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Justices affirm denial of claim arising after arbitration

October 23, 2012

A claim arising after a dispute between a company and its accountant was resolved through binding arbitration may not proceed, the Indiana Supreme Court ruled Tuesday.

The four justices unanimously agreed that summary judgment in favor of the defendant was proper in National Wine & Spirits, Inc., National Wine & Spirits Corporation, NWS, Inc., NWS Michigan, Inc., and NWS, LLC v. Ernst & Young, LLP 49S02-1203-CT-137.

That case was filed after an NWS employee committed fraud and theft that caused significant losses. NWS alleged negligence, breach of contract and unjust enrichment against Ernst & Young and demanded arbitration.

“Under the facts of this case, the issue underlying the deception claim is the veracity of the documents produced at arbitration, which was an issue necessarily decided by the arbitration panel,” Justice Steven David wrote for the court. “Accordingly, issue preclusion bars the company’s deception claim, and we affirm the trial court’s grant of summary judgment in favor of the accounting firm.”

NWS was estopped from making the deception claim because it had already litigated and lost in arbitration proceedings, according to the ruling. “Although the arbitration agreement limited discovery to that which is expressly authorized by the panel, NWS never asked the panel for additional discovery,” David wrote.

“NWS cannot now complain it could not adequately prepare to litigate (a comparative fault) issue when given the opportunity to postpone the arbitration.”

 

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