Destination Yachts, Inc., and Sheldon Graber v. Shirley Pierce and Al Burnham , 113 N.E.3d 645 ( 2018 )

FILED
Oct 19 2018, 8:57 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANTS ATTORNEYS FOR APPELLEES
Clay W. Havill James D. Johnson
Francis X. Mattingly Blair M. Gardner
L. Katherine Boren Jackson Kelly, PLLC
Ziemer, Stayman, Weitzel & Evansville, Indiana
Shoulders, LLP
Evansville, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Destination Yachts, Inc., and October 19, 2018
Sheldon Graber, Court of Appeals Case No.
Appellants-Defendants, 18A-CT-1057
Appeal from the Daviess Circuit
v. Court
The Honorable Mark R.
Shirley Pierce and Al Burnham, McConnell, Special Judge
Appellees-Plaintiffs. Trial Court Cause No.
14C01-1706-CT-272
Mathias, Judge.
[1] Shirley Pierce (“Pierce”) and Al Burnham (“Burnham”) (collectively “the
Purchasers”) bought a houseboat manufactured and sold by Destination
Yachts, Inc. (“DYI”). Thereafter, the Purchasers led a complaint in Daviess
Circuit Court against DYI and its president, Sheldon Graber (“Graber”)
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(collectively “the Defendants”), alleging various contract and tort claims arising
out of their purchase of the houseboat. The Defendants subsequently led a
motion to dismiss the Purchasers’ claims, arguing inter alia that the purchase
agreement was subject to a mandatory, binding arbitration clause. The trial
court granted the motion to dismiss with prejudice. The parties then proceeded
to arbitration, but before the arbitration could occur, the Defendants led a
motion with the arbitrator claiming that the trial court’s order dismissing the
Purchasers’ claims with prejudice was a judgment on the merits that acted to
bar any subsequent claim, including arbitration. The Purchasers then returned
to the trial court and led a motion to correct error or, in the alternative, for
relief from judgment arguing that the earlier dismissal with prejudice did not
bar arbitration. The trial court agreed and granted the motion. The Defendants
appeal and present two issues, which we restate as: (1) whether the trial court
erred by granting the Purchasers’ motion to correct error/motion for relief from
judgment, and (2) whether Graber is a party to the contract and therefore
properly subject to any arbitrable claims.
[2] We af rm.
Facts and Procedural History
[3] The Purchasers met with Graber at DYI’s Washington, Indiana location on
April 24, 2014, to discuss the purchase of a houseboat. After some discussion,
the Purchasers and DYI entered into a Contract and Purchase Agreement (“the
Agreement”) which provided that the Purchasers agreed to buy a custom-built
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houseboat for a price of $314,909.19. Included in this Agreement, which was
drafted by DYI, was an arbitration clause that provides:
SECTION THREE
RESOLUTION OF PROBLEMS
It is understood and agreed that any problems arising during the
construction of the boat can best be resolved by maintenance of a
close liaison between Builder and Purchaser, and that the parties
will make every good-faith effort to avoid and resolve any
problems and disputes by maintaining such close liaison between
Builder and Purchaser. All disputes, complaints, problems and
objections relating to the terms, conditions and obligations of
the within Purchase Agreement, unless resolved directly
between Builder and Purchaser, shall be submitted to binding
arbitration in the matter set forth in Sections Seven and
Twelve below.
***
SECTION SEVEN
INSPECTION
All work-in-process at Builder’s plant shall be subject to
inspection by Purchaser, and Builder shall grant Purchaser access
to Builder’s premises for such inspection at all reasonable times
and upon prior notice by Purchaser.
Prior to the completion of the boat, Purchaser and/or a
representative of Purchaser and Builder and/or a representative
of Builder shall carry out a nal inspection of the boat, at the
conclusion of which Purchaser shall be entitled to submit in
writing, to Builder, such changes, complaints and/or objections,
if any, as Purchaser may have with respect to the construction of
the boat within seven (7) days of inspection. Any valid
complaints or objections so stated shall be corrected or remedied
by Builder as soon as practical thereafter.
