In re Marriage of Roth , 395 P.3d 1226 ( 2017 )

COLORADO COURT OF APPEALS 2017COA45
Court of Appeals No. 16CA0029
El Paso County District Court No. 13DR30542
Honorable Gilbert A. Martinez, Judge
In re the Marriage of
Michelle J. Roth,
Appellant,
and
Robert M. Roth,
Appellee.
JUDGMENT VACATED, ORDER REVERSED,
AND CASE REMANDED WITH DIRECTIONS
Division I
Opinion by JUDGE TAUBMAN
Graham and Navarro, JJ., concur
Announced April 6, 2017
Davide C. Migliaccio, Attorney at Law, Davide C. Migliaccio, Colorado Springs,
Colorado, for Appellant
Stinar, Zendejas & Gaithe, LLC, M. James Zendejas, Colorado Springs,
Colorado, for Appellee
¶1 This dissolution of marriage case between Michelle J. Roth
(wife) and Robert M. Roth (husband) presents a novel issue
involving the interplay of subject matter jurisdiction between the
district court and an arbitrator when the arbitrator dies while a
request to modify or correct an arbitration award is pending before
him.
¶2 The appeal arises from the district court’s judgment
confirming an arbitration award dividing the parties’ marital estate.
Wife contends that the district court lacked subject matter
jurisdiction to confirm the award when both parties had timely
requested the arbitrator to modify or correct it but the arbitrator
died before he could rule on those requests. She argues that, at
that point, the court only had jurisdiction to appoint a replacement
arbitrator to complete the arbitration proceedings. Husband
responds that the court properly confirmed the award because wife
had not alleged proper grounds under the Colorado Uniform
Arbitration Act (CUAA), §§ 13-22-201 to -230, C.R.S. 2016, to
modify or correct it.
¶3 We conclude that the district court exceeded its jurisdiction in
confirming the award and that it erred in denying wife’s motion to
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appoint a replacement arbitrator. Thus, we vacate the judgment
confirming the award, reverse the order denying wife’s motion, and
remand the case to the district court to appoint a replacement
arbitrator to complete the arbitration proceedings.
I. Background
¶4 After husband petitioned in 2013 to end the parties’ three-year
marriage, the parties agreed to arbitrate the permanent orders
issues and requested that the district court transfer jurisdiction of
the case to their chosen arbitrator, a retired district court judge.
The court granted their request.
¶5 The parties’ arbitration agreement provided in relevant part
that all dissolution issues would be submitted to arbitration; the
CUAA would govern the proceedings; after issuing an award, the
arbitrator would reserve jurisdiction for twenty days to enable the
parties to seek clarification, correction, or modification of the
award; and if jurisdiction was reserved on an issue, the arbitrator
would hear it unless he was unavailable.
¶6 Arbitration proceedings were conducted pursuant to the
parties’ agreement, and the arbitrator issued an award on March
10, 2015. In relevant part, the award divided the parties’ property
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by giving seventy-five percent to husband and twenty-five percent to
wife based on the short duration of the marriage and husband’s
greater contributions to acquiring the property. It further provided
that the resulting equalization payment due from husband to wife
would be paid in quarterly installments, based on one percent of
the gross profits of husband’s business, plus statutory interest.
The award also provided, consistent with the parties’ arbitration
agreement and the CUAA, that the parties would have twenty days
to request a correction, modification, or clarification of the award
from the arbitrator. See § 13-22-220(1)-(2), C.R.S. 2016.
¶7 Both parties submitted timely requests to the arbitrator for
modification and clarification of the award. Wife raised multiple
issues in her request, including the equity of the seventy-five
percent/twenty-five percent marital estate division, the valuation of
husband’s business interests, the distribution of the parties’ tax
refund, and the equalization payment terms. Husband requested
that the arbitrator clarify the award concerning the tax refund and
tax debt, reconsider the valuation finding for one of his businesses,
and reduce the equalization payments to wife accordingly.
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¶8 On April 12, 2015, while the parties were in the process of
submitting their responses and replies to the arbitrator concerning
their requests for modification or clarification, the arbitrator died.
Five days later, wife moved in district court to appoint a
replacement arbitrator under section 13-22-215(5), C.R.S. 2016,
which provides that “[i]f an arbitrator ceases or is unable to act
during the arbitration proceeding, a replacement arbitrator shall be
appointed . . . to continue the proceeding and to resolve the
controversy.” A week later, husband moved that the district court
confirm the arbitrator’s award under section 13-22-222, C.R.S.
