Lane v. Urgitus

• Decision Date: 23 October 2006
• Docket Number: No. 06SA49.,06SA49.
• Citation: 145 P.3d 672
• Parties: Robert B. LANE, d/b/a Lane Realty Company, Plaintiff, v. Ronald J. URGITUS, Richard M. Calhoun, and CB Richard Ellis, Inc., Defendants.
• Court: Colorado Supreme Court

145 P.3d 672

Robert B. LANE, d/b/a Lane Realty Company, Plaintiff, v. Ronald J. URGITUS, Richard M. Calhoun, and CB Richard Ellis, Inc., Defendants.

No. 06SA49.

Supreme Court of Colorado, En Banc.

October 23, 2006.

COPYRIGHT MATERIAL OMITTED

Frascona, Joiner, Goodman and Greenstein, 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®.

Justice HOBBS delivered the Opinion of the Court.

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.¹ 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.

The complaint alleges the existence of a referral fee agreement among the licensed Colorado real estate brokers, who are parties to this case.² 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.³

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, 2005.⁴ Urgitus and Calhoun did not respond, and they withdrew their membership in DMCAR on May 9, 2005.

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.⁵

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.⁶ Three months thereafter 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.

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 Plaintiff's Motion to Compel Arbitration;" and (2) Plaintiff's 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...