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In the event purchaser does not inspect boat prior to shipping any
changes will be at the expense of the purchaser. Builder will
make every effort to take pictures and keep purchaser informed
but can not be responsible in the event purchaser wants changes
after shipment, purchaser waives any remedy as to cosmetic
and/or mechanical changes in the event no inspection is made.
Any dispute as to the validity of such complaints or objections,
or as to the parties’ respective responsibilities concerning same
or the within Purchase Agreement, shall be settled by
arbitration. Should arbitration become necessary either party
may serve upon the other notice requiring the matter to be
arbitrated and such notice shall set out the name of the arbitrator
appointed by the party giving such notice. Within seven (7) days
of the receipt of such notice the other party shall either agree to
the arbitrator appointed by the party giving the notice or appoint
its own arbitrator and notify the rst party of the name of same.
In the event the two arbitrators so appointed cannot agree as of
the resolution of the complaint or objection, then the two
arbitrators shall select a third arbitrator and shall thereupon
proceed with all due diligence to settle the matter. The decision
of the majority of the arbitrators shall be nal and binding
upon the parties. Each party shall be responsible for the cost and
fees of the arbitrator selected by that party. The costs and fees of
the third arbitrator, if necessary, shall be borne equally by the
parties. In the event the two arbitrators selected as hereinabove
provided cannot agree upon a third arbitrator, then the third
arbitrator, if necessary, shall be appointed by the Daviess Circuit
Court, Daviess County, Indiana, upon petition by either party.
***
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SECTION TWELVE
GOVERNING LAW AND VENUE
It is agreed that this agreement shall be governed by, construed,
and enforced in accordance with the laws of the State of Indiana.
Purchaser and Builder agree that in the event any type of
litigation should result from the within Purchase Agreement,
then the exclusive venue of such litigation shall be with the
Daviess Circuit Court, Daviess County, Indiana.
Appellants’ App. Vol. 2, pp. 48–51 (emphases added). Graber signed the
Agreement as President of DYI. Id. at 53.
[4] After the houseboat was built and delivered to the Purchasers, they found a
number of alleged defects. The parties attempted to resolve these concerns, and
even attempted mediation in 2016, but were unable to come to an agreement.
[5] Despite the clear language of the Agreement requiring arbitration of any claims,
the Purchasers led suit against the Defendants on June 7, 2017 in Daviess
Circuit Court. The complaint set forth eight counts against the Defendants. The
counts against DYI were: breach of contract, breach of a written warranty,
breach of the implied warranty of merchantability, and breach of the implied
warranty of tness for a particular purpose. The counts against both DYI and
Graber were: fraud in the inducement to enter into the Agreement, negligent
misrepresentation, rescission, and unjust enrichment. Appellants’ App. Vol. 2,
pp. 13–20.
[6] On August 22, 2017, the Defendants led a motion to dismiss the Purchasers’
complaint. The Defendants argued rst and foremost that the entire controversy
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was subject to mandatory, binding arbitration and that the trial court should
dismiss the case with an order to compel arbitration. Appellants’ App. Vol. 2, p.
36. The Defendants also argued that the integration clause in the Agreement
prevented any claim based on Graber’s oral statements regarding the
houseboat; that the claim alleging a breach of the written warranty failed to
state a claim upon which relief could be granted; that the Purchasers’ claims
against Graber were improper and should be dismissed because they were based
on oral statements and sought to hold Graber personally liable for the alleged
faults of DYI; that the Purchasers’ claims for fraud in the inducement, negligent
misrepresentation, rescission, and unjust enrichment failed to state valid claims
for relief; that the demand for attorney fees should be dismissed; and that the
Defendants should instead be awarded attorney fees. Id. at 37–46. Attached to
their motion, the Defendants submitted a proposed order dismissing the
Purchasers’ claims with prejudice. After the Purchasers led a response to this
motion, the Defendants led a surreply.
[7] The trial court held a hearing on the motion to dismiss on November 13, 2017.