2016. A status conference was set to address the parties’ motions.
¶9 At the conference, wife argued that the arbitrator had greater
power under the CUAA to modify the award than the court did, and
therefore, the court could not confirm the award when the parties’
requests to the arbitrator to modify and clarify it were still pending,
but must instead appoint a replacement arbitrator to consider those
requests. Husband argued that under the CUAA, even the
arbitrator cannot alter the merits of the award, and therefore, the
parties’ arbitrator, even if still alive, would have lacked authority to
modify the award on the grounds wife alleged. Wife responded that
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a replacement arbitrator, and not the court, must determine which
issues fall within the statutory modification criteria and which do
not. She further argued that she was confident the arbitrator
would have corrected the award concerning one issue she raised —
that under the equalization payment terms, more in interest will
accrue on the equalization amount than is paid out to her
quarterly.
¶ 10 The district court found that wife was essentially seeking to
relitigate the permanent orders and it denied her motion for a
replacement arbitrator and granted husband’s motion to confirm
the award. It then entered a dissolution decree incorporating the
award.
II. Husband’s Request to Dismiss the Appeal
¶ 11 Initially, we deny husband’s request to dismiss the appeal as
untimely under C.A.R. 4. Wife’s notice of appeal was filed on the
forty-ninth day after the order denying her motion for C.R.C.P. 59
relief. Accordingly, the appeal is timely under C.A.R. 4(a), which
requires that a notice of appeal be filed within forty-nine days of
such an order.
III. Subject Matter Jurisdiction
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¶ 12 Wife contends that under the CUAA, the district court lacked
subject matter jurisdiction to confirm the arbitration award while
the parties’ requests to modify or correct it were pending before the
arbitrator. She argues that when the arbitrator died before ruling
on the parties’ requests, the court had subject matter jurisdiction
only to appoint a replacement arbitrator. We agree and therefore
vacate the district court’s judgment confirming the award.
A. Legal Standards
¶ 13 We review de novo the legal issue of whether the district court
has subject matter jurisdiction. Egelhoff v. Taylor, 2013 COA 137,
¶ 23, 312 P.3d 270, 274.
¶ 14 “A court has subject matter jurisdiction where it has been
empowered to entertain the type of case before it by the sovereign
from which the court derives its authority.” Wood v. People, 255
P.3d 1136, 1140 (Colo. 2011); see In re Marriage of Stroud, 631 P.2d
168, 170-71 (Colo. 1981). Whether a court has subject matter
jurisdiction is determined by the nature of the claim and the relief
sought. Stroud, 631 P.2d at 171. Statutory limits on a court’s
subject matter jurisdiction must be explicit. Wood, 255 P.3d at
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 1140. A judgment rendered without subject matter jurisdiction is
void. Stroud, 631 P.2d at 170.
¶ 15 In construing the CUAA, “we undertake de novo review and
look first to the plain language, always striving to give effect to the
General Assembly’s intent and chosen legislative scheme.” Sooper
Credit Union v. Sholar Grp. Architects, P.C., 113 P.3d 768, 771 (Colo.
2005).
1. The District Court’s Subject Matter Jurisdiction
¶ 16 “In Colorado, arbitration is a favored method of dispute
resolution.” Lane v. Urgitus, 145 P.3d 672, 678 (Colo. 2006). Thus,
under the CUAA, a valid and enforceable arbitration agreement
“divests” the district court of jurisdiction over all questions
submitted to arbitration, “pending the conclusion of arbitration.”
Id. at 679; see Braata, Inc. v. Oneida Cold Storage Co., 251 P.3d
584, 588 (Colo. App. 2010); see also § 13-22-206(1), C.R.S. 2016
(agreement to arbitrate is “valid, enforceable, and irrevocable”).
Accordingly, if an enforceable agreement requires arbitration of a
particular claim, “a court lacks subject matter jurisdiction to
consider that issue.” McCord v. Affinity Ins. Grp., Inc., 13 P.3d
1224, 1231 (Colo. App. 2000); see Guthrie v. Barda, 188 Colo. 124,
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126-27, 533 P.2d 487, 488 (1975) (upholding district court order
dismissing action for lack of subject matter jurisdiction based on
valid agreement to arbitrate).
