MATTHEW J. TEDESCO, Plaintiff and Appellant,
HOME SAVINGS BANCORP, INC., d/b/a HOME SAVINGS OF AMERICA, and DIRK S. ADAMS, Defendants and Appellees.
Submitted on Briefs: October 11, 2017.
FROM: District Court of the Tenth Judicial District, In and
For the County of Fergus, Cause No. DV 11-77 Honorable Jon A.
Oldenburg, Presiding Judge
Appellant: Thomas A. Marra, Antonia P. Marra, Marra, Evenson
& Bell, P.C., Great Falls, Montana.
Appellees: Craig R. Buehler, Buehler Law Office, Lewistown,
Matthew Tedesco began working in March 2008 for Home Savings
of America (HSOA), a federally chartered savings and loan
association. After a few months on the job, Tedesco signed an
employment agreement containing a provision that required the
parties to submit any disputes to binding arbitration. HSOA
terminated Tedesco's employment in 2011. Tedesco sued
HSOA, its CEO and Board Chair Dirk Adams, and Home Savings
Bancorp (HSBC), which owned all of HSOA's stock. Tedesco
alleged wrongful discharge, breach of contract, and fraud.
The District Court ordered the parties to proceed to binding
arbitration. The Arbitrator issued an award in favor of Adams
and HSBC,  and the District Court confirmed the
award. Tedesco appeals both the order compelling arbitration
and the order confirming the award. We affirm both orders.
AND FACTUAL BACKGROUND
Tedesco worked as a regional manager for First National
Mortgage Sources until 2008. In that position, he oversaw
lending branches and created a lending platform to secure
mortgages for First National Bank. When First National Bank
decided to shed First National Mortgage Sources, it granted
Tedesco permission to move his branches and lending platform
to another institution.
Tedesco contacted Adams, and the two negotiated an agreement
under which HSOA-a Minnesota corporation-would employ Tedesco
to move his branches and lending platform to HSOA. Tedesco
signed HSOA's Employee Handbook Acknowledgment and an
Alternative Dispute Resolution Agreement on February 22,
2008. The Alternative Dispute Resolution Agreement stated
that Tedesco agreed to arbitrate any disputes arising from
his employment with HSOA. Tedesco began his work with HSOA in
Shortly after Tedesco signed the Handbook Acknowledgment and
the Alternative Dispute Resolution Agreement, Adams asked
Tedesco to prepare an employment agreement. Tedesco prepared
a proposed agreement with the assistance of counsel and
presented it to Adams in April 2008. Adams rejected
Tedesco's proposed agreement.
In July 2008, Adams presented Tedesco with a "Retail
Regional Manager Terms of Employment" (Employment
Agreement). The Employment Agreement contained this
"Enforcement" provision: "Any and all disputes
arising under or related to the Agreement shall be resolved
by binding arbitration under the auspices of, and according
to the rules promulgated by, the American Arbitration
Association - Commercial Mediation Rules." The
Employment Agreement also stated that Tedesco's
employment was "terminable at the will of either
party." Tedesco signed the Employment Agreement on July
30, 2008. Tedesco later testified that he would have faced
immediate termination had he not signed the agreement. He
claimed also that, by July 2008, he already had moved his
branches and lending platform to HSOA and relocated his
HSOA terminated Tedesco's employment on June 1, 2011.
Tedesco filed a complaint in August 2011 against Adams and
"Home Savings Bancorp, Inc., d/b/a Home Savings of
America." He asserted wrongful discharge under the
Montana Wrongful Discharge from Employment Act (WDEA), breach
of contract, fraud, constructive fraud, and fraud in the
When Tedesco refused to submit to arbitration, HSBC and Adams
filed a motion to compel arbitration and to stay the action,
or to dismiss the complaint under M. R. Civ. P. 12. The
District Court issued an order in February 2015 compelling
arbitration through the American Arbitration Association
(AAA) and staying the proceedings pending the outcome of the
arbitration. The court found that, although the February 2008
Handbook Acknowledgment and Alternative Dispute Resolution
Agreement did not constitute valid contracts, the July 2008
Employment Agreement's arbitration provision was binding
on the parties.
At arbitration, the parties submitted evidence and
participated in an evidentiary hearing, at which Tedesco and
Adams testified. In August 2016, the Arbitrator granted
summary judgment to Adams and HSBC on Tedesco's wrongful
discharge, breach of contract, and fraud claims.
