Tug Hill Marcellus LLC v. BKV Chelsea LLC ( 2021 )

The summaries of the Colorado Court of Appeals published opinions
constitute no part of the opinion of the division but have been prepared by
the division for the convenience of the reader. The summaries may not be
cited or relied upon as they are not the official language of the division.
Any discrepancy between the language in the summary and in the opinion
should be resolved in favor of the language in the opinion.
SUMMARY
February 11, 2021
2021COA17
No. 19CA2234, Tug Hill Marcellus LLC v. BKV Chelsea LLC —
Courts and Court Procedure — Colorado Uniform Arbitration
Act — Appeals
A division of the court of appeals considers for the first time
whether the court has jurisdiction to hear an appeal of an order
denying a motion to consolidate arbitration proceedings under
section 13-22-228(1), C.R.S. 2020, of the Colorado Revised Uniform
Arbitration Act. The division concludes that, because an order
denying a motion to consolidate arbitration proceedings is neither
one of the pre-arbitration orders listed in section 13-22-228(1)(a)
and (b), nor a “final judgment” under section 13-22-228(1)(f), the
court lacks jurisdiction over the appeal.
COLORADO COURT OF APPEALS 2021COA17
Court of Appeals No. 19CA2234
City and County of Denver District Court No. 19CV33147
Honorable Morris B. Hoffman, Judge
Tug Hill Marcellus LLC, Radler 2000 LP, and Chief Exploration & Development
LLC,
Petitioners-Appellants,
v.
BKV Chelsea LLC,
Respondent-Appellee.
APPEAL DISMISSED
Division VI
Opinion by JUDGE LIPINSKY
Richman and Pawar, JJ., concur
Announced February 11, 2021
Lewis Roca Rothgerber Christie LLP, Douglas B. Tumminello, Denver,
Colorado; Sidley Austin LLP, Angela C. Zambrano, Barret V. Armbruster,
Dallas, Texas, for Petitioners-Appellants Tug Hill Marcellus LLC and Radler
2000 LLP
Hayes and Boone, LLP, Lee F. Jonston, Kate Repko, Kelli Bills, Denver,
Colorado, for Petitioner-Appellant Chief Exploration & Development LLC
Fox Rothschild LLP, Patrick J. Casey, Spencer L. Sears, Esther H. Lee, Denver,
Colorado, for Respondent-Appellee
¶1 Appellants Tug Hill Marcellus LLC, Radler 2000 LP, and Chief
Exploration & Development LLC (collectively, Sellers), appeal the
district court’s order denying their petition to consolidate appellee
BKV Chelsea LLC’s three separate arbitration proceedings against
them. Because orders denying petitions to consolidate arbitration
proceedings are not one of the two pre-award court orders that may
be appealed under the Colorado Revised Uniform Arbitration Act
(the Act), we lack jurisdiction over this matter and dismiss Sellers’
appeal.
I. Background
¶2 Sellers entered into substantially similar agreements with BKV
for the sale of interests in oil, gas, and mineral leases and related
assets. The agreements included identical arbitration provisions.
BKV alleged that Sellers breached their agreements and served the
individual Sellers with a demand for arbitration. BKV requested a
separate arbitration proceeding against each of the Sellers.
¶3 Sellers proposed that the arbitration proceedings be
consolidated, but BKV refused. Sellers petitioned the district court
to consolidate the three arbitration proceedings. The district court
entered an order denying Sellers’ petition on the grounds that the
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arbitration provisions in the agreements did not indicate that BKV
had consented in advance to consolidate the separate arbitration
proceedings.
¶4 Sellers appealed the district court’s order. Sellers assert that
this court has jurisdiction over this appeal under section
13-22-228(1)(f), C.R.S. 2020, and C.A.R. 1(a)(1). BKV moved to
dismiss the appeal on jurisdictional grounds. A motions division of
this court deferred a decision on BKV’s motion until Sellers and
BKV had fully briefed the issue.
II. Discussion
A. An Order Denying a Motion to Consolidate Arbitration
Proceedings Is Not One of the Two Pre-Award Arbitration
Orders Appealable Pursuant to Section 13-22-228(1)
¶5 Although section 13-4-102, C.R.S. 2020, and C.A.R. 1(a)(1)
grant this court jurisdiction over the “final judgments” of district
courts, section 13-22-228(1) of the Act narrowly circumscribes our
jurisdiction to hear appeals of arbitration-related orders.
