MBNA AMERICA BANK, N.A. VS. BOWLING (ROSCOE)Annotate this Case
RENDERED: AUGUST 15, 2008; 2:00 P.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
MBNA AMERICA BANK, N.A.
APPEAL FROM CLAY CIRCUIT COURT
HONORABLE R. CLETUS MARICLE, JUDGE
ACTION NO. 05-CI-00457
REVERSING & REMANDING
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BEFORE: DIXON, LAMBERT, AND STUMBO, JUDGES.
STUMBO, JUDGE: MBNA America Bank (hereinafter Appellant) appeals the
denial of its Petition and Application to Confirm and Enforce Arbitration Award.
Its primary arguments, and the ones we find most persuasive and dispositive of the
case, are that the trial court was required to enforce the arbitration award because
Roscoe Bowling (hereinafter Appellee) failed to contest to the existence of an
arbitration agreement prior to arbitration and failed to timely file a motion to
vacate or modify the award. No brief was filed on behalf of Appellee. After
considering the facts of this case and the law, we find that the trial court should
have enforced the arbitration award. Accordingly we reverse.
Appellee applied for and was granted a credit card account from
Appellant. Part of the agreement provided that all claims arising from the account
would be resolved through binding arbitration. Appellee subsequently failed to
make monthly payments on the card.
Appellant then filed a claim with the National Arbitration Forum
(NAF). Appellee did not object to either the jurisdiction of the arbitrator or the
existence of an arbitration agreement during the arbitration proceedings. The
arbitrator found that the parties agreed to binding arbitration, that Appellee was
properly served with the arbitration claim, and that the arbitration proceeded in
accordance with the NAF Code of Procedure. The arbitrator issued an award in
favor of Appellant in the amount of $5,324.17. This award was entered on August
Appellee failed to pay Appellant the amount awarded pursuant to the
arbitration award. On December 8, 2005, Appellant filed a Petition and
Application to Confirm and Enforce Arbitration Award with the Clay Circuit Court
pursuant to KRS 417.150. On April 27, 2006, Appellee filed an answer to the
petition in which he alleged he never agreed to arbitration.
A few hearings were held on this matter which ultimately led to the
trial court entering an order denying the Petition to Enforce on April 16, 2007.
This appeal followed.
Since there was no brief filed on behalf of Appellee, it is not quite
clear what arguments Appellee put forth that caused the trial court to deny the
Petition to Enforce. However, after having viewed the video tapes of the hearings,
it appears Appellee claimed that he never agreed to arbitration and that he did not
receive notice of the arbitration proceedings. Neither of these arguments should
have prevailed. The arbitration award should have been enforced.
The settlement of disputes by arbitration is favored in the
law of this Commonwealth. Valley Const. v. Perry Host
Management, Ky. App., 796 S.W.2d 365 (1990); cf.
Carrs Fork Corp. v. Kodak Min. Co., Ky., 809 S.W.2d
699 (1991). Generally, much judicial latitude and
deference are accorded to an arbitration decision. It will
not be disturbed by the courts “merely because it was
unjust, inadequate, excessive or contrary to law.” Carrs
Fork Corp., 809 S.W.2d at 702. Although there are cases
where equity demands intervention by the courts, this
Court has consistently held that an arbitration award is to
be considered the end of the controversy-not the
beginning. Id. The issue of whether notice was effected
is a procedural matter which is relegated to the arbitrator.
Cf. The Beyt, Rish, Robbins Group v. Appalachian
Regional Healthcare, Inc., Ky. App., 854 S.W.2d 784,
786 (1993); Bastone v. Dial-A-House, Inc., 100 Misc.2d
1026, 420 N.Y.S.2d 467 (N.Y.Sup.Ct.1979); see also
John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 84
S.Ct. 909, 11 L.Ed.2d 898 (1964). (Emphasis added).
Lombardo v. Investment Management and Research Inc., 885 S.W.2d 320, 322
(Ky. App. 1994). Here, the arbitrator specifically found that Appellee had been
served with notice of the proceedings.
As for the existence of the arbitration agreement, Appellee’s failure to
raise this issue during arbitration is fatal to his argument. Kentucky Courts have
held that since the Kentucky Uniform Arbitration Act (KUAA) is so similar to the
Federal Arbitration Act (FAA) they should be interpreted consistently. See
Louisville Peterbilt, Inc. v. Cox, 132 S.W.3d 850 (Ky. 2004).
KRS 417.060 states that if a party denies the existence of an
arbitration agreement, the arbitration proceedings can be stayed while a trial court
summarily decides if one exists. Federal courts have held that once an arbitration
award has been entered, the parties are no longer permitted to go back and litigate
the issue of whether an arbitration agreement existed to begin with. See
Comprehensive Accounting Corp. v. Rudell, 760 F.2d 138 (7th Cir. 1985); Halley
Optical Corp. v. Jagar Int’l Mktg Corp., 752 F.Supp. 638 (S.D.N.Y. 1990); Smiga
v. Dean Witter Reynolds, Inc., 766 F.2d 698 (2d Cir. 1985). In other words, if a
party intends to dispute the existence of an arbitration agreement, he must do so via
a stay in the arbitration proceedings pursuant to KRS 417.060.
No one should be forced into arbitration without an
opportunity to show that he never agreed to arbitrate the
dispute that is the subject of the arbitration. The
[respondents] had that opportunity when they were
notified of the arbitration, and they let it pass by. It was
then too late for them to sit back and allow the arbitration
to go forward, and only after it was all done, and
enforcement was sought, say: oh by the way, we never
agreed to the arbitration clause. That is a tactic that the
law of arbitration, with its commitment to speed, will not
Comprehensive Accounting at 140. Here, Appellee had notice of the arbitration
proceedings, as shown by the findings in the arbitration award, and chose not to
seek a stay in order to contest the existence of the agreement.
We note that KRS 417.160 permits a party to move to vacate an
arbitration award under certain circumstances. This motion, however, must be
made within 90 days of receipt of the award. No action was taken on Appellee’s
behalf until Appellant petitioned the court to enforce the award, which was more
than 90 days after the arbitration award.
Having been given notice of the arbitration proceedings and not
moved to stay the proceedings pursuant to KRS 417.060 in order to contest the
existence of an arbitration existence, Appellee’s remedies became limited. When
Appellee did not exercise these remedies, he became bound by the arbitration
award. For these reasons, we reverse the trial court’s order denying the petition to
enforce and remand for entry of a judgment in accordance with this opinion.
BRIEF FOR APPELLANT:
NO BRIEF WAS FILED
Megan J. Linder
Sarah A. Veith