Tedesco filed an application with the District Court in
October 2016 to vacate, correct, or modify the
Arbitrator's award. The court denied Tedesco's
application. It reasoned that its role was not to
"review the merits of the controversy, " and it
referenced the Arbitrator's "broad authority and
powers to determine all issues." The District Court then
entered judgment confirming the Arbitrator's award.
This Court reviews de novo a district court's order on a
motion to compel arbitration. Global Client Solutions,
LLC v. Ossello, 2016 MT 50, ¶ 19, 382 Mont. 345,
367 P.3d 361.
A district court's review of an arbitration award is
strictly limited by Montana's Uniform Arbitration Act
(UAA). Paulson v. Flathead Conservation Dist., 2004
MT 136, ¶ 24, 321 Mont. 364, 91 P.3d 569; Geissler
v. Sanem, 285 Mont. 411, 415, 949 P.2d 234, 237 (1997).
We review district court decisions on arbitration awards like
any other district court decision, accepting findings of fact
that are not clearly erroneous but deciding questions of law
de novo. City of Livingston v. Mont. Pub. Emps. Ass'n
ex rel. Tubaugh, 2014 MT 314, ¶ 11, 377 Mont. 184,
339 P.3d 41. We review a district court's ultimate
decision to confirm an arbitration award for an abuse of
discretion. Colstrip Energy Ltd. P'ship v. Nw.
Corp., 2011 MT 99, ¶ 18, 360 Mont. 298, 253 P.3d
The test for an abuse of discretion is whether the trial
court acted arbitrarily, without employment of conscientious
judgment, or exceeded the bounds of reason resulting in
substantial injustice. Colstrip Energy Ltd.
P'ship, ¶ 18. In reviewing whether the District
Court abused its discretion in confirming the arbitration
award, we apply the law that a court cannot review the merits
of the controversy, but may only confirm, vacate, modify, or
correct an arbitration award pursuant to §§
27-5-311, -312, and -313, MCA. Roberts v. Lame Deer Pub.
Sch. Dist. #6, 2013 MT 358, ¶ 7, 373 Mont. 49, 314
"The Federal Arbitration Act (FAA) governs contracts
that involve interstate commerce." Kelker v.
Geneva-Roth Ventures, Inc., 2013 MT 62, ¶ 11, 369
Mont. 254, 303 P.3d 777. The FAA preempts state laws that
"prohibit outright the arbitration of a particular type
of claim." Kelker, ¶ 15 (citing
AT&T Mobility LLC v. Concepcion, 563 U.S. 333,
341, 131 S.Ct. 1740, 1747 (2011)). "However, when a
state law does not conflict with the FAA so as to frustrate
the objectives of Congress, it is not necessarily
preempted." Keystone, Inc. v. Triad Sys. Corp.,
1998 MT 326, ¶ 23, 292 Mont. 229, 971 P.2d 1240. The FAA
preempts a state law "to the extent that it stands as an
obstacle to the accomplishment and execution of the full
purposes and objectives of Congress" in enacting the
FAA. Sakkab v. Luxottica Retail N. Am., Inc., 803
F.3d 425, 432 (9th Cir. 2015). The Employment Agreement
between Tedesco and HSOA involved interstate commerce: HSOA
was a Minnesota corporation, Tedesco was a Montana resident,
and Tedesco's work with HSOA involved doing business
across state lines. The FAA therefore applies to the
Employment Agreement's arbitration clause. See
Kelker, ¶ 11. Montana's UAA also applies to the
extent that it does not conflict with the FAA's
objectives. See Sakkab, 803 F.3d at 432.
1. Whether the District Court erred in compelling
Tedesco argues that the District Court erred in ordering the
parties to proceed to arbitration. He contends that the
Employment Agreement generally and the arbitration clause
specifically were invalid. In his view, because there was no
valid agreement between the parties to arbitrate their
disputes, the District Court should have denied Adams's
and HSBC's motion to compel arbitration. Adams and HSBC
challenge Tedesco's appeal of the District Court's
order compelling arbitration as untimely.
Timeliness of Tedesco's Appeal of the Order Compelling
The District Court issued its order compelling arbitration on
February 26, 2015, and it simultaneously stayed the
proceedings. Adams and HSBC argue that the order was
"final and appealable" and therefore that Tedesco
had thirty days to appeal it. Because Tedesco did not appeal
the order compelling arbitration until March ...