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determining whether an agreement to arbitrate existed between the parties
Summary of this case from Soucy v. Nova Guides, Inc.Opinion
No. 06SA49.
October 23, 2006.
Appeal from the District Court, City and County of Denver, No. 05CV5605, Catherine A. Lemon, J.
Frascona, Joiner, Goodman and Green-stein, P.C. Matthew B. Osofsky, G. Roger Bock, Oliver E. Frascona, Boulder, Colorado, Attorneys for Plaintiff.
Silver Deboskey, P.C. Joe L. Silver, Martin D. Beier, Denver, Colorado, Attorneys for Defendants.
Rothgerber Johnson Lyons LLP, Richard K. Clark, Craig R. Welling Denver, Colorado, Attorneys for Amici Curiae National Association of REALTORS® and Colorado Association of REALTORS®.
This case involves a dispute over real estate transaction referral fees among Colorado licensed real estate brokers who were members of the Denver Metropolitan Commercial Association of REALTORS ("DMCAR") when the transactions and disputes in this case arose. An express condition of membership is that members will submit such disputes to binding arbitration. Each of the brokers separately executed an application form for membership that included consent to arbitration in accordance with the requirements of interconnected local and national REALTOR® professional organizations.
"REALTOR®" is a federally registered collective membership mark used by the National Association of REALTORS® and its constituent state and local associations of REALTORS® to indicate their membership status. Individuals who are membership of these associations are called REALTORS®. It appears from the record that the Denver Board of REALTORS®, which calhoun first joined, is now a part of DMCAR, which Urgitus joined.
The complaint alleges the existence of a referral fee agreement among the licensed Colorado real estate brokers, who are parties to this case. The district court entered an order for binding arbitration pursuant to section 13-22-207, C.R.S. (2005), of Colorado's Uniform Arbitration Act. In bringing this original proceeding under C.A.R. 21, the defendant brokers assert that no arbitration agreement existed because (1) the parties did not execute an arbitration agreement with each other, (2) membership in a voluntary association does not create a contract among members of that organization, and (3) even if there was an agreement to arbitrate, it ceased to exist when the defendant brokers withdrew their membership from DMCAR.
Whether the parties entered into the alleged referral fee agreement is a factual matter for the arbitration. Under Colorado's arbitration act, the arbitrator determines whether a condition precedent to arbitrability has been fulfilled and whether a contract containing a valid agreement to arbitrate is enforceable. § 13-22-206(3), C.R.S. (2006).
The petitioners phrase their issues as follows:
1. Whether, in the absence of a written agreement between them to arbitrate, parties can be compelled to arbitrate because they belong or formerly belonged to a professional organization with bylaws that require its members to arbitrate.
2. Whether the trial court exceeded its authority and abused its discretion in declining to certify its decision for appeal.
We affirm the district court's arbitration order. We hold that the district court did not err in ordering arbitration because (1) each of these licensed real estate brokers had previously consented to arbitration with other members of the professional organization should disputes arise among themselves; (2) each of these brokers were members of the organization when they entered into the alleged referral fee agreement and the disputes arose; and (3) their consents to arbitrate constituted an implied condition of the alleged referral fee agreement enforceable under Colorado's Uniform Arbitration Act, sections 13-22-201 to -239, C.R.S. (2006).
Our holding and reasoning in this case are limited to the circumstance of an agreement among the parties to the lawsuit that includes an implied condition to arbitrate. We do not decide or address whether by-laws of a voluntary association are enforceable against and among individuals absent a contractual relationship that would include an implied condition as exists in this case.
Because the district court should have stayed the lawsuit pending arbitration pursuant to section 13-22-207(7), rather than dismissing it, we set aside the district court's order of dismissal, and order the lawsuit stayed pending arbitration.
I.
Plaintiff Robert Lane, d/b/a Lane Realty Company, ("Lane") is a licensed Colorado real estate broker and employing broker at Lane Realty Company. He served as chief financial officer for Weberg Enterprises, Incorporated from 1985 until 2002, when the company closed, and as property manager for Weberg Properties, the real estate arm of John Weberg's property. In 2002 John Weberg solicited Lane's advice regarding realtors who could assist Weberg in disposing of his real estate portfolio. Lane alleges that he contacted several realtors and, on July 22, 2002, he entered into a "referral fee agreement" with CB Richard Ellis, Incorporated ("CBRE") for "a referral of 20% on any deals going forward with John P. Weberg."
