Background
In 2012, James Wright and Daniel Goldstein, acting through their respective companies Damages Inc. and Altru-Media LLC, formed a joint venture called And Justice For All, LLC (AJFA) to develop and manage legal advertising websites. They signed both an operating agreement and a memorandum of understanding (MOU) containing a broad arbitration clause requiring disputes to proceed to American Arbitration Association (AAA) binding arbitration. When the venture proved unprofitable and Goldstein moved to sell assets in 2019, Wright sued in Colorado district court on behalf of himself, his company, and AJFA, alleging breach of contract, fiduciary duty, fraud, and other claims.
The defendants moved to compel arbitration under the MOU’s arbitration clause. Wright objected, contending that only the operating agreement—not the MOU—governed his claims. The district court granted the motion to compel. During the arbitration proceeding, which lasted nearly a year, the arbitrator ruled against Wright on all nine claims and awarded the defendants attorney fees. Wright then moved the district court to vacate the award, arguing the arbitrator lacked jurisdiction over him in his individual capacity because he had signed the MOU only as a corporate representative. The district court denied the motion, finding Wright had waived his objection by participating extensively in arbitration before raising it.
The Court’s Holding
The Colorado Court of Appeals reversed, holding that Wright did not waive his objection to arbitral jurisdiction. The court examined the plain language of the Colorado Revised Uniform Arbitration Act (CRUAA) § 13-22-223(1)(e), which permits a court to vacate an award for the absence of an arbitration agreement “unless the person participated in the arbitration proceeding without raising the objection . . . not later than the beginning of the arbitration hearing.” Because Wright objected to the arbitrator four days before the scheduled hearing—in compliance with the statute’s deadline—he preserved his right to challenge arbitrability before the district court.
The court rejected the prior Colorado case Harper Hofer & Associates, LLC v. Northwest Direct Marketing, Inc., which held that a party must seek judicial stay of arbitration before the hearing to avoid waiver. The court found no such requirement in the statute’s text. The CRUAA requires only that objections be raised to the arbitrator “not later than the beginning of the arbitration hearing”; it does not mandate a separate motion to the trial court. The court also recognized that while the General Assembly could have set an earlier deadline, it deliberately chose to allow objections through the prehearing stage.
The court remanded for the district court to make findings of fact on whether an arbitration agreement actually existed between Wright in his individual capacity and the defendants Goldstein, Page 1 Solutions, and Altru-Media. The court affirmed in all other respects, including the arbitrator’s authority to determine arbitrability questions based on the parties’ incorporation of AAA rules empowering the arbitrator to rule on her own jurisdiction.
Key Takeaways
- A party objecting to arbitral jurisdiction may comply with CRUAA § 13-22-223(1)(e) by raising the objection to the arbitrator no later than the beginning of the hearing, without requiring a separate motion to the trial court for judicial stay.
- Colorado courts must follow the plain language of the arbitration statute even when prior case law suggests a different interpretation, particularly when the statute represents a deliberate legislative choice about timing and procedure.
- A party’s participation in an arbitration proceeding does not constitute waiver of jurisdictional objections if the objection is timely raised under the statutory deadline, regardless of how long the parties engaged in preparatory proceedings.
- Arbitrators may determine threshold arbitrability questions when parties explicitly incorporate arbitration rules—such as AAA rules—that empower the arbitrator to rule on jurisdiction and arbitrability.
Why It Matters
This decision clarifies Colorado’s arbitration waiver doctrine and resolves conflicting precedent regarding the timing and method of objecting to an arbitrator’s jurisdiction. By rejecting the more stringent Harper Hofer standard, the court has made it procedurally easier for parties to preserve arbitrability objections. Companies and individuals who believe they were improperly dragged into arbitration now have a clearer path to object without needing to seek immediate court intervention, provided they raise their concerns before the arbitration hearing begins. This aligns Colorado law with decisions from other states interpreting the Uniform Arbitration Act and emphasizes the importance of statutory language over prior case law in the arbitration context.
For counsel handling commercial disputes in Colorado, the decision underscores the need to file contemporaneous objections with the arbitrator as a prerequisite to challenging arbitrability later in court. However, the remand for factual findings on whether an agreement existed—rather than summary dismissal of Wright’s claims—indicates the court will still require a genuine inquiry into whether the signing parties actually intended to be bound before enforcement.