Colorado Court of Appeals Confirms the Broad Scope of “Arising Under” Arbitration Agreements and Expands Duty-of-Loyalty Claims

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From JDSupraStephen Baumann II and Adrienne Scheffey discuss a Colorado case that interprets the phrase “arising under” broadly. Stephen and Adrienne write:

Drawing on federal case law, the state appellate court addressed Digital’s claim that because the arbitration agreement applied to any disputes “arising under” the contract, as opposed to the broader language of “relating to” or “any act relating to the parties,” the claim of duty of loyalty was outside of the scope of the arbitration agreement.  With no precedent from the Tenth Circuit, the court considered, in detail, case law from the First, Second, Third, Fifth, Sixth, Seventh, Eighth, and Eleventh Circuits.  Consistent with the majority of courts, the Colorado Court of Appeals concluded that use of the phrase “arising under” in an arbitration clause, without any other limiting criteria, is insufficient to narrow the scope of an arbitration agreement.  Instead, contrary to the position of the Second, Federal, and Ninth Circuits, the court concluded that the phrase “arising under” implies a broad scope consistent with both federal and Colorado policies favoring arbitration.  In so holding, the court rejected the contention that parties must use the phrase “relating to” in order to draft an arbitration clause with a broad scope.  The court noted that had the parties wished to limit the scope of the arbitration agreement, they could have drafted the arbitration clause to include qualifying language or to explicitly exclude particular types of claims from its scope.  Without specific limiting language, the court concluded that there was no clear implication that the parties intended to narrow the scope of the arbitration clause.

Source: Colorado Court of Appeals Confirms the Broad Scope of “Arising Under” Arbitration Agreements and Expands Duty-of-Loyalty Claims | Littler – JDSupra

This is consistent with an unpublished Massachusetts Appeals Court case earlier this year which also interpreted the phrase “arising out of” broadly. The Massachusetts appellate court said:

Atlantic argues that the independent contractors exclusion is ambiguous when the phrase ‘arising out of’ is read in the context of other provisions in the policy. … We perceive no ambiguity here. The phrase is ‘generally understood to mean originating from, growing out of, flowing from, incident to, or having connection with.’ … And that customary understanding leads to a natural and clear meaning of the exclusion, namely that bodily injury or property damage connected to the operations of the insured’s (Park Grove) subcontractor (Atlantic) are excluded from coverage.

Source Insurance – Exclusion – Independent contractor reporting on Certain Underwriters at Lloyd’s, London v. Atlantic Construction Services, Inc. (Lawyers Weekly No. 81-067-18) (5 pages) (Docket No. 16-P-1646) (Jan. 24, 2018).

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