Casarotto v. Lombardi

901 P.2d 596, 274 Mont. 3, 52 State Rptr. 911, 1995 Mont. LEXIS 206
CourtMontana Supreme Court
DecidedAugust 31, 1995
Docket93-488
StatusPublished
Cited by16 cases

This text of 901 P.2d 596 (Casarotto v. Lombardi) is published on Counsel Stack Legal Research, covering Montana Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Casarotto v. Lombardi, 901 P.2d 596, 274 Mont. 3, 52 State Rptr. 911, 1995 Mont. LEXIS 206 (Mo. 1995).

Opinions

JUSTICE TRIEWEILER

delivered the opinion of the Court.

Plaintiffs Paul and Pamela Casarotto filed this suit in the District Court for the Eighth Judicial District in Cascade County to recover damages which they claim were caused by the defendants’ breach of contract and tortious conduct. Defendants Nick Lombardi and Doctor’s Associates, Inc., (DAI) moved the District Court for an order dismissing plaintiffs’complaint, or in the alternative, staying further judicial proceedings pending arbitration of plaintiffs’ claims pursuant to a provision in DATs franchise agreement with plaintiffs which required that disputes “arising out of or relating to” that contract be settled by arbitration. The District Court granted defendants’ motion, and ordered that further judicial proceedings be stayed until arbitration proceedings were completed in accordance with the terms of the parties’ agreement. Plaintiffs appealed from that order, and on December 15, 1994, we reversed the order of the District Court and remanded this case to that court for further proceedings. Casarotto v. Lombardi (1994), 268 Mont. 369, 886 P.2d 931. Following this Court’s decision, the defendants petitioned the Supreme Court of the United States for a writ of certiorari. That petition was granted, and on June 12, 1995, the United States Supreme Court ordered that the December 15, 1994, judgment of this Court be vacated, and remanded this case to the Supreme Court of Montana for further consideration in light of that Court’s decision in Allied-Bruce Terminix Cos. v. Dobson (1995), 513 U.S._, 115 S. Ct. 834, 130 L. Ed. 2d 753. Having [5]*5further considered our prior decision in light of Dobson, we now reaffirm and reinstate our prior opinion.

FACTUAL BACKGROUND

Paul and Pamela Casarotto entered into a franchise agreement with DAI which allowed them to open a Subway Sandwich Shop in Great Falls, Montana. DAI’s franchise agreement included on page nine a provision which required that controversies or claims related to the contract shall be settled by arbitration in Bridgeport, Connecticut. However, the franchise agreement did not include notice on the front page to the effect that the contract was subject to arbitration, as required by § 27-5-114(4), MCA.

The Casarottos filed this action in the District Court based on their allegations that DAI breached its agreement with them, defrauded them, and engaged in other tortious conduct, all of which resulted in loss of business and the resulting damage.

DAI moved to dismiss the Casarottos’ claim or to stay further judicial proceedings pending arbitration pursuant to the arbitration provision in its franchise agreement. The District Court granted DATs motion to stay further judicial proceedings pursuant to 9 U.S. C. § 3, which is part of the Federal Arbitration Act found at 9 U.S.C. §§ 1-15 (1988).

On appeal from the District Court’s order, we considered whether Montana’s notice requirement was preempted by the Federal Arbitration Act in light of the U.S. Supreme Court’s recent decision in Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior University (1989), 489 U.S. 468, 109 S. Ct. 1248, 103 L. Ed. 2d 488. In that case, the Supreme Court stated that:

The FAA contains no express pre-emptive provision, nor does it reflect a congressional intent to occupy the entire field of arbitration. But even when Congress has not completely displaced state regulation in an area, state law may nonetheless be pre-empted to the extent that it actually conflicts with federal law — that is, to the extent that it “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 404, 85 L.Ed.2d 581 (1941). The question before us, therefore, is whether application of Cal.Civ.Proc. Code Ann. § 1281.2(c) to stay arbitration under this contract in interstate commerce, in accordance with the terms of the arbitration agreement itself, would undermine the goals and policies of the FAA. We conclude that it would not.

[6]*6Volt, 489 U.S. at 477-78, 109 S. Ct. at 1255 (citation omitted; emphasis added).

Based on the cited language from Volt, we concluded that the nature of our inquiry was whether Montana’s notice requirement found at § 27-5-114(4), MCA, would “undermine the goals and policies of the FAA.” We concluded that it does not. Casarotto, 886 P.2d at 931. We explained our conclusion as follows:

Our conclusion that Montana’s notice requirement does not undermine the policies of the FAA is based on the Supreme Court’s conclusion that it was never Congress’s intent when it enacted the FAA to preempt the entire field of arbitration, and its further conclusion that the FAA does not require parties to arbitrate when they have not agreed to do so. That Court held that the purpose of the FAA is simply to enforce arbitration agreements into which parties had entered, and acknowledged that the interpretation of contracts is ordinarily a question of state law. Volt, 489 U.S. at 474, 109 S.Ct. at 1253.

Presumably, therefore, the Supreme Court would not find it a threat to the policies of the Federal Arbitration Act for a state to require that before arbitration agreements are enforceable, they be entered knowingly. To hold otherwise would be to infer that arbitration is so onerous as a means of dispute resolution that it can only be foisted upon the uninformed. That would be inconsistent with the conclusion that the parties to the contract are free to decide how their disputes should be resolved.

Montana’s notice requirement does not preclude parties from knowingly entering into arbitration agreements, nor do our courts decline to enforce arbitration agreements which are entered into knowingly.

Therefore, we conclude that Montana’s notice statute found at § 27-5-114(4), MCA, would not undermine the goals and policies of the FAA, and is not preempted by 9 U.S.C. § 2 (1988).

Casarotto, 886 P.2d at 938-39.

On January 18, 1995, subsequent to our decision in this case, the U.S. Supreme Court decided Dobson. On June 12, 1995, the same Court vacated our prior Casarotto decision and remanded the matter to this Court for further consideration in light of the Dobson decision.

In Dobson, the plaintiffs were the assignees of a contract with Terminix for life-time protection against termites. They sued Terminix in Alabama state court when they found their house “swarming [7]*7with termites.” Terminix moved the court for a stay pursuant to § 2 of the Federal Arbitration Act (9 U.S.C. § 2 (1988)) so that arbitration could proceed pursuant to a provision for arbitration in the termite protection plan. The stay was denied.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Talbot v. WMK-Davis, LLC
2016 MT 247 (Montana Supreme Court, 2016)
In re Nexium (Esomeprazole) Antitrust Litigation
309 F.R.D. 107 (D. Massachusetts, 2015)
Burchett v. MasTec North America, Inc.
2004 MT 177 (Montana Supreme Court, 2004)
Phillips v. General Motors Corp.
2000 MT 55 (Montana Supreme Court, 2000)
City of Cut Bank v. Tom Patrick Construction, Inc.
1998 MT 219 (Montana Supreme Court, 1998)
TERMINIX INTERN. CO. v. Jackson
723 So. 2d 555 (Supreme Court of Alabama, 1998)
Doctor's Associates, Inc. v. Casarotto
517 U.S. 681 (Supreme Court, 1996)
Chase v. Blue Cross of California
42 Cal. App. 4th 1142 (California Court of Appeal, 1996)
Casarotto v. Lombardi
901 P.2d 596 (Montana Supreme Court, 1995)

Cite This Page — Counsel Stack

Bluebook (online)
901 P.2d 596, 274 Mont. 3, 52 State Rptr. 911, 1995 Mont. LEXIS 206, Counsel Stack Legal Research, https://law.counselstack.com/opinion/casarotto-v-lombardi-mont-1995.