COA: Default judgment proper in arbitration case

A Crawford County man waived his right to arbitration by failing to respond to an estate’s motion to compel arbitration, making a default judgment by the trial court appropriate, the Indiana Court of Appeals has ruled.

In December 2017, Dexter Eastridge and the Estate of Richard Rayles entered into a contract for the sale of standing timber. The agreement included an arbitration clause requiring the parties to arbitrate any disputes that arose.

In September 2019, the estate mailed a letter to Eastridge, attaching a proposed complaint and nominating C. Gregory Fifer as the estate’s elected arbitrator. The complaint asserted Eastridge had failed to complete the work contracted for under the agreement and to make the guaranteed payment.

The estate’s letter requested Eastridge to notify it and Fifer of Eastridge’s selection of an arbitrator within 20 days. Eastridge didn’t reply.

A month later, the estate filed a petition to compel arbitration, requesting the court to order Eastridge to submit the issue to final and binding arbitration and to select his arbitrators. The Crawford Circuit Court ordered him to make his selection within 10 days.

Sometime after being served, Eastridge sent a short, handwritten notice to the estate, indicating that he elected Tim Richards as his arbitrator. The note did not contain the contact information for Richards, and the estate could not locate or identify an arbitrator by that name.

The estate contacted Eastridge in early December, asking him for Richards’ address and phone number. Eastridge never contacted the estate nor filed a response to the trial court’s order.

On Jan. 21, 2020, the trial court ordered Eastridge to provide the estate with Richards’ contact information within 10 days or default judgment would be entered. Eastridge failed to appear or reply.

The following month, the trial court entered an order of disqualification on its own motion, and a new trial court judge was appointed. The new judge then denied the estate’s request for a default judgment because the estate had failed to provide the trial court with Eastridge’s military status. On March 5, the estate renewed its motion for a default judgment, attaching the missing nonmilitary affidavit.

In September 2020, approximately six months after the renewed petition was filed and 10 months after service of the original petition, with no response by Eastridge, the trial court granted default judgment against Eastridge in the amount of $172,979.22, plus attorney fees.

Eastridge filed a motion to set aside the default judgment, claiming it was void because the estate had failed to comply with the Indiana Uniform Arbitration Act; the facts of the case were extraordinary and justified relief; and he had failed to participate on the basis of mistake, surprise or excusable neglect. The trial court denied Eastridge’s motion.

The COA affirmed the ruling by the Crawford Circuit Court.

“Almost one year and a half after the Estate requested to commence arbitration and a default judgment was entered, Eastridge now requests this court to reject the default judgment and proceed by arbitration. Granting his request would create a precedent which would prevent a trial court from dealing with a situation where a party fails to participate in the arbitration process,” Judge Patricia Riley wrote for the COA.

Riley wrote that Eastridge attempted to avoid the waiver of his right to arbitrate by arguing the statutory framework of Indiana’s Uniform Arbitration Act.

“The plain meaning of section 4 gives the trial court the power to appoint an arbitrator only on the application of a party,” Riley wrote for the court. “We cannot find any evidence — nor does Eastridge provide us with any — that one of the parties requested the application of section 4 and allowed the trial court to appoint an arbitrator. Accordingly, we find that Eastridge waived his right to arbitration and we turn to the trial rules for further determination of this cause.

“… Because we conclude that Eastridge waived his right to arbitration and in the absence of any argument by Eastridge to set aside the default judgment based on any of the grounds enumerated in Indiana Trial Rule 60(B), we affirm the trial court’s denial of Eastridge’s motion to set aside the default judgment,” Riley wrote in Dexter Eastridge v. Estate of Richard Rayles, 21A-PL-673.

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