Court Opinion

ID: 4013328
Source: CourtListenerOpinion
Date Created: 2016-07-06 16:04:42.843551+00
Date Added: 2024-06-11T14:36:38.767499
License: Public Domain

MEMORANDUM DECISION
                                                                         FILED
Pursuant to Ind. Appellate Rule 65(D),                               Jul 06 2016, 6:44 am
this Memorandum Decision shall not be                                    CLERK
regarded as precedent or cited before any                            Indiana Supreme Court
                                                                        Court of Appeals
court except for the purpose of establishing                              and Tax Court

the defense of res judicata, collateral
estoppel, or the law of the case.

ATTORNEYS FOR APPELLANT                                   ATTORNEYS FOR APPELLEE
Julia Blackwell Gelinas                                   Kevin P. Podlaski
Kandi Kilkelly Hidde                                      Ryan M. Gardner
Maggie L. Smith                                           Beers Mallers Backs & Salin, LLP
Jenai M. Brackett                                         Fort Wayne, Indiana
Frost Brown Todd LLC
Indianapolis, Indiana
Ivan B. Perkins
Michael B. Kadish
The Kadish Law Group, P.C.
Santa Monica, California

                                           IN THE
    COURT OF APPEALS OF INDIANA

Allied Professionals Insurance                            July 6, 2016
Company, a Risk Retention                                 Court of Appeals Case No.
Group, Inc.,                                              49A02-1601-PL-29
Appellant-Garnishee Defendant,                            Appeal from the Marion Superior
                                                          Court
        v.                                                The Honorable Cynthia J. Ayers,
                                                          Judge
Neff Realty, LLC,                                         Trial Court Cause No.
Appellee-Plaintiff/Judgment Creditor                      49D04-1403-PL-8280

Baker, Judge.

Court of Appeals of Indiana | Memorandum Decision 49A02-1601-PL-29 | July 6, 2016            Page 1 of 6
[1]   Allied Professionals Insurance Company (Allied) appeals the trial court’s order

      denying its motion to compel arbitration. Neff Realty, Inc. (Neff) sought

      coverage after a portion of an office building leased by an Allied policyholder

      caught fire. Neff argues that Allied waived its right to arbitrate the dispute

      because its demand to arbitrate was untimely. Finding that a clause in the

      policy unambiguously reserves questions of arbitrability for the arbitrator, we

      reverse and remand with instructions to: (1) grant Allied’s motion to compel

      arbitration; (2) award Allied fees and costs, including appellate fees and costs,

      pursuant to the arbitration clause in the insurance policy; and (3) dismiss or stay

      the litigation pending the arbitration.

                                                     Facts
[2]   On April 15, 2013, a fire ignited in an office building owned by Neff. The fire

      started in a space leased by Karen Buckner. Buckner had subleased part of the

      space to Barbara Kelley. At the time of the fire, Allied had issued a

      malpractice/professional liability insurance policy (the Policy) to Buckner.

      Kelley was not insured under the Policy.

[3]   On April 29, 2013, Buckner tendered a claim for the fire damages to Allied;

      Allied denied coverage on May 2, 2013. On March 7, 2014, Neff filed a lawsuit

      against Buckner to recover damages it sustained as a result of the fire. Buckner

      re-tendered her claim to Allied, which again denied the claim on April 23,

      2014. In both claim denials, Allied referred to the Policy’s arbitration clause

      (the Arbitration Clause), which states, in relevant part, as follows:

      Court of Appeals of Indiana | Memorandum Decision 49A02-1601-PL-29 | July 6, 2016   Page 2 of 6
               All disputes or claims involving [Allied] shall be resolved by
               binding arbitration, whether such dispute or claim arises between
               the parties to this Policy, or between [Allied] and any person or
               entity who is not a party to the Policy but is claiming rights,
               either under the Policy or against [Allied]. . . . Any person or
               entity asserting such dispute or claim (the “Claimant”) must
               submit the matter to binding arbitration . . . . If the Claimant
               refuses to arbitrate, then any other party may, by notice as herein
               provided,[1] require that the dispute be submitted to arbitration
               within fifteen (15) days. . . . The arbitration shall occur in Orange
               County, California. . . . Any questions as to arbitrability of any
               dispute or claim shall be decided by the arbitrator. . . .

      Appellant’s App. p. 163. Allied repeatedly reminded Buckner that if she wished

      to resolve the claim dispute, she would have to submit the dispute to binding

      arbitration pursuant to the Arbitration Clause.

[4]   On May 7, 2015, Neff obtained a default judgment against Buckner for

      $355,000. Buckner subsequently declared personal bankruptcy and assigned

      her rights against Allied to Neff. In early 2015, Neff2 began seeking payment

      from Allied by sending letters and discovery requests. Allied repeatedly denied

      coverage and stated that any dispute over coverage must be arbitrated pursuant

      to the Arbitration Clause.