The complaint alleges the following. In February 2004, after the sale of one of Weberg's properties, Fairways Plaza Shopping Center, CBRE paid Lane approximately $52,000 as a referral fee. When a second Weberg property sold in 2004, the County Line property, Ronald Urgitus, the employing broker of CBRE, refused payment of the referral fee. Lane learned of a listing with CBRE for the sale of a third Weberg property, Denver Distribution Center. Lane contacted Richard Calhoun, managing broker at CBRE, regarding the status of his referral fees for the two listings for which he had received no fee. Calhoun refused payment.
On January 21, 2005, pursuant to the procedures of the Denver Board of REALTORS®, Lane submitted a Request and Agreement to Arbitrate form to DMCAR. The DMCAR sent a notice of the arbitration request to Urgitus and Calhoun on February 8, 2005, and requested a response by February 23, 2005. Urgitus and Calhoun did not respond, and they withdrew their membership in DMCAR on May 9, 2005.
Only individuals licensed as real estate brokers are eligible to apply for membership in the local REALTOR® association.
In his suit filed in July 2005 to collect the fees allegedly owed to him, Lane sought an arbitration order. The brokers involved on both sides of this action are Colorado licensed real estate brokers. Urgitus filed an application for membership with DMCAR, was accepted, and was a member of this association when the disputes for which the court ordered arbitration arose. Calhoun filed an application for membership with DMCAR, was accepted, and was a member of this association when the disputes for which the court ordered arbitration arose.
Amici Curiae National Association of REALTORS® and Colorado Association of REALTORS® inform us that 25,000 REALTOR® members reside and work in Colorado; that the national organization first adopted the Code of Ethics and Arbitration Manual in 1973; and that arbitrations are conducted pursuant to detailed procedures before a panel of neutral real estate professionals trained to conduct such arbitrations.
The application for membership Urgitus signed for DMCAR contained the following provisions:
In the event my application is approved, I agree as a condition of membership to complete the orientation and ethics course of DMCAR; and to otherwise on my own initiative thoroughly familiarize myself with the Code of Ethics of the National Association of REALTORS®, including the duty to arbitrate business disputes in accordance with the Code of Ethics and Arbitration Manual of the Board and the Constitutions, Bylaws, and Rules and Regulations of DMCAR, the Colorado Association and the National Association. I further agree to satisfactorily complete a reasonable and non-discriminatory written examination covering such Code, Constitutions, Bylaws, Rules and Regulations, and duty to arbitrate. I further agree that my act of paying dues shall evidence my initial and continuing commitment to abide by the aforementioned Code of Ethics, Constitutions, Bylaws, Rules and Regulations, and duty to arbitrate, all as from time to time amended.
(Emphasis added). The application form Calhoun signed for DMCAR contained provisions equivalent to those Urgitus signed. Incorporated by reference in the signed applications, the Code of Ethics, Arbitration Manual, and Standards of Practice of the National Association of REALTORS® provides in "Part Two — Membership Duties and Their Enforcement" that:
The duties of membership include the following: (a) to abide by the Code of Ethics of the National Association of REALTORS® (b) to abide by the bylaws of this Board and its rules and regulations; and (c) to submit to arbitration all disputes specified in Part ten of this Manual by the procedure therein provided, and to abide by the arbitrators' award. . . .
"Part Ten — Arbitration of Disputes," in turn, provides that "[t]he obligation to participate in arbitration contemplated by this Article includes the obligation of REALTORS® (principles) to cause their firms to arbitrate and be bound by any award." The matters that must be arbitrated include "entitlement to commissions and compensation in cooperative transactions that arise out of the business relationships between REALTORS® and between REALTORS® and their clients and customers. . . ." Article 17 of the Standards of Practice of the National Association of REALTORS® provides:
In the event of contractual disputes . . . between REALTORS® (principals) associated with different firms, arising out of their relationship as REALTORS®, the REALTORS® shall submit the dispute to arbitration in accordance with the regulations of their Board or Boards rather than litigate the matter.
