In September, the Colorado Court of Appeals found itself dealing with yet another case wherein one side wanted the case decided by arbitration and the other side wanted the case decided by a court.

The facts in the case went like this. In August 2020, Debra Wood died in a fire at her apartment in Clifton, east of Grand Junction. The fire was caused by an electrical problem in a window air conditioner in poor condition. The owners of the apartment building had previously been told the building, which contained four rental units, was in need of $20,000 in electrical upgrades. However, those upgrades had not been made.

Also, the building did not have a sprinkler system or smoke detectors, and Wood’s apartment had only one exit. Wood died of smoke inhalation before she made it to the exit.

Wood’s two daughters, Faith and Grace, sued the owners of the building for the wrongful death of their mother. The building owners — the defendants in the case — filed a motion asking the Mesa County District Court to dismiss the lawsuit and order the parties to arbitration. This motion was based on language in Debra Wood’s lease stating that all disputes “arising in connection” with the lease were subject to binding arbitration.

The District Court judge denied the defendants’ motion and they appealed. The Colorado Court of Appeals affirmed the District Court’s ruling, concluding that the daughters’ claims were governed by a Colorado statute — the Premises Liability Act — and therefore the binding arbitration provision in the lease did not apply. The Premises Liability Act, the court noted, exclusively sets forth the duties property owners owe to someone injured at their property and takes priority over any other contractual or noncontractual duties.

So, you might ask, why do people put arbitration provisions in their contracts? It’s because, in theory at least, arbitration is less expensive and more expeditious than a lawsuit in the courts. Plus, with arbitration, there is no jury. A single arbitrator (and sometimes a panel of three arbitrators) will decide the case. In addition, arbitration eliminates the risk of a class action.

But if you’re a claimant in a legal dispute, you might very well want a jury deciding your case. And you will definitely worry about the fact that with arbitration there is no right of appeal. In a legal dispute decided by a court, there will be a judge overseeing the proceeding who will know a higher court is looking over his (or her) shoulder and expecting the judge to make decisions based on rules of law put in place by a legislature or through judicial precedent. By contrast, arbitrators know there will be no appeal, creating a temptation to see justice done based on something other than the careful application of existing rules of law.

Fortunately, most arbitrators have at least some training in the law and they are, with rare exception, sincere and ethical. Nonetheless, because there is no right of appeal, if an arbitrator (having a bad day) reads a statute that says “black” to mean “white,” there is nothing the losing side can do about it.

In any event, unless the Colorado Supreme Court reverses the Court of Appeals, the liability, if any, of the apartment building owners for the death of Debra Wood will be decided in the Mesa County District Court and not through an arbitration proceeding.

Jim Flynn is a business columnist. He is of counsel with the Colorado Springs firm Flynn & Wright LLC. He can be contacted at moneylaw@jtflynn.com.

Money and the Law columnist Jim Flynn