Kluver v. PPL Mont., LLC

• Citation: 368 Mont. 101,293 P.3d 817
• Decision Date: 31 December 2012
• Docket Number: No. DA 11–0681.,DA 11–0681.
• Parties: Charles Kelly KLUVER; Karson Kluver; and Genie Land Company, Plaintiffs and Appellants, and Douglas & 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 Blackfoot, LLC.; The Montana Power Company, LLC.; Avista Corporation; Pacificorp; Portland General Electric Company and John Does 1–20, Defendants and Appellees.
• Court: United States State Supreme Court of Montana

368 Mont. 101

293 P.3d 817

Charles Kelly KLUVER; Karson Kluver; and Genie Land Company, Plaintiffs and Appellants,

and

Douglas & 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 Blackfoot, LLC.; The Montana Power Company, LLC.; Avista Corporation; Pacificorp; Portland General Electric Company and John Does 1–20, Defendants and Appellees.

No. DA 11–0681.

Supreme Court of Montana.

Argued Sept. 21, 2012.

Submitted Oct. 2, 2012.

Decided Dec. 31, 2012.

For Appellants: Robert K. Baldwin (argued); Brian K. Gallik; Goetz, Gallik & Baldwin, P.C., Bozeman, Montana, Mark D. Parker; Casey Heitz; Parker, Heitz & Cosgrove, PLLC, Billings, Montana.

For Appellees: Tom W. Stonecipher (argued); Margaret C. Weamer; Tarlow Stonecipher & Steele, PLLC, Bozeman, Montana W. William Leaphart, Attorney at Law, Helena, Montana (McRaes and Greenleaf Land & Livestock Co.).

Guy W. Rogers (argued); Jon A. Wilson; Brown Law Firm, P.C., Billings, Montana, Thomas W. Stoever, Jr.; Timothy R. MacDonald; Arnold & Porter, LLP, Denver, Colorado (PPL Montana, LLC, Puget Sound Energy, Inc., Northwestern Corporation; Pacificorp; The Clark Fork and Blackfoot, LLC; The Montana Power Company, LLC, and Avista Corp.).

Shane P. Coleman; Jason S. Ritchie; Holland & Hart, LLP, Billings, Montana (Portland General Electric Company).

Justice MICHAEL E. WHEAT delivered the Opinion of the Court.

[368 Mont. 103]¶ 1 Charles Kelly Kluver, Karson Kluver, and Genie Land Company (collectively the “Kluvers”) appeal two orders of the Sixteenth Judicial District Court, Rosebud County; one involving rulings on evidentiary motions, and the other granting a motion to enforce a settlement agreement in favor of PPL Montana, LLC, Puget Sound Energy, Inc., Northwestern Corporation, the Clark Fork and Blackfoot, LLC, the Montana Power Company, LLC, Avista Corporation, Pacificorp, Portland General Electric Company, John Does 1–20, (collectively the “Power Companies”), and Douglas McRae, Kim McRae, and Greenleaf Land and Livestock Company (collectively the “McRaes”). We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 2 The Kluvers and McRaes are neighbors and ranchers in Rosebud County. In February 2007, they commenced a lawsuit against the Power Companies ¹ alleging that the Colstrip power facility, which borders land owned by the Kluvers and McRaes, contaminated groundwater under their property. The Kluvers and McRaes were represented by Monte Beck (Beck), John Amsden (Amsden), Jory Ruggiero (Ruggiero) and Brett Engel (Engel). The Power Companies' counsel included Guy Rogers (Rogers), Thomas Stoever (Stoever), and Stephen Redshaw (Redshaw).

¶ 3 After over three years of litigation, on July 14, 2010, the parties assembled in Billings to participate in a mediation to see if a negotiated settlement could be reached. Present at the mediation were the mediator, the Kluvers and their wives, Beck, Ruggiero, Engel, Rogers, Stoever, Redshaw, and Gordon Criswell (Criswell), an employee of PPL Montana and a representative for the Power Companies. The McRaes did not attend, but authorized their counsel to proceed with the mediation and agree to a settlement on their behalf. The mediation lasted the entire day, concluding at approximately 10:00 p.m. with the transmission of a Memorandum of Understanding (MOU) as an email from Ruggiero to Rogers and copied to other counsel.

¶ 4 The relevant portions of the MOU are as follows:

The following terms memorialize the global settlement agreement between all Plaintiffs in this matter ... and all Defendants ...

Defendants shall pay all Plaintiffs [_____] dollars.²

Plaintiffs shall sign a global release of all defendants ... [that] shall include all past, present and future claims ... [that] arise out of the subject matter of this lawsuit....

Within 60 days, Plaintiffs shall convey fee simple title to the following lands to Defendant PPLM:

[Sections 3 and 10 in their entirety, [t]he Southwest 8th of section 33 and all of section 4 that Plaintiffs own. This land is demarcated on the map held by the mediator].