"Article VI — Privileges and Obligations," section 5(a), of the DMCAR Bylaws provides that "if a member resigns or otherwise causes membership to terminate, the duty to submit to arbitration continues in effect even after membership lapses or is terminated, provided that the dispute arose while the former member was a REALTOR®."
On February 8, 2005, DMCAR notified Urgitus and Calhoun of Lane's request to arbitrate and sent them a form to sign relating to the arbitration. They did not sign and return the form. Three months thereafter A. they withdrew from membership in the REALTOR® organizations. The transactions and disputes for which Lane alleges that compensation is due from Urgitus and Calhoun arose before they terminated their membership.
Urgitus and Calhoun contend that the form accompanying the notice of arbitration request constitutes an admission that the duty to arbitrate involving REALTOR members does not arise unless the member signs this form. However, the application forms Urgitus and Calhoun signed, and the incorporated documents in the record of this original proceeding, plainly impose a duty of arbitration even if a member does not sign and return the form when requested to do so.
Pursuant to section 13-22-207, C.R.S. (2006), the district court ordered Urgitus to "submit the matters described in [Lane's] complaint to binding arbitration pursuant to the rules of [DMCAR]," and placed the case "under stay pending the outcome of the arbitration and until such time as the parties request that the determination of the arbitrators be reduced to a judgment of this Court." Thereafter, the district court amended its prior order nunc pro tunc, as follows:
(1) the title of the Order shall read "Order Granting Plaintiffs Motion to Compel Arbitration;" and (2) Plaintiffs claim to compel arbitration is granted and the remaining claims of the Amended Complaint are dismissed, without prejudice.
Urgitus sought certification of the district court's order for appeal, pursuant to C.R.C.P. 54(b). The district court denied the motion for certification and required that the "parties shall cooperate in the immediate scheduling of arbitration."
II.
We hold that the district court did not err in ordering arbitration because (1) each of these licensed real estate brokers had previously consented to arbitration with other members of the professional organization should disputes arise among themselves; (2) each of these brokers were members of the organization when they entered into the alleged referral fee agreement and the disputes arose; and (3) their consents to arbitrate constituted an implied condition of the alleged referral fee agreement enforceable under Colorado's Uniform Arbitration Act, sections 13-22-201 to -239, C.R.S. (2006).
Standard of Review
Whether an agreement to arbitrate exists is a matter of law that we review de novo. Allen v. Pacheco, 71 P.3d 375, 378 (Colo. 2003); see also Parker v. Ctr. for Creative Leadership, 15 P.3d 297, 298 (Colo.App. 2000) ("The question of arbitrability is one for the court to decide."). In determining whether the parties have agreed to submit the issue in question to arbitration, we follow state law principles governing contract formation. Allen, 71 P.3d at 378; City County of Denver v. Dist. Court, 939 P.2d 1353, 1361 (Colo. 1997).
We must construe the terms of the arbitration agreement in a manner that allows each party to receive the benefit of the bargain, and the scope of the agreement must faithfully reflect the reasonable expectations of the parties. Allen, 71 P.3d at 378. We must interpret the arbitration agreement in a manner that best effectuates the intent of the parties. Id.
To determine the scope of an arbitration agreement, we must examine the wording in order to ascertain and give effect to the mutual intent of the parties as well as the subject matter and purposes to be accomplished by the agreement. In re Marriage of Popack, 998 P.2d 464, 467 (Colo.App. 2000). We ascertain the parties' intent by looking to the plain language of the arbitration agreement. Allen, 71 P.3d at 378; see also State Farm Mut. Auto. Ins. Co. v. Stein, 940 P.2d 384, 387 (Colo. 1997) (addressing insurance policies generally).
We will enforce the agreement as written unless there is an ambiguity in the language; courts should neither rewrite the agreement nor limit its effect by a strained construction. Allen, 71 P.3d at 378. Thus, like any contract, an arbitration agreement must be given effect according to the plain and ordinary meaning of its terms. Id.
