Opinion
No. C-827
Decided December 6, 1976.
Action to foreclose a mechanic's lien. Trial court dismissed the action, the court of appeals, 37 Colo. App. 1, 543 P.2d 1275, affirmed the trial court, and the supreme court granted certiorari.
Reversed
1. APPEAL AND ERROR — Inability to Determine — Application of Rule — Appropriate — Not Ripe for Review. Where the court is unable to determine from the pleadings and the record before it, whether the application of a rule was appropriate, the issue is not ripe for review.
2. ARBITRATION — Defense — Failure to Arbitrate — Offer of Proof — Waiver or Estoppel — Dismissal Without Hearing — Inappropriate. Where defendant asserted defense of plaintiff's failure to arbitrate pursuant to contract provisions, and record indicates that plaintiff made offer of proof which, if fulfilled, would conceivably form a factual basis for a finding of waiver or estoppel of that defense, held, under these circumstances, dismissal of claim of waiver without a hearing on the factual issues was inappropriate.
Certiorari to the Colorado Court of Appeals
Dwight K. Shellman, Jr., Associates, P.C., Dwight K. Shellman, Jr., for petitioner.
Klingsmith, Russell, Angelo Wright, P.C., Harrison F. Russell, Robert E. Wright, for respondents.
We granted certiorari to review the dismissal of a civil action and the termination of rights guaranteed by a mechanic's lien. The court of appeals affirmed the trial court's judgment dismissing the civil action and the mechanic's lien. Thomas Wells Associates v. Cardinal Properties, Inc., 37 Colo. App. 1, 543 P.2d 1275 (1975). We reverse and remand to the court of appeals with directions that the case be remanded to the district court for a hearing and a factual determination on the waiver issue.
Both the trial court and the court of appeals dismissed the petitioner's claim for relief for architectural fees because of the petitioner's failure to arbitrate. The petitioner asserts that the arbitration requirements of the contract were waived by the parties and that the trial court dismissed the petitioner's complaint without a hearing on the factual issues. The petitioner was entitled to a hearing, including an opportunity to present evidence to sustain the claim of waiver. For that reason, we reverse.
Cardinal Properties, Inc. (hereinafter Cardinal) obtained a parcel of real estate from the Mid-Continent Life Insurance Company (hereinafter Mid-Continent), subject to the redemption of certain security and ownership interests. Thereafter, Cardinal entered into a standard American Institute of Architects contract to secure plans for the construction of condominiums. Cardinal went bankrupt. Mid-Continent obtained the rights of Cardinal by assignment. Extended litigation preceded dismissal, and dismissal occurred on the morning of trial when Mid-Continent asserted that failure to arbitrate defeated the plaintiff's claim. Five different complaints were filed which were the subject of complex answers and counterclaims. Wells claimed that the arbitration requirements of the contract had been waived, but was not granted a hearing on the issue of waiver. The trial court granted Mid-Continent's motion for summary judgment or to dismiss, holding that Mid-Continent had standing to assert the defense of failure to arbitrate and that Mid-Continent had not waived that defense. In granting Mid-Continent's motion, the trial court refused to consider evidence or to grant a hearing to determine whether waiver or estoppel would foreclose dismissal for failure to arbitrate.
Standing
[1] The court of appeals relied on Wigton v. McKinley, 122 Colo. 14, 221 P.2d 383 (1950), for the proposition that "a plaintiff may not assert, for the purposes of Mid-Continent's motion to dismiss, a position inconsistent with, and destructive of, its theory of the case." From the pleadings and the record before us, we are unable to determine if the application of the rule in Wigton v. McKinley, supra, was appropriate in this case. Accordingly, the issue is not ripe for review, and we do not reach it here.
In Wigton v. McKinley, supra, the inconsistency in issue was contained in a tendered amendment to the answer. The court, in effect, construed the initial pleading as a judicial admission. See, e.g., Jones v. Hopper, 410 F.2d 1323 (10th Cir. 1969), cert. denied, 397 U.S. 991, 90 S.Ct. 1111, 25 L.Ed.2d 399 (1970); Dodge v. Chambers, 43 Colo. 366, 96 P. 178 (1908); Skeens v. Kroh, 30 Colo. App. 88, 489 P.2d 347 (1971). Viewing the complaint in this case in the light most favorable to the plaintiff, see Spomer v. City of Grand Junction, 144 Colo. 207, 355 P.2d 960 (1960), the complaint alone does not preclude entertainment of a theory of recovery in which the defendant may be liable on the contract on some theory of adoption or ratification. A hearing will establish whether the arbitration defense is available as a shield to prevent prosecution of the plaintiff's claim. Resolution of such issues properly awaits development of the facts before the trial court. See generally, 2A Moore's Federal Practice ¶ 8.32 (1975 and Supp. 1976) (authorities cited); 5 Wright Miller, Federal Practice and Procedure § 1283 (1969 and Supp. 1976) (authorities cited) ("a party may plead inconsistently, subject only to the limits of good faith and honesty set forth in Rule 11.").
Waiver
[2] The court of appeals stated that the only ground 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. Our review of the record indicates that at the hearing on the motion to dismiss, counsel for the plaintiff made an offer of proof regarding certain conversations between agents for Mid-Continent and Wells which, if fulfilled, would conceivably form a factual basis for a finding of waiver or estoppel.
As we said in Guthrie v. Barda, 188 Colo. 124, 533 P.2d 487 (1975): "A determination of certain disputed issues of fact was necessary in order to ascertain whether the arbitration clause was valid . . . . [W]hen findings of jurisdictional facts are required, these findings must be made by the court prior to trial. C.R.C.P. 12(d); Treadwell v. District Court, 133 Colo. 520, 297 P.2d 891; Williams v. Minnesota Mining Manufacturing, 14 F.R.D. 1 (S.D. Calif. 1953); Dolese v. Tollett, 162 Okla. 158, 19 P.2d 570; Bridges v. Wyandotte Worsted Co., 243 S.C. 1, 132 S.E.2d 18. . . ."
Accordingly, we reverse and remand for proceedings not inconsistent with this opinion.