United States District Court, D. Colorado
OPINION AND ORDER GRANTING IN PART AND DENYING IN
PART MOTION TO COMPEL ARBITRATION
Marcia
S. Krieger Senior United States District Judge
THIS
MATTER comes before the Court pursuant to the
Defendants' Motion to Compel Arbitration (#
8), the Plaintiff's (“Ultegra”)
response (# 10), and the Defendants'
reply (# 11).
The
facts of this action, as alleged in the Complaint (#
1) are straightforward. In September 2018, seeking
funds to complete a real estate transaction, the Defendants
contacted Ultegra about loaning more than $13 million
Marzolf. The parties allegedly entered into an agreement
(“the fee agreement”) that called for the
Defendants to pay certain fees to Ultegra at certain points
in time. Although the Defendants represented - falsely,
Ultegra contends - that they had the wherewithal to pay those
fees and complete the agreement, many of the fees went
unpaid. Ultimately, Ultegra informed the Defendants that it
was prepared to close on the loan and requested that the
Defendants make a $5 million down payment as reflected in the
parties' agreement. The Defendants were unable to make
the payment, and the deal fell through. Ultegra now seeks
payment of the various fees due and owing under the terms of
the parties' agreement, asserting claims (presumably
under Colorado law) sounding in breach of contract,
promissory estoppel, and negligent misrepresentation against
all Defendants, and a claim against Mr. Marzolf personally
for breaching a guarantee agreement relating to the deal.
The
Defendants now move (# 8) to compel Ultegra
to resolve its claims through arbitration, in accordance with
a term in the parties' fee agreement requiring
arbitration. Ultegra opposes the motion on the grounds that
the Defendants have taken the position that no enforceable
agreements exist between them. Ultegra concedes that it would
not oppose arbitration upon a concession by the Defendants
that they are parties to and executed the fee
agreement.[1] In reply, the Defendants concede that
Defendant Marzolf Holdings I, LLC (“Holdings”)
executed the fee agreement, but the Court understands that
the remaining Defendants maintain that they never entered
into nor are bound by the fee agreement.
Based
on the parties' positions, the Court grants the motion as
to Holdings. Holdings concedes that it entered into an
agreement with Ultegra that contains an arbitration agreement
and that both Ultegra and Holdings agree that the arbitration
provision is binding. Thus, Ultegra's claims against
Holdings are: 1) severed from the remaining claims in this
action; and 2) stayed pending the completion of the
arbitration.
As to
the claims against Mr. Marzolf and against Defendant Austin
Peay, LLC, these Defendants have not shown that they are
parties to the fee agreement with standing to enforce the
arbitration provision. Although the fee agreement recites
that they are contracting parties, neither Mr. Marzolf nor
Austin Peay signed the signature page of the agreement, and
the agreement does not appear to contemplate that they would.
Under Colorado law, which the Court assumes applies to this
action (the parties having not identified any other
jurisdiction's law as controlling), the Defendants must
establish that the fee agreement binds them before the Court
will compel the claims against them to arbitration. See
generally Bellman v. i3Carbon, LLC, 563 Fed.Appx. 608,
613-14 (10th Cir. 2014). Mr. Marzolf and Austin
Peay's briefing makes clear that they “will not
admit that they executed agreements with the Plaintiff
(because they did not).” The Defendants' contention
that they are not bound by the fee agreement generally thus
prevents them from availing themselves of the arbitration
provisions in it. Accordingly, the Court denies the motion to
compel Ultegra to arbitrate its claims against Mr. Marzolf
and Austin Peay.
For the
foregoing reasons, the Defendants' Motion to Compel
Arbitration (# 8) is GRANTED IN PART
AND DENIED IN PART. Ultegra's claims against
Holdings are severed from the remaining claims in this action
and Ultegra and Holdings shall proceed to arbitrate those
claims in accordance with the terms of their agreement. The
Defendants' motion is denied as to the claims asserted
against Mr. Marzolf and Austin Peay, and those claims will
proceed in this action.
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Notes:
[1] Ultegra also argues that Marzolf's
motion should be denied because Marzolf failed to confer in
advance of filing it, as required by D.C. Colo. L. Civ. R.
7.1(a). The Court declines ...