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No. 00-856
IN THE SUPREME COURT OF THE STATE OF MONTANA
2001 MT 306
LEON E. LANGEMEIER and MARILYN K.
LANGEMEIER and FIRST AMERICAN TITLE
INSURANCE COMPANY,
Petitioners and Respondents,
v.
JAMES R. KUEHL and ROBERT F. KUEHL,
Respondents and Appellants.
APPEAL FROM: District Court of the Twenty-Second Judicial District,
In and for the County of Carbon,
The Honorable Blair Jones, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
Jack Sands, Attorney at Law, Billings, Montana
For Respondents:
Michael Dockery, Crowley Law Firm, Billings, Montana
W. Scott Green, West, Patten, Bekkedahl & Green, P.L.L.C., Billings, Montana
Submitted on Briefs: September 27, 2001
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Decided: December 28, 2001
Filed:
__________________________________________
Clerk
Justice Jim Regnier delivered the Opinion of the Court.
¶1 The Respondents, James R. Kuehl and Robert F. Kuehl, sought a Motion to Modify/
Vacate Arbitrator's Award and the Petitioners, Leon E. Langemeier, Marilyn K.
Langemeier and First American Title Insurance Company, sought an Application for
Confirmation of Arbitration Award from the Twenty-Second Judicial District Court,
Carbon County. The Honorable Blair Jones denied the Kuehls' Motion and granted the
Petitioners' Application. On August 4, 2000, the District Court issued a Confirmation of
Arbitration Award and Judgment. The Kuehls appeal. We affirm.
¶2 The issues presented on appeal are as follows:
¶3 1. Did the District Court abuse its discretion by confirming the arbitrator's award of
attorney's fees to the Langemeiers and First American Title Insurance Company?
¶4 2. Did the District Court abuse its discretion by confirming the actions of the arbitrator
in allowing Robert Kuehl to be made a party to the proceedings and in awarding a
judgment against him?
¶5 3. Is the injunctive language in the arbitrator's award so broadly written that it
effectively takes the Kuehls' property without due process and unconstitutionally restricts
their access to the courts?
FACTUAL BACKGROUND
¶6 James and Christine Kuehl owned a farm approximately six miles south of Bridger,
Montana. The farm was divided by a driveway and abutted land owned by Bart Heiken. In
1994, Heiken sold to Leon and Marilyn Langemeier (collectively, the "Langemeiers") a
small parcel of his property next to the Clarks Fork River and James and Christine Kuehl's
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property. From the boundary line between James and Christine's and the Langemeiers'
property to the highway, the Langemeiers built a gravel road upon a county road easement.
¶7 In 1995, James and Christine Kuehl sued several defendants, including the Petitioners.
James and Christine claimed that the county road easement had been abandoned, asked to
quiet title and sought damages for trespass. As motions for summary judgment were
pending, the district court ordered the parties into mediation.
¶8 On June 26, 1997, the parties participated in a settlement conference. James and his
father, Robert, were present at the conference but Christine did not attend. She filed for
divorce around that time. At the end of the settlement conference, James and Robert Kuehl
(collectively, the "Kuehls"), the Langemeiers, a representative of First American Title
Insurance Company ("First American") and representatives of Carbon County signed a
Memorandum of Understanding. Pursuant to the Memorandum of Understanding, the
parties signed a Settlement Agreement and Release of All Claims (the "Settlement
Agreement") on or around July 30, 1997. The district court dismissed with prejudice
James and Christine's lawsuit.
¶9 Both the Memorandum of Understanding and the Settlement Agreement provided that
the parties would resolve any disputes arising under the agreements through arbitration.