In determining whether an ambiguity exists, we must ask whether the disputed provision is reasonably susceptible on its face to more than one interpretation. Id. We also evaluate the arbitration agreement as a whole and construe the language in harmony with the plain and generally accepted meaning of the words employed, unless the intent of the parties demonstrates that an alternative interpretation is intended. Id.
If ambiguities are found in the arbitration agreement, we afford the parties a presumption in favor of arbitration and resolve doubts about the scope of the arbitration clause in favor of arbitration. Id.; see City County of Denver, 939 P.2d at 1364.
B. Arbitration Agreements Are Favored in Colorado
In Colorado, arbitration is a favored method of dispute resolution. Peterman v. State Farm Mut. Auto. Ins. Co., 961 P.2d 487, 493 (Colo. 1998); see Wales v. State Farm Mut. Auto. Ins. Co., 38 Colo.App. 360, 363, 559 P.2d 255, 256 (1976). Our constitution, our statutes, and our case law all support agreements to arbitrate disputes. Colo. Const, art. XVIII, § 3; §§ 13-22-201 to -239, C.R.S. (2006); Peterman v. State Farm Mut. Auto. Ins. Co., 961 P.2d at 493.
Article XVIII, section 3 of the Colorado Constitution provides:
It shall be the duty of the general assembly to pass such laws as may be necessary and proper to decide differences by arbitrators, to be appointed by mutual agreement of the parties to any controversy who may choose that mode of adjustment. The powers and duties of such arbitrators shall be prescribed by law.
Pursuant to this provision, the General Assembly's enactment of the Uniform Arbitration Act, sections 13-22-201 to -239, provides a uniform statutory framework for arbitration in order to encourage the settlement of disputes. In re Marriage of Popack, 998 P.2d at 467 ("All doubts whether a dispute is arbitrable are to be resolved in favor of arbitration."); Farmers Ins. Exch. v. Taylor, 45 P.3d 759, 761 (Colo.App. 2001).
Title 13, part 2, Uniform Arbitration Act was originally enacted in 1975. In 2004, the substantive provisions were repealed and reenacted, causing some addition, relocation, and elimination of sections as well as subject matter. Section 13-22-203(2), C.R.S. (2004), provides that "part 2 shall govern an agreement to arbitrate made before August 4, 2004, if all parties to the agreement or to the arbitration proceeding so agreed in a record." Since the agreement to arbitrate in this case was made prior to August 4, 2004, and no revisions were made to the Act in 2006, we cite to part 2 Uniform Arbitration Act, C.R.S. (2006).
Colorado's arbitration act explicitly authorizes a cause of action to compel arbitration when a party alleges an enforceable agreement to arbitrate and another person's refusal to arbitrate pursuant to the agreement.
(1) On the motion of a person showing an agreement to arbitrate and alleging another person's refusal to arbitrate pursuant to the agreement:
(a) If the refusing party does not appear or does not oppose the motion, the court shall order the parties to arbitrate; and
(b) If the refusing party opposes the motion, the court shall proceed summarily to decide the issue and order the parties to arbitrate unless it finds that there is no enforceable agreement to arbitrate.
(2) On the motion of a person alleging that an arbitration proceeding has been initiated or threatened but that there is not an agreement to arbitrate, the court shall proceed summarily to decide the issue. If the court finds that there is an enforceable agreement to arbitrate, it shall order the parties to arbitrate.
§ 13-22-207, C.R.S. (2006).
Colorado's arbitration act provides for a division of duties between arbitrators and the court:
(1) An agreement contained in a record to submit to arbitration any existing or subsequent controversy arising between the parties to the agreement is valid, enforceable, and irrevocable except on a ground that exists at law or in equity for the revocation of a contract.
(2) The court shall decide whether an agreement to arbitrate exists or a controversy is subject to an agreement to arbitrate.
(3) An arbitrator shall decide whether a condition precedent to arbitrability has been fulfilled and whether a contract containing a valid agreement to arbitrate is enforceable.
(4) If a party to a judicial proceeding challenges the existence of, or claims that a controversy is not subject to, an agreement to arbitrate, the arbitration proceeding may continue pending final resolution of the issue by the court, unless the court otherwise orders.
