INDIANAPOLIS FLOOR STORE v. JENKINS (2025)

MEMORANDUM DECISION

Case Summary

[1] Indianapolis Floor Store (“IFS”) appeals the small claims court judgment in favor of LaVar Jenkins on his damages claim. The restated issue on appeal is whether the court erred when it denied IFS's motions to stay or dismiss the case based on a contract requiring arbitration.

[2] We reverse and remand with instructions.

Facts and Procedural History

[3] On August 8, 2022, Jenkins and IFS executed a “Home Improvement Contract” (“the Contract”) in which IFS agreed to do specified work on Jenkins’ kitchen remodeling project in Indianapolis. App. at 53. The Contract price was $10,237.54, $5,000 of which Jenkins paid on September 9, 2022. The Contract contained an “Agreement to Mediate and Arbitrate” which provided, in relevant part, as follows: “Homeowner(s) agree that should any disputes arise out of this contract, the parties shall first participate in mediation and if unsuccessful then binding arbitration under the Indiana Rules for Alternative Dispute Resolution.” Id. at 54.

[4] Jenkins was unsatisfied with IFS's work and, on December 9, 2022, filed a “Notice of Claim” in the Warren Township Small Claims Court. Id. at 45. The Notice of Claim alleged that IFS had caused damage to Jenkins’ property and home while engaged in the kitchen remodeling project and that IFS did not finish the work. Jenkins filed the claim pro se and did not attach to it a copy of the Contract. On January 23, 2023, IFS filed a Motion to Dismiss Complaint, along with an attachment containing the Contract, on the ground that the Contract required alternative dispute resolution. On March 10, 2023, IFS filed a Counterclaim for the amount still “owing” on the Contract and to foreclose on a mechanic's lien related to the Jenkins kitchen remodeling project. Id. at 60.

[5] In an order dated March 20, 2023, the court noted that it did not have jurisdiction to adjudicate IFS's Counterclaim for foreclosure “because it is an action to enforce a lien.” Id. at 78. After noting that the parties’ prior attempt at mediation had been unsuccessful, the court stated, “pursuant to section 7 of the contract conditions, the Court order[s] arbitration be completed by June 1, 2023.” Id. On March 30, the trial court entered an order stating: “The Court is not taking any position concerning this cause of action until the arbitration is completed.” Id. at 80.

[6] In July, IFS filed a second motion to dismiss Jenkins’ action based on Jenkins’ alleged failure to engage in arbitration as previously ordered and also filed a Motion to Compel Jenkins’ compliance. The court took IFS's motions under advisement and, on July 25, issued an order setting a pretrial hearing for September 20, 2023, to give the parties time to engage in arbitration. The order further stated that “[a]rbitration in the Marion County Small Claims Court is voluntary, and the parties can choose not to participate.” Id. at 116.

[7] On September 25, the court granted Jenkins a default judgment against IFS, which the court set aside on IFS's motion on December 8. In the latter order, the court also stated:

That the Court orders the Parties to appear at the Warren Township Small Claims Court on January 22, 2024, at 1:00 P.M. to meet with and complete arbitration. Arbitration in the Marion County Small Claims Court is voluntary, and the parties can choose not to participate. The Court finds that the [sic] section 7 of the parties[’] home improvement contract mandates the mediation and arbitration.

Id. at 143.

[8] On January 22, 2024, the parties appeared but arbitration was not completed because “two of [IFS's] essential witnesses were no longer available to testify due to the delay in starting.” Id. at 8. The court “note[d] that participation in arbitration is voluntary” and that the matter remained set for trial on February 12, 2024. Id. On February 1, IFS filed a motion to stay the proceedings pending the completion of arbitration. In an order dated February 5, the court denied IFS's “motion for designation of arbitration and motion to stay the February 12, 2024[,] trial,” on the ground that it did not have authority under the Rules for Alternative Dispute Resolution (“ADR”) to require arbitration. Id. at 153.

