Opinion ID: 885540
Heading Depth: 1
Heading Rank: 4

Heading: issues

Text: ¶ 32 Did the District Court abuse its discretion when it refused to vacate the arbitration award on the basis that the arbitrator had disregarded Montana law? ¶ 33 The Appellants contend that the arbitrator disregarded clear Montana law concerning the statute of frauds and the parol evidence rule, which requires that the arbitration award be vacated. Stu Henkel Realty responded by alleging, inter alia, manifest disregard of the law requires something more than a mere disagreement with the law applied by the arbitrator. ¶ 34 After recognizing that this Court had created a manifest disregard of law standard for review of an arbitration award and that arbitration awards are to be afforded significant deference, the District Court stated that the arbitrator had considered the parol evidence rule and the statute of frauds in his decision. The District Court went on to state that if the arbitrator's decision was incorrect, which the District Court did not find, it cannot be considered anything greater than a misapplication of the law. ¶ 35 Section 27-5-312, MCA (1997), specifies when an arbitration award must be vacated by a district court: (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; (c) the arbitrators exceeded their powers; (d) 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. (2) The 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. .... (5) If the application to vacate is denied and no motion to modify or correct the award is pending, the court shall confirm the award. We have previously determined that when an arbitrator is aware of a clearly governing principle of Montana law, and blatantly refuses to follow it, the statutory conditions of § 27-5-312(1)(b), MCA, have in fact been met. Geissler v. Sanem (1997), 285 Mont. 411, 416, 949 P.2d 234, 237-38. The test for manifest disregard of the law requires that the arbitrator appreciates the existence of a clearly governing legal principle but decides to ignore or pay no attention to it. See Geissler, 285 Mont. at 417-18, 949 P.2d at 239. ¶ 36 Upon review of the arbitrator's Amended Award dated July 8, 1998, which was the award confirmed by the District Court, we conclude that the arbitrator did consider the statute of frauds and the parol evidence rule in rendering his decision. While he may not have mentioned these principles of law by name, he stated the following: There are, however, rights which arise by virtue of the facts and circumstances surrounding the entire transactions between TWT, the Dillons and SHR. Some of these rights arise by virtue of an oral agreement which ordinarily would not be enforceable since there is no writing to evidence its terms and conditions. However, under Montana law if a party reasonably relies upon information and promises made by another, in some cases the oral agreement by and between the parties can be enforced by virtue of the doctrine of equitable estoppel. ¶ 37 It is apparent that the arbitrator considered the statute of frauds and the parol evidence rule in determining that the oral agreement between the parties would not ordinarily be enforceable without invoking the doctrine of equitable estoppel. Under our narrow standard of review of arbitration awards, we cannot overturn an award simply because the arbitrator may have misapplied the law. See Geissler, 285 Mont. at 417, 949 P.2d at 238. Therefore, we conclude that the District Court did not abuse its discretion when it refused to vacate the arbitration award on the basis that the arbitrator had disregarded Montana law.