The Anackers entered into a verbal contract with Sudan to drill a well.  Sudan began drilling the well where Anacker’s subcontractor had prepared a flat pad for the equipment.  After drilling was partially complete, Anacker noticed the well was too close to the neighbor’s drain field.  Sudan was notified and directed to abandon the first well and drill a second, which he did.

Sudan filed a complaint to foreclose on a construction lien for the amount of drilling the first well: $3,970.  After depositions, the District Court granted summary judgment for Anacker based on two grounds: 1) failure by Sudan to complete the first well defeated his lien; and 2) Sudan breached the contract by not drilling the well in a workmanlike manner.

Because the parties had entered a contract to drill a well.  A well was completed, the second well, and thus the contract work was substantially performed.  As such, Justice Nelson ruled that the district court’s first rational was unfounded.

Regarding the second issue, some deposition testimony supported the assertion that Sudan drilled in the wrong location, while some indicated that the location of the first well was Anacker’s mistake.  Therefore, a genuine issue of material fact exists as to whether the abandonment of the first well was a change order or a breach, rendering summary judgment improper.

Justice Cotter wrote a concurring opinion stating she agreed that the decision was in keeping with SCOMONT’s precedents on construction lien disputes, but wrote to express her belief that cases such as this “confound the purpose underlying the construction lien statutes.” Sudan, ¶ 18.

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In October of 1999, Herbergers’ mailed a notice of change in terms to Kortum-Managhan along with her monthly statement.  The change included the following arbitration clause:

Arbitration for Disputes—No Jury Trials or Class Actions:  This 
paragraph 18 describes how all Claims . . . will be arbitrated instead of 
litigated in court.

B.  We OR you have the right to require that each Claim be resolved by 
arbitration.  A Claim will be arbitrated if (a) both we and you or (b) either 
we or you, exercise the right to require that a Claim be arbitrated.  If, for 
example, we exercise our right to require that a Claim be resolved by 
arbitration but you do not also exercise your right to require that the Claim 
be arbitrated, the Claim will be resolved by arbitration. . . . 

C.  If we or you request arbitration of a Claim, we and you will not have the 
right to litigate the Claim in court.  This means (1) there will be no jury trial 
on the Claim, (2) no pre-arbitration discovery except as the Rules permit, 
and (3) no Claim may be arbitrated on a class-action basis, and neither we 
nor you will have the right to participate as a representative or member of 
any class of claimants pertaining to any Claim subject to arbitration.  
Generally, the arbitrator’s decision will be final and binding.  There are 
other rights that you would have if you went to court that also may not be 
available in arbitration.

In the underlying suit to this action, Herbergers’ filed a Motion to Compel Arbitration which was granted by the District Court. Kortum-Managhan argued that she was never advised, in any meaningful way, that she was waiving her fundamental constitutional rights to a jury trial and to access to the courts by her continued use of her Herbergers’ credit card.

Because the rights to trial by jury and access to the courts are fundamental constitutional rights, and deserve the highest level of court scrutiny and protection, their waiver must be proved to have been made voluntarily, knowingly, and intelligently.  In order for a fundamental right to be effectively waived, a consumer must be informed of the consequences before personally consenting to the waiver.  Kortum-Managhan, ¶ 26 (citing Kloss v. Edward D. Jones & Co., 2002 MT 129, ¶ 64).

The test to determine whether an individual deliberately, understandingly, and intelligently waived their fundamental constitutional rights to trial by jury and access to the courts is to consider the totality of a series of factors laid out in Kloss, ¶ 65. Under those factors, SCOMONT concluded that Kortum-Managhan’s right to a jury trial was not sufficiently waived. In fact, the Court said “that Herbergers, through the use of the ‘bill stuffer,’ attempted to lull [Kortum-Managhan] into agreeing to waive her constitutional rights and that attempting to change the terms of a contract through the use of a ‘bill stuffer’ is ‘sneaky and unfair.’” Kortum-Managhan, ¶ 31.

In closing, SCOMONT held that:

Based on the foregoing, we conclude that making a change in a credit agreement by way of a “bill stuffer” does not provide sufficient notice to the consumer on which acceptance of the unilateral change to a contract can be expressly or implicitly found. Consequently, Herbergers’ unilateral attempt to amend its original cardholder agreement to include an arbitration clause was ineffective.

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