from the Lawrence Township Small Claims The Honorable
Kimberly J. Bacon, Judge Trial Court Cause No.
ATTORNEY FOR APPELLANT, Andrea L. Ciobanu, Indianapolis,
ATTORNEY FOR APPELLEE, Kyle Michael, Hebron, Kentucky.
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.
We reverse and remand.
& Procedural History
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).
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.
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.
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
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