¶6 Under section 13-22-228(1), a party may only appeal two types
of arbitration-related court orders entered before an arbitrator
enters an award — an order denying a motion to compel arbitration
and an order granting a motion to stay arbitration.
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§ 13-22-228(1)(a) & (b). (Section 13-22-228(1) also authorizes
appeals of orders confirming or denying confirmation of an award,
modifying or correcting an award, vacating an award without
directing a rehearing, and a final judgment entered pursuant to the
Act. § 13-22-228(1)(c), (d), (e) & (f).) A division of this court
explained that “[t]he specific language of the Act reveals a legislative
intent to limit appeals to the listed circumstances.” Gergel v. High
View Homes, L.L.C., 58 P.3d 1132, 1134 (Colo. App. 2002).
¶7 Section 13-22-228(1)’s limited grant of appellate jurisdiction is
consistent with the state’s policy of favoring arbitration “as a
convenient and efficient alternative to resolving disputes by
litigation.” Vallagio at Inverness Residential Condo. Ass’n v. Metro.
Homes, Inc., 2015 COA 65, ¶ 13, 412 P.3d 709, 713, aff’d, 2017 CO
69, ¶ 13, 395 P.3d 788. “In Colorado, arbitration is a favored
method of dispute resolution. Our constitution, our statutes, and
our case law all support agreements to arbitrate disputes.” Lane v.
Urgitus, 145 P.3d 672, 678 (Colo. 2006) (citations omitted). The
General Assembly adopted the Act “to provide a uniform statutory
framework for arbitration and to encourage settlement of disputes
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through the arbitration process.” Sopko v. Clear Channel Satellite
Servs., Inc., 151 P.3d 663, 666 (Colo. App. 2006).
¶8 The Act expressly authorizes parties to file specified
arbitration-related motions in district court, even though the court’s
rulings on those motions may not be appealable. (We interpret
Sellers’ “petition” as a motion.) “Not all orders entered by a trial
court respecting arbitration proceedings are appealable.” Thomas v.
Farmers Ins. Exch., 857 P.2d 532, 534 (Colo. App. 1993).
¶9 For example, one of the permissible arbitration-related
motions is a motion for the “consolidation of separate arbitration
proceedings.” § 13-22-210(1), C.R.S. 2020. The district court “may
order consolidation . . . as to all or some of the claims if all parties
in the arbitration proceedings consent” and the court finds that the
criteria listed in the statute are met. Id.
¶ 10 But an order denying a motion to consolidate separate
arbitration proceedings is not appealable because it is not one of
the pre-award orders listed in section 13-22-228(1). Such orders
are neither orders denying a motion to compel arbitration nor
orders granting a motion to stay arbitration, which are appealable
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under section 13-22-228(1)(a) and (b). (And, as explained in Part
II.B below, they are also not appealable “final judgments.”)
¶ 11 “[W]hen the legislature speaks with exactitude, [courts] must
construe the statute to mean that the inclusion or specification of a
particular set of conditions necessarily excludes others.” Lunsford
v. W. States Life Ins., 908 P.2d 79, 84 (Colo. 1995). The precise
language of section 13-22-228(1) “leaves no room for permitting
appeals other than those specifically enumerated.” J.P. Meyer
Trucking & Constr., Inc. v. Colo. Sch. Dists. Self Ins. Pool, 18 P.3d
198, 202 (Colo. 2001). The omission of orders denying motions to
consolidate arbitration proceedings from section 13-22-228(1)
indicates that “the legislature could not have intended” to allow
appeals of such orders. Beeghly v. Mack, 20 P.3d 610, 613 (Colo.
2001) (“Under the rule of interpretation expressio unius [est] exclusio
alterius, the inclusion of certain items implies the exclusion of
others.”).
¶ 12 Our conclusion is consistent with the case law addressing the
appealability of other types of pre-award orders not listed in section
13-22-228(1). For example, “an order compelling arbitration is not
appealable because it is not denominated as such by the Act.”
5
Gergel, 58 P.3d at 1135; see Frontier Materials, Inc. v. City of
Boulder, 663 P.2d 1065, 1066 (Colo. App. 1983) (“Conspicuously
absent from that list [in the substantially similar predecessor
statute to 13-22-228(1)] is an order by the court compelling the
parties to arbitrate.”).
¶ 13 Courts in other states that have adopted statutes identical to
section 13-22-228(1) have reached the same conclusion. In St.