¶ 17 Under section 13-22-222(1), when a motion to confirm an
arbitration award is made to the district court, “the court shall
issue a confirming order unless the award is modified or corrected
[by the arbitrator] pursuant to section 13-22-220,” or by the court
pursuant to section 13-22-224, C.R.S. 2016, or the award is
vacated by the court pursuant to section 13-22-223, C.R.S. 2016.
See Applehans v. Farmers Ins. Exch., 68 P.3d 594, 599 (Colo. App.
2003) (concluding that district court correctly denied motion to
confirm arbitration award when party’s application to modify or
correct it was pending with arbitrator).
2. The Arbitrator’s Subject Matter Jurisdiction
¶ 18 Under the common law doctrine of functus officio, the
arbitration proceedings concluded and the arbitrator lost subject
matter jurisdiction after delivering an award to the parties. Osborn
v. Packard, 117 P.3d 77, 80 (Colo. App. 2004). The CUAA was
intended to alter that doctrine, however, by giving arbitrators some
specified power to modify or correct awards even after they have
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been delivered to the parties. Id.; Applehans, 68 P.3d at 597; 5A
Stephen A. Hess, Colorado Practice Series, Handbook on Civil
Litigation § 1:17 (2016 ed.); compare § 13-22-220 (statute governing
modification of arbitration awards), and Sooper Credit Union, 113
P.3d at 769, 772-73 (permitting arbitrator to modify or correct
confusing awards for clarity), with 9 U.S.C. §§ 9-11 (2012) (federal
arbitration act (FAA) provisions governing modification of
arbitration awards), and Fradella v. Petricca, 183 F.3d 17, 20 n.4
(1st Cir. 1999) (noting that FAA does not give arbitrators power to
modify or correct awards after they are delivered).
¶ 19 Under the CUAA, on a party’s motion to the arbitrator within
twenty days of notice of the award, the arbitrator may modify or
correct an award (1) if there is an evident mathematical
miscalculation or evident mistake in the description of a person,
thing, or property referred to in the award; (2) if the award is
imperfect in a matter of form not affecting the merits of the
decision; (3) if the arbitrator did not issue a final and definite award
on a claim submitted; or (4) to clarify the award. § 13-22-220(1);
see § 13-22-224(1)(a), (1)(c); see also Rocha v. Fin. Indem. Corp., 155
P.3d 602, 604 (Colo. App. 2006).
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B. Analysis
¶ 20 Under the terms of the parties’ arbitration agreement and
pursuant to the CUAA, subject matter jurisdiction over the
permanent orders issues was transferred to the arbitrator, thereby
divesting the court of its jurisdiction to determine such issues. See
Lane, 145 P.3d at 679; Braata, 251 P.3d at 588; see also § 13-22-
206(1). Subject matter jurisdiction then remained with the
arbitrator after the award was issued, again under both the CUAA
and the parties’ agreement, because the parties timely requested
that the arbitrator modify or correct the award. See § 13-22-220(1)-
(2); see also Osborn, 117 P.3d at 80 (arbitrator did not exceed his
jurisdiction by issuing a clarifying order on party’s timely request
after the award was issued). Under these circumstances, the
arbitration proceedings had not yet concluded and subject matter
jurisdiction to confirm the award was not yet in the district court
when the arbitrator died. See Lane, 145 P.3d at 679 (Courts are
divested of jurisdiction “pending the conclusion of arbitration.”); see
also § 13-22-222(1) (court shall confirm award unless it is modified
or corrected by the arbitrator under section 13-22-220).
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¶ 21 Husband’s contention — asserted for the first time at oral
argument — that the arbitrator had lost jurisdiction because he did
not act on the parties’ requests to modify or correct the award
within the twenty-day period provided in section 13-22-220(2) is
unpersuasive. Husband provided no authority at oral argument to
support this contention. Moreover, it conflicts with the plain
language of the parties’ agreement and the CUAA. The agreement
provides that the arbitrator reserves jurisdiction “[p]ursuant to
statute” for twenty days “for the parties to seek clarification,
correction, or modification of the award.” The CUAA provides that
“[a] motion” to modify an award “shall be made . . . within twenty
days after the movant receives notice of the award” and it permits
an arbitrator to modify or clarify an award on such a motion. § 13-
22-220(1), (2). Husband’s position conflicts with subsection (3) of
section 13-22-220, which gives a party ten days to object to another
party’s motion to modify or correct an award. Thus, under the
statute, the arbitrator clearly retains authority to rule on a timely
motion to modify even after the original twenty days have expired.
