Stowe v. Big Sky Vacation Rentals, Inc.

• Citation: 398 Mont. 91,454 P.3d 655,2019 MT 288
• Decision Date: 17 December 2019
• Docket Number: DA 18-0614
• Parties: John STOWE and Katharine Stowe, Plaintiffs, and Tudor Insurance Company, as subrogee of John and Katharine Stowe, Intervening Plaintiff, v. BIG SKY VACATION RENTALS, INC., Defendant. Big Sky Vacation Rentals, Inc., Third-Party Plaintiff and Appellee, v. Pointcentral, LLC., Third-Party Defendant and Appellant.
• Court: United States State Supreme Court of Montana

398 Mont. 91

454 P.3d 655

2019 MT 288

John STOWE and Katharine Stowe, Plaintiffs,

and

Tudor Insurance Company, as subrogee of John and Katharine Stowe, Intervening Plaintiff,

v.BIG SKY VACATION RENTALS, INC., Defendant.

Big Sky Vacation Rentals, Inc., Third-Party Plaintiff and Appellee,

v.Pointcentral, LLC., Third-Party Defendant and Appellant.

DA 18-0614

Supreme Court of Montana.

Submitted on Briefs: May 29, 2019

Decided: December 17, 2019

For Appellant: Lilia Norma Tyrrell, Jordan P. Helvie, Kasting, Kauffman & Mersen, P.C., Bozeman, Montana

For Appellee: Antonia P. Marra, Thomas A. Marra, Marra, Evenson & Levine, P.C., Great Falls, Montana, John H. Tarlow, Matthew A. Haus, Tarlow Stonecipher Weamer and Kelly, PLLC, Bozeman, Montana

Justice Dirk M. Sandefur delivered the Opinion of the Court.

¶1 PointCentral, LLC (PointCentral) appeals from the judgment of the Montana Eighteenth Judicial District Court, Gallatin County, denying its motion to dismiss the third-party claims of Big Sky Vacation Rentals, Inc. (BSVR) pursuant to M. R. Civ. P. 12(b). We address the following dispositive issues:

1. Whether the District Court erroneously concluded that the PointCentral/BSVR arbitration agreement was invalid or unenforceable due to lack of mutuality or equitable unconscionability?

2. Whether the PointCentral/BSVR arbitration agreement is illegal or unenforceable in contravention of § 27-1-703, MCA ?

¶2 We reverse.

PROCEDURAL AND FACTUAL BACKGROUND

¶3 BSVR is a Montana-based corporation engaged in the business of property management and vacation rentals in Big Sky, Montana. PointCentral is a Virginia-based technology company engaged in the business of providing home automation products and services that allow vacation rental and property managers to remotely control access, HVAC, and hot water systems in managed residential properties from desktop computers or mobile devices. PointCentral licenses its proprietary products, and related services, to property management companies for sale or provision to third-party property owners.

¶4 In 2013, John and Katharine Stowe (Stowes) executed a ten-page contract with BSVR for management and vacation rental of their Big Sky home.¹ On July 14, 2014, BSVR introduced to its clients a "Home Assurance Plan" touted as an "all-encompassing maintenance and security program" with various features including, inter alia , "24/7 [e]mergency response service for guests."² An included component of the Plan was a PointCentral system that would provide specified keyless entry, security, and energy management features. The e-mail announcement stated that the keyless entry component was mandatory to clients and would involve an initial installation fee (shared by BSVR and clients) with a recurring quarterly service fee.³ The announcement described the component as a:

keyless monitoring system that allows us to issue unique codes to every person entering your property. Guests will be given a unique code vs. keys upon full payment of a reservation and will use this code to open the lock on the door.... Each property has a dashboard as shown in the attached PowerPoint that allows us to see when cleaning staff have entered, status of a property (occupied, unoccupied, clean in progress, etc.)[.] ... In addition, should someone enter the home with a key without notifying us, the infrared camera will snap two photos which are immediately sent to our cell phones. This system does not replace the security system that an owner may already have, but rather enhances it’s [sic] effectiveness and eliminates the possibility of keys being lost or misplaced. The lock-out feature allows us to remotely unlock the door via cell phone should an owner or guest forget their code and lock themselves out of the property.

