NO. 94-188
IN THE SUPREME COURT OF THE STATE OF MONTANA
1994
MARGARET A. DUCHSCHER and
WALDEN J. DUCHSCHER,
Plaintiffs and Respondents,
v.
JIMMY LEE VAILE,
Defendant and Appellant.
APPEAL FROM: District Court of the Twelfth Judicial District,
In and for the County of Hill,
The Honorable John Warner, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
J. Michael Young, Jardine, Stephenson,
Blewett & Weaver, Great Falls, Montana
For Respondents:
Patricia O'Brien Cotter, Cotter & Cotter,
Great Falls, Montana (for Margaret Duchscher)
Theodore K. Thompson, Attorney at Law,
Havre, Montana (for Walden Duchscher)
Submitted on Briefs: December 1, 1994
Decided: December 15, 1994
Filed:
Justice William E. Hunt, Sr., delivered the opinion of the Court.
Defendant Jim Vaile appeals the order of the Twelfth Judicial
District Court, Hill County, refusing to modify or partially vacate
an out-of-court arbitration award in favor of plaintiff Margaret
Duchscher. We affirm.
The issue on appeal is whether the District Court erred in
refusing to partially vacate or modify Margaret's arbitration
award.
Plaintiffs and defendant were involved in an automobile
accident in Havre, on January 9, 1989. Margaret and Walden
Duchscher initially filed suit in District Court, seeking both
general and special damages from Jim Vaile. The parties later
agreed by stipulation to submit the dispute to binding arbitration
before Gordon R. Bennett, retired District Court Judge. The
stipulation granted the arbitrator the power to decide all issues
of liability and either grant or deny compensatory and general
damages pursuant to Montana law. The stipulation further provided
that costs may be awarded to the prevailing party. However, the
stipulation specifically provided that "each party shall bear their
own attorneys fees."
Arbitration began on August 4, 1993, in Great Falls. The
arbitrator received testimony and evidence for two days. On
August 5, the arbitrator indicated that he was prepared to rule
without post-hearing briefs or argument. He informed counsel that
he was finding for plaintiffs on all issues of liability, and
stated that he would award Margaret $60,000 in special damages and
$50,000 in general damages, for a total of $110,000. Walden also
received an arbitration award which is not contested and is not at
issue on appeal.
The arbitrator further stated that he intended to award
Margaret her attorney fees in addition to the damage award.
Counsel for all parties informed the arbitrator that the
arbitration stipulation specifically prohibited the award of
attorney fees. The arbitrator then stated that he would amend his
original decision, withdrawing the $50,000 award for general
damages.
The arbitrator issued the formal written arbitration award on
August 6, 1993, awarding Margaret the following damages:
Special Damages
Past medical expenses $ 15,285.75
Past prescription expenses 1207.44
Past travel related to treatment z 4521.41
Past wage loss $ 13,848.OO
Future medical and related expenses $ 25,ooo.oo
General damages
Past pain and suffering $ 50,000.00
Future pain and suffering $ 40,000.00
TOTAL $149,862.60
The arbitrator stated in the final award that "I understand the
parties have agreed on attorney fees and costs and will therefore
make no award for them."
After the final award, Vaile paid all but $40,000 of
Margaret's award. Vaile appealed Margaret's award to the District
3
court, seeking modification or partial vacation of the general
damages award in the amount of $40,000. Vaile argued that the
arbitrator improperly increased the general damages award in order
to cover Margaret's attorney fees. The District Court refused to
modify or vacate the general damages award, stating that it lacked
the power under Montana's Uniform Arbitration Act, §§ 27-5-312 and
-313, MCA, to modify the arbitration award. Vaile appeals.
Did the District Court err in refusing to partially vacate or
modify the arbitration award?
The National Conference of Commissioners on Uniform State Laws
approved the revised Uniform Arbitration Act (UAA) on August 20,
1955. Since its approval, 35 states have adopted in substance the
provisions of the UAA. Montana adopted the UAA in 1985. Section
27-5-112, MCA, provides that "[tlhis chapter must be construed to
effectuate its general purpose to make uniform the law of those
states that enact [the UAAI .'I Therefore, to effect the purpose set
forth by the Legislature, we look to applicable decisions of other
jurisdictions which have also adopted the UAA.
The scope of judicial review of an arbitration award is
strictly limited to the statutory provisions governing arbitration.
Mausbach v. Lemke (Nev. 1994), 866 P.2d 1146, 1149; United
Technology v. Dar Al Islam (N.M. 1993), 846 P.2d 307, 309; Canon
School Dist. v. W.E.S. Const. Co. (Ariz. App. Div. 1 1993), 868
P.2d 1014, 1021; Utility Trailer Sales of Salt Lake v. Fake (Utah
1987), 740 P.2d 1327, 1329; Loomis, Inc. v. Cudahy (Idaho 1982),
4
656 P.2d 1359, 1361-62; see also Faure, The Arbitration
Alternative: Its Time Has Come, 46 Mont. L. Rev. 199, 214 (1985).
Sections 27-S-312 and -313, MCA, establish the statutory grounds to
modify, correct, or vacate an arbitration award and generally limit
the district court's review to allegations of fraud, partiality,
misconduct, excess of power, or technical problems in the execution
of the award.
Section 27-5-312(l), MCA, provides:
Vacating an award. (1) Upon the application of a party,
the district court shall vacate an award if:
(a) the award was procured by corruption, fraud, or
other undue means;
(b) there was evident partiality by an arbitrator
appointed as a neutral or corruption in any of the
arbitrators or misconduct prejudicing the rights of any
party;
Cc) the arbitrators exceeded their powers;
Cd) the arbitrators refused to postpone the hearing
upon sufficient cause being shown therefor or refused to
hear evidence material to the controversy or otherwise so
conducted the hearing, contrary to the provisions of 27-
5-213, as to prejudice substantially the rights of a
party; or
(e) there was no arbitration agreement and the
issue was not adversely determined in proceedings under
27-5-115 and the party did not participate in the
arbitration hearing without raising the objection.