¶ 22 Husband’s argument that any error by the district court in
confirming the award was harmless because wife did not raise
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proper grounds under the CUAA for the arbitrator to have modified
or corrected it is also unpersuasive. The parties contracted for
arbitration, including for the arbitrator to determine any
modification or clarification request made to him within twenty days
of the award. Accordingly, only the arbitrator, and not the court,
had subject matter jurisdiction to resolve such requests, including
determining, in the first instance, whether proper grounds were
alleged for modification or correction under section 13-22-220(1).
¶ 23 That the CUAA gives the arbitrator greater power to alter an
award after it has been issued than it gives to the court supports
our conclusion. Under the CUAA, an arbitrator has the power to
clarify an award, even when the award is not patently ambiguous,
but the court does not have that power. See Sooper Credit Union,
113 P.3d at 772; 5A Hess, Handbook on Civil Litigation § 1:17;
compare § 13-22-220(1)(c) (giving arbitrator power to modify or
correct award in order to clarify it), with § 13-22-224(1) (giving court
power to modify or correct award only when there is an “evident”
miscalculation or mistake in the award or it is imperfect in a matter
of form).
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¶ 24 Additionally, a motion to an arbitrator to modify or correct an
award tolls the time within which to move that the court do so
under section 13-22-224(1) or to move that the court vacate the
award under section 13-22-223. See Swan v. Am. Family Mut. Ins.
Co., 8 P.3d 546, 547-48 (Colo. App. 2000); but cf. Am. Numismatic
Ass’n v. Cipoletti, 254 P.3d 1169, 1170-71 (Colo. App. 2011)
(concluding that arbitration award dismissing case was final and
time to move in district court to challenge it began running even
though collateral request for attorney fees was still pending before
arbitrator). As the Swan division noted, requiring a party seeking
to modify or vacate an award to file duplicate motions with both the
arbitrator and the court would be inconsistent with the legislative
intent to make arbitration effective and efficient and would not
promote judicial economy because it could lead to the anomalous
result of an arbitrator modifying an award at the same time the
court is vacating it. 8 P.3d at 548; cf. Fradella, 183 F.3d at 19-20 &
n.4 (request to an arbitrator for modification or clarification does
not toll time to file a motion in court under the FAA, which contains
no provision allowing for such a request to an arbitrator).
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¶ 25 Accordingly, under CUAA’s framework, once subject matter
jurisdiction has been transferred to an arbitrator, it is not then
transferred back to the court to act on the award — whether to
modify, vacate, or confirm it — until the arbitration proceedings are
concluded, meaning that the arbitrator has resolved any timely
section 13-22-220(1) requests to modify or correct the award. See
§ 13-22-222(1) (court shall confirm award unless it is modified or
corrected by the arbitrator pursuant to section 13-22-220);
Applehans, 68 P.3d at 599 (court properly refused to confirm award
when application was pending before arbitrator to modify or correct
it); see also Lane, 145 P.3d at 679 (court is divested of jurisdiction
pending conclusion of arbitration).
¶ 26 We note that, as discussed at oral argument, the parties’
agreement states that if jurisdiction is reserved by the arbitrator on
any issue after the award is issued, the arbitrator will hear the
issue “unless he is unavailable.” Although this provision of the
agreement does not specify what happens if the arbitrator is
unavailable, the agreement provides that the CUAA governs the
proceedings. And section 13-22-215(5) requires the appointment of
a replacement arbitrator when an arbitrator becomes unable to act
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during the arbitration proceedings. Thus, when the arbitrator died
before he could rule on the parties’ timely requests to modify or
correct the award, the district court had subject matter jurisdiction
under the CUAA only to appoint a replacement arbitrator to
complete the arbitration proceedings. See § 13-22-215(5); see also
Lane, 145 P.3d at 679.
¶ 27 That is not to say, however, that such a replacement arbitrator
may go beyond the authority provided under section 13-22-220(1)
in ruling on the parties’ pending modification requests. See Sooper
Credit Union, 113 P.3d at 771 (“Once an arbitrator issues and
delivers an award to the parties, modification or correction is
permitted only under the ‘narrow circumstances’ provided by
statute.” (quoting Applehans, 68 P.3d at 597)). Rather, the
replacement arbitrator may act only pursuant to the statute and
“may not redetermine the merits” of the award. Id. at 769; cf.
