Firelock Inc. v. District Court In and For the 20th Judicial Dist. of State of Colo.

• Decision Date: 24 July 1989
• Docket Number: No. 88SA262,88SA262
• Citation: 776 P.2d 1090
• Parties: FIRELOCK INCORPORATED, a Colorado corporation, Petitioner, v. The DISTRICT COURT IN AND FOR THE 20TH JUDICIAL DISTRICT OF the STATE OF COLORADO; The Honorable Richard C. McLean, District Judge; and McGhee Communications, Inc., Respondents.
• Court: Colorado Supreme Court

Page 1090

776 P.2d 1090

58 USLW 2074

FIRELOCK INCORPORATED, a Colorado corporation, Petitioner, v. The DISTRICT COURT IN AND FOR THE 20TH JUDICIAL DISTRICT OF the STATE OF COLORADO; The Honorable Richard C McLean, District Judge; and McGhee Communications, Inc., Respondents.

No. 88SA262.

Supreme Court of Colorado En Banc.

July 24, 1989.

Mosley, Wells, Johnson & Ruttum, P.C., Morris B. Hoffman, Denver, for petitioner.

Warren & Carlson, Richard N. Carlson, Niwot, for respondents.

Richard W. Laugesen, Denver, amicus curiae.

William P. DeMoulin and W. David Pantle, Denver, for amicus curiae Colo. Bar Ass'n.

ROVIRA, Justice.

This case requires us to determine whether the Colorado Mandatory Arbitration Act (Act), §§ 13-22-401 to 13-22-409, 6A C.R.S. (1987), violates the Colorado Constitution and the due process and equal protection clauses of the fourteenth amendment to the United States Constitution.

The Boulder County District Court held that the Act was constitutional and denied the petitioner's request to refrain from assigning the case for arbitration. We issued a rule to show cause pursuant to C.A.R. 21, and we now discharge the rule.

I.

In 1988, McGhee Communications, Inc. (McGhee) commenced an action in the Boulder County District Court, which is located in the Twentieth Judicial District, against the petitioner, Firelock Incorporated (Firelock). McGhee claimed that it rendered advertising services to Firelock for which Firelock did not pay. In its complaint, McGhee certified that the probable recovery would not exceed $50,000, exclusive of interest and costs, and that the case was not exempt from mandatory arbitration. See C.R.C.P. 109.1.

Firelock filed an answer denying that the requested amount was owed, asserted several affirmative defenses, and demanded a jury trial. Firelock also filed a motion to refrain from assignment for mandatory arbitration under the Act. In support of its motion, Firelock claimed that the Act violated article II, sections 3, 6, 23, and 25; article III; article VI, sections 1 and 9; and article XVIII, section 3, of the Colorado Constitution; the fourteenth amendment to the United States Constitution; and C.R.C.P. 38. McGhee resisted the motion and requested that the trial court find the Act constitutional and order arbitration to be commenced promptly.

The trial court denied the motion, and Firelock then filed a petition pursuant to C.A.R. 21. In its petition, Firelock requested that this court issue an order to show cause why the respondent district court should not be restrained from referring the case for arbitration. Firelock also requested that we make the rule absolute and declare the Act unconstitutional.

II.

The Act was approved on May 28, 1987, and became effective on January 1, 1988. The Act is scheduled to terminate on July 1, 1990. See § 13-22-402(1), 6A C.R.S. (1987). Beginning on January 1, 1989, and on each January 1 thereafter, the judicial department must submit to the General Assembly an annual report evaluating the mandatory arbitration pilot project. See § 13-22-408, 6A C.R.S. (1987).

The Act provides a framework of mandatory arbitration in eight pilot judicial districts of which the twentieth, where the Boulder District Court is located, is one. See § 13-22-402(1), 6A C.R.S. (1987). In these eight pilot districts, any civil action filed in any court of record except the county court and small claims court after January 1, 1988, and before July 1, 1990 seeking money damages in the sum of $50,000 or less, excluding costs and interest, is to be assigned to mandatory arbitration once the action is at issue. See § 13-22-402(2), 6A C.R.S. (1987).

Pursuant to the Act, the complaint and any applicable counterclaim or cross-claim governed by the Act must contain a certification that the probable amount of recovery exceeds or does not exceed $50,000, the limit imposed for mandatory arbitration. The Act establishes procedures for the selection and compensation of arbitrators, see § 13-22-403, and sets forth an outline of procedures for the arbitration hearing, see § 13-22-404. Arbitrators must be "qualified" and must file a consent to act as an arbitrator in the district in which the court is located, but an arbitrator need not be an attorney. See § 13-22-403(3). Section 13-22-405 provides for a trial de novo for any party dissatisfied with the decision of the arbitrators. The demand for a trial de novo must be filed with the court within thirty days after the filing of the arbitrators' decision. See § 13-22-405(1). The Act also provides that, unless the trial de novo results in "an improvement of the position of the demanding party by more than ten percent," the demanding party must pay the costs of the arbitration proceeding including arbitrator fees, but not exceeding $1,000. See § 13-22-405(3).