Francis Xavier Hospital v. Ruscon/Abco, the South Carolina Court of
Appeals refused to hear the appeal of an order denying the
consolidation of arbitration proceedings because the language of
that state’s analogue to section 13-22-228(1) “does not expressly
allow an appeal from an order denying an application to consolidate
pending arbitration proceedings.” 330 S.E.2d 548, 550 (S.C. Ct.
App. 1985). The Washington Court of Appeals similarly noted that,
while the statute “designates specific orders in arbitration actions
from which an appeal may be taken, . . . an order of consolidation is
not one of them.” Cummings v. Budget Tank Removal & Env’t Servs.
LLC, 260 P.3d 220, 224 (Wash. Ct. App. 2011).
¶ 14 Our reading of section 13-22-228(1) is also consistent with the
policy underlying the Act — to provide a convenient and efficient
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alternative to litigation. See Vallagio at Inverness Residential
Condo. Ass’n, ¶ 13, 412 P.3d at 713. Appeals of district court
orders denying motions to consolidate separate arbitration
proceedings would delay the arbitration process and increase the
parties’ legal expenses. Notably, the only pre-award orders that are
appealable under section 13-22-228(1) are orders blocking or
hindering the arbitration process. See § 13-22-228(1)(a) & (b)
(authorizing appeals of orders denying motions to compel
arbitration and orders staying arbitration). An order denying a
motion to consolidate separate arbitration proceedings neither
blocks nor hinders the arbitration process. Rather, it allows the
arbitration process to proceed.
¶ 15 For these reasons, we conclude that we lack jurisdiction to
hear appeals from orders denying a motion to consolidate separate
arbitration proceedings. “Because this court’s jurisdiction is
conferred by statute, we cannot expand its scope beyond [its]
legislative grant,” Wilson v. Kennedy, 2020 COA 122, ¶ 6, ___ P.3d
___, ___, and, therefore, we may not exercise jurisdiction in this
case.
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B. An Order Denying a Motion to Consolidate Arbitration
Proceedings Is Not a “Final Judgment”
¶ 16 Sellers seek to circumvent the omission of orders denying
motions to consolidate separate arbitration proceedings from
section 13-22-228(1) by arguing that the district court’s order is an
appealable “final judgment” under section 13-22-228(1)(f) and
C.A.R. 1(a)(1). As noted above, subsections 13-22-228(1)(a) and (b)
describe with specificity the pre-award orders that may be appealed,
and an order denying a motion to consolidate separate arbitration
proceedings is not one of them.
¶ 17 More fundamentally, an order denying a motion to consolidate
separate arbitration proceedings is not the equivalent of a “final
judgment.” “[I]n determining whether a trial court’s order is subject
to review, the appellate court must consider the substance and not
the form of the order.” Gergel, 58 P.3d at 1136. Gergel concerned
an attempt to appeal an order compelling the parties to arbitrate.
The appellants contended that their motion to stay the arbitration
proceedings, which the district court denied, was substantively a
motion for a temporary injunction, as they had labeled it. Id. at
1135-36. The grant or denial of a temporary injunction is an
8
appealable order. Id. at 1135. But because the parties’ motion
“requested neither temporary relief nor preservation of the status
quo,” the division of this court concluded that the district court’s
denial of the motion was the functional equivalent of an order
directing arbitration. Id. at 1136. Such an order is not listed in
section 13-22-228(1) and, thus, is not appealable. Id.¶ 18 In contrast to the form and substance of the court’s order
denying Sellers’ motion to consolidate BKV’s arbitration
proceedings, an order entering a “final judgment” “finally disposes
of the particular action and prevents further proceedings . . . .”
State ex rel. Suthers v. CB Servs. Corp., 252 P.3d 7, 10 (Colo. App.
2010) (quoting Levine v. Empire Savings & Loan Ass’n, 192 Colo.
188, 190, 557 P.2d 386, 387 (1976)). In civil cases, our supreme
court has “consistently held that a ‘final judgment is one which
ends the particular action in which it is entered, leaving nothing
further for the court pronouncing it to do in order to completely
determine the rights of the parties involved in the proceeding.’”
Scott v. Scott, 136 P.3d 892, 895 (Colo. 2006) (quoting Harding
Glass Co. v. Jones, 640 P.2d 1123, 1125 n.2 (Colo. 1982)).
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¶ 19 Here, although Sellers’ motion to consolidate was the only
filing in the underlying case, the district court’s order denying it did
not “finally dispose[] of the . . . action and prevent[] further
proceedings.” See Suthers, 252 P.3d at 10. The parties may return
to the district court before, during, or after the arbitrations by filing
one of the arbitration-related motions authorized under the Act.