Section 27-5-313(l), MCA, provides:
Modification or correction of award by court. (1) Upon
application made within 90 days after delivery of a copy
of the award to the applicant, the district court shall
modify or correct the award if:
(a) there was an evident miscalculation of figures
or an evident mistake in the description of any person,
thing, or property referred to in the award;
(b) the arbitrators awarded upon a matter not
submitted to them and the award may be corrected without
affecting the merits of the decision upon the issues
submitted; or
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(c) the award is imperfect in a matter of form not
affecting the merits of the controversy.
The Montana Uniform Arbitration Act clearly does not authorize
judicial review of arbitration awards on the merits of the
controversy, particularly in light of 5 27-5-312(2), MCA, which
provides that 'l[t]he fact that the relief was such that it could
not or would not be granted by a court of law or equity is not
grounds for vacating or refusing to confirm the award." Accord
Fernandez v. Farmers Insurance Co. of Arizona (N.M. 1993), 857 P.2d
22, 25 (construing statutory provisions identical to §§ 27-5-312
and -313, MCA).
We review the refusal of a trial court to vacate, modify, or
correct an arbitration award under an abuse of discretion standard.
See Canon School Dist., 868 P.2d at 1021, 1024. Vaile argues that
the arbitrator exceeded his authority by "juggling general damage
calculations in order to award attorneys fees" to Margaret after
learning that the parties contracted to pay their own attorney
fees. Margaret argues that the verbal statements of the arbitrator
at the conclusion of the arbitration proceedings cannot be afforded
the status of a final and binding arbitration award.
Section 27-5-216(l), MCA, provides that
[tlhe award must be in writing and signed by the
arbitrators joining the award. The arbitrators shall
deliver a copy to each party personally by certified mail
or as provided in the agreement.
We hold that the requirements set forth in § 27-5-216(l), MCA, must
be met before a final arbitration award can be said to exist. In
6
this case, a final and binding arbitration award did not exist
until the arbitrator reduced his award to writing, signed it, and
delivered it to the parties.
Vaile urged the District Court, and urges this Court on
appeal, to disregard the express language of the written
arbitration award and to find that the arbitrator impermissibly
awarded attorney fees to Margaret. Like the District Court, we
decline to do so. The arbitrator expressly stated in the award:
"I understand the parties have agreed on attorney fees and costs
and will therefore make no award for them." (Emphasis added.) The
party seeking to vacate, modify, or correct an arbitration award
bears the burden of proving that one of the statutorily enumerated
grounds exists. See Matter of Town of Silver City (N.M. 1993), 857
P.2d 28, 34.
While the District Court acknowledged that the arbitrator may
have briefly considered the issue of attorney fees at the
conclusion of the arbitration proceedings, the District Court
concluded that the final written award did not provide for attorney
fees. The District Court concluded that the $40,000 in general
damages which Vaile contests was not awarded as attorney fees, but
instead, was awarded to Margaret for future treatment of her
medical conditions. The arbitrator clearly stated in the final
award:
I would evaluate past pain and suffering, loss of
established course of life and plain inconvenience at
$50,000 and, assuming, perhaps optimistically, that
7
treatment will
alleviate some of this detriment I would
evaluate future general damages at $40,000.
We hold that the District Court correctly denied Vaile's motion to
partially vacate or modify Margaret's final award.
Affirmed.
Justice
We concur:
8
Justice Terry N. Trieweiler specially concurring.
I concur with the majority's conclusion that the District
Court did not abuse its discretion when it refused to vacate or
modify the plaintiffs' arbitration award.
I disagree with what is left out of the majority opinion.
Section 27-5-112, MCA, provides that the purpose of Montana's
Uniform Arbitration Act is to make uniform the law of those states
which have enacted it. One of those states that has enacted the
Uniform Arbitration Act is New Mexico.
The New Mexico court, in Fernandez v. Farmers Insurance Co. of Arizona
(N.M. 19931, 857 P.2d 22, 26 (cited in the majority opinion),
provided that while judicial review is limited by statute, the
district court may find an arbitrator's mistake of fact or law ~0
cross as to imply misconduct, fraud, or lack of fair and impartial
judgment, each of which is a valid ground for vacating an award.
I conclude that such a consideration must, at a minimum, be
included in our standard of review. Otherwise, agreements to
arbitrate would be agreements to avoid the obligations imposed
under Montana law, and therefore, void as contrary to public
policy.
Finally, the parties in this case stipulated that the
arbitration award would be made pursuant to Montana law. If the
arbitrator's decision was based on a gross disregard for Montana
law, it exceeded his authority pursuant to the arbitration
agreement. I conclude that the district court's scope of review
should include review for gross mistakes of law or fact.
9
However, applying that standard of review in this case, I
conclude that there were no mistakes of law or fact so gross that
they justify setting aside the arbitrator's award. For these
ifeaSOllS , I specially concur in the majority opinion.
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December 15, 1994
CERTIFICATE OF SERVJCE
I hereby certify that the following certified order was sent by United States mail, prepaid, to the
following named:
J. Michael Young
Jardine, Stephenson, Blewett & Weaver, P.C.
P.O. Box 2269
Great Falls MT 59403-2269
Patricia O’Brien Cotter
Cotter & Cotter
Box 3425
Great Falls MT 59403-3425
Theodore K. Thompson
Thompson and Swenson
419 Fourth Avenue
Havre MT 59501
ED SMITH
CLERK OF THE S UPREME COURT
STATE OF MONTANA