At this hearing, counsel for the Defendants repeated the claims made in their
motion: that the entire suit was subject to arbitration and, in the alternative, that
the Purchasers’ claims failed as a matter of law. With regard to the claims
against Graber personally, defense counsel argued:
Now further, we also believe this arbitration agreement applies
to Sheldon Graber as an individual as President of DYI at all
times. As the arbitration provision, sorry, as the arbitration
provisions of the agreement should require that all claims in
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this matter against DYI be heard in arbitration, so should all
Claims against Sheldon Graber, because Sheldon has been
acting as President of DYI, and interacting with the plaintiffs. He
was acting as President of DYI, during any discussions about the
construction of this houseboat. Because the plaintiffs and DYI
have intended to arbitrate disputes between them, for the a,
sorry, between them the arbitration agreement should also
extend to plaintiffs[’] claims against Graber’s actions as they
allege he took those actions and did not allege that he took those
actions in any capacity other than as President of DYI. If such
agents, such as a President of a company that has entered into an
arbitration agreement are not extended the bene t of the
arbitration provisions, then it would be all too easy for crafty
litigants to feed and [sic] arbitration agreement by naming non
signatories as parties. By naming non signatories in their
individual capacity only, plus all defendants in both their of cial
and individual capacities must have the bene t of the arbitration
clause that they entered into. Per the integration provisions of
this agreement also of our plaintiffs[’] claims, we believe that
the arbitration agreement alone in the arbitration provisions
should cause this matter to be dismissed, but if the Court nds
otherwise I believe the integration provisions of this agreement
bar any claims based on an alleged promise of a ride high boat. . .
Appellants’ App. Vol. 3, pp. 43–44 (emphases added). At the conclusion of the
hearing, the trial court took the matter under advisement.
[8] On November 15, 2017, the trial court granted the motion to dismiss, using the
order submitted by the Defendants,1 which provided:
1
Compare Appellants’ App. Vol. 2, p. 60 with id. at 92.
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This matter, having come before the Court upon Defendants’
Motion to Dismiss Complaint and the Court GRANTS the
same.
IT IS THEREFORE ORDERED, ADJUDGED AND
DECREED, that this cause of action is dismissed with
prejudice.
Appellants’ App Vol. 2, p. 92 (emphasis added).
[9] On January 12, 2018, the Purchasers led a notice of arbitration claim. Both
parties then proceeded with the selection of the arbitrators,2 and participated in
a conference call on January 29, 2018, during which the parties agreed to
certain procedures and scheduling for the arbitration, and the arbitration was
set to take place on June 18–22 of that year. See id. at 108. Pursuant to this
agreed-upon schedule, the Purchasers led an arbitration complaint on
February 7, 2018, presenting claims substantially similar to the ones it presented
in their complaint with the trial court, except that the count alleging unjust
enrichment was replaced with a count seeking to pierce the corporate veil.
[10] On February 22, 2018, the Defendants led with the arbitrators a motion to
dismiss the arbitration proceedings, arguing for the first time that the trial
court’s order dismissing the Purchasers’ claims with prejudice was a judgment
on the merits that barred further litigation on the issues. Also on February 22,
Graber led a motion objecting to the arbitrator’s jurisdiction over him. In
2
The arbitrators selected were: D. Timothy Born of Terrell, Baugh, Salmon & Born, LLP; Richard A. Young
of Kightlinger Gray, LLP; and Richard L. Norris of Norris Choplin Schroeder, LLP.
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direct contradiction with his arguments to the trial court that the claims against
him were subject to arbitration, Graber now claimed that the arbitrators had no
jurisdiction to hear any complaints against him because he was not a party to
the Agreement. The arbitrators denied these motions on March 16, 2018.
[11] In the meantime, the Purchasers, on March 8, 2018, led in the trial court a
motion to correct error or, in the alternative, a motion for relief from judgment.
The Purchasers argued that the trial court order dismissing their complaint with
prejudice was improper because the trial court should have either stayed the
proceedings or dismissed the complaint without prejudice. The Defendants
countered that the trial court’s dismissal order was a nal judgment on the
merits, that the time had passed to timely le a motion to correct error, and that
the Purchasers had not shown grounds for relief under Trial Rule 60. After
brie ng by both parties, the trial court entered an order granting the Purchasers’
motion, which provided in relevant part:
This matter is before the Court on Plaintiffs’ Motion to Correct
Error or In the Alternative, for Relief from Order. The Court,
being duly advised, nds as follows:
1. The Plaintiffs led their complaint herein on June 7, 2017
alleging several theories of recovery. In the “Prayer for Relief”
they sought the following:
(a) Judgment in Plaintiffs’ favor and against Defendants for
rescission and damages in the amount suf cient to
compensate Plaintiffs for damage sustained;
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(b) Return of all monies paid or, in the alternative, all
applicable damages pursuant to 2-714 of the Commercial
Code and all incidental and consequential damages;
(c) Incurred and need cost of repairs;
(d) All attorneys’ fees, witness fees, expenses, court costs and
other fees incurred by Plaintiffs; and
(e) Any and all other just and proper relief in the premises.