§ 13-22-206, C.R.S. (2006).
In Howsam v. Dean Witter Reynolds, Inc., the United States Supreme Court restated the basic principles governing arbitration:
This Court has determined that "arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." Although the Court has also long recognized and enforced a "liberal federal policy favoring arbitration agreements," it has made clear that there is an exception to this policy: The question of whether the parties have submitted a particular dispute to arbitration, i.e. the " question of arbitrability," is "an issue for judicial determination [u]nless the parties clearly and unmistakably provide otherwise."
537 U.S. 79, 83, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002) (internal citations omitted).
Under Colorado's arbitration act, a valid, enforceable arbitration provision divests trial courts of jurisdiction over all questions that are to be submitted to arbitration, pending the conclusion of arbitration. Hughley v. Rocky Mountain Health Maint. Org., Inc., 927 P.2d 1325, 1330 (Colo. 1996). Thus, a trial court order granting a motion to stay the proceedings and to compel arbitration is an "interlocutory order" that is not immediately appealable. See Fonden v. U.S. Home Corp., 85 P.3d 600, 603 (Colo.App. 2003) (citing the United States Supreme Court decision in Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 86, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000), (specifically noting "that if the district court had entered a stay instead of a dismissal, that order would not be appealable") (internal quotations omitted)).
C. An Agreement to Arbitrate Exists in this Case
Under Colorado law, contractual conditions may be express or implied. E.g., Goodson v. Am. Standard Ins. Co., 89 P.3d 409, 414 (Colo. 2004); Cary v. United of Omaha Life Ins. Co., 68 P.3d 462, 466 (Colo. 2003) (addressing implied contractual duty of good faith and fair dealing). When interpreting a contract, we consider "the facts and circumstances attending its execution, so as to learn the intentions of the parties." Eisenhart v. Denver, 27 Colo.App. 470, 478, 150 P. 729, 732 (1915), aff'd, 64 Colo. 141, 170 P. 1179 (1918). In contractual settings, we can look to the circumstances surrounding the contract's formation in construing the contract, in order to carry out the intent of the contracting parties. Lazy Dog Ranch v. Telluray Ranch Corp., 965 P.2d 1229, 1235 (Colo. 1998).
Furthermore, the substance, main objective, and purpose of the contractual agreement control over the form of the contract. 17A Am.Jur.2d Contracts § 336 (2006). Accordingly, contractual conditions may be implied by law, the purpose of the contract, or the intent of the parties. Mumblow v. Monroe Broad., Inc., 401 F.3d 616, 622 (5th Cir.2005). Conditions are implied in fact when those conditions are "necessarily inherent in the actual performance of the contract." Bergman v. Commerce Trust Co., 35 Kan.App.2d 301, 129 P.3d 624, 628 (2006) (citing 13 Williston on Contracts § 38.11 (4th ed.2000)).
In the case before us, the parties to the real estate referral fee agreement alleged to exist in this case had previously consented to arbitrate disputes arising among themselves while each was a member of the professional organization. They had not rescinded their consents to arbitrate when the disputes between them arose. Each was still a member of the professional organization that set forth guidelines and procedures for such arbitration. These undisputed facts and the extensive documentary evidence in the record spelling out this duty to arbitrate were the basis for the district court's order compelling arbitration and for our legal conclusion in this case upholding the district court's arbitration order. The district court did not abuse its discretion.
An articulated purpose and objective of joining the REALTOR® organization is to facilitate the resolution of disputes through arbitration. This duty to arbitrate is a condition of their membership agreements and, consequently, of their professional relationship while members. When members of the organization subsequently enter into agreements among themselves, such as the alleged referral fee agreement in this case, and have not rescinded their previously-executed consents to arbitration, those consents become an implied condition of doing business with each other and of their contractual performance.
By the plain language of the membership applications they signed, Urgitus and Calhoun each consented to binding arbitration should a dispute arise between them during the time they were members of the DMCAR. The notice contained in the applications concerning this duty to arbitrate is explicit and is repeated three times on the face of the signature page above each of their signatures.
