Graziano v. STOCK FARM HOMEOWNERS ASS'N
2011 MT 194
| Mont. | 2011Background
- Graziano purchased Lot 53A in Stock Farm in 2000; CCRs encumber the Lot and were part of the information packets and title records.
- Stock Farm CCRs were recorded in 1997 and control the Stock Farm community; Graziano had notice or constructive notice of the CCRs.
- Graziano is a member of the Association, which is governed by SFLLC; the Board historically controlled the Association before independent governance.
- Graziano raised concerns about mismanagement and reserves, resulting in a June 22, 2009 letter demanding eight actions; no meaningful Board response.
- The Board communicated to members that Graziano threatened legal action; Graziano filed a multi-claim complaint in October 2009 seeking various remedies.
- Defendants moved to stay proceedings and compel arbitration under Section XVI of the CCRs; the district court granted the motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CCRs are a contract of adhesion enforceable by arbitration | Graziano asserts CCRs are adhesive and unenforceable | Association/SFLLC contend CCRs are non-adhesive and enforceable | CCRs not an adhesion contract; arbitration clause enforceable |
| Whether Graziano's defamation claim is exempt from arbitration as personal injury | Defamation is personal injury and exempt from arbitration | None of Graziano's claims are personal injury; all subject to arbitration | Defamation recognized as personal injury exempt from arbitration; remaining claims must be arbitrated |
Key Cases Cited
- Woodruff v. Bretz, Inc., 353 Mont. 6; 218 P.3d 486 (Mont. 2009) (standard for determining arbitration enforceability; adhesion considerations)
- Iwen v. U.S. West Direct, 1999 MT 63; 293 Mont. 512; 977 P.2d 989 (Mont. 1999) (review of arbitration/contract issues de novo; contract formation standards)
- Kosel v. Stone, 146 Mont. 218; 404 P.2d 894 (Mont. 1965) (constructive notice for real property encumbrances)
- Culbertson-Froid-Bainville Health Care Corp. v. JP Stevens & Co., Inc., 2005 MT 254; 329 Mont. 38; 122 P.3d 431 (Mont. 2005) (assessing the credibility and weight of self-serving affidavits in contract/transactional disputes)
- Kortum-Managhan v. Herberger's NBGL, 2009 MT 79; 349 Mont. 475; 204 P.3d 693 (Mont. 2009) (interpretation of arbitration/adhesion in retail/consumer contexts)
- Kloss v. Edward D. Jones & Co., 2002 MT 129; 310 Mont. 123; 54 P.3d 1 (Mont. 2002) (analysis of sophisticated party and arbitration provisions)