2. Plaintiffs did not speci cally request relief in the form of an
order requiring the parties to participate in binding arbitration.
3. It is the trial court’s opinion that Plaintiffs are not entitled to
any relief from the trial court other than an order requiring the
parties to participate in binding arbitration. In essence, the trial
court does not have jurisdiction to address the merits of the case
or grant relief thereon. Pursuant to the terms of the contract,
the relief previously requested by Plaintiffs can only be
awarded through arbitration.
4. For this reason the trial court granted Defendants[’]
Motion to Dismiss with Prejudice, essentially determining that
the trial court could not, pursuant to the terms of the contract
itself, address any of the issues raised by the Complaint on their
merits. In essence, the Plaintiffs’ sole remedy under the contract
was to seek binding arbitration in accordance with the terms of
the contract to address the merits.
5. The Defendants have apparently misinterpreted the Court’s
order assuming that it was a judgment in their favor on the
merits. It was not. It was intended merely to dismiss the legal
action assuming that the parties would thereafter participate in
binding arbitration to resolve the matter on the merits as
required by the contract. Defendants, instead, apparently
asserted their position that the dismissal of the law suit was a
determination on the merits and have made it known that they
do not intend to participate in arbitration.
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6. Defendants[’] decision to refuse to participate in binding
arbitration, if that is their intention, is made at their own risk.
7. In order to be clear, and so as to not prejudice either party
by any misunderstanding that may have been created as a result
of the trial court entering an order that did not clearly state all
of the above, the court will grant Plaintiffs’ motion for relief
from the judgment as set forth below.
8. Justice requires that this relief be granted.
IT IS THEREFORE ORDERED that Plaintiffs are granted relief
from the judgment herein as follows:
1. The order dismissing the matter with prejudice dated
November 15, 2017 is set aside.
2. In its place the trial court orders as follows:
The Plaintiffs Shirley Pierce and/or Al Burnham shall have thirty
days from the date of this order to amend the “Prayer for Relief”
in their complaint to seek the sole remedy available to them
through the trial court, that is an order requiring the parties to
participate in binding arbitration. If Plaintiffs do not amend the
complaint accordingly in the time permitted then the Court shall
enter an order dismissing the complaint.
Appellants’ App. Vol. 2, pp. 9–10.
[12] On April 26, 2018, the Defendants led a motion to stay the arbitration pending
appeal, which the trial court denied on May 2, 2018. The Defendants then led
a notice of appeal on May 7, 2018, and subsequently led a motion to stay with
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this court. The motions panel of this court granted the motion to stay by order
issued on May 29, 2018.3 This appeal ensued.
Discussion and Decision
[13] The Defendants claim that the trial court erred in several respects when it
granted the Purchasers’ motion to correct error/motion for relief from
judgment. First, they argue the trial court could not have properly granted the
motion under Trial Rule 59 because the time limit for ling a motion to correct
error had passed. Second, they argue that the trial court could not have properly
granted the motion under Trial Rule 60(A) because the alleged problems with
the trial court’s dismissal order were not clerical, but substantive. The
Defendants next argue that the Purchasers did not establish any grounds for
relief under Trial Rule 60(B). Lastly, the Defendants argue that the Purchasers’
claims against Graber are not subject to arbitration. Assuming arguendo that we
agree with the Defendants with regard to their arguments regarding Trial Rule
59 and Trial Rule 60(A), we nevertheless believe that the trial court was within
its discretion to grant relief from its earlier order under Trial Rule 60(B). We
also conclude that the Defendants, having expressly argued before the trial
court that the claims against Graber were subject to arbitration, cannot now be
heard to argue otherwise.