The record in this original proceeding demonstrates that arbitration is both a benefit and duty that DMCAR REALTOR® professionals undertake to receive and perform from, for, and with each other. Incorporated by reference in the signed applications are the ethical code, standards, and arbitration manual of these interconnected local and national organizations that spell out clearly and unambiguously this reciprocal duty to arbitrate. This duty to arbitrate applies to all disputes concerning compensation that arise among members of DMCAR, which is affiliated with the interconnected REALTOR® organizations.
The primary defense to the existence of an arbitration agreement in this case is that there is no direct written agreement among Urgitus and Lane or Calhoun and Lane; thus, there can be no enforceable agreement to arbitrate in this case pursuant to Colorado's arbitration act. We disagree.
Pursuant to Article XVIII, section 3 of the Colorado Constitution, the General Assembly's enactment of the Uniform Arbitration Act, sections 13-22-201 to -239, provides a uniform statutory framework for arbitration in order to encourage the settlement of disputes. All doubts as to whether a dispute is arbitrable are to be resolved in favor of arbitration. In re Marriage of Popack, 998 P.2d at 467; Farmers Ins. Exch. v. Taylor, 45 P.3d at 761.
Thus, the General Assembly intended that Colorado's arbitration act would encompass all forms of contract and contract conditions that expressly or impliedly include a duty to arbitrate. Under Colorado law, contractual conditions may be express or implied. Goodson v. Am. Standard Ins. Co., 89 P.3d at 414; Cary v. United of Omaha Life Ins. Co., 68 P.3d at 466. We may look to the circumstances surrounding the contract's formation in construing the contract, in order to carry out the intent of the contracting parties. Lazy Dog Ranch v. Telluray Ranch Corp., 965 P.2d at 1235. When the record of the agreement we are called upon to construe or enforce consists of documentary evidence, we may base our legal conclusion upon that documentary evidence and do not depend upon a trial court's factual findings or interpretation of that evidence. Winslow Constr. Co. v. City County of Denver, 960 P.2d 685, 692 (Colo. 1998); M.D.C./Wood, Inc. v. Mortimer, 866 P.2d 1380, 1382 (Colo. 1994) (stating that "when facts are presented to the trial court by stipulation, or uncontested documentary evidence, that an appellate court may draw its own conclusions"); see also Archangel Diamond Corp. v. Lukoil, 123 P.3d 1187, 1195 (Colo. 2005) ("We review documentary evidence de novo.").
As demonstrated by the case before us, an agreement to arbitrate can take the form of previously-executed consents to arbitrate that become an implied condition of subsequent agreements the members of the professional organization make among themselves. Section 13-22-206(1) of Colorado's arbitration act provides that "[a]n agreement contained in a record to submit to arbitration any existing or subsequent controversy arising between the parties to the agreement is valid, enforceable, and irrevocable except on a ground that exists at law or in equity for the revocation of a contract."
The litigants here are sophisticated business persons who agreed to abide by a set of governance rules and ethical standards that included professional commitments beyond those otherwise required by Colorado law and the regulations of the Colorado Real Estate Commission. Economic advantage to each other as fellow DMCAR REALTORS® is clearly a benefit of belonging to the national and local organizations. Valid contractual duties can arise out of a network of agreements involving commercially sophisticated parties who are able to bargain for an allocation of risks, duties, and remedies. See, e.g., BRW, Inc. v. Dufficy Sons, Inc., 99 P.3d 66, 73 (Colo. 2004). As clearly shown by the present case, REALTOR® members are encouraged to refer real estate transactions to each other, to contract with each other for a fee for such referrals, and to avoid a course of contested litigation should a dispute arise while they are members.
Our court of appeals has held that arbitration provisions and procedures contained in a voluntary membership organization of real estate professionals are binding on its members. Jorgensen Realty, Inc. v. Box, 701 P.2d 1256, 1257-58 (Colo.App. 1985). We observe that the Jorgensen case and other professional real estate organization cases like it arise when the contracting parties to professional agreements attempt to avoid enforcement of their prior unrescinded arbitration consents.