Section 13-22-406 provides that the supreme court, pursuant to its authority under article VI, section 21, of the Colorado Constitution, is empowered to promulgate rules governing the arbitration proceedings established in the Act. Pursuant to this authority, we adopted C.R.C.P. 109.1. C.R.C.P. 109.1 establishes the procedure for certification of the probable amount of recovery and the basis for any exemption from the Act, see C.R.C.P. 109.1(b), sets forth sanctions for failure to comply with the certification procedures, see C.R.C.P. 109.1(c), and provides for a detailed procedure for the selection of arbitrators, see C.R.C.P. 109.1(d). C.R.C.P. 109.1 also provides for the filing of a pre-arbitration "Disclosure Statement," see C.R.C.P. 109.1(h), sets forth limited rules for discovery, see C.R.C.P. 109.1(i), and establishes the details of the arbitration hearing and the powers of the arbitrators, see C.R.C.P. 109.1(1). C.R.C.P. 109.1(q) provides that if neither party demands a trial de novo within thirty days after the filing of the arbitrators' award, then the award becomes final and the trial court must enter judgment on the award in accordance with C.R.C.P. 58(a).

III.

On appeal, Firelock presents several reasons for finding that the Act is unconstitutional. Firelock argues that the Act violates article III and article VI, sections 1 and 9, of the Colorado Constitution, which provide for the separation of powers; article II, sections 3 and 6, of the Colorado Constitution, which provide for the right of access to courts; article II, section 23, of the Colorado Constitution and C.R.C.P. 38, which provide for the right to trial by jury; article II, section 25, of the Colorado Constitution and the equal protection and due process clauses of the United States Constitution; and article XVIII, section 3, of the Colorado Constitution, which provides the General Assembly with authority over consensual arbitration. We will address each of these arguments in turn.

A.

Firelock asserts that the Act violates the separation of powers provision of the Colorado Constitution because section 13-22-402(2) requires "that the pilot district courts must refrain from exercising their general jurisdiction pending arbitration." Firelock also asserts that the Act "is an unconstitutional delegation of judicial power to unqualified private citizens" because it allows arbitration to be "conducted by persons who are not only not members of the judiciary, but indeed who do not even have to be licensed attorneys."

Article III of the Colorado Constitution provides:

The powers of the government of this state are divided into three distinct departments,--the legislative, executive and judicial; and no person or collection of persons charged with the exercise of powers properly belonging to one of these departments shall exercise any power properly belonging to either of the others, except as in this constitution expressly directed or permitted.

"The fundamental meaning of the separation of powers doctrine is that the three branches of government are separate, coordinate, and equal." Pena v. District Court, 681 P.2d 953, 955-56 (Colo.1984). The purpose of article III is to prevent one branch of government from exercising any power that is constitutionally vested in another branch of government. Van Kleek v. Ramer, 62 Colo. 4, 156 P. 1108 (1916).

According to article VI, section 1, the judicial power of the state is vested

in a supreme court, district courts, a probate court in the city and county of Denver, a juvenile court in the city and county of Denver, county courts, and such other courts or judicial officers with jurisdiction inferior to the supreme court, as the general assembly may, from time to time establish.

With respect to the authority vested in district courts, article VI, section 9, states that "[t]he district courts shall be trial courts of record with general jurisdiction, and shall have original jurisdiction in all civil, probate, and criminal cases, except as otherwise provided herein."

We must decide, therefore, whether the General Assembly can constitutionally require a district court to refrain from exercising its original jurisdiction in some civil cases while arbitration is proceeding. To answer this question, we must examine the nature of the judicial function and determine whether the arbitration panels provided in the Act exercise judicial authority.

In Mizar v. Jones, 157 Colo. 535, 537, 403 P.2d 767, 769 (1965), we noted "that courts do exist primarily to afford a forum to settle litigable matters between disputing parties." A "court" consists of " 'persons officially assembled, under authority of law, at the appropriate time and place, for the administration of justice.' " In re Allison, 13 Colo. 525, 528, 22 P. 820, 821 (1889). In Union Colony v. Elliott, 5 Colo. 371, 381 (1880), we quoted Blackstone's definition of a court:

A court is defined to be a place where justice is judicially administered.... In every court there must be at least three constituent parts; the actor, reus and judex; the actor or plaintiff who complains of an injury...