3
The Defendants also led a motion to expedite this appeal, which our motions panel denied.
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I. Indiana Policy Favors Arbitration
[14] Before turning to the merits of the parties’ arguments, we first note that Indiana
has long recognized a strong policy favoring the enforcement of arbitration
agreements. Koors v. Steffen, 916 N.E.2d 212, 215 (Ind. Ct. App. 2009); see also
MPACT Const. Grp., LLC v. Superior Concrete Constructors, Inc., 802 N.E.2d 901,
905 (Ind. 2004) (citing PSI Energy, Inc. v. AMAX, Inc., 644 N.E.2d 96, 98 (Ind.
1994) (writing that “Indiana was surely among the rst jurisdictions to sanction
arbitration as a means of dispute resolution,” referring to a territorial statute
enacted prior to statehood in 1816 authorizing and regulating arbitrations)).4
[15] The current statute controlling orders to arbitrate provides in relevant part:
(a) On application of a party showing an agreement described in
section 1[5] of this chapter, and the opposing party’s refusal to
arbitrate, the court shall order the parties to proceed with
arbitration. Ten (10) days notice in writing of the hearing of such
application shall be served personally upon the party in default. If
the opposing party denies the existence of the agreement to
arbitrate, the court shall proceed summarily to the determination
of the issue raised without further pleading and shall order
arbitration if found for the moving party; otherwise, the
application shall be denied.
(b) On application, the court may stay an arbitration proceeding
commenced or threatened on a showing that there is no
agreement to arbitrate. Ten (10) days notice in writing of the
4
See The Laws of Indiana Territory, ch. XXXII (1807) (“An Act authorising and regulating arbitrations.”).
5
Section 1 generally provides that “[a] written agreement to submit to arbitration is valid, and enforceable,
an existing controversy or a controversy thereafter arising is valid and enforceable, except upon such grounds
as exist at law or in equity for the revocation of any contract.” Ind. Code § 34-57-2-1(a).
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hearing of the application shall be served personally upon the
party in default. Such an issue, when in substantial and bona de
dispute, shall be forthwith summarily determined without further
pleadings and the stay ordered if found for the moving party. If
found for the opposing party, the court shall order the parties to
proceed to arbitration.
(c) If an issue referable to arbitration under the alleged
agreement is involved in an action or proceeding pending in a
court having jurisdiction to hear applications under subsection
(a), the application shall be made in that action or proceeding.
Otherwise and subject to section 17 [6] of this chapter, the
application may be made in any court with jurisdiction.
(d) Any action or proceeding involving an issue subject to
arbitration shall be stayed if an order for arbitration or an
application for an order for arbitration has been made under
this section . . . , or, if the issue is severable, the stay may be with
respect to the issue only. When the application is made in such
an action or proceeding, the order for arbitration must include
such a stay.
(e) An order for arbitration shall not be refused on the ground
that the claim in issue lacks merit or bona des or because any
fault or grounds for the claim sought to be arbitrated have not
been shown.
(f) If the court determines that there are other issues between the
parties that are not subject to arbitration and that are the subject
of a pending action or special proceeding between the parties and
that a determination of such issues is likely to make the
arbitration unnecessary, the court may delay its order to arbitrate
6
Section 17 provides, “The term ‘court’ means any circuit or superior court. The making of an agreement
described in section 1 of this chapter providing for arbitration in Indiana confers jurisdiction on the court to
enforce the agreement under and to enter judgment on an award thereunder.” Ind. Code § 34-57-2-17.
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until the determination of such other issues or until such earlier
time as the court speci es.
(g) On application the court may stay an arbitration proceeding
on a showing that the method of appointment of arbitrators is
likely to or has resulted in the appointment of a majority of
arbitrators who are partial or biased in some relevant respect. The
court shall then appoint one (1) or more arbitrators as provided in
section 4[7] of this chapter.
Ind. Code § 34-57-2-3 (emphases added).
[16] Accordingly, once the court is satis ed that the parties contracted to submit
their dispute to arbitration, the court is required by statute to compel
arbitration. Capitol Const. Servs., Inc. v. Farah, LLC, 946 N.E.2d 624, 628 (Ind.
