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The Supreme Court of Montana has ruled that a REALTOR® must submit to arbitration if a non-member client agrees to be bound by the arbitration process.
Clare Kendall ("Client"), a client of Ted Topolski and Bill Walker ("REALTORS®"), members of the Helena Association of REALTORS® ("Association"), submitted a non-member arbitration request form to the Association for arbitration of a dispute between her and the REALTORS®. By signing the non-member arbitration request form, the Client agreed to be bound by the ruling in the arbitration conducted by the Association. The REALTORS® did not want to participate in the Association's arbitration process, and filed a lawsuit seeking to stop the Association from conducting the arbitration. The trial court ruled in favor of the Association, and the REALTORS® appealed.
The Supreme Court of Montana affirmed the trial court decision, ruling that the REALTORS® were required to arbitrate the dispute with the Client because of their membership in the Association. The court first considered whether the Association's rules requiring REALTORS® to arbitrate their dispute with the Client were enforceable. The REALTORS® argued that for a duty to arbitrate to exist, state and federal law require that a written agreement between the parties binding them to the arbitration must exist. Since the Client was not a member of the Association, the REALTORS® argued that they had no obligation to arbitrate their dispute with her. The court rejected this argument, ruling that nothing in the Montana statutes or in federal law prohibited the dispute from being arbitrated. The court agreed with the reasoning of the trial court, which had stated that the Montana statutes explicitly set forth the right of trade association members to agree in advance on what types of disputes are arbitrable. Here, the Association's bylaws did this.
Next, the court considered the REALTORS®' argument that because they had not signed the form submitted by the Client, there was no agreement to arbitrate between the Client and them. They also stated that they had no other contractual agreements with the Client which required them to arbitrate this dispute. The court also rejected this argument, ruling that because they were members of the Association, they were bound by its bylaws. The Association's bylaws require that members abide by the Code of Ethics, and so the REALTORS® were bound by the requirements of Article 17 of the Code of Ethics, which requires REALTORS® to arbitrate disputes like those brought by the Client when the third party agrees to be bound by the arbitration process. Therefore, the trial court's rulings were affirmed.
Topolski v. Helena Association of REALTORS®, 15 P.3d 414 (Mont. 2000).