No. 88-137 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1988 

BROOK W. GARRETSON AND LINDA GARRETSON, 

Plaintiffs and Appellants, 

-vsMOUNTAIN WEST FARM BUREAU MUTUAL INSURANCE 

CO., and WESTERN AGRICULTURAL INSURANCE CO., 

Defendants and Respondents. 

APPEAL FROM: District Court of the Thirteenth Judicial District, 

In and for the County of Yellowstone, 

The Honorable Diane Barz, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Calvin A. Calton; Calton, Hamman, Calton C Wolfe, 

Billings, Montana 

For Respondent : 

James D. Walen; Felt & Martin, Billings, Montana 

Submitted on Briefs: June 22, 1988 

Decided: September 23, 1988 

Filed: SEP 2 3 1988 

Clerk 
Mr. Justice John Conway Harrison delivered the Opinion of the 

Court. 

Plaintiffs Brook and Linda Garretson appeal a District 

Court order granting summary judgment in favor of Mountain 

West Farm Bureau Mutual Insurance Company (Farm Bureau). 

Summary judgment was granted January 12, 1988, in the 

Thirteenth Judicial District, Yellowstone County. We affirm. 

On May 19, 1987, plaintiff-appellant Brook Garretson 

was involved in an automobile accident. The vehicle driven 

by Garretson, a 1984 Chrysler Laser, was "totalled." The 

Garretsons purchased the vehicle December 19, 1986, for 

$8,995. At the time of the accident, the Garretsons' 

outstanding balance on their car loan was $8,295. 

The Garretsons insured the vehicle with Farm Bureau and 

the insurance policy included the following provisions: 

Appraisal. (Not applicable to liability 

coverages) . If you and we fail to agree 

on the amount of loss, either one can 

demand that the amount of loss be set by 

appraisal. If either makes a written 

demand for appraisal, each shall select a 

competent, independent appraiser and 

notify the other of the appraiser's 

identity within 20 days of receipt of the 

written demand. The two appraisers shall 

then select a competent, impartial 

umpire. If the two appraisers are unable 

to agree upon an umpire within 15 days, 

you or we can aslc a judge of a court of 

record in the state where the residence 

[sic] premises is located to select an 

umpire. The appraisers shall then set 

the amount of the loss.. .Each 

appraiser shall be paid by the party 

selecting that appraiser. Other expenses 

of the appraisal and the compensation of 

the umpire shall be shared equally. 
Suit against us. No action shall be 

brought against us unless there has been 

compliance with the policy provisions and 

the action is started within four years 

after the date of discovery of loss or 

damage. 

The Garretsons' insurance claim was investigated by Gary 

Cantrell (Cantrell), Farm Bureau's claims representative. 

Cantrell initially valued the car at $6,295 and offered to 

settle the claim in that amount. According to Garretson, 

Cantrell stated that if the offer were refused, the value 

would be determined through arbitration and the Garretsons 

would receive $5,400 to $5,500 for the vehicle. Cantrell 

contends he merely described the appraisal procedures set 

forth in the insurance policy. The Garretsons assert 

Cantrell later phoned Linda Garretson at work and attempted 

to settle the claim with her. 

The Garretsons demanded payment in the amount of 

$8,295. When Farm Bureau refused, the Garretsons filed a 

complaint on June 16, 1987, alleging bad faith. On July 13, 

1987, counsel for Farm Bureau demanded the Garretsons' loss 

be appraised through the procedures set forth in Garretsons' 

policy. The Garretsons refused, contending the most accurate 

estimation of their loss was the remaining amount of their 

loan. Additionally, the Garretsons claim an accurate 

appraisal is impossible because the damage is so severe. 

Yet, according to Farm Bureau, severely damaged vehicles can 

still be appraised by experts with reasonable accuracy. 

Summary judgment was granted in favor of Farm Bureau on 

January 12, 1988. The District Court found Farm Bureau had 

neither breached the contract nor acted in bad faith, and was 
entitled to value the vehicle through the appraisal process. 

The District Court also noted Western Agricultural Insurance 

Company was not a proper defendant in this action. 

The parties have stated the issues in this case in 

differing ways. We believe the critical issue on appeal is 

whether a private automobile insurance policy may require the 

parties to submit to an appraisal process to determine the 

value of the loss in the event there is a disagreement as to 

value. Although the policy does not specifically provide 

that the parties are bound by the process, the wording 

indicates the appraisal process is intended to generate a 

valuation which is final and binding. 

Prior to 1985, S 28-2-708, MCA, stated: 

Restraints upon legal proceedings void. 

Every stipulation or condition in a 

contract by which any party thereto is 

restricted from enforcing his rights 

under the contract by the usual 

proceedings in the ordinary tribunals or 

which limits the time within which he may 

thus enforce his rights is void. 

