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)

Filed:

Submitted on Briefs: December 1, 1994

Decided: December 15, 1994
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

Past prescription expenses

Past travel related to treatment

Past wage loss

Future medical and related expenses

General damages

Past pain and suffering

Future pain and suffering

TOTAL

$ 15,285.75

z

1207.44

4521.41

$ 13,848.OO

$ 25,ooo.oo

$ 50,000.00

$ 40,000.00

$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

5
(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.

10
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 SUPREME COURT

STATE OF MONTANA