*1 Appellants’ trial courts’ denial in the declaratory relief. injunctive for
claims
Affirmed.12 BAILEY, J.,
NAJAM, J., concur. BRUMLEY, al., Appellants, et
Connie COL-
COMMONWEALTH BUSINESS CORP.,
LEGE EDUCATION d/b/a College, Appellee.
No. 45A04-1002-CT-66. of Indiana. Appeals
Court of
March 2011. forcing Indiana Code section we Inasmuch as Parents’ Archdiocese's 20-27-11— intertwined, agree inextricably are interpretation claims we defer to its of the reasonable Carroll’s determination that Par- School District is statute to mean judi- by principles ents’ claim is barred of res longstanding practice entitled to terminate its Accordingly, cata in this case. because providing free shuttle bus service to the School District Board is administrative nonpublic schools. agency charged responsibility en- with the *3 Holub,
David Law Offices of David W. Holub, P.C., Merrillville, IN, Attorney W. Appellants. for Felkins, Kennedy, Segal Jason L. Jill M. Ltd., Singer Mahoney, & McCambridge IL, Attorneys Chicago, Appellee. for OPINION VAIDIK, Judge. Summary
Case interlocutory an from an appeal This is arbitration. Plaintiff stu- compelling order Smith, Brumley, dents Ronisha Connie brought against suit Stephanie Anderson College. Brown Mackie defendant allege were fraudulent- at Brown Mackie ly induced to enroll due of accreditation. misrepresentations arbitra- Brown Mackie moved tion on arbitration clauses in the based plaintiffs’ agreements. student enrollment The trial court sustained Brown Mackie’s motion, appeal. dispute and the now We and whether the on based that, plaintiffs’ tort, statute, otherwise, action conclude because or shall challenges be, the enrollment your election, at submit- BMC[’s] entirety rather than the arbitration their ted to and resolved individual binding particular, claims clauses pursuant to the terms de- arbitration. affirm. subject remain We scribed herein. History1 and Procedural
Facts College postsec- offers a Brown Mackie IF EITHER OR YOU CBC CHOOS- ondary degree program surgical tech- ARBITRATION, ES NEITHER PAR- *4 nology at its Merrillville location. Ac- TY WILL HAVE THE RIGHT ATO cording plaintiffs, to the Brown Mackie TRIAL, JURY TO ENGAGE IN DIS- program that its was accredit- advertised COVERY, AS EXCEPT PROVIDED graduates eligible ed and that to sit IN THE APPLICABLE ARBITRA- certifying for a exam administered RULES, TION OR OTHERWISE LIT- Surgical Technology National Board of IGATE THE OR DISPUTE CLAIM IN Surgical Assisting. plaintiffs The en- FURTHER, ANY .... COURT YOU surgical rolled in Brown Maekie’s technol- WILL NOT HAVE THE RIGHT TO ogy program relying rep- on the school’s A PARTICIPATE AS REPRESENTA- resentations that it was accredited. OR TIVE MEMBER OF ANY CLASS plaintiffs signed Each of the a Brown OF CLAIMANTS PERTAINING TO Mackie “ENROLLMENT AGREE- ANY CLAIM SUBJECT TO ARBI- supplemental MENT” as well as a form TRATION. THE ARBITRATOR’S titled “ARBITRATION.” The header of DECISION BE FINAL WILL AND read, the enrollment “Accredit- BINDING. OTHER RIGHTS THAT member, Accrediting ed Council for Inde- OR AiP YOU WOULD HAVE IN (ACICS).” pendent Colleges and Schools COURT ALSO MAY NOT BE AVAIL- See, e.g., Appellee’s App. p. 57. The ABLE IN ARBITRATION. fees, agreement specified tuition and stat- The arbitrator shall have no authority ed the policy, school’s refund and outlined to arbitrate claims on a class action ba- the student complaint process. sis, brought by against and claims or Both the enrollment and ar- you may joined not be or consolidated bitration substantially forms contained with claims brought by against any or similar arbitration clauses. Those clauses person.... other provided: (“FAA”), The Federal Arbitration Act College-MV You and Brown Mackie §§ seq., govern U.S.C. et shall this agree any dispute or claim between provision. This arbitration (or you any company and BMC affiliated provision shall survive the termination of BMC, officers, or of its di- your relationship with BMC.... rectors, trustees, employees agents) See, e.g., id. at 58. arising relating out of or to this enroll- or, ment agreement agree- absent such The paid tuition and attended ment, courses, your enrollment or at their program point attendance but at some BMC, they whether such dispute arises be- learned that Brown Mackie lacked fore, during, your or after in surgical technology. attendance accreditation argument 1. We heard oral in this case on March 2011. inducement against Brown ment—fraud and fraudulent filed suit of the content of express concerning and im- misstatements alleging breach Agreement exist, this Court cannot negligent intentional
