Articles Posted in Arbitration & Mediation

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Facing more than $40,000 in unsecured debt that she owed to Discover Bank and other banks, Susan Ossello enrolled in a debt reduction program and signed a contract with Global Client Solutions. Ossello subsequently stopped making payments on her credit card debt, and Discover Bank brought a collection action against her. Ossello filed a third-party complaint against Global, alleging that Global used deceptive and fraudulent representations to solicit her participation in an illegal debt settlement plan. Global filed a motion to compel arbitration and to dismiss the third-party complaint for lack of jurisdiction. The district court concluded that the arbitration clause in Global’s contract was unconscionable and not unenforceable and therefore denied Global’s motion to dismiss and to compel arbitration. The Supreme Court affirmed, holding that the district court did not err in (1) reserving to itself the determination of arbitrability, and (2) declaring that the arbitration provision was unconscionable and therefore not enforceable against Ossello. View "Discover Bank v. Ossello" on Justia Law

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This action involved a dispute arising from the construction of a large house. Interstate Mechanical, Inc. initiated an arbitration action to recover payments it claimed as a result of its work on the house project. Abbey/Land LLC and Glacier Construction Partners LLC (collectively, Plaintiffs) then filed suit against Interstate in Montana District Court in Flathead County. Thereafter, Glacier asserted counterclaims in the Interstate arbitration proceeding and obtained a positive arbitration award against Interstate. Abbey/Land subsequently filed an amended complaint dismissing Glacier as a plaintiff and naming it as a defendant. Glacier tendered the Abbey/Land claims to its insurer, James River Insurance Company. James River refused to provide defense or indemnity. Glacier and Abbey/Land settled the Flathead County action as between themselves. James River moved to intervene in the Flathead County action to challenge the reasonableness of the confessed judgment against Glacier. Meanwhile, Abbey/Land and Glacier entered settlements with all other parties. The district court never ruled on James River’s motion to intervene and entered final judgment against Glacier. The Supreme Court reversed, holding that the district court erred in entering judgment without considering either its motion to intervene or the reasonableness of the confessed judgment. View "Abbey/Land LLC v. Interstate Mechanical, Inc." on Justia Law

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The City of Bozeman dismissed Robert Chase, a building inspector, and Chase claimed that the dismissal was improper. The Montana Public Employees’ Association (MPEA) gave notice to the City Manager of its decision to arbitrate Chase’s grievance according to the grievance procedure but failed to timely request a list of potential arbitrators from the Montana Board of Personnel Appeals. More than one year after the dispute arose, MPEA contacted the City to proceed with arbitration. The City declined to cooperate. More than four years after the dispute first arose, MPEA filed suit seeking a declaratory judgment that the City must participate in arbitration. The City asserted a counterclaim for declaratory relief. The district court granted summary judgment and issued declaratory relief to the City, concluding that Chase’s grievance did not survive MPEA’s failure to follow the agreement’s time limits and that MPEA waived any right to arbitrate through its four-year delay. The Supreme Court reversed, holding (1) whether a dispute remains arbitrable despite the failure to follow the an arbitration agreement’s procedures, including time limits, is a question of procedural arbitrability that is for an arbitrator and not for a court to decide; and (2) the City’s waiver argument was an issue for an arbitrator to decide. View "Mont. Pub. Employees Ass’n v. City of Bozeman" on Justia Law

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Matthew Tubaugh, a police officer with the City of Livingston, was discharged from the police force after a series of incidents. Tubaugh protested his discharge pursuant to his rights under a collective bargaining agreement (CBA) then in effect between the City and the Montana Public Employees Association. An arbitrator determined that there was just cause to discipline Tubaugh but that the proper disciplinary action was a three-month suspension without pay. The district court vacated the arbitrator’s award. The Supreme Court reversed and remanded with instructions to confirm the arbitration award, holding that the district court (1) incorrectly determined that the arbitrator exceeded her authority in her interpretation of the CBA; (2) erred in holding that the arbitrator violated public policy by requiring the City to reinstate Tubaugh to his previous position or to one of comparable pay; (3) erred by determining that the arbitrator’s award should be vacated because of its findings related to a fitness for duty examination; and (4) erred by holding that the arbitrator exceeded her authority by directing removal of the fitness for duty examination from Tubaugh’s personnel file. View "Livingston v. Mont. Pub. Employees Ass’n" on Justia Law