On December 9, 1998, the Langemeiers requested arbitration, asserting that James Kuehl
had interfered with the Langemeiers' use of the road, thus violating the Settlement
Agreement. On December 16, 1998, First American joined in the request for arbitration,
claiming that James Kuehl violated the Settlement Agreement by refusing to allow Neil
Bratton to conduct a survey. First American stated that the survey was necessary to
provide insurable title to the property that would be conveyed under the Memorandum of
Understanding. Before the arbitration hearing, Robert Kuehl purchased a half interest in
the property at issue for $10 and other consideration.
¶10 An arbitration hearing was held on December 1, 1999. On December 13, 1999, the
arbitrator, T. Thomas Singer, made a Preliminary Award and, on January 18, 2000, made a
Final Arbitration Award. Singer awarded the Langemeiers $801 against James Kuehl and
provided an injunction against any further action by the Kuehls concerning the disputed
roadway. Singer also awarded attorney's fees to the Langemeiers and First American
jointly and severally against James and Robert Kuehl.
¶11 On December 17, 1999, the Langemeiers petitioned the District Court to confirm the
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Arbitration Award. On April 10, 2000, the Kuehls moved to modify or vacate the
Arbitration Award to eliminate the award of attorney's fees, eliminate the judgment
against Robert Kuehl and restrict the breadth of the injunction. The District Court held a
hearing on June 5, 2000. On July 17, 2000, the District Court issued an order denying the
Kuehls' motion and granting the Langemeiers' petition. The District Court confirmed the
Arbitration Award on August 4, 2000. The Kuehls appeal.
STANDARD OF REVIEW
¶12 Montana statute limits judicial review of an arbitration award. Terra West
Townhomes, L.L.C. v. Stu Henkel Realty, 2000 MT 43, ¶ 22, 298 Mont. 344, ¶ 22, 996
P.2d 866, ¶ 22; Nelson v. Livingston Rebuild Ctr., Inc., 1999 MT 116, ¶ 11, 294 Mont.
408, ¶ 11, 981 P.2d 1185, ¶ 11. When parties submit a matter to binding arbitration, courts
are not permitted to review the merits of the controversy, but may only confirm, vacate,
modify, or correct an arbitration award. See §§ 27-5-311 to -313, MCA; Terra West
Townhomes, ¶ 22, Nelson, ¶ 11. The standard of review for a court's refusal to modify or
vacate an arbitration award is whether the court abused its discretion. Terra West
Townhomes, ¶ 22; Stockade Enters. v. Ahl (1995), 273 Mont. 520, 522, 905 P.2d 156, 157
(citations omitted).
ISSUE ONE
¶13 Did the District Court abuse its discretion by confirming the arbitrator's award of
attorney's fees to the Langemeiers and First American Title Insurance Company?
¶14 The Kuehls claim that the District Court erred in confirming the arbitrator's award of
attorney's fees. They argue that the arbitrator had neither statutory nor contractual
authority to make such an award. In particular, the Kuehls contend that the Settlement
Agreement stated that attorney's fees would not be awarded in future disputes. The
Langemeiers and First American counter that all of the parties involved in the arbitration
hearing requested attorney's fees and no party objected to these requests. Furthermore, the
Langemeiers argue that an award of attorney's fees is proper where an arbitrator finds that
a party's acts were "malicious and reprehensible."
¶15 The Settlement Agreement states, in part, that:
the parties do hereby mutually release, acquit, and forever discharge the other, and
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do hereby agree to hold harmless the other and their respective successors, . . .
agents, attorneys, insurance companies, stockholders and assigns (including without
limitation Carbon County Abstract & Title Company) of and from any and all
actions . . . including without limitation attorney's fees and punitive damages, which
have arisen, could arise, or in any way related to the acts, omissions, and/or
incidents described in the Complaint and other documents and pleadings filed in the
Action. The Kuehls and First American expressly acknowledge and agree that the
foregoing release shall include all claims . . . including without limitation attorney's
fees and punitive damages, which have arisen, could arise, or in any way related to
the right-of-way for the [disputed property].