¶5 Attached to the BSVR e-mail announcement was a referenced .pdf copy of a Microsoft PowerPoint presentation describing a PointCentral "Smart Home Control" system. The presentation was manifestly a marketing tool designed by PointCentral for marketing its products and services to BSVR. It described the PointCentral system as a "SmartHome Automation" system that would provide "[r]emote, web[-]enabled control and visibility of all properties including ... [k]eyless access" and "[p]roperty status" monitoring via the cellular telephone network rather than the internet. (Ellipsis in original.) It stated that "PointCentral is the cloud-based service that gives [the property manager] the ability to control systems in [all] of your homes from any web-enabled device." (Emphasis omitted.) The presentation described various system access history logging, reporting, and alert/notification features. Using motion-sensor-triggered infrared cameras in door locksets, PointCentral designed the keyless access monitoring feature to log and photograph detected motion events around exterior doors and then send motion alerts and photographs to configured desktop and mobile devices. BSVR alleges that, in implementing the system, it purchased all recommended system components from PointCentral and installed them in client homes through a PointCentral approved third-party installer.

¶6 BSVR and PointCentral were engaged under a July 2014 dealer/licensing agreement (Agreement) authorizing BSVR to sell or provide "PointCentral-ready Products" and "PointCentral Services" to third-party clients.⁴ The Agreement provided for PointCentral to provide various services to BSVR including, inter alia , enabling of data communication between installed residential systems and the PointCentral operations network, data hosting, remote access to hosted data, and remote control of installed residential systems via a user interface on the PointCentral website. The Agreement included an attached price quote to BSVR for contemplated PointCentral-ready products and services referenced as the "PointConnect System." The Agreement required PointCentral to provide technical support to BSVR, but specified that BSVR would "provide all customer service and technical support for the PointCentral Services and PointCentral-ready Products" to BSVR clients.

¶7 The Agreement also included reciprocal contract indemnification provisions and a broadly-worded arbitration agreement. Except for third-party claims within the scope of PointCentral’s duty to indemnify BSVR, the Agreement required BSVR to indemnify PointCentral for contract and tort claims asserted by third parties against PointCentral as a result of, or "arising from," breaches of the Agreement or related tortious conduct by BSVR. Except for third-party claims within the scope of BSVR’s duty to indemnify PointCentral, the Agreement similarly required PointCentral to indemnify BSVR for contract and tort claims asserted by third parties against BSVR as a result of, or "arising from," breaches of the Agreement or related tortious conduct by PointCentral.

¶8 Subject to two narrow exceptions, the arbitration agreement broadly required BSVR and PointCentral to arbitrate "[a]ny controversy or Claim" between them "arising out of or relating to" the Agreement or a "breach thereof." In the event of a third-party lawsuit against PointCentral within the actual or apparent scope of BSVR’s contract indemnification duty, the first exception allowed PointCentral to join BSVR as a third-party defendant for the purpose of enforcing its contract right to indemnification from BSVR. Under the second exception, PointCentral further retained "the right to seek injunctive relief in any court of competent jurisdiction with respect to any breach" of the Agreement by BSVR regarding "PointCentral’s intellectual property or proprietary rights or business reputation."⁵

¶9 Based on system activity logs and photographs, Stowes allege that, on February 12, 2016, at 2:27 a.m., their PointCentral keyless entry system detected a motion-based "intrusion" event and immediately generated two infrared photographs depicting electrical sparks flying in the home. They allege that the system immediately transmitted the intrusion alert and photographs to configured BSVR desktop(s) or mobile device(s). Stowes allege that an ensuing fire subsequently destroyed the home as a result of BSVR’s failure to timely monitor, notice, and respond to the system-transmitted intrusion alert and photographs until hours later when it was too late to save the home. Based on those allegations, Stowes filed a District Court complaint in April 2017 asserting various contract and tort claims against BSVR, including breach of contract, negligence, and negligent misrepresentation. In August 2017, Stowes’ homeowners insurance carrier (Tudor Insurance Company (Tudor)) intervened on leave of court to assert a subrogation claim against BSVR for recovery of insurance proceeds paid to Stowes as a result of the fire.

¶10 On leave of court eight months later, BSVR asserted third-party claims against PointCentral for contribution and indemnification regarding the Stowes and Tudor claims. BSVR’s third-party complaint incorporated by reference all allegations set forth in the Stowes and Tudor complaints and further alleged that: (1) PointCentral produced the remote monitoring system and accompanying explanatory information provided to Stowes; (2) BSVR installed the system through a PointCentral-approved installer; and (3) the PointCentral system was the cause, or at least a contributing cause, of the damages claimed by Stowes and Tudor.

¶11 In June 2018, based on the arbitration agreement in their 2014 licensing Agreement, PointCentral filed a motion pursuant to M. R. Civ. P. 12(b)(1) or 12(b)(6) for dismissal of BSVR’s third-party claims. The District Court denied the motion in October 2018 based on the fact that the agreement provided two exceptions to PointCentral not provided to BSVR. The court concluded that the agreement thus lacked mutual consideration and was therefore unenforceable as a matter of generally applicable contract law. PointCentral timely appeals.

STANDARDS OF REVIEW

¶12 Rulin...