[9] IFS filed a “Renewed” motion for arbitration and a stay of proceedings on February 8. Id. at 154. At a hearing on February 12, the trial court denied IFS's renewed motion, and IFS indicated that it wished to pursue an interlocutory appeal of that order. In an order dated February 26, the court stated as follows:

The following is the contract provision governing disputes among the parties:

Applicable Laws. Customer agrees to comply with all applicable laws and regulation [sic]. The sale shall be governed by and construed under the laws of the State of Indiana. Venue and jurisdiction of all disputes shall lie in Marion County, Indiana. In the event of any dispute among the parties exceeding the jurisdictional limits of the Small Claims Court of Marion County, Indiana, the parties agree to submit the dispute first to mediation and, if necessary, to binding arbitration according to the Rules for Alternative Dispute Resolution promulgated by the Supreme Court of the State of Indiana.

Id. at 164.¹ The court found that Jenkins’ claim does not exceed the court's jurisdiction, and, therefore, the Contract's mandatory arbitration clause was not applicable.²

[10] The trial court held a bench trial on Jenkins’ claims on July 1, 2024, and entered judgment in favor of Jenkins. This appeal ensued.

Discussion and Decision

[11] We begin by noting that Jenkins has not filed an Appellee's brief. In such situations, we will reverse a judgment of a small claims court “if the appellant demonstrates prima facie error, which is error at first sight, on first appearance, or on the face of it.” Nick's Packing Servs., Inc. v. Chaney, 181 N.E.3d 1025, 1028 (Ind. Ct. App. 2021).

[12] Generally, we review a judgment of a small claims court for clear error. See, e.g., Balash v. Mader, 245 N.E.3d 705, 706 (Ind. Ct. App. 2024). Similarly, “[w]e review facts from a bench trial under a clearly erroneous standard with due deference paid to the trial court's opportunity to assess witness credibility.” Branham v. Varble, 952 N.E.2d 744, 746 (Ind. 2011). However,

this deferential standard does not apply to the substantive rules of law, which are reviewed de novo just as they are in appeals from a court of general jurisdiction. Similarly, where a small claims case turns solely on documentary evidence, we review de novo, just as we review summary judgment rulings and other paper records.

Trinity Homes, LLC v. Fang, 848 N.E.2d 1065, 1068 (Ind. 2006) (quotations and citations omitted). Thus, in small claims cases such as this—where the case turns solely on documentary evidence, such as the interpretation of a contract—our review is de novo. See, e.g., Scott-LaRosa v. Lewis, 44 N.E.3d 89, 94 (Ind. Ct. App. 2015) (noting we review de novo a small claims court's construction of a contract provision, which is a pure question of law).

[13] Here, there are both questions of fact and questions of law. What the contract actually says is a question of fact. The applicable contract provision is contained in section 7 of the “Contract Conditions” and provides, in relevant part: “Homeowner(s) agree that should any disputes arise out of this contract, the parties shall first participate in mediation and if unsuccessful then binding arbitration under the Indiana Rules for Alternative Dispute Resolution.” App. at 54. This led the small claims court to note at various points that “section 7 of the contract conditions” required arbitration.³ Id. at 78; see also id. at 143. However, in its February 26, 2024, order, the trial court stated that “the contract provision governing disputes among the parties” provided, in relevant part, that

[i]n the event of any dispute among the parties exceeding the jurisdictional limits of the Small Claims Court of Marion County, Indiana, the parties agree to submit the dispute first to mediation and, if necessary, to binding arbitration according to the Rules for Alternative Dispute Resolution promulgated by the Supreme Court of the State of Indiana.

Id. at 164. Based on that language providing jurisdictional limits to the requirement of arbitration, the court ruled that arbitration was not required because Jenkins’ claim “does not exceed the jurisdiction of the Marion County Small Claims Courts.” Id.

