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COA sends houseboat dispute to arbitration

October 19, 2018

A dispute between the purchasers and supplier of a Daviess County houseboat must go to arbitration after an Indiana appellate panel determined a trial court ruling did not overrule an arbitration clause signed by both parties.

The case of Destination Yachts, Inc., and Sheldon Graber v. Shirley Pierce and Al Burnham, 18A-CT-1057, began in April 2014, when Shirley Pierce and Al Burnham purchased a houseboat from Destination Yachts, Inc. Pierce and Burnham signed a purchase agreement that required, among other things, that all disputes would be resolved through arbitration.

Pierce and Burnham discovered several defects with their houseboat after it was built and delivered, and after unsuccessfully seeking to resolve the issues directly with DYI and its president, Sheldon Graber, they sued in June 2017. But the Daviess Circuit Court dismissed the complaint with prejudice in November, finding the arbitration clause was binding.

Thus, Pierce and Burnham filed a notice of arbitration claim in January 2018 and scheduled the arbitration proceedings for the following June. However, the defendants in February filed a motion to dismiss the arbitration proceedings, arguing the trial court’s order was a judgment on the merits that precluded further litigation.

The agreed-upon arbitrators denied Graber’s motion, while Pierce and Burnham filed a motion to correct error or, in the alternative, a motion for relief from judgment, arguing the dismissal order was improper. This time the trial court agreed with the plaintiffs, writing that, “The Defendants have apparently misinterpreted the Court’s order assuming that it was a judgment in their favor on the merits. It was not.” The court gave Piece and Burnham 30 days to file an amended prayer for relief that sought “the sole remedy available to them through the trial court,” an order for arbitration.

Graber and DYI appealed, but the Indiana Court of Appeals upheld the grant of the motion to correct error/motion for relief from judgment on Friday. Writing for a unanimous appellate panel, Judge Paul Mathias said the proper course of action for the trial court would have been to stay the litigation pending the outcome of the arbitration, or to dismiss the case without prejudice. Thus, the decision to dismiss with prejudice made the subsequent relief under Indiana Trial Rule 60(B)(1) appropriate, Mathias said.

“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,” the judge wrote. “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.”

“… 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,” Mathias said.

Finally, in a footnote, the court declined Pierce and Burnham’s request for appellate attorney fees, finding the defendants’ appellate arguments were “far from being ‘permeated with meritlessness, bad faith, frivolity harassment, vexatiousness, or purpose of delay.’”

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