Polk-King v. Discover Bank, 031419 INCA, 18A-SC-1772

Docket Nº:18A-SC-1772
Opinion Judge:ALTICE, JUDGE.
Party Name:Melba Polk-King, Appellant-Defendant, v. Discover Bank, Appellee-Plaintiff
Attorney:ATTORNEY FOR APPELLANT, Andrea L. Ciobanu, Indianapolis, Indiana. ATTORNEY FOR APPELLEE, Kyle Michael, Hebron, Kentucky.
Judge Panel:Najam, J. and Pyle, J., concur.
Case Date:March 14, 2019
Court:Court of Appeals of Indiana

Melba Polk-King, Appellant-Defendant,


Discover Bank, Appellee-Plaintiff

No. 18A-SC-1772

Court of Appeals of Indiana

March 14, 2019

Appeal from the Lawrence Township Small Claims The Honorable Kimberly J. Bacon, Judge Trial Court Cause No. 49K03-1406-SC-3436

ATTORNEY FOR APPELLANT, Andrea L. Ciobanu, Indianapolis, Indiana.

ATTORNEY FOR APPELLEE, Kyle Michael, Hebron, Kentucky.


Case Summary

[¶1] Discover Bank (Discover) initiated a small claims action against Melba Polk-King in 2014. Following a failed arbitration in 2015 and another year of inaction by Discover, the court dismissed the action without prejudice in 2017 for failure to prosecute. Upon Discover's motion, the court later reinstated the action and then stayed the action for a second attempt at arbitration. Polk-King argued that the reinstatement was improper, the statue of limitations had run, and Discover could not reinitiate arbitration. Despite her protests, the second arbitration proceeded, and the arbitrator entered an award in favor of Discover. The small claims court then confirmed the arbitrator's award and denied Polk-King's request to vacate the award and dismiss with prejudice. On appeal, Polk-King argues that the court erroneously reinstated the action after the dismissal for failure to prosecute.

[¶2] We reverse and remand.

Facts & Procedural History

[¶3] On June 9, 2014, Discover filed a notice of claim against Polk-King in small claims court. Discover alleged that Polk-King had an unpaid consumer credit card balance of nearly $4000. Following a hearing in October 2014, the matter remained pending while Discover conducted a fraud investigation and pursued discovery. Discover eventually requested a bench hearing, which the small claims court set for May 12, 2015. Before the scheduled hearing, however, Polk-King filed a motion to compel arbitration. Thus, at the hearing, the court continued the matter indefinitely to allow for the arbitration process to be completed. The court noted that an arbitration claim had been filed with the Judicial Arbitration and Mediation Services (JAMS).

[¶4] The JAMS case coordinator sent notices to Discover in July, August, and September 2015 that the initial case management fee of $800 had yet to be paid. On October 9, 2015, the case coordinator sent letters to the parties warning that if the fee is not received in thirty days, "we will assume Respondent is not interested in pursuing arbitration and JAMS will close the file." Appellant's Appendix at 20. The parties were notified on November 9, 2015 that the arbitration had been closed due to non-payment of the fee. The following day, Discover sent a letter to Polk-King attempting to reach a settlement outside of arbitration to avoid the "large JAMS fee". Id. at 47. On November 13, 2015, Polk-King rejected any settlement except for a "mutual walk-a-way", noting that "JAMS closed the case, the statute of limitation has expired and Discover failed to comply with the motion to compel". Id. at 48. In December 2015, new counsel was substituted to represent Discover.

[¶5] After nearly a year of inaction, on November 28, 2016, Discover filed a motion to return the case to the court's active docket. Discover (wrongly) alleged that Polk-King had failed to pay the required arbitration fees and that the arbitration had been terminated as a result of her inaction. Polk-King filed a motion to dismiss on December 5, 2016. Polk-King asserted that Discover was the party responsible for paying the fee and asked the court to dismiss the action with prejudice due to Discover's failure to pay the fee. The court set the motions for a hearing.

[¶6] At a hearing on March 20, 2017, Discover admitted to failing in its obligation to pay the arbitration fee, which caused closure of the arbitration process. The court then dismissed the case without prejudice and made the following journal entry: "Parties were ordered to arbitration and that has not occured [sic] by no fault of defendant[;] leaving this open on her credit history is unduly prejudicial.

Plaintiff may refile if arbitration is unsuccessful." Id. at 6. Shortly thereafter, on May 8, 2017, Discover filed a motion to vacate the dismissal and stay the action until the completion of arbitration. In support of its motion, Discover stated: 1. Where the parties agreed to arbitration, the Court dismissed this matter without prejudice…and advised that "Plaintiff may refile if arbitration is unsuccessful."

2. However, per the Federal Arbitration Act, where a suit is referable to arbitration, the court shall stay the trial of the action until such arbitration has been completed. 9 U.S.C. § 3 (emphasis added).

3. Without a case pending in this court, the parties will not be able to file a Motion to Confirm Arbitration Award upon completion of arbitration.

4. Moreover, while...

To continue reading