Thomas Wells and Associates v. Cardinal Properties, Inc., 75--002

• Decision Date: 23 September 1975
• Docket Number: No. 75--002,75--002
• Citation: 37 Colo.App. 1,543 P.2d 1275
• Parties: THOMAS WELLS AND ASSOCIATES, Plaintiff-Appellant, v. CARDINAL PROPERTIES, INC., a Texas Corporation, et al., Defendants-Appellees. . I
• Court: Colorado Court of Appeals

Page 1275

543 P.2d 1275

37 Colo.App. 1

THOMAS WELLS AND ASSOCIATES, Plaintiff-Appellant, v. CARDINAL PROPERTIES, INC., a Texas Corporation, et al.,

Defendants-Appellees.

No. 75--002.

Colorado Court of Appeals, Div. I.

Sept. 23, 1975.

Rehearing Denied Oct. 23, 1975.

Certiorari Granted Jan. 12, 1976.

Dwight K. Shellman, Jr. & Associates, P.C., Dwight K. Shellman, Jr., Dorothy Nuttall, Aspen, for plaintiff-appellant.

Klingsmith, Russell, Angelo & Wright, P.C., Harrison Russell, Robert E. Wright, Jr., Gunnison, for defendants-appellees.

BERMAN, Judge.

In this action to foreclose a mechanic's lien filed by plaintiff, Thomas Wells & Associates, the trial court granted the motion to dismiss the complaint made by defendant Mid-Continent Life Insurance Company (Mid-Continent). On appeal by plaintiff, we affirm.

In its 'Amended and Supplemental Complaint,' plaintiff, an architectural firm, based its right to recover for services rendered under a standard form American Institute of Architects contract entered into between the plaintiff and the defendant Cardinal Properties, Inc. (Cardinal). Plaintiff alleged that defendants Mid-Continent and Cardinal were co-owners of the real property at the date of the filing of the action, and that the contract was 'executed by plaintiff and Cardinal Properties, Inc., but (was) required, authorized and ratified by Mid-Continent as co-tenant and co-venturer in said project.'

Mid-Continent, in its 'Amended Answer,' admitted, Inter alia, an undivided 20% Ownership of the real property but denied it required, authorized, or ratified the contract, denied it was ever a co-tenant or co-venturer with Cardinal, and affirmatively alleged 'that any contract between plaintiff and the defendant Cardinal Properties, Inc., was a contract specifically limited to the executing parties of said contract.' Mid-Continent, for one of its defenses, alleged the failure of plaintiff to comply with Article 11 of the contract, which provides for mandatory binding arbitration of 'all claims, disputes and other matters in question arising out of, or relating to, this Agreement or the breach thereof.'

Subsequent to the filing of its 'Amended Answer,' Mid-Continent moved for dismissal pursuant to C.R.C.P. 12(b)(5) on the ground that plaintiff had failed to allege or show compliance with the arbitration provision of Article 11 of the contract and that compliance with Article 11 constitutes a condition precedent to any action for relief under Colorado law. The trial court granted the motion.

Plaintiff presents two issues for review by this court. First, plaintiff contends that there were disputed issues of fact, to wit, whether the arbitration clause had been waived and whether Mid-Continent was entitled to assert the provision since it was not a party to the contract, and that thus the dismissal was erroneously granted. Second, plaintiff contends that even if Mid-Continent has the right to assert the arbitration clause and has not waived that right, the trial court should have stayed the action pending arbitration, rather than grant a dismissal.

The only grounds urged by plaintiff at the hearing and on appeal to support a waiver was Mid-Continent's prior participation in the litigation without raising the arbitration clause in defense until its 'Amended Answer.' Thus, the facts upon which plaintiff relies to support its waiver argument are undisputed and based upon the pleadings in the case.

Although a party may waive the right to assert an arbitration clause as a condition precedent to litigation on the contract, Fravert v. Fesler,11 Colo.App. 387, 53 P. 288, arbitration is favored and waiver is not. Dominion Insurance Co., Ltd. v. Hart, 178 Colo. 461, 498 P.2d 1138. Plaintiff did not name Mid-Continent as a party defendant in its first complaint. Although the first amended complaint named Mid-Continent a party defendant, the trial court...