Summary
In Kluver, although we did not find the error reversible because of other evidence sufficient to support the trial court's ruling in that case, we stressed the zero-tolerance policy in the law prohibiting evidence of what occurred during mediation.
Summary of this case from Harrell v. Farmers Educ. Coop. Union of Am.Opinion
No. DA 11-0681
01-03-2013
CHARLES KELLY KLUVER, KARSON KLUVER, and GENIE LAND COMPANY, Plaintiffs and Appellants, and DOUGLAS MCRAE, KIM MCRAE, and GREENLEAF LAND & LIVESTOCK COMPANY, Plaintiffs and Appellees, v. PPL MONTANA, LLC, as a successor in interest to the Montana Power Co., PUGET SOUND ENERGY, INC., NORTHWESTERN CORPORATION, THE CLARK FORK AND BLAKFOOT LLC, THE MONTANA POWER COMPANY, LLC, AVISTA CORPORATION, PACIFICORP, PORTLAND GENERAL ELECTRIC COMPANY and JOHN DOES 1-20, Defendants and Appellees.
SYNOPSIS OF THE CASE
In 2007, the Kluvers and McRaes sued several power companies who owned or operated the Colstrip power facility for polluting area groundwater. The parties assembled in Billings to participate in a mediation in July, 2010. At the conclusion of the mediation, the Kluvers' and McRaes' counsel emailed a memorandum of understanding (MOU) to all other counsel. The MOU referenced future documents and land transactions by which the Kluvers would convey land to the power companies, lease that land back, and receive a "perpetual first option to purchase" the land back. Several weeks later, the power companies and the McRaes sought to enforce the MOU in the Sixteenth Judicial District Court. The Kluvers objected, arguing the MOU was not an enforceable agreement. After holding an evidentiary hearing, at which the District Court heard testimony about the mediation and admitted the MOU into evidence, the court entered an order enforcing the MOU as a valid settlement agreement. On appeal, the Kluvers argued the MOU was an unsigned, unenforceable agreement. They asserted the District Court erred by re-writing the "perpetual first option to purchase," which they claimed was an "option," into a right of first refusal. They also maintained the District Court incorrectly admitted evidence regarding the mediation that was protected by the mediation confidentiality statute and the attorney-client privilege.
On appeal, the Court determined the District Court erred in admitting evidence protected by the mediation confidentiality statute. However, the Court concluded the error was harmless because the MOU, which was not confidential, was sufficient for the District Court to find that the parties entered into an enforceable agreement. Applying the Uniform Electronic Transaction Act, the Court found the MOU was a signed agreement that contained all essential terms. The Court also determined the District Court correctly found that the MOU contained a right of first refusal and not an option.
Justices Jim Nelson and Patricia Cotter dissented. Justice Nelson stated that there was insufficient admissible evidence to support the Court's decision that the parties' MOU was an enforceable contract and expressed grave concerns with the Court's use of privileged mediation and mediation-related evidence to reach its decision.