[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
and County of Denver District Court No. 14CV33937, Honorable
A. Bruce Jones, Judge
Connelly, Connelly Law LLC, Denver, Colorado, for
De Diego, De Diego Law, Santa Monica, California, for
1] Judge Learned Hand once wrote that "words
are chameleons, which reflect the color of their
environment." Commr v. Natl Carbide Corp.,
167 F.2d 304, 306 (2d Cir. 1948), affd, 336 U.S.
422, 69 S.Ct. 726, 93 L.Ed. 779 (1949). In this appeal, the
words are the phrase "arising under." Their
environment is an arbitration clause, which reads: "Any
disputes arising under this [a]greement will be
resolved by binding arbitration...." (Emphasis added.)
We are tasked with figuring out whether this phrase takes on
a narrow or a broad hue from its context in the arbitration
2] The appellant in this case— plaintiff,
Digital Landscape Inc., which we shall call Digital—
asserts that "arising under" has a narrow scope.
For Digital, this means that the arbitrator lacked
jurisdiction to decide a claim that Digital submits did not
"arise under" the contract in this case. The
appellee— defendant, Media Kings LLC, which we shall
call Media— submits that the scope of "arising
under" is broad, so the arbitrator had jurisdiction to
consider the claim. In this appeal, Digital asks us to review
the district courts judgment confirming an arbitrators
order and denying Digitals request to vacate it.
3] Modern arbitration clauses are products of a
strong policy that favors arbitration. For example, divisions
of this court have concluded that "arising under,"
as it is used in an arbitration clause, is broad because (1)
Colorado courts favor arbitration to resolve disputes; and
(2) we should resolve any doubts that we have about a
clauses scope in favor of arbitration.
4] But Digital points us to a debate among federal
circuits concerning the scope of "arising under" in
an effort to convince us to part company with these Colorado
decisions. One side of the debate thinks that the scope of
"arising under" is narrow, while the other side
thinks that the phrases scope is broad. After considering
both sides of the debate, we are persuaded by the reasoning
of the circuits that conclude that "arising under"
is broad: these circuits are convinced that "arising
under" is colored by a fundamental attribute of its
environment— the arbitration clause— which
reflects the strong federal policy that encourages
5] We therefore conclude that all the claims that
the arbitrator considered in this case were "dispute[s]
arising under" the contract between Digital and Media,
which were to "be resolved by binding arbitration."
The arbitrator therefore had jurisdiction to resolve those
6] We also disagree, for reasons that we explain
below, with two other contentions that Digital raises. As a
result, we affirm the district courts judgment.
7] Media entered into a contract to provide
marketing services to Transcendent Marketing, LLC, which we
shall call Transcendent. Transcendent was not a named party
in this case.
8] Media then contracted with Digital to provide
advertising services to Transcendent. Under the contract,
Media agreed to pay Digital a portion of its earnings from
Transcendent in exchange for Digitals work on the project.
9] But Media did not pay Digital. And someone from
Digital told someone from Transcendent that Media had not
paid. Apparently dissatisfied with Medias work and with its
lack of payment to Digital, Transcendent proposed that
Digital take over the project. Digitals principal officer
agreed, but he had one of his other companies assume the
work. This proposal effectively cut Media out of its
agreement with Transcendent.
10] Digital sued Media for breach of contract,
seeking unpaid earnings that Digital contended Media owed it
for work it had done for Transcendent. Media filed
counterclaims. The one that is the focus of the appeal
alleged that Digital had breached the implied covenant of
good faith and fair dealing by disclosing confidential
information to Transcendent, Medias client; by soliciting
Transcendents business; by disparaging Media to
Transcendent; and by stealing Transcendent as a client.
11] Because the contract between Media and Digital
included an arbitration clause, the district court ordered
them to arbitrate their dispute. The court stayed the case
until the arbitration proceeding was finished.
12] During the arbitration proceeding, Digital
argued that Media had breached the contract because Media had
not paid Digital the amount that the contract required. The
arbitrator agreed, and she awarded Digital $68,197.41.
13] When discussing the counterclaim alleging that
Digital had breached the implied covenant of good faith and
fair dealing, the arbitrator also referred to it as
addressing a breach of Digitals duty of loyalty to Media.
She then decided that, although the agreement described
Digital as an independent contractor, Digital still owed a
duty of loyalty to Media, which Digital had breached. So the
arbitrator awarded Media $24,400 in damages.
14] In her final order, the arbitrator concluded
that neither Media nor Digital had prevailed. She therefore
declined to award either of them attorney fees.
15] Digital filed a petition in the district court
that asked the court to confirm the part of the arbitration
order that awarded damages to Digital, vacate the part of the
order that awarded damages to Media because the arbitrator
had exceeded the scope of the arbitration clause, and award
Digital its attorney fees. The district court disagreed with
Digitals requests, so it confirmed the order in its
16] Digital raises three contentions.