      1
        The Policy provision regarding notice of a claim or suit requires that the named insured “shall, within three
      (3) business days, by certified mail return receipt requested forward to [Allied] every demand, notice,
      summons, or other process received by him or her or by his or her representative.” Appellant’s App. p. 162-
      63.
      2
        At some point, Neff’s insurer, State Auto Insurance Company (State Auto) paid for Neff’s damages. At
      that point, Neff began acting through State Auto, though State Auto is not a named party in this litigation.

      Court of Appeals of Indiana | Memorandum Decision 49A02-1601-PL-29 | July 6, 2016                   Page 3 of 6
[5]   On June 22, 2015, Neff filed a motion for proceedings supplemental against

      Allied. Allied claims that it did not see or receive the motion until August 28,

      2015. On September 10, 2015, Allied removed the proceedings supplemental to

      federal court. It moved to dismiss the case based upon improper service and, in

      the alternative, to compel arbitration. The federal district court found that

      service was proper and remanded the case to Marion Superior Court. Allied

      filed a new motion to compel arbitration and to dismiss or stay the proceedings

      in the trial court pending arbitration on December 1, 2015. The trial court

      summarily denied the motion on December 28, 2015, and Allied now appeals. 3

                                     Discussion and Decision
[6]   Allied argues that the trial court erroneously denied its motion to compel

      arbitration. We apply a de novo standard of review to a trial court’s ruling on a

      motion to compel. Tamko Roofing Prods., Inc. v. Dilloway, 865 N.E.2d 1074,

      1078 (Ind. Ct. App. 2007). This case calls on us to interpret a contract, and it is

      well established that matters of contract interpretation generally present

      questions of law to which we apply a de novo standard of review. In re Ind.

      State Fair Litigation, 49 N.E.3d 545, 548 (Ind. 2016). It is also well established

      that Indiana policy favors arbitration and that, in construing arbitration

      agreements, all doubts are to be resolved in favor of arbitration. MPACT Constr.

      3
        The Arbitration Clause also provides that the prevailing party upon a motion to compel arbitration shall
      recover all reasonable legal fees and costs. In denying Allied’s motion to compel, the trial court also awarded
      fees and costs to Neff.

      Court of Appeals of Indiana | Memorandum Decision 49A02-1601-PL-29 | July 6, 2016                   Page 4 of 6
      Group, LLC v. Sup. Concrete Constructors, Inc., 802 N.E.2d 901, 905 (Ind. 2004);

      Nat’l Wine & Spirits, Inc. v. Ernst & Young, LLP, 976 N.E.2d 699, 707 (Ind. Ct.

      App. 2012).

[7]   Neff argues that Allied has waived the right to have the dispute arbitrated

      because it did not file a motion to compel within fifteen days of Neff’s demand

      for coverage. We need not answer this question, as the Arbitration Clause

      plainly and unambiguously states that “[a]ny questions as to arbitrability of any

      dispute or claim shall be decided by the arbitrator.” Appellant’s App. p. 163.

[8]   Neff has never challenged this clause delegating determinations of arbitrability

      to the arbitrator. See Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 70-73

      (2010) (holding that unless plaintiff challenged a delegation provision

      specifically, courts must treat it as valid and leave any challenge to the validity

      of the arbitration agreement as a whole for the arbitrator). Therefore, it could

      not be clearer that this clause requires that issues regarding waiver and/or

      unconscionability4 must be resolved by an arbitrator rather than by a trial court.

      See, e.g., BG Group, PLC v. Rep. of Argentina, 134 S. Ct. 1198, 1207 (2014)

      (holding that courts presume—even in the absence of a delegation clause—that

      arbitrators should resolve disputes about procedural preconditions for

      arbitration, including waiver, delay, or a like defense to arbitrability).

      4
          Neff has also argued that it is unconscionable to require the arbitration to take place in California.

      Court of Appeals of Indiana | Memorandum Decision 49A02-1601-PL-29 | July 6, 2016                        Page 5 of 6
[9]    Given the plain language of the Policy, which clearly indicates the parties’

       intent to arbitrate and to delegate questions of arbitrability to the arbitrator, we

       find that the trial court erred by denying Allied’s motion to compel arbitration. 5

       We therefore reverse and remand with instructions to grant Allied’s motion,

       including its requests for costs and fees pursuant to the Arbitration Clause and

       for a stay or dismissal pending arbitration.

[10]   The judgment of the trial court is reversed and remanded with instructions.

       May, J., and Brown, J., concur.

       5
         We acknowledge that this outcome may seem harsh. Without expressing an opinion on the issue of
       arbitrability, we emphasize that Allied has repeatedly invoked the Arbitration Clause through its dealings
       with all parties, including Buckner, Neff, and State Auto. We note that the Arbitration Clause does not
       require that a motion to compel be filed to preserve the right to arbitrate, and we note that when Allied filed
       its motion to compel, it cannot have come as a shock to Neff, given Allied’s repeated invocations of that
       contractual provision.

       Court of Appeals of Indiana | Memorandum Decision 49A02-1601-PL-29 | July 6, 2016                    Page 6 of 6