Paulson v. Flathead Conservation District, 02-733

• Decision Date: 25 May 2004
• Docket Number: No. 02-733,02-733
• Citation: 2004 MT 136,91 P.3d 569,321 Mont. 364
• Parties: JACK PAULSON and DONNA PAULSON, Petitioners and Appellants, v. FLATHEAD CONSERVATION DISTRICT and MONTANA DEPARTMENT OF FISH, WILDLIFE AND PARKS, Defendants and Respondents.
• Court: Montana Supreme Court

2004 MT 136

321 Mont. 364

91 P.3d 569

JACK PAULSON and DONNA PAULSON, Petitioners and Appellants, v. FLATHEAD CONSERVATION DISTRICT and MONTANA DEPARTMENT OF FISH, WILDLIFE AND PARKS, Defendants and Respondents.

No. 02-733

Supreme Court of Montana.

Submitted on Briefs: May 13, 2003

Decided: May 25, 2004

For Appellants: Wilmer E. Windham, Attorney at Law, Polson, Montana.

For Respondents: Ed Corrigan, County Attorney; Dennis J. Hester, Deputy County Attorney, Kalispell, Montana.

Rebecca J. Dockter, Special Assistant Attorney General, Helena, Montana.

Justice Jim Rice delivered the Opinion of the Court.

¶1 Appellants Jack Paulson and Donna Paulson (Paulsons) appeal the July 18, 2002, order of the Eleventh Judicial District Court, Flathead County, granting a motion for judgment on the pleadings by Respondents Flathead Conservation District (FCD) and Montana Department of Fish, Wildlife and Parks (FWP). We affirm.

¶2 We restate the issues as follows:

¶3 1. Did the District Court err in concluding that the arbitration panel validly determined factual and legal issues in accordance with the arbitration provisions of The Natural Streambed and Land Preservation Act of 1975?

¶4 2. Did the District Court err in concluding Delano A. Hanzel was a neutral arbiter?

¶5 3. Was the arbitration process constitutional?

FACTUAL AND PROCEDURAL BACKGROUND

¶6 This case involves a dispute between owners of property situated on Bigfork Bay in Flathead County, Montana, and two administrative agencies, the Flathead Regional Development Office (FRDO) and the FCD. The FRDO is the county agency charged with administration of the Flathead County Lakeshore Protection Program (Lakeshore Program), governed by § 75-7-201, et seq., MCA, which grants authority to local governments for protection of the natural lakes of Montana. The FRDO exercises jurisdiction over projects in Flathead Lake. The FCD is the agency charged with administration of The Natural Streambed and Land Preservation Act of 1975 (Streambed Act), governed by § 75-7-101, et seq., MCA, which grants authority to conservation districts for protection of Montana's natural rivers and streams. The Streambed Act is also called the "310 Law," so named after the permit required for construction projects in Montana's streams (310 Permit). The FCD exercises jurisdiction over projects in the Swan River. Section 75-7-112, MCA, of the Streambed Act, calls for a "team" consisting of one representative of the applicant, the FCD, and FWP to consider proposed projects in Montana's rivers and streams.

¶7 On January 3, 2000, the Paulsons submitted a project proposal to the FRDO for construction of a retaining wall and dock extension into what they considered Flathead Lake. Upon receipt of their permit for the project from the FRDO, the Paulsons began work on their waterfront improvements. In May 2000, however, the Paulsons were notified by the FCD that they may be in violation of the Streambed Act because, according to the FCD, their project was also located in the Swan River. Thus, on May 11, 2000, the Paulsons submitted to the FCD a project application, entitled Joint Application for Proposed Work in Montana's Streams, Wetlands, Floodplains, and Other Water Bodies (Joint Application), requesting after-the-fact approval for the installation of the retaining wall and dock extension into the Swan River.

¶8 On May 22, 2000, the FCD Board of Supervisors (Supervisors) denied the Paulsons' request for a 310 Permit. The letter from the FCD notified the Paulsons that anyone proposing work in a perennial stream must first obtain an approved permit from the local conservation district, and, as the landowners, they were responsible for correcting their illegal activity. The letter set forth several conditions for restoration of the stream and its immediate banks, including removing the concrete retaining wall and the dock extension, taking measures for reclamation and erosion control, and undergoing a site inspection by the FCD when they had restored the river bank to its original condition.

¶9 The Joint Application form provided a means of responding in the event an applicant disagreed with the supervisors' decision. On July 7, 2000, the Paulsons returned the form with a check in the box stating, "I disagree with the supervisors' decision and hereby formally request arbitration."