Other jurisdictions are in accord with our holding here, particularly when addressing REALTOR® organization members and the duty to arbitrate. The Oklahoma Court of Civil Appeals applied Jorgensen to REALTOR® members who had a real estate sales commission dispute between themselves. Rogers Realty, Inc. v. Smith, 76 P.3d 71, 72 (Okla.Civ.App. 2003). See also Topolski v. Helena, Ass'n of REALTORS®, Inc., 303 Mont. 224, 15 P.3d 414, 414 (2000) (holding that terms of brokers' membership in association required them to arbitrate dispute with client, even though they had not entered into any other contract or agreement with client to arbitrate disputes with her); King v. Larsen Realty, Inc., 121 Cal.App.3d 349, 357, 175 Cal.Rptr. 226 (1981) (holding that members of the California Association of REALTORS® are bound to arbitrate when they have contracted to abide by the Association's bylaws, and those bylaws impose a duty to arbitrate); Bastone v. Dial-A-House, 100 Misc.2d 1026, 1027, 420 N.Y.S.2d 467 (1979) (holding that realtor, "by virtue of his membership, was bound by the duly enacted provisions of the constitution and bylaws" of the local board of REALTORS®); Elbadramany v. Stanley, 490 So.2d 964, 966 (Fla.App. 1986) (holding that "a provision in the constitution, charter or by-laws of voluntary association which requires that disputes between members be submitted to arbitration constitutes a binding agreement between such members to submit future disputes to arbitration"); Van C Argiris Co. v. Pain/Wetzel Assocs., Inc., 63 Ill.App.3d 993, 20 Ill.Dec. 616, 380 N.E.2d 825, 828 (1978) (holding that bylaws of real estate brokers' organization constitute contractual agreement between members to arbitrate and dispute between said members relating to "matters arising out of their business as brokers or agents" is subject to arbitration).
Here, the DMCAR applications for membership signed by Urgitus and Calhoun incorporate by reference the terms of the " Code of Ethics of the National Association of REALTORS®, including the duty to arbitrate business disputes in accordance with the Code of Ethics and Arbitration Manual of the Board and the Constitutions, Bylaws, and Rules and Regulations of [DMCAR or the Denver Board], the Colorado Association and the National Association."
The referenced Code of Ethics requires arbitration when a dispute arises out of the parties'"relationship as REALTORS®."
In the event of contractual disputes or specific non-contractual disputes as defined in Standard of Practice 17-4 between (principals) associated with different firms, arising out of their relationship as REALTORS®, the REALTORS® shall submit the dispute to arbitration in accordance with the regulations of their Board or Boards rather than litigate the matter.
National Association of REALTORS®, Code of Ethics and Standards of Practice, Article 17, in Manual at 12.
Originally adopted in 1913, the Code of Ethics has been amended from time to time. We cite to the 2005 edition of Code of Ethics and Arbitration Manual which was in effect at the time the dispute arose and the arbitration complaint was filed. This edition includes all case interpretations approved by the Professional Standards Committee through 2004.
Neither Urgitus, nor Calhoun, may defeat the arbitration of transactions and fee disputes that arose during their membership in the REALTOR® organization by withdrawing from membership after the disputes with Lane arose. The plain language and meaning of the REALTOR® documents in this original proceeding, incorporated by reference in the signed application for memberships, requires arbitration of disputes arising when the disputants were members. This lawsuit addresses only such disputes.
If they entered into the referral fee agreement as alleged in the complaint, which is a factual matter for determination in the arbitration under section 13-22-206(3), C.R.S. (2006), then Urgitus and Lane became bound by the implied condition to arbitrate that is enforceable under Colorado's arbitration act. A valid arbitration provision of a contract divests a trial court of jurisdiction over all questions that are to be submitted to arbitration, pending conclusion of arbitration. The district court did not err in ordering arbitration in this case.
We decline to award attorneys fees in this original proceeding because we accepted jurisdiction to review an important public issue we had not previously decided, and we do not find its presentation to have been frivolous.
Because the district court should have stayed the lawsuit pending arbitration pursuant to section 13-22-207(7), rather than dismissing it, we set aside the district court's dismissal order, and order the lawsuit stayed pending arbitration.
III.
Accordingly, we affirm the district court's arbitration order, discharge our rule in part, and make our rule absolute in part.
Justice EID specially concurs.
Justice COATS dissents.