In a recent published decision, the Colorado Court of Appeals clarified the timing under which a litigant must object to arbitration proceedings under the Colorado Revised Uniform Arbitration Act, C.R.S. § 13-22-201, et seq. (CRUAA). In doing so, the Court also expressly departed from a prior published decision.

In Wright v. Goldstein, the parties formed an LLC and entered into an operating agreement and Memorandum of Understanding (MOU) regarding the new LLC. The MOU contained an arbitration provision. The LLC was not commercially successful, and the plaintiff ultimately brought several claims against the defendant. The defendant moved to compel arbitration under the MOU's arbitration provision, and the plaintiff opposed, arguing that the claims arose under the operating agreement, which did not contain an arbitration provision, instead of the MOU. The trial court granted the motion and the parties proceeded to arbitration. The plaintiff renewed its objections to the arbitrator four days before the final arbitration hearing. The arbitrator overruled the objections, ultimately finding for the defendant and assessing its attorneys' fees against the plaintiff.

The plaintiff moved the trial court to vacate the award, arguing that no valid arbitration agreement existed and the parties' dispute otherwise was not arbitrable. Instead of addressing the merits of those arguments, the trial court found the plaintiff had waived them by participating in the arbitration.

The Court of Appeals reversed, reasoning that the plaintiff properly and timely raised its objection because it raised the objection to the arbitrator before “the beginning of the arbitration hearing,” as expressly permitted under the CRUAA. It recognized that the plaintiff “participated ‘substantially’ in the arbitration proceeding for several months before raising his objection on the proverbial eve of the arbitration hearing,” and “the General Assembly could have required a party who believes no agreement to arbitrate exists to raise their objection earlier in the arbitration proceeding or in a prehearing motion to the court,” but acknowledged the legislature “struck the balance differently by requiring only a prehearing objection to the arbitrator. We can't second-guess that legislative choice.”

In reaching this conclusion, the Court expressly rejected the reasoning of a prior decision from another division of the Court of Appeals, which the trial court relied on in denying the plaintiff's motion to vacate. In that prior case, the appellate court held that a litigant waives its objections to arbitrability if it fails to raise them in the trial court through a motion to stay arbitration filed before the commencement of the arbitration hearing—not just in the party's opposition to a motion to compel arbitration, or objections made to the arbitrator, as the plaintiff in Wright did.

The Court in Wright emphasized that the plain language of Section 13-22-223(1)(e) controls, and that section allows a party to timely raise any arbitrability objections to the arbitrator any time before the final arbitration hearing begins. Because the plaintiff raised its objections to the arbitrator four days before the hearing began, its objections were preserved, and the trial court erred in finding they were waived.

The Wright decision provides useful guidance for ensuring arguments for vacating an arbitration award are properly preserved. But it also serves as a tacit reminder that a published decision by one division of the Colorado Court of Appeals—even one that is directly on-point—may not serve as decisive authority before another division, particularly where binding precedent from the Colorado Supreme Court does not exist. Litigators appearing before Colorado courts, therefore, should not resign themselves to the logical framework erected by prior intermediate appellate decisions. As in Wright, the Court may well be persuaded to revisit legal issues it has ostensibly already resolved.