¶10 Over the course of the next twelve months, the Paulsons took a number of steps to determine which agency, the FRDO or the FCD, had jurisdiction over their waterfront improvement project. First, the Paulsons requested and received written verification from the FRDO that the retaining wall complied with the requirements of their valid Lakeshore Program permit. Then, the Paulsons requested and received a letter from the Flathead County Commissioners to the FCD stating that, in their opinion, since their project was not situated in a streambed, the FCD should cooperate in issuing a 310 Permit. The FCD responded to the Commissioners' letter that the process was presently under arbitration as established by the Streambed Act, and an arbitration panel would make a final decision in the matter. At that point, the Flathead County Attorney's Office initiated legal representation of the FCD. The Paulsons proceeded pro se.

¶11 Pursuant to the statutory arbitration process as set forth in § 75-7-114, MCA, of the Streambed Act, the Paulsons, the FCD, and FWP each chose three proposed arbitrators and submitted the names to senior Flathead County Judge Ted O. Lympus. Judge Lympus chose one representative from each of the parties' list of three submissions to serve on a three-member arbitration panel. One member of the panel, to whom the Paulsons object on appeal, was Delano A. Hanzel, a FWP retiree.

¶12 A fourteen-hour arbitration hearing was held on May 3, 2001. However, the hearing transcript is not part of the record on appeal. The parties allege that the major issue before the arbitration panel was whether the Supervisors correctly determined that the situs of the Paulsons' construction project was on a "natural, perennial-flowing stream or river" and therefore subject to the FCD's jurisdiction. On May 11, 2001, the arbitration panel rendered its decision that the FCD, did, in fact, have jurisdiction pursuant to the Streambed Act over this matter.

¶13 The Paulsons subsequently secured legal counsel who, on August 3, 2001, filed a motion to vacate the arbitration award in District Court. The Paulsons contended at the time of arbitration, as they do on appeal, that the instant dispute involved a jurisdictional issue between administrative agencies which was a question of law to be determined by the District Court, not a question of fact for the arbitration panel. The Paulsons' motion requested: (1) that the District Court hold a hearing to determine which, if either, of the involved local governmental agencies had jurisdiction under these circumstances; (2) permission to serve the Flathead County Commission; (3) a determination of the appropriateness of legal representation of the FCD by the Flathead County Attorney's Office; (4) an order vacating the arbitration award in favor of the FCD; and (5) if the court determined jurisdiction was proper under the conservation district, appointment of a new panel which did not include a retiree from an involved party (FWP). Paulsons' motion did not raise constitutional issues.

¶14 On August 31, 2001, the Flathead County Attorney, on behalf of the FCD, joined by FWP, filed a response to the Paulsons' motion to vacate. These pleadings asserted the Paulsons' motion failed to state a claim upon which relief could be granted and requested an order confirming the arbitration award and dismissing the motion.

¶15 On October 5, 2001, the Flathead County Attorney, on behalf of the FCD, filed a motion for judgment on the pleadings pursuant to Rule 12(c), M.R.Civ.P., in which the FWP concurred. The Paulsons filed a brief in opposition, followed by replies by both the Flathead County Attorney and FWP. The issues raised by the motion were: (1) whether the arbitration panel had the power to determine both the factual and legal issues before it; (2) whether a conflict of interest arose from the legal representation of the FCD by the Flathead County Attorney's Office in light of the FRDO's involvement in the jurisdictional dispute, since both entities are Flathead County administrative agencies; and (3) whether arbiter Delano A. Hanzel was partial because of his employment status as a retiree of FWP.

¶16 On July 18, 2002, the District Court issued an order granting the FCD's and FWP's motion for judgment on the pleadings, and, after the Paulsons moved to reconsider, reaffirmed that judgment on September 26, 2002. The Paulsons appeal.

STANDARD OF REVIEW

¶17 A movant for judgment on the pleadings pursuant to Rule 12(c), M.R.Civ.P., must establish that no material issue of fact remains and that the movant is entitled to judgment as a matter of law. Hedges v. Woodhouse, 2000 MT 220, ¶ 8, 301 Mont. 180, ¶ 8, 8 P.3d 109, ¶ 8 (citing Clayton v. Atlantic Richfield Co. (1986), 221 Mont. 166, 169-70, 717 P.2d 558, 560

). The pleadings are to be construed in the light most favorable to the nonmoving party, whose allegations are taken as true. Hedges, ¶ 8. Because a motion for judgment on the pleadings is decided as a matter of law, we apply our standard of review for conclusions of law: whether they are correct. Hedges, ¶ 8 (citing Steer, Inc. v. Dept. of Revenue (1990), 245 Mont. 470, 474-75, 803 P.2d 601, 603).

¶18 Judicial review of arbitration awards is limited by statute. Terra West Townhomes, L.L.C. v. Stu Henkel Realty, 2000 MT 43, ¶ 22, 298 Mont. 344, ¶ 22, 996 P.2d 866, ¶ 22 (citing Nelson v. Livingston Rebuild Ctr., Inc., 1999 MT 116, ¶ 11, 294 Mont. 408, ¶ 11, 981 P.2d 1185, ¶ 11). When a matter has been submitted to binding arbitration, courts are not permitted to review the merits of the...