Ct. App. 2011) (citing Ind. Code § 34-57-2-3(a)). “However, [Indiana Code
section 34-57-2-3] does not specify the proper disposition of the litigation upon
such a determination.” Indiana CPA Society, Inc. v. GoMembers, Inc., 777 N.E.2d
747, 750 (Ind. Ct. App. 2002); accord Koors, 916 N.E.2d at 215.
[17] In GoMembers, we noted that Indiana courts had historically either stayed or
dismissed litigation subject to arbitration under such circumstances without
explaining why either course was appropriate. Id. at 752 (citing Albright v.
Edward D. Jones & Co., 571 N.E.2d 1329, 1334 (Ind. Ct. App. 1991) (noting that
trial court stayed litigation), trans. denied; Northwestern Mut. Life Ins. Co. v.
7
Section 4 provides that, if the arbitration agreement does not specify the method of appointing arbitrators,
and if the parties cannot agree upon such appointment, or if the agreed method fails, or if the appointed
arbitrator fails to act or is unable to act, the trial court has the duty and power to appoint arbitrators. Ind.
Code § 34-57-2-4.
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Stinnett, 698 N.E.2d 339, 343 (Ind. Ct. App. 1998) (holding that trial court
should have granted motion to dismiss where issue was subject to arbitration);
Wilson Fertilizer & Grain, Inc. v. ADM Mill. Co., 654 N.E.2d 848, 849 (Ind. Ct.
App. 1995) (holding that trial court properly dismissed action and ordered
parties to proceed to arbitration), trans. denied). In GoMembers we concluded:
Both of the analytical approaches developed by other courts have
merit and may in fact often lead to the same result. However, we
nd that a superior resolution is to allow trial courts to
exercise their discretion to either stay or dismiss litigation
based on the nature of the contested issues that should first be
submitted to arbitration. By utilizing this discretion, courts may
examine the facts and circumstances of each case to determine
the most prudent course of action. Factors which the trial court
may wish to consider include whether court intervention will be
necessary to compel discovery, whether the arbitration award
will be enforced through the court, whether the entire
controversy is arbitrable, which state’s substantive law will be
applicable to the controversy, and the location of the parties and
the evidence.
Id. at 752 (emphasis added).8
II. Trial Court Should Not Have Dismissed the Complaint With
Prejudice
[18] Here, the Defendants argue that the trial court’s action of dismissing the
Purchasers’ complaint with prejudice acted as a judgment on the merits that
8
In referring to the dismissal of litigation, we presume that the GoMembers court was referring to a dismissal
without prejudice, as a dismissal with prejudice would generally constitute a judgment on the merits that
would bar any further litigation by way of the doctrine of res judicata. See infra.
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bars any attempt at arbitration. To be sure, it is well settled that a dismissal with
prejudice is generally a dismissal on the merits, and as such it is conclusive of
the rights of the parties and res judicata as to the questions which might have
been litigated. Lakeshore Bank & Tr. Co. v. United Farm Bureau Mut. Ins. Co., 474
N.E.2d 1024, 1027 (Ind. Ct. App. 1985) (opinion on rehearing). Thus, by
entering an order dismissing the Purchasers’ claims with prejudice, the trial
court effectively ended the dispute between the parties.
[19] However, the trial court, as indicated in its ruling on the Purchasers’ motion to
correct error/motion for relief from judgment, did not intend for the
controversy to be ended by its dismissal order. Rather, the trial court intended
that the case proceed to arbitration. Indeed, the parties, including the
Defendants initially, proceeded to prepare for arbitration. Pursuant to Indiana
Code section 34-57-2-3(d), the proper course of action under these
circumstances would have been for the trial court to have stayed the action
pending the outcome of the arbitration, or dismiss the action without prejudice.
See GoMembers, 777 N.E.2d at 752. The trial court instead dismissed the
complaint with prejudice. The Defendants argue that, regardless of the trial
court’s intentions, the trial court could not undo its previous dismissal with
prejudice by way of a motion to correct error or a motion for relief from
judgment.