The District Court found that this language did not expressly preclude attorney's fees
incurred in the arbitration proceeding. Instead, the court stated that First American could
rely on the hold harmless language to recover attorney's fees. We need not decide the
actual intent of the above language. It is sufficient for a court merely to determine that the
arbitrator could rationally derive his remedy from the language of the arbitration
agreement. See Nelson, ¶ 19. The fact that a court may not have awarded a party damages
is not grounds for vacating an arbitrator's award. See § 27-5-312(2), MCA; Nelson, ¶ 18;
Duchscher v. Vaile (1994), 269 Mont. 1, 5, 887 P.2d 181, 184.
¶16 Here, not only did the arbitrator and the District Court judge conclude that attorney's
fees were an available award under the Settlement Agreement, but all of the parties also
apparently felt entitled to an award of attorney's fees. During the arbitration, each party
(1)
submitted a request for fees to the arbitrator. The arbitrator noted in the Preliminary
Award that the Kuehls not only requested costs and fees before the arbitration, but they
also offered no argument or authority opposing First American's request for attorney's fees
during the arbitration. It was only after the arbitrator decided against the Kuehls that they
complained that the arbitrator exceeded his authority by awarding such fees. The only
argument that the Kuehls presented to contradict this was Robert Kuehl's own testimony
that he did not recall asking for fees and his testimony that he objected to the other side's
request for fees. Reviewing this record, we conclude that the arbitrator could rationally
derive a remedy of attorney's fees.
¶17 In addition, an arbitrator may, under limited circumstances, award attorney's fees
through his equity powers where bad faith or malicious behavior is involved. See Terra
West Townhomes, ¶ 40 (listing bad faith or malicious behavior as narrow exceptions to the
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traditional rule that an arbitrator should not award attorney's fees without a statutory or
contractual basis). In the case at bar, the arbitrator found that, after the parties executed the
Settlement Agreement, "[t]he Kuehls' behavior has been malicious and reprehensible."
The arbitrator also noted that Robert Kuehl's behavior has "turned a dispute over 900
square feet of ground in a beet field near Bridger - ground that cannot be worth $2,000,
and that has never belonged to him - into litigation that has cost him and the other parties
tens of thousands of dollars." We, therefore, conclude that the arbitrator had a reasonable
basis to award attorney's fees under his equitable powers.
¶18 We note, in passing, that the Kuehls argue that the respondents improperly submitted
their request for attorney's fees and that the arbitrator miscalculated the fees. The Kuehls,
however, offer little support for these contentions, either factual or legal, other than citing
various Montana Code sections. Therefore, we find no basis for addressing these
arguments.
¶19 For the above reasons, we conclude that the District Court did not abuse its discretion
by confirming the arbitrator's award of attorney's fees to the Langemeiers and First
American.
ISSUE TWO
¶20 Did the District Court abuse its discretion by confirming the actions of the arbitrator
in allowing Robert Kuehl to be made a party to the proceedings and in awarding a
judgment against him?
¶21 The Kuehls argue that, because Robert Kuehl was never a party to the original
lawsuit, the arbitrator could not make him a party to the arbitration proceedings nor award
a judgment against him. In making Robert Kuehl a party, the arbitrator, according to the
Kuehls, exceeded his powers. The Langemeiers and First American counter that Robert
Kuehl became a party by executing the Memorandum of Understanding and the
Arbitration Agreement, which are the agreements at issue in this dispute. First American
further contends that, because the parties expressly submitted the issue to the arbitrator, he
did not exceed his powers in determining that Robert Kuehl was a party.
¶22 The dispute over the Final Arbitration Award arose out of the Settlement Agreement
and the remedies set forth in that document. Robert Kuehl signed and was a party to that
agreement. As the arbitrator noted in the Preliminary Award, Robert Kuehl did not
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identify himself as an assistant, representative or agent of James Kuehl during the
arbitration or in either the Memorandum of Understanding or the Settlement Agreement.