Rocha, 155 P.3d at 604-05 (reversing order denying motion to
vacate modified arbitration award that had changed the substance
of the original award). However, the arbitrator, and not the court,
must first rule on the parties’ pending requests for modification or
correction under section 13-22-220. Only then will the arbitration
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proceedings be concluded and subject matter jurisdiction returned
to the district court for further proceedings to confirm the final
award under section 13-22-222, to vacate it under section 13-22-
223, or to modify it under section 13-22-224.
¶ 28 The Applehans case is illustrative. There, an arbitrator
entered an award for the plaintiff for damages and, within ten days,
the defendant insurance company filed a request for modification
with the arbitrator to reduce the award to the amount of its policy
limits. 68 P.3d at 596. Before the arbitrator could rule on that
modification request, however, the plaintiff moved that the district
court confirm the original award. Id. The court refused to do so
because of the pending modification request before the arbitrator.
Id. The arbitrator then held a hearing and entered a modified
award for the policy limit amount. Id. The plaintiff then moved for
the court to vacate, modify, or correct the modified award, and the
court denied that motion. Id.
¶ 29 On appeal, a division of this court reversed the district court’s
order refusing to vacate the modified award, holding that the
arbitrator had exceeded his authority under the CUAA by
substantively changing the amount of the plaintiff’s recovery. Id. at
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 596-98. The division affirmed the court’s denial of the plaintiff’s
motion to confirm the original award, however, finding that the
court acted properly because the defendant’s request to the
arbitrator to modify or correct the award was still pending when the
court ruled. Id. at 599, 601.
¶ 30 In contrast, here, the district court erred and, we conclude,
exceeded its subject matter jurisdiction by confirming the
arbitration award while the parties’ timely requests to the arbitrator
to modify or correct it were still pending. Under the CUAA and
consistent with the parties’ arbitration agreement, the court should
have instead appointed a replacement arbitrator to consider the
pending requests. See § 13-22-215(5).
¶ 31 Last, husband’s argument that the district court had subject
matter jurisdiction to confirm the award under section 13-22-220(4)
is unpersuasive. This subsection permits a court in which a motion
to confirm, modify, correct, or vacate an award is pending to submit
the claim at issue to the arbitrator to resolve. See § 13-22-220(4).
That is not what happened here. The court did not return an issue
that was properly before it pursuant to one of these types of
motions to the arbitrator to decide. Rather, it decided an issue that
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was properly before the arbitrator under section 13-22-220(1), but
that the arbitrator had not yet resolved. In doing so, it exceeded its
subject matter jurisdiction under the CUAA.
IV. Replacement Arbitrator
¶ 32 Wife further contends that the district court erred by denying
her motion to appoint a replacement arbitrator. We again agree and
we reverse the court’s order and remand the case to appoint a
replacement arbitrator to complete the arbitration proceedings.
¶ 33 The language of the CUAA is mandatory on this issue: if an
arbitrator ceases or is unable to act, a replacement arbitrator “shall
be appointed” to continue the proceedings and resolve the
controversy. § 13-22-215(5); see also § 13-22-211(1), C.R.S. 2016.
The word “shall” in a statute is presumed mandatory. People v.
Bland, 884 P.2d 312, 316 (Colo. 1994); In re Marriage of Slowinski,
199 P.3d 48, 52 (Colo. App. 2008). And, because under the CUAA,
arbitration agreements are valid, enforceable, and irrevocable, see
§ 13-22-206(1), a mandatory meaning of “shall” applies here
consistent with the overall statutory scheme and with the parties’
agreement to submit all issues, including any timely modification or
clarification requests, to the arbitrator. Cf. Slowinski, 199 P.3d at
18
 52 (construing term “shall” in statute providing for emergency
restrictions of parenting time as mandatory consistent with overall
purpose of statute).
¶ 34 Accordingly, because it is undisputed that the parties’ chosen
arbitrator could not act as of April 12, 2015, the district court was
required to appoint a replacement arbitrator to continue and
complete the arbitration proceedings.
V. Husband’s Request for Appellate Attorney Fees
¶ 35 In light of the disposition, and because husband fails to state
a legal basis for recovery of appellate attorney fees, we deny the
request. See C.A.R. 39.1 (party requesting appellate fees must
explain legal and factual basis for such an award).
VI. Conclusion
¶ 36 The district court’s judgment confirming the March 10, 2015,
arbitration award is vacated, its order denying wife’s motion to
appoint a replacement arbitrator is reversed, and the case is
remanded to appoint a replacement arbitrator to complete the
arbitration proceedings.
JUDGE GRAHAM and JUDGE NAVARRO concur.
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