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The Montana Association of Counties Joint Powers Insurance Authority (MACo/JPIA) obtained catastrophic property insurance from Allianz Global Risks US Insurance Company to cover damages over $100,000. The Lincoln County Port Authority (Port) insured a building in its industrial facility through the MACo/JPIA self-insured risk pool. After the building's roof collapsed, MACo/JPIA informed the Port that it would no longer insure the building. The building was subsequently destroyed by a fire, and MACo/JPIA and Allianz refused to cover the loss. The Port filed this suit against Allianz. The district court concluded that the Allianz policy insured the Port and awarded $6,060,980 based on the findings of an appraisal panel. The Supreme Court (1) affirmed the district court's determination that Allianz's policy provided coverage for the building; (2) affirmed the district court's refusal to reform the Allianz policy; (3) reversed the district court's award of "replacement cost" for those portions of the building that the Port had slated for demolition; and (4) remanded to allow the district court to calculate post-judgment interest owed to the Port for the damages owed under the policy. View "Lincoln County Port Auth. v. Allianz Global Risks US Ins. Co." on Justia Law

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Plaintiff, a former high school instructor, was terminated from her employment for insubordination. Plaintiff appealed her termination to binding arbitration pursuant to the terms of a collective bargaining agreement. The arbitrator denied Plaintiff's grievance. The district court upheld the arbitration award, concluding that the arbitrator had not exceeded his powers and that Plaintiff had failed to meet her burden of proving that a ground for vacating, correcting, or modifying the award existed. The Supreme Court affirmed, holding that the district court did not abuse its discretion in refusing to vacate, modify, or correct the arbitration award. View "Roberts v. Lame Deer Sch. Dist. No. 6" on Justia Law

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After Employee failed to ask a shopper for a loyalty card per Employer's policy, Employee was fired. Employee brought a wrongful discharge claim against Employer under Montana's Wrongful Discharge From Employment Act (WDEA). Employee accepted Employer's offer to arbitrate the dispute because she said Mont. Code Ann. 39-915 would force her to pay Employer's attorney fees if she declined the offer and later lost at trial. Employee then successfully moved to amend her complaint to add destruction of evidence and declaratory judgment claims, alleging, inter alia, that section 39-2-915 was unconstitutional. The district court subsequently dismissed Employee's amended complaint, concluding that it had lost jurisdiction over Employee's claim once she accepted the offer to arbitrate. The court also ruled that 39-2-915 was constitutional. The Supreme Court (1) affirmed the dismissal of Employee's amended complaint, as the court lost its ability to consider Employee's claim once she agreed to arbitration; and (2) set aside the district court's determination of Employee's constitutional claim, as the court lost its authority to act further once Employee agreed to arbitrate. View "Ensey v. Mini Mart, Inc." on Justia Law

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Plaintiffs commenced a lawsuit against several power companies alleging that the Colstrip power facility, which bordered land owned by Plaintiffs, contaminated groundwater under their property. The parties proceeded with mediation after three years of litigation. The mediation ended with the transmission of a memorandum of understanding (MOU) to the parties' counsel. After some of Plaintiffs expressed reservations about accepting the settlement, the power companies filed a motion to enforce the settlement agreement, arguing that the MOU was a written and signed settlement agreement. After a hearing, the district court granted the motion to enforce the settlement agreement, finding that the MOU was a binding, enforceable settlement agreement. The Supreme Court affirmed, holding that the district court (1) did not err by finding the MOU was an enforceable settlement agreement; (2) did not err by allowing parol evidence to change an option to purchase into a right of first refusal; and (3) erred in admitting evidence protected by the mediation confidentiality statute, but the error was harmless. View "Kluver v. PPL Mont., LLC" on Justia Law

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Blue Cross and Blue Shield of Montana (BCBS) signed an employment agreement with Plaintiff containing a clause to compel arbitration for any disputes regarding the employment agreement. After Plaintiff's employment was terminated, Plaintiff brought an action against BCBS claiming that BCBS violated the Wrongful Discharge from Employment Act (WDEA). Plaintiff, however, could bring a WDEA claim only if she did not have a written contract of employment for a specific term. The district court compelled arbitration to allow the arbitrator to determine in the first instance whether Plaintiff had a term employment contract. The Supreme Court affirmed the district court's order to compel arbitration, holding that because the instant dispute implicated the terms or provisions of the employment agreement, the district court correctly determined that an arbitrator should decide, in the first instance, whether Plaintiff was an at-will employee or whether she had a term contract. View "Marsden v. Blue Cross & Blue Shield of Mont., Inc." on Justia Law

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Plaintiffs filed suit seeking a judicial resolution of an LLC in which both Plaintiffs and Defendants held ownership interests. The district court ordered judicial dissolution and appointment of a receiver after finding that the managing member of the LLC, one of the defendants, had never operated the LLC in conformity with the operating agreement and had acted in a manner that was unduly prejudicial to Plaintiffs. The Supreme Court affirmed, holding (1) there were substantial undisputed facts to support the district court's order for dissolution under Mont. Code Ann. 35-8-902(1), and the district court properly applied the statute; and (2) the district court properly denied Defendants' motion to amend their answer to add counterclaims because Defendants were required to arbitrate such claims under the operating agreement. View "Gordon v. Kuzara" on Justia Law