plied — an enforceable determine an existence of plain- and fraud. The misrepresentation, Id. dispute.” that Brown to arbitrate the part in relevant tiffs claimed “knowingly made at 345. representatives Mackie’s about accredi- false statements to students Soon, however, cause was tation, job placement after externships and transferred to another court for consolida- thereby inducing students graduation, action, and pending tion with a similar Surgical Technology enroll in defendant’s compel Mackie’s motion to arbitra- Appellants’ App. p. With- program.” Gerald N. by Judge tion was readdressed program, an accredited degree out a from Svetanoff. they were unable to plaintiffs alleged Brown Mack- Judge granted Svetanoff jobs type surgical secure with re- ie’s motion to for. being trained spect plaintiffs. Svetanoff *5 compel to arbitra- Brown Mackie moved agreed Judge reasoning Pera’s vis-a- above-quoted arbitration tion based on the alone, but vis the enrollment ten- response, plaintiffs In provisions. Judge he did not think Pera’s rationale stating, among other dered affidavits separate extended to the arbitration forms. no things, “given opportuni- Judge Svetanoff that “the al- concluded ty study to read or the enrollment form fraud, the leged which have affected presented,” “given op- no BMC enforceability provisions of the arbitration attorney to have an review the portunity Agreement, contained the Enrollment form,” not enrollment “did know affect the enforcement of the does not not made aware that words on the [were] Agreement Arbitration that con- separate give away right said students the to back representations alleged tained none of the discovery,” conduct “did not know what by plaintiffs the to have been false and meant,” know, discovery the term “did not separate Ar- Accordingly fraudulent. aware, that words on not made [were] Agreements bitration are enforceable as to ” away give right the back said students them.... Id. all who executed their claims with each other to combine at 18. action,” in a against BMC class and “did plaintiffs sought The leave to file this not know not made aware that [were] interlocutory appeal. The trial court words on the back said students were be- certification, granted accepted ju- and we ing give away right asked to to have a risdiction.
jury dispute hear a with BMC.” Id. at Discussion and Decision The claim that the trial court R. Original judge trial John Pera issued by granting Mackie’s motion erred denying an order Brown Mackie’s motion compel pur- arbitration. Brown Mackie compel arbitration. Pera found ports “cross-appeal,” attacking the ra- allege that the “Plaintiffs that the school is tionale of the trial court’s order. accredited, Agreement not whereas the ex- I. Standard Review/Materials Indeed, plicitly states otherwise. Plain- Appeal Reviewable on claim addresses the actual contents of tiffs’ Therefore, an appeal document. because This is an from order arbitration, compelling of the which we review de grounds Agree- for the revocation Sec., Philip rel. Mor- Tinder v. novo. State ex Carter Pinkerton 305 F.3d Co., (7th Cir.2002); ris Tobacco 1214-15 735 4 Am.Jur.2d Alterna- denied, reh’g trans. de- (Ind.Ct.App.2008), (2007); § tive Dispute Resolution see nied. also Ind. Trial Rule 56. one jurisdic- As explains, tion “A motion to compel arbitra- preliminary parties A issue raised analogous tion is to a motion for summary compel is how motions to arbitration are judgment. party seeking to compel procedurally, and what materi- approached proving arbitration has the burden of subject plain- als are to our review. The calling existence a contract for arbitra- in opposition tiffs offered affidavits ... tion. After a compel motion to arbitra- Brown Mackie’s motion to arbitra- compel tion supported, has been made and tion. Brown Mackie maintains that a mo- burden is on the non-movant to present compel just tion is treated supposed evidence that dismiss, like a motion to and that in resolv- agreement is not valid or does not apply to case, we are confined to the ing plead- this dispute question.” The Dunes written contractual ings and instrument. GP, Bradford, L.L.C v. 966 So.2d 9.2,12. See Ind. Trial Rules (Ala.2007) (quotations and citations omit- Though often associated with motions