[20] Assuming arguendo that the Defendants are correct that the trial court could not
grant relief under Trial Rule 59 or Trial Rule 60(A), we agree with the
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Purchasers that the trial court was within its discretion to grant relief under
Trial Rule 60(B)(1).
III. The Trial Court Did Not Abuse Its Discretion in Granting Relief
from Judgment Under Trial Rule 60(B)(1)
[21] Indiana Trial Rule 60(B) provides in pertinent part:
Mistake – Excusable neglect – Newly discovered evidence –
Fraud, etc. On motion and upon such terms as are just the court
may relieve a party or his legal representative from a judgment,
including a judgment by default, for the following reasons:
(1) mistake, surprise, or excusable neglect;
***
The motion shall be led within a reasonable time for reasons
(5), (6), (7), and (8), and not more than one year after the
judgment, order or proceeding was entered or taken for reasons
(1), (2), (3), and (4). A movant ling a motion for reasons (1), (2),
(3), (4), and (8) must allege a meritorious claim or defense. A
motion under this subdivision (B) does not affect the nality of a
judgment or suspend its operation. This rule does not limit the
power of a court to entertain an independent action to relieve a
party from a judgment, order or proceeding or for fraud upon the
court. . . .
[22] The burden is on the movant to establish grounds for Trial Rule 60(B) relief. In
re Paternity of P.S.S., 934 N.E.2d 737, 740 (Ind. 2010). A motion made under
Trial Rule 60(B) is addressed to the “equitable discretion” of the trial court. Id.at 740–41. Accordingly, the grant or denial of a Trial Rule 60(B) motion will be
disturbed only when that discretion has been abused. Id. at 741. A trial court
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abuses its discretion only when its action is clearly against the logic and effect of
the facts before it and the inferences which may be drawn therefrom. Id. An
abuse of discretion will not have occurred so long as there exists even slight
evidence of mistake, surprise, or excusable neglect. See Stemm v. Estate of Dunlap,
717 N.E.2d 971, 974 (Ind. Ct. App. 1999).
[23] In the present case, the Defendants do not dispute that the Purchasers’ motion
was filed within the required one-year timeframe or that the Purchasers have
alleged a meritorious defense. Thus, the only question before us is whether the
trial court was within its discretion to conclude that the Purchasers established
grounds for relief for the reasons of mistake, surprise, or excusable neglect. 9
[24] Under the facts and circumstances of the present case, we conclude that the trial
court was well within its discretion to grant the Purchasers relief from the
dismissal order pursuant to Trial Rule 60(B)(1), i.e., for the reason of “mistake,
surprise, or excusable neglect.” Here, it is apparent that all of the parties, at
least initially, understood the trial court’s dismissal order as not precluding
arbitration, otherwise there would have been no reason for the parties to
proceed with the arbitration process and go as far as to select the arbitrators.
When the Defendants claimed that the arbitration was precluded by the trial
9
The Purchasers also argue that they were entitled to relief from judgment under Trial Rule 60(B)(3). Since
we agree with them that they are entitled to judgment under Trial Rule 60(B)(1), we need not address their
argument under Rule 60(B)(3).
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court’s dismissal order, it is clear that the Purchasers (and the trial court) were,
at the least, surprised by the sudden reversal in course.
[25] The Defendants argue that if there was a mistake in the trial court’s order, it
was a mistake on the part of the trial court, and that the proper method of
addressing such a mistake was to file a direct appeal. See Kretschmer v. Bank of
Am., N.A., 15 N.E.3d 595, 600 (Ind. Ct. App. 2014) (noting that a Trial Rule
60(B)(1) motion is not a substitute for a direct appeal and does not attack the
substantive, legal merits of a judgment, but rather addresses the procedural,
equitable grounds justifying the relief from the finality of a judgment), trans.
denied (citing In re Paternity of P.S.S., 934 N.E.2d at 740). Here, the issue is not
so much a mistake on the part of the trial court, but the surprise in how the
Defendants initially treated the trial court’s order as not precluding arbitration
for weeks, only to claim the exact opposite and argue that it did preclude
arbitration. Certainly, the trial court was within its equitable discretion to
consider the totality of the circumstances before it and conclude that its earlier
order should be modified to clarify that its order of dismissal did not intend to
preclude arbitration. For these reasons, we cannot say that the trial court
abused its considerable discretion in such matters when it granted the
Purchasers’ motion for relief from judgment and ordered the parties to proceed
with arbitration. See 4 William F. Harvey, Indiana Practice, Rules of Procedure
Annotated § 60.1 (3d ed. 1999) (noting that the equitable power of a court of
general jurisdiction is “very substantial.”).