This statute has been included in the laws of Montana since 

1895 and is a codification of the common law rule. See, 

Wortman v. Montana Central Railway Co. (1899) , 22 Mont. 266, 

278, 56 P. 316, 321. The effect of S 28-2-708, MCA, was that 

contract provisions requiring arbitration of all future 

contract disputes were void. See, e.g. Smith v. Zepp (1977), 

173 Mont. 358, 369, 567 P.2d 923, 929. 

The 1985 Montana Legislature amended S 28-2-708, MCA, 

adding the law would not affect the validity of an agreement 

enforceable under the "Uniform Arbitration Act, I' Title 27, 

Chapter 5 of the Montana Codes. The amendment validates 

arbitration provisions in a contract if they meet the 
requirement stated in the Uniform Arbitration Act. This 

obviously has a limiting effect on the scope of $ 28-2-708, 

MCA. Both parties refer to the Act in their arguments, but 

we find the Act inapplicable to the present case. Section 

27-5-114, MCA, states in part: 

(2) A written agreement to submit to 

arbitration any controversy arising 

between the parties after the contract is 

made is valid and enforceable except upon 

such grounds as exist at law or in equity 

for the revocation of a contract. This 

subsection does not apply to: 

(b) any agreement concerning or relating 

to insurance policies or annuity 

contracts except for those contracts 

between insurance companies; 

This statute clearly excludes the Garretsons' auto insurance 

policy and the current dispute is not controlled by the 

Uniform Arbitration Act. 

Prior to 1985, contract provisions requiring 

arbitration to resolve all future disputes were invalid. 

However, we had developed at least one exception to this 

rule. While we had concluded that a contract could not 

require binding arbitration of all future disputes, those 

disputes relating solely to questions of fact, such as value 

or quantity, were subject to arbitration. 

The roots of this exception predate the codification of 

the general rule. In Randall v. American Fire Ins. Co. 

(1891), 10 Mont. 340, 353, 25 P. 953, 956-957, this Court 

stated: 
[Tlhe question, as to how far courts will 

be governed by a provision in the 

contract, requiring that controversies 

arising as to the rights and liabilities 

of parties thereunder be submitted to 

arbitration, has engaged the profound 

consideration of both American and 

English courts of last resort. The 

conclusion reached, and probably settled 

beyond further controversy, is that a 

provision in a contract, requiring . all . - 

differences or controversies arising 

between the parties as to their rights 

and liabilities thereunder, to be 

submitted to arbitration, will not be 

allowed to interfere with or bar the 

litigation of such controversies when 

brought into court. To enforce such 

provisions would be to allow parties to 

barter away the jurisdiction of courts to 

determine the rights of parties and 

redress their wrongs. Therefore such 

provisions are disregarded as against 

public policy. But many of the same 

eminent authorities hold that a provision 

in a contract requiring that the value or 

quantity of a thing which might be 

involved in a controversy thereunder be 

ascertained and determined by 

arbitration, or in some other possible 

and reasonable manner, does not oust the 

jurisdiction of the courts, but only 

requires a certain character of evidence 

of a fact in controversy. Therefore a 

provision in a contract like the one 

under consideration in the case at bar, 

requiring that the value of the assured 

property, under certain conditions, shall 

be ascertained by appraisal, is not 

disregarded as against public policy, but 

is upheld has valid. (Citations 

omitted.) (Emphasis in original.) 

The Randall case was cited with favor in School District No. 

1 v. Globe & Republic Ins. Co. (1965), 146 Mont. 208, 

212-213, 404 P.2d 889, 892, where we upheld the validity of 
an insurance policy provision requiring arbitration when the 

parties disputed the amount of loss incurred. In Globe, we 

noted a distinction between an agreement requiring a private 

appraisal to settle a dispute regarding a pure question of 

fact, i.e., the value of the loss incurred, and an agreement 

requiring binding arbitration as to the resolution of all 

future disputes. See also, Palmer Steel Structures v. 

Westech, Inc. (1978), 178 Mont. 347, 350, 584 P.2d 152, 154; 

Smith v. Zepp (1977), 173 Mont. 358, 369, 567 P.2d 923, 929; 

and State ex rel. Cave Const. Co. v. District Court (1967), 

150 Mont. 18, 22, 430 P.2d 624, 626. 

Where there is no disputed issue of material fact, 

summary judgment is proper. We agree respondent is entitled 

to judgment as a matter of law. The District Court did not 

err in granting summary judgment since there is no disputed 

issue of material fact. Rumph v. Dale Edwards, Inc. (1969) 

183 Mont. 359, 365, 600 P.2d 163. 

The appellants' complaint arose from a dispute over the 

amount of loss resulting from an automobile accident. By the 

terms the insurance contract, if either party demands an 

appraisal, that amount of loss to the vehicle must be set by 

an appraisal. Here, the dispute deals with the amount of 

loss and the insurance contract clearly provides for an 

appraisal of such dispute. The parties must comply with the 

appraisal process before filing a complaint. The contract 

provisions in Globe were almost identical to those before us. 

There we held appraisal provisions were not contrary to 

public policy and therefore it was proper for either party to 

demand an appraisal. Upon like reasoning, the District Court 

properly granted Farm Bureau's motion for summary judgment. 
We agree with the District Court's conclusion that the 

parties are bound by the appraisal process set forth in the 

insurance policy. Therefore, we affirm the District Court's 

order of summary iudgment. 

Affirmed. A 

We concur: