandatory. Whether to appeal an order denying a motion to compel arbitration immediately or after final judgment is a strategic decision left to the client and attorney after consideration and analysis of case-specific issues.(fn14)
To determine whether there is a valid agreement to arbitrate, courts apply the Colorado Uniform Arbitration Act (CUAA).(fn15) The CUAA was enacted in 1975 to "provide a uniform statutory framework for arbitration and to encourage settlement of disputes through the arbitration process."(fn16) Colorado's public policy of favoring arbitration has been a part of the Colorado Constitution since 1876.(fn17) In promoting that public policy, the CUAA provides:
An agreement contained in a record to submit to arbitration any existing or subsequent controversy arising between the parties to the agreement is valid[] and irrevocable except on a ground that exists at law or in equity for the revocation of a contract.(fn18)
The test for whether an arbitration agreement is valid and enforceable is the same under Colorado law as it is under the Federal Arbitration Act (FAA).(fn19) Like any contract, an arbitration agreement may be revoked on the following grounds: fraud in the inducement,(fn20) undue influence,(fn21) duress,(fn22) minority,(fn23) mental incapacity,(fn24) and mistake.(fn25) Because of the strong public policy in favor of arbitration, all doubts regarding whether an agreement to arbitrate is valid are resolved in favor of arbitration.(fn26) Accordingly, absent a...
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