[14] The alleged contract language quoted in the court's February 26 order appears to come from a document in Jenkins’ “Witness and/or Exhibit List,” filed in the trial court on January 12, 2023. That document appears to be part of a form contract of L.D. Smith Plumbing, attached to its refusal to provide a proposal for plumbing service to Jenkins.⁴ That document quite clearly was not part of the Contract between IFS and Jenkins; the trial court committed clear error when it found that it was.

[15] The construction of the applicable contract provision—i.e., section 7 of the contract conditions in the Home Improvement Contract between the parties—is a question of law. Our task in construing a contract is to determine and implement the parties’ intent when they entered into the contract. Wohlt v. Wohlt, 245 N.E.3d 611, 616 (Ind. 2024).

And to do that, courts start with the language of the parties’ agreement. If the contract's terms are unambiguous, then they are conclusive of the parties’ intent, and courts give the contract its plain meaning. Thus, when reviewing an unambiguous written contract, courts look only to that document, staying within its four corners.

Id. (citations omitted).

[16] The language of section 7 is quite clear—it requires that the parties engage in mediation and “binding arbitration” regarding “any disputes aris[ing] out of th[e] contract.” App. at 54 (emphasis added). Jenkins’ claim against IFS for damages “arises out of” the Contract with IFS to do kitchen remodeling work for him; Jenkins’ notice of claim alleged that IFS caused damage to his property and home while engaged in such work and that IFS did not finish the work.⁵ Therefore, under the plain language of the Contract, Jenkins was required to engage in mediation ⁶ and, if that was unsuccessful, binding arbitration.

[17] When parties contract “to submit their dispute to arbitration, the court is required by [Indiana Code Section 34-57-2-3(d)⁷ ] to compel arbitration.” Destination Yachts, Inc. v. Pierce, 113 N.E.3d 645, 653 (Ind. Ct. App. 2018), trans. denied.⁸ When arbitration is so compelled, the court has discretion to either “stay[ ] the action pending the outcome of the arbitration[ ] or dismiss the action without prejudice.” Id. (citing Ind. CPA Soc., Inc. v. GoMembers, Inc., 777 N.E.2d 747, 752 (Ind. Ct. App. 2002)). Thus, the small claims court erred when it refused to compel arbitration and stay or dismiss the action.

Conclusion

[18] IFS has established prima facie error in that the trial court clearly erred when it relied on a provision not found in the Contract, and it erroneously refused to compel arbitration and dismiss or stay the case. We reverse and remand with instructions for the small claims court to (1) order the parties to arbitration as required by the Contract and (2) stay the case pending arbitration or dismiss the case without prejudice.

[19] Reversed and remanded.

FOOTNOTES

1.   The court did not provide a citation to any document.

2.   The order then authorized IFS to seek an interlocutory appeal. However, the motions panel of this Court subsequently denied the motion to accept interlocutory jurisdiction.

3.   Confusingly, the small claims court noted, at the same time, that arbitration in Marion County was “voluntary” and the “parties can choose not to participate.” E.g., App. at 143.

4.   We note that IFS did not include this document in the record on appeal, but it is accessible via the Odyssey case management system under cause number 49K06-2212-SC-3520.

5.   In addition, at the bench trial on the merits of his claims, Jenkins testified that he had a contract with IFS to do the kitchen remodeling work but IFS did not “complete[ ] the work” and caused “damage” to his property while engaged in part of the work. Tr. at 74.

6.   The record shows that the parties engaged in mediation, but it was unsuccessful.

7.   We note that IFS cited only a repealed version of this statute.

8.   The small claims court erred to the extent it found that it does not have authority to order arbitration in this case per Ind. Alternative Dispute Resolution Rule 1.4 and our opinion in Kim v. Vill. at Eagle Creek Homeowners Assoc., 133 N.E.3d 250, 252 (Ind. Ct. App. 2019). While the small claims court is not included in the ADR rules and cannot order arbitration under those rules, it may nevertheless enforce a contract provision in which the parties agreed to mandated ADR. Id. at 252 n.1.

Bailey, Judge.

Vaidik, J., and DeBoer, J., concur.