ILNews

Court affirms arbitration dismissal

Jennifer Nelson
January 1, 2008
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The Indiana Court of Appeals today upheld the dismissal with prejudice of a bank's application to confirm an arbitration award regarding credit card debt because the bank failed to follow the proper procedure outlined in the Federal Arbitration Act.

In MBNA America Bank v. Aaron Kay, No. 49A02-0711-CV-961, MBNA submitted a purported dispute over credit card debt by Aaron Kay to the National Arbitration Forum. Kay objected to the arbitration. The arbitrator found in favor of the bank and entered the award in Minnesota; Kay lived in Indiana.

MBNA filed an application to confirm the award in Marion Superior Court. Kay filed a response in opposition to the application. The trial court denied the application and dismissed it with prejudice.

MBNA appealed, arguing the court erred by dismissing the application with prejudice based on Kay's dispute in arbitration over the forum clause in the cardholder agreement. The bank also claimed challenges to the validity of a contract and an arbitration clause must be decided by the arbitrator and not the court.

The Court of Appeals affirmed the trial court's decision because the bank didn't petition any United States District Court for an order directing that a disputed arbitration proceed in the manner provided for in the written agreement for arbitration, as found in 9 U.S.C.A. Section 4, wrote Senior Judge Betty Barteau. Once a party objects to arbitration, a court has to decide if a valid arbitration agreement exists.

Because there was no federal court determination that a valid agreement existed, the arbitration award the bank was seeking confirmation on wasn't properly obtained, she wrote. The procedure outlined in the Federal Arbitration Act wasn't followed and as such, the court didn't err in dismissing MBNA's application to confirm the award.

Granting the dismissal with prejudice was not an error because it is generally recognized that a dismissal with prejudice is a dismissal on the merits and here the court reached the merits of whether the application should be granted, Senior Judge Barteau wrote.

The Court of Appeals also affirmed the trial judge's order that MBNA correct any inaccuracy in Kay's credit record regarding the present dispute.
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  1. All the lawyers involved in this don't add up to a hill of beans; mostly yes-men punching their tickets for future advancement. REMF types. Window dressing. Who in this mess was a real hero? the whistleblower that let the public know about the torture, whom the US sent to Jail. John Kyriakou. http://www.nytimes.com/2013/01/26/us/ex-officer-for-cia-is-sentenced-in-leak-case.html?_r=0 Now, considering that Torture is Illegal, considering that during Vietnam a soldier was court-martialed and imprisoned for waterboarding, why has the whistleblower gone to jail but none of the torturers have been held to account? It's amazing that Uncle Sam's sunk lower than Vietnam. But that's where we're at. An even more unjust and pointless war conducted in an even more bogus manner. this from npr: "On Jan. 21, 1968, The Washington Post ran a front-page photo of a U.S. soldier supervising the waterboarding of a captured North Vietnamese soldier. The caption said the technique induced "a flooding sense of suffocation and drowning, meant to make him talk." The picture led to an Army investigation and, two months later, the court martial of the soldier." Today, the US itself has become lawless.

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