17] First, Digital contends that the arbitrator did
not have jurisdiction to consider whether Digital had
breached a duty of loyalty to Media because the duty of
loyalty claim did not "arise under" the arbitration
18] Second, Media filed a counterclaim alleging that
Digital had breached the implied covenant of good faith and
fair dealing. Digital submits that the arbitrator improperly
converted this counterclaim to a different claim—
breach of loyalty— that Media had not raised. Digital
continues that it did not have notice of the different
elements of this claim. Digital wraps up this contention by
asserting that the arbitrators ruling on this different
claim was unfair and that the arbitrators award to Media was
19] Third, even if we disagree with the first two
contentions, Digital asserts that it was nonetheless entitled
to attorney fees because (1) its contract with Media stated
that the prevailing party in an arbitration proceeding
concerning the terms of the contract would be entitled to
attorney fees; (2) it prevailed on its breach of contract
claim; (3) Media prevailed on a claim— the breach of
loyalty claim— that was not part of the contract; so
(4) Media did not prevail on a claim that was related to the
Standard of Review and General Arbitration Principles
20] We review de novo
• whether a dispute falls within the scope of an
arbitration clause, Taubman Cherry Creek Shopping Ctr.,
LLC v. Neiman-Marcus Grp., Inc., 251 P.3d 1091, 1093
• "a district courts legal conclusions on a motion
to confirm or vacate an arbitration award,"
Rocha v. Fin. Indem. Corp., 155 P.3d 602, 604
(Colo.App. 2006); and
• whether "the arbitrators refusal to award
attorney fees to plaintiff as the prevailing party was a
determination beyond the scope of the parties arbitration
agreement," Magenis v. Bruner, 187 P.3d 1222,
1225 (Colo.App. 2008).
21] "To facilitate confidence in the finality
of arbitration awards and discourage piecemeal litigation,
[Colorados arbitration statutes] strictly limit[ ] the role
of the courts in reviewing awards, and a party challenging an
award bears a heavy burden." BFN-Greeley, LLC v.
Adair Grp., Inc., 141 P.3d 937, 940 (Colo.App. 2006).
"An arbitrator is the final judge of both fact and
law," id., and courts may not review the merits
of an arbitration award if there are not statutory grounds to
vacate, modify, or correct them, Levy v. Am. Family Mut.
Ins. Co., 293 P.3d 40, 49 (Colo.App. 2011).
22] Such statutory grounds are found in section
13-22-223(1)(d), C.R.S. 2018, which provides, as is pertinent
to this case, that a court "shall vacate" an award
"if the court finds that ... [a]n arbitrator exceeded
[her] powers." An arbitrator does not "exceed [her]
powers by rendering a decision that is contrary to the rules
of law that would have been applied by a court, so long as
there is no violation of an express term of the agreement to
arbitrate." Byerly v. Kirkpatrick Pettis Smith
Polian, Inc., 996 P.2d 771, 774 (Colo.App. 2000). In
other words, "[i]t is not sufficient ... to argue merely
that the arbitrator committed an error of law on the
merits." Giraldi v. Morrell, 892 P.2d 422, 424
(Colo.App. 1994). "Rather, [a] plaintiff must establish
that the arbitrator exceeded the powers granted in the
agreement by refusing to apply or ignoring the legal standard
agreed upon by the parties for resolution of the
dispute." Id. And an arbitrator has a great
deal of flexibility in fashioning appropriate remedies.
BFN-Greeley, LLC, 141 P.3d at 941.
Scope of "Arising Under"
23] Arbitration is a "favored method of dispute
resolution" in Colorado. Lane v. Urgitus, 145
P.3d 672, 678 (Colo. 2006). "Our constitution, our
statutes, and our case law all support agreements to
arbitrate disputes." Id. But, like the federal
courts, we do not force parties to arbitrate disputes when
they have not clearly agreed to submit them to arbitration.
Id. at 679.
24] An arbitration clause is a contract. Allen
v. Pacheco, 71 P.3d 375, 378 (Colo. 2003). We must
therefore "interpret the [arbitration clause] in a
manner that best effectuates the intent of the parties."
Id. We determine their intent by reading the
language of the clause, looking to "the plain and
ordinary meaning of its terms." Id. We will
enforce the clause as it is written unless it contains an
25] "If ambiguities are found ... we must
afford the parties a presumption in favor of arbitration and
resolve doubts about the scope of the arbitration clause in
favor of arbitration." Id. "More
specifically, we must compel arbitration unless we can say
with positive assurance that the arbitration clause is not
susceptible of any interpretation that encompasses the
subject matter of the dispute." Id. (quoting
City & Cty. of Denver v. Dist. Court,939 P.2d 1353,
1364 (Colo. 1997)). A " broad or unrestricted
arbitration clause makes the ...