Stardust Ventures, LLC v. Gary Roberts and Teresa Roberts
65 N.E.3d 1122
| Ind. Ct. App. | 2016Background
- Stardust (custom houseboat builder) and Gary & Teresa Roberts orally agreed in Nov 2013 to a custom houseboat for $775,000 with midsummer 2014 delivery; Stardust provided a written Quote requiring a 20% payment before build and a $10,000 nonrefundable deposit.
- The Robertses paid Stardust $75,000 on Nov 20, 2013; Stardust had an internal policy not to start construction until it received 20% ($155,000).
- Stardust outsourced a hull build for another project to create space and then sent an unsigned Purchase Agreement; the Robertses signed and returned it on Feb 4, 2014, and Stardust’s president signed Feb 12, 2014; the Agreement incorporated the Quote and contained an arbitration clause giving Stardust the option to elect arbitration.
- The Robertses canceled the contract in early March 2014 and requested a refund; Stardust refused to return the $75,000, asserting deposits were nonrefundable.
- The Robertses sued in April 2014 to recover the $75,000. Stardust moved to dismiss to compel arbitration; the trial court denied that motion and later granted summary judgment for the Robertses.
- On appeal, the court addressed (1) whether a valid, enforceable Purchase Agreement (including the arbitration clause) existed and (2) whether Stardust waived its right to arbitrate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of Purchase Agreement | The Robertses: no binding written agreement; they revoked the offer before Stardust’s signature, so no enforceable arbitration clause | Stardust: parties manifested mutual assent (signed Agreement); Stardust’s conduct (drafting, tendering, incurring costs to make room) shows intent to be bound | Court: Agreement valid and enforceable; signatures and parties’ conduct establish contract and arbitration clause applies |
| Waiver of arbitration | The Robertses: Stardust delayed or acted inconsistently and thus waived arbitration; procedural missteps forfeited the right | Stardust: timely elected arbitration via motion to dismiss and did not wait for adverse judgment or manipulate the court process | Court: No waiver; timely election and early motion show no inconsistent conduct; dismissal to compel arbitration was proper |
| Proper remedy (dismissal v. stay) | Robertses: implied preference that Stardust should have sought a stay rather than dismissal | Stardust: dismissal is appropriate where all claims are subject to arbitration | Court: Dismissal is acceptable because the single claim is arbitrable; directed remand to compel arbitration |
| Preservation of issue on appeal | Robertses: Stardust failed to take certain procedural steps to preserve arbitration claim | Stardust: properly raised arbitration in its first substantive pleading and preserved the issue | Court: Issue preserved; no requirement to file additional motions or immediate interlocutory appeal |
Key Cases Cited
- Roddie v. N. Am. Manufactured Homes, Inc., 851 N.E.2d 1281 (Ind. Ct. App. 2006) (motion to dismiss based on arbitration is treated as motion to compel arbitration; review de novo)
- Capitol Const. Servs., Inc. v. Farah, LLC, 946 N.E.2d 624 (Ind. Ct. App. 2011) (factors for waiver include timing of arbitration request and whether party acted inconsistently with arbitration right)
- MPACT Const. Group, LLC v. Superior Concrete Constructors, Inc., 802 N.E.2d 901 (Ind. 2004) (discusses strong policy favoring arbitration but recognizes waiver by inconsistent conduct; waiver is question of fact)
- JKL Components Corp. v. Insul-Reps, Inc., 596 N.E.2d 945 (Ind. Ct. App. 1992) (failure to timely request arbitration and seeking dismissal on wrong procedural ground can indicate waiver)
- Koors v. Steffen, 916 N.E.2d 212 (Ind. Ct. App. 2009) (dismissal vs. stay analysis when arbitration clause applies to all claims)
- Ind. Bureau of Motor Vehicles v. Ash, Inc., 895 N.E.2d 359 (Ind. Ct. App. 2008) (party drafting and tendering a contract can manifest assent and form a binding contract)