to ted). dismiss, motions to arbitration are procedural distinct mechanisms. Tam that, We follow suit Cf. and conclude Prods., Roofing ko Inc. v. Dilloway, 865 parties like opposing motions for summary (“Due N.E.2d 1078 (Ind.Ct.App.2007) judgment, parties opposing motions to *6 to the fact that Tamko’s oral motion to compel may designate arbitration rely and upon dismiss was based its contention that beyond on pleadings evidence and required litigation, arbitration was before written contractual instruments. So for we satisfactorily view the motion more as a case, purposes of this plaintiffs’ affida arbitration.”); compel motion to Roddie v. vit testimony was and is appropriate for Homes, Inc., N. Am. 851 Manufactured consideration. 1281, (“Be N.E.2d 1284 (Ind.Ct.App.2006) cause NAMH’s motion to dismiss was II. The Federal Arbitration Act upon based its contention that arbitration The pro Federal Arbitration Act required was, was litigation, before it in vides, provision “A written in ... a con arbitration.”). essence, a compel motion to evidencing tract involving transaction a point comparison, As of the denial of a by commerce to settle arbitration a contro compel motion to appealable arbitration is versy thereafter arising out of such con § as a matter of right, Ind.Code 34-57-2- valid, irrevocable, ... tract shall be 19(a)(1); Mgmt., Int’l Creative Inc. v. D & enforceable, upon grounds save such as Co., Inc., 1305, R Entm’t 1310 equity exist at law or in for the revocation denied, reh’g (Ind.Ct.App.1996), trans. de (2006); § contract.” 9 U.S.C. nied, whereas the denial of a motion to § accord Ind.Code 34-57-2-1. Where a necessarily appeal- dismiss is not a final seeks to party compel pursuant arbitration order, 2(H); Appellate able see Ind. Rule to a written arbitration agreement, then Stinnett, Nw. Mut. Ins. v. Co. Life “upon being making satisfied that the (Ind.Ct.App.1998). N.E.2d for arbitration or the fail issue, comply hold that motions to ure to therewith is not Authorities are procedurally directing arbitration akin to court shall make an order See, summary judgment. e.g., parties proceed motions for to arbitration in accor- als, that “You provide duplicate which agreement.” of the with the terms dance College-MV agree § Brown Mackie 4; 34-57-2- § accord Ind.Code 9 U.S.C. you or claim between any dispute written arbitration applies 3. The FAA arising ... out of or involving relating interstate BMC to this in contracts provisions § enrollment ... commerce, and creates whether such 9 U.S.C. before, applicable dispute during, law in both arises your or after body of substantive courts, Corp. attendance and whether the dispute state Southland is federal and 1, 12, tort, statute, on 465 U.S. 104 S.Ct. based or other- Keating, v. (1984). wise, be, election, at your shall or BMC[’s] L.Ed.2d by to and resolved submitted individual enacted the FAA to Congress arbitration.” These arbitration binding resistance to arbitration judicial overcome writing, are signed clauses are policy favoring a national and to declare appear on their face to be plaintiffs, and parties of claims that contract arbitration provisions contemplating enforceable arbi- that manner. Vaden Discov to settle in present plaintiffs’ dispute. tration of the 1262, 1271, Bank, er 556 U.S. The Plaintiffs’ Defenses IY. (2009). FAA places The 173 L.Ed.2d equal footing on an agreements primary The advance two de- requires contracts and courts to with other operation fenses to avoid of the arbitration according to their terms. enforce them clauses. Sci, Inc. v. Bd. Volt Info. Tr. of Leland A. Fraudulent Inducement Univ., 468, 478, 489 U.S. Junior
Stanford
principal claim one of
(1989).
v.
Concrete
through
party
when a
is induced
fraudu
(Ind.2004).
901, 906
802 N.E.2d
lent
to enter
into a
misrepresentations
Litho,
Lightning
contract.
Inc. v. Danka
III. The Parties’ Arbitration
(Ind.
Indus., Inc.,
1238, 1241
776 N.E.2d
Agreement
Ct.App.2002).
party’s
“If a
manifestation
party seeking
A
to
arbitra
by
of assent is induced
either a fraudulent
tion first must demonstrate the existence
misrepresentation by
or a material
an enforceable arbitration
of
which the
party upon
recipient
other
disputed
type
and that the
matter is the
of
justified
relying,
the contract is voidable
parties agreed
claim that the
to arbitrate.
(Second)
by
recipient.”
Restatement
Franklin,
Chrysler Corp.
Daimler
v.
164(1) (1981).
§
of
Fraudulent
Contracts
(Ind.Ct.App.2004).