For example, if one of the Sellers refused to arbitrate, BKV could file
a motion to compel arbitration under section 13-22-207(1), C.R.S.
2020, or, if a party found evidence that one of the arbitrators
engaged in misconduct in connection with the arbitration, that
party could file a motion to vacate the arbitrator’s award under
section 13-22-223(1)(b)(III), C.R.S. 2020. The district court’s order
denying Sellers’ motion to consolidate the arbitration proceedings
does not prevent any of these further proceedings.
¶ 20 In any event, a final and appealable judgment will be entered
in this case only if and when an arbitrator enters an award in one of
the arbitration proceedings and the district court enters a judgment
“in conformity therewith.” See § 13-22-225(1), C.R.S. 2020;
S. Wash. Assocs. v. Flanagan, 859 P.2d 217, 220 (Colo. App. 1992)
(“The ‘award’ of a panel of arbitrators . . . [was] not . . . a ‘final
10
judgment.’” Rather, the final judgment in the case was “the
stipulated order and judgment confirming the arbitration award
pursuant to the [Act].”); see Mountain Plains Constructors, Inc. v.
Torrez, 785 P.2d 928, 930-31 (Colo. 1990) (holding that “an order
denying a motion to compel arbitration may . . . be appealed after
final judgment”). The language of Mountain Plains Constructors
would make no sense if an order denying a motion to compel
arbitration could be appealed immediately after the district court
ruled on a different pre-award motion, such as a motion to
consolidate separate arbitration proceedings.
¶ 21 Sellers attempt to distinguish Marshwood Associates v.
Krumbhaar & Holt, Associated Architects, P.A., 451 A.2d 305 (Me.
1982), and St. Francis Xavier Hospital, the two out-of-state cases
BKV cites in support of its argument that an order denying
consolidation is not an appealable final judgment. Both cases held
that an order denying consolidation of arbitration proceedings does
not have the effect of a final judgment and is thus not appealable.
Marshwood Assocs., 451 A.2d at 307; St. Francis Xavier Hosp., 330
S.E.2d at 550. Sellers contend that these cases are distinguishable
11
because they interpreted versions of the Act that do not authorize
trial courts to consolidate arbitration proceedings.
¶ 22 But Sellers’ argument assumes, contrary to the Act, that every
ruling on a permitted arbitration-related motion is appealable. As
explained in Part II.A above, simply because a statute authorizes
the court to take an action does not make that action appealable.
¶ 23 Moreover, under Sellers’ reasoning, any pre-award order, even
if not listed in section 13-22-228(1), would be an appealable final
judgment. This argument cannot be squared with section
13-22-228(1)’s meticulous delineation of the only pre-award court
orders that may be appealed. See § 13-22-228(1)(a) & (b). If any
pre-award order were a “final judgment,” then section
13-22-228(1)(a) & (b) would be superfluous; there would be no need
to specify that an order denying a motion to compel arbitration and
an order granting a motion to stay arbitration are appealable. We
do not interpret statutes to render the language in a subsection
superfluous. People v. Burnett, 2019 CO 2, ¶ 21, 432 P.3d 617,
622.
¶ 24 It is significant that section 13-22-228(1) places the two
appealable pre-award orders in separate subsections from “final
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judgments.” Because they are listed in different subsections from
“final judgments,” an order denying a motion to compel arbitration
and an order granting a motion to stay arbitration cannot be “final
judgments.” And it would make no sense to read section
13-22-228(1) to mean that, while these two pre-award orders are
not “final judgments,” all other types of pre-award orders may be
deemed “final judgments.”
¶ 25 In sum, we only have jurisdiction to “review interlocutory
orders where specifically authorized by statute or rule.” Gergel, 58
P.3d at 1134 (emphasis added). “We have ‘no authority to expand
[our] appellate jurisdiction’” beyond that granted by the General
Assembly and “cannot ‘modify the jurisdiction granted [us] by
statute.’” Wilson, ¶ 6, ___ P.3d at ___ (alterations in original)
(quoting People in Interest of L.R.B., 2019 COA 85, ¶ 15, ___ P.3d
___, ___). Under the plain language of section 13-22-228(1), we
have no jurisdiction to review an order denying a motion to
consolidate arbitration proceedings.
III. Conclusion
¶ 26 The appeal is dismissed.
JUDGE RICHMAN and JUDGE PAWAR concur.
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