This contrasts with several other signatories of the Settlement Agreement who did identify
themselves as representatives of other parties. The arbitrator also found that Robert Kuehl
could not claim ignorance of the law of contracts and agency as an excuse because he
presented himself as an expert in the law during the arbitration.
¶23 Nevertheless, the Kuehls contend that the arbitrator somehow violated Robert Kuehl's
due process rights by making him a party. We disagree. While the Kuehls argue that
Robert Kuehl did not receive notice of his status as a party prior to the proceedings, he
signed the Settlement Agreement over two years before the arbitration. The arbitrator
specifically found that Robert Kuehl's testimony that he did not intend for the agreements
to bind him was not credible.
¶24 The matter was clearly before the arbitrator. An arbitrator's power concerning every
body of law is broader than the power of the courts concerning the same bodies of law.
See Terra West Townhomes, ¶ 31. So long as the arbitrator rationally derived the fashioned
remedy from the agreement, a court will uphold it on review. See Nelson, ¶ 19. Robert
Kuehl's signature on the Memorandum of Understanding and the Settlement Agreement
provided the arbitrator a rational basis to find that Robert Kuehl was properly a party to
the proceedings. Therefore, we conclude that the District Court did not abuse its discretion
by confirming the arbitrator's decision to make Robert Kuehl a party to the proceedings
and to award a judgment against him.
ISSUE THREE
¶25 Is the injunctive language in the arbitrator's award so broadly written that it effectively
takes the Kuehls' property without due process and unconstitutionally restricts their access
to the courts?
¶26 The Kuehls argue that language in the Final Arbitration Award denies them the right
to protect their property and prevents them from accessing the courts as guaranteed under
Article II, Section 16, of the Montana Constitution. The Langemeiers counter that the
disputed road does not belong to the Kuehls. Because the property is a public road, the
Langemeiers allege that the Kuehls do not have an interest that allows them to claim a
constitutional violation. First American contends that the language of the arbitrator's
award is not overly broad and that the Kuehls did not establish grounds for vacating or
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modifying the injunctive language.
¶27 The final arbitration award contains the following language:
James R. and Robert F. Kuehl, and their heirs, personal representatives, successors
and assigns, are prohibited and enjoined from commencing or prosecuting any
action or proceeding, whether formal, informal, administrative or judicial, that arises
from or is related to the easterly 30 feet of Plat No. 1685 or to the other acts,
omissions or incidents described in any of the pleadings or documents filed in
Carbon County Cause No. DV 95-02 or in the briefs and exhibits submitted in this
arbitration; or that in any way challenges or questions the ownership of the easterly
30 feet of Pla[t] No. 1685.
¶28 The District Court found that prohibiting the Kuehls from commencing or prosecuting
an action or proceeding regarding property in which they have no interest does not violate
their due process rights nor improperly restrict their access to the courts. We agree. As the
District Court pointed out, the language of the award was designed to stave off further
"malicious and reprehensible" behavior by the Kuehls. The injunctive language does this
in two different ways.
¶29 First, the injunctive language prohibits the Kuehls from bringing an action "that arises
from or is related to the easterly 30 feet of Plat No. 1685." It also prevents the Kuehls
from bringing an action "that in any way challenges or questions the ownership of the
easterly 30 feet of Pla[t] No. 1685." The Kuehls claim that this language effectively takes
property from them without due process of law. Their argument ignores that the
Memorandum of Understanding, the Settlement Agreement and the Final Arbitration
Award all establish that the Kuehls do not have a property interest in the disputed
property. The Kuehls cannot claim the language deprives them of the use of their property
when the property is not their's to use. To prevail on their due process claim, the Kuehls
must have a definite property interest and show that such interest was, under color of state
law, abridged without appropriate process. See ISC Distributors, Inc. v. Trevor (1995),
273 Mont. 185, 191, 903 P.2d 170, 173; see also Board of Regents v. Roth (1972), 408 U.
S. 564, 569-70, 92 S.Ct. 2701, 2705, 33 L.Ed.2d 548. Because they do not have a property
interest in the disputed roadway, the Kuehls' due process claim is without merit.