Within 60 days, Defendants and Plaintiffs shall enter into a renewable, ninety-nine (99) year lease whereby Defendants shall lease to Plaintiffs [all land conveyed above and Section Nine]. This lease shall entitle Plaintiffs to make all uses of the surface....

Within 60 days, Defendants and Plaintiffs shall enter into a perpetual first option to purchase whereby Plaintiffs ... shall be entitled to the first right to purchase [all land conveyed above and Section Nine] for the sum of One (1) dollar.

This Memorandum has been reviewed and approved by the parties and their counsel copied herein.

[368 Mont. 105]¶ 5 On the evening of July 14, 2010, Engel called the McRaes and informed them that a settlement had been reached at the mediation. A few days later, Karson Kluver went to the McRaes' home and expressed relief that the case was over, appreciation that the McRaes participated in the case, and sadness that he would have to part with some of his land as part of the settlement. As a result of this conversation, the McRaes both thought the Kluvers believed the parties reached a settlement at the mediation.

¶ 6 On July 19, 2010, Ruggiero filed a Notice of Tentative Settlement with the court. During the next few weeks, there were email communications between counsel discussing different aspects of the settlement, primarily those dealing with the real estate transactions and the documentation necessary to complete them. In some of these emails the MOU was referred to as a “draft.”

¶ 7 A few weeks after the mediation, Doug McRae and the Kluvers had a conversation at a store in Miles City. The Kluvers told Doug that they had met with a tax attorney who informed them that the proceeds from the settlement would not be as great as they had anticipated, and they therefore were having reservations about accepting the settlement. On September 14, 2010, at the insistence of the Kluvers, Ruggiero filed a Notice Regarding Failure of Settlement Discussions. It stated that the “tentative settlement has now failed and has resulted in no final, enforceable settlement agreement.”

¶ 8 Approximately two weeks later, the Power Companies filed a Motion to Enforce Settlement Agreement and Request for Evidentiary Hearing, arguing that the MOU was a written and signed settlement agreement. They attached affidavits of Rogers, Criswell, and Redshaw discussing the negotiations at the mediation. Later, Beck, Ruggiero and Engel also filed affidavits with the court reporting what occurred at the mediation.

¶ 9 The Kluvers objected to the Power Companies' Motion and filed a Motion to Strike the Defendants' Brief and Affidavits. They maintained there was no enforceable settlement agreement and that the Power Companies relied upon confidential and privileged settlement negotiations that were inadmissible pursuant to the mediation confidentiality statute. The McRaes did not share the same position as the Kluvers; instead, they agreed with the Power Companies that the MOU was an enforceable agreement.

¶ 10 Several motions followed, which prompted the District Court to order a hearing for February 17, 2011. Following the hearing, the court ordered, among other things, that the Kluvers waived any right to confidentiality of the fact of a settlement and that the affidavits presented by the Power Companies were admissible. It ordered the mediator to submit a report to the court indicating whether a settlement was reached. It further scheduled an evidentiary hearing for March 21, 2011, to determine whether the MOU was an enforceable settlement agreement.

¶ 11 Pursuant to the District Court's order, the mediator filed a report on March 21, 2011, stating that the case had settled at the July 14, 2010, mediation.

¶ 12 At the March 21, 2011, evidentiary hearing, Rogers, Ruggiero, Beck, Criswell and the McRaes testified. The Kluvers did not. Among other things, the witnesses testified that the case settled at the mediation and the MOU and map were a final expression of the terms of the settlement. The testimony revealed details about the mediation process, including how the MOU was created and transmitted between the parties. Specifically, Ruggiero testified that during the mediation he sat in the same room as the Kluvers and that they authorized him to draft and send the MOU to opposing counsel at the conclusion of the mediation. The witnesses also explained some of the MOU's terms, particularly those involving the land transactions and the “perpetual first option to purchase.” In addition, they addressed the parties' failure to complete certain duties specified in the MOU within the required 60–day period following the mediation. Rogers testified that because the Kluvers had fired their counsel, they could no longer communicate with them regarding these tasks. The McRaes also provided testimony regarding the conversations they had with the Kluvers following the mediation.

¶ 13 During the hearing, the MOU and map were admitted into evidence.

¶ 14 On October 20, 2011, the court issued its Findings of Fact, Conclusions of Law, and Order, in which it granted the Power Companies' and McRaes' (collectively “Appellees”) Motion to Enforce the Settlement Agreement, and ordered the parties to complete the settlement set forth in the MOU within 60 days. The Kluvers appealed this order, along with the court's February 23, 2011, order involving rulings on the evidentiary motions. We heard oral argument on September 21, 2012, and the matter is now ripe for disposition.

¶ 15 The parties raise several arguments on appeal. We address the following three issues:

¶ 16 Issue One: Did the District Court err by finding that the MOU was a binding, enforceable settlement agreement?

[368 Mont. 107]¶ 17 Issue Two: Did the District Court err by...