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IV. Graber Cannot Now Argue That the Claims Against Him Are
Not Subject to Arbitration
[26] Graber argues that the trial court erred to the extent that it ordered the claims
against him to proceed to arbitration. Graber claims that he was not a party to
the Agreement and that the arbitration clause thereof should not apply to him.
Unfortunately for Graber, this is exactly the opposite of what his counsel
argued before the trial court in the motion to dismiss. As noted above, Graber’s
counsel explicitly argued that the claims against Graber had to be dismissed in
the trial court because of the arbitration clause of the Agreement:
[W]e also believe this arbitration agreement applies to Sheldon
Graber as an individual as President of DYI at all times. As the
arbitration provision, sorry, as the arbitration provisions of the
agreement should require that all claims in this matter against
DYI be heard in arbitration, so should all Claims against
Sheldon Graber[.]
Appellants’ App. Vol. 3, p. 43.
[27] Graber argues that the statements of counsel cannot alter the provisions of the
Agreement. That much is true, but Graber cannot now be heard to argue that
the claims against him cannot be heard by the arbitrators, as that is precisely
what he requested from the trial court. Whether viewed in terms of invited
Court of Appeals of Indiana | Opinion 18A-CT-1057 | October 19, 2018 Page 21 of 23
error10 or judicial estoppel,11 we cannot say that the trial court erred in ordering
the claims against Graber to proceed to arbitration.
[28] This is not to say that the arbitrators must conclude that Graber is liable for the
actions of DYI. Our holding is limited to only require the claims against Graber
to be heard by the arbitrators. See Wilson Fertilizer & Grain, 654 N.E.2d at 853
n.4 (“Once the [trial] court determines that a dispute is subject to arbitration, all
additional concerns, including issues regarding the merits of the underlying
claim or procedural arbitrability, are for the arbitrator.”).
Conclusion
[29] When the trial court determined that the arbitration provisions of the
Agreement required the Purchasers’ claims to be subject to mandatory, binding
arbitration, the court should have ordered the parties to proceed with arbitration
and either stayed the proceedings or dismissed the claims without prejudice.
Instead, the trial court dismissed the claims with prejudice. Despite this fact,
however, the parties proceeded with the arbitration process to the point of
selecting the arbitrators. It was only after this point that the Defendants argued
for the first time that the trial court’s earlier order dismissing the Purchasers’
claims with prejudice was a final judgment on the merits that barred arbitration
10
Under the doctrine of invited error, which is grounded in estoppel, a party may not take advantage of an
error that she commits, invites, or which is the natural consequence of her own neglect or misconduct. Witte
v. Mundy ex rel. Mundy, 820 N.E.2d 128, 133 (Ind. 2005).
11
“Judicial estoppel is a judicially created doctrine that seeks to prevent a litigant from asserting a position
that is inconsistent with one asserted in the same or a previous proceeding.” Morgan Cty. Hosp. v. Upham, 884
N.E.2d 275, 280 (Ind. Ct. App. 2008), trans. denied.
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of these claims. Under these particular facts and circumstances, the trial court
was within its equitable discretion to grant the Purchasers relief from its earlier
order under Trial Rule 60(B)(1). Moreover, because Graber explicitly argued to
the trial court that the claims against him should be dismissed and subject to
arbitration, he cannot now be heard to argue the exact opposite. Accordingly,
the judgment of the trial court is affirmed.12
[30] Affirmed.
Bailey, J., and Bradford, J., concur.
12
We also decline the Purchasers’ request to award appellate attorney fees under Appellate Rule 66(E). Even
though we affirm the trial court, the Defendants’ appellate arguments are far from being “permeated with
meritlessness, bad faith, frivolity, harassment, vexatiousness, or purpose of delay.” Thacker v. Wentzel, 797
N.E.2d 342, 346 (Ind. Ct. App. 2003).
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