¶30 Second, the language of the Arbitration Award prohibits the Kuehls from litigating
matters related to the disputed roadway or described in the Arbitration Action or
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proceedings. The Kuehls claim that this language denies them access to the courts. We,
like the District Court, do not read the language so broadly.
¶31 The injunctive language seeks only to restrain the Kuehls from contesting matters
previously decided. The Kuehls have already enjoyed access to the courts regarding these
matters as this dispute has wound its way through two arbitrations, approval by the
District Court and now an appeal before us. While Article II, Section 16, of the Montana
Constitution guarantees every person access to the courts, it does not grant a person
license to relitigate a cause or to burden the resources of the court with successive claims.
See State v. Perry (1988), 232 Mont. 455, 463, 758 P.2d 268, 273. As we have recited in
the past, "judicial economy dictates restrictive limitations on reruns." Coleman v. State
(1981), 194 Mont. 428, 439, 633 P.2d 624, 630, cert. denied (1982), 455 U.S. 983, 102 S.
Ct. 1492, 71 L.Ed.2d 693, (citing United States ex rel. Townsend v. Twomey (7th Cir.
1971), 452 F.2d 350, 357, cert. denied (1972), 409 U.S. 854, 93 S.Ct. 190, 34 L.Ed.2d 98).
¶32 The Respondents presented a request for this injunctive language to the arbitrator for
his determination. The language restrains the Kuehls from pursuing repetitive claims
previously resolved by the Settlement Agreement concerning property in which they have
no interest. Even if the arbitrator wrote the injunction more broadly than a court of law or
equity would have written it, we will not vacate the award. See § 27-5-312(2), MCA;
Nelson, ¶ 18. We thus conclude that the injunctive language was not so broadly written
that it either effectively takes the Kuehls' property without due process or
unconstitutionally restricts their access to the courts.
¶33 Affirmed.
/S/ JIM REGNIER
We Concur:
/S/ JAMES C. NELSON
/S/ PATRICIA COTTER
/S/ W. WILLIAM LEAPHART
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Justice Terry N. Trieweiler concurring in part and dissenting in part.
¶34 I concur with the majority's conclusions that the District Court did not abuse its
discretion when it confirmed the arbitrator's award of attorney's fees and when it
confirmed the arbitrator's decision to make Robert Kuehl a party to the proceedings and
award judgment against him.
¶35 However, I dissent from that part of the majority opinion which affirms an arbitrator's
authority to limit access to Montana's courts. Access to Montana's courts is guaranteed by
Article II, Section 16, of the Montana Constitution without regard to the merits of a
person's claim. Not even judges or justices can deny access to Montana's courts. An
arbitrator who is a mere private contractor to resolve disputes certainly has no authority to
deny a constitutional right based on his conclusions about the merits of a claim before the
claim is even presented. While I agree that claims, once filed, may be dismissed based on
the fact that they present issues previously decided, I disagree that a person may be
prospectively prohibited from making a claim based on the presumption that it will be
procedurally barred. If a person uses courts to harass another party, sanctions are
available.
¶36 Therefore, I conclude that the injunctive language of the arbitrator's award effectively
denied Kuehls their constitutional right of access to Montana's courts. For these reasons, I
would reverse that part of the District Court judgment which held otherwise and I dissent
from the majority's failure to do so.
/S/ TERRY N. TRIEWEILER
1. The Kuehls were not represented by counsel during the arbitration. Instead, Robert Kuehl assisted his
son, James. The arbitrator noted in the Preliminary Award that Robert Kuehl "presented himself as an
expert in the law." Therefore, in their preparation brief to the arbitrator, the Kuehls asked for "technical
assistance" fees instead of attorney's fees.
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