N.E.2d
prevent
inducement does not
the formation
burden,
but it
satisfy
altogether,
To
its
Brown Mackie of a contract
does render
Id. at cmt. a.
tendered the
enrollment materi-
the contract “voidable.”
Unconscionability
B.
If a party challenges
validity
arbitrate,
of the precise agreement to
have also set forth
allega-
court
challenge
must address the
before
tions that their enrollment
are
ordering compliance
agreement,
with that
“unconscionable.” The
claim
id.,
challenge
validity
whereas “a
to the
“given papers
sign upon
whole,
the contract
specifical
as
and not
registering with Brown Mackie to enroll
clause,
ly to the arbitration
go
must
to the
Technology program
...
Surgical
but
Buckeye
arbitrator.”
Cashing,
Check
Inc.
not
an opportunity
offered
to read
440, 449,
Cardegna,
v.
546 U.S.
nor
the entire
invited to discuss
(2006).
1204, 163L.Ed.2d 1038
provisions.”
Br.
Appellants’ Reply
p.
its
8-9.
example,
For
“if the claim is fraud
in the inducement of the arbitration clause
A contract is
if
unconscionable
itself—an
goes
‘making’
issue which
disparity
great
bargaining power ex
of the agreement
to arbitrate —-the [ ]
parties,
ists between the
such that
may proceed
court
adjudicate
it. But
party
sign
weaker
is made to
a contract
statutory
language
[FAA’s]
does not
unwillingly
being
or without
aware of its
permit the
court to
[ ]
consider claims of
v.
terms.
Castleton Health Care
Sanford
fraud in the inducement of the contract
Ctr., LLC,
(Ind.Ct.
generally.”
Corp.
Prima Paint
&
Flood
denied,
App.2004), reh’g
trans. dismissed.
Co.,
395, 403-04,
Mfg.
Conklin
388 U.S.
“If a contract or term thereof is uncon
(1967).
S.Ct.
The affidavit margin and him. Id. repay on Client ing unconscionability unavailing. is further man agreed to borrow the funds “given claim that Manager presented ner. Id. client with study the enroll- opportunity no read or form Agreement” broker’s “Customer’s form,” “given no opportunity ment a loan represented that it was docu attorney the enrollment have an review *9 2, it ment. Id. at 3. Client did not read form,” not made “did not know and [were] necessary follow but believed it was “to aware that words on the back said stu- money.” Id. at 2. through getting the away give right dents the to conduct dis- requir a clause agreement contained covery,” not and not “did know [were] disputes arising arbitration of while ing the made aware that words on back said give away represented broker client. Id. After client being students asked broker right jury dispute agreement, to have a hear a executed the customer manager allegedly began a. “In trading such a case there is no effective money speculative client’s stocks and manifestation of assent and no contract at follows, however, only all.” Id. “This result options, amassing sizable commissions and if misrepresentation losses, very relates to the all without Id. client’s consent. proposed nature of the contract itself and Client closed her account and filed suit. merely not to one of its nonessential stay Id. Broker moved to the proceedings Id.; terms.” see Novotny also v. Renewal arbitration, pending which motion the trial by Corp., Andersen 21 n. 6 court denied. Id. The issue presented (“[I]n (Ind.Ct.App.2007) Hilligoss, “(a) manager’s whether obtaining of fraud went to the actual contents of the signature client’s on broker’s customer’s contract, and the facts regarding the con- (b) fraud, so, agreement constituted if tract, which included the it did void the contract?” Id. at 3. The clause, misstated.”). trial court found that manager procured signature agree- client’s to the customer understood, When so Hilligoss accords “by ment representing it as a loan docu- with the weight authority of finding fraud- ment, signing of which formality was a in-the-execution claims non-arbitrable. See, for a receipt light e.g., loan.... In Cancanon v. Barney [man- Smith Har- Co., (11th Upham ris & ager’s] understanding of all that the 805 F.2d cus- Cir.1986) (“[W]here for, agreement provided allegation tomer is one repre- factum, i.e., fraud ineffective assent sent it as a loan document is a fraudulent contract, to the subject the issue is not misrepresentation goes very resolution pursuant to an arbitration nature of the document itself.” Id. This clause contained in the contract docu- Court found substantial support- evidence ments.”); Rosenthal v. Great W. Fin. Sec. ing the trial court’s conclusion and af- Corp., 14 Cal.Rptr.2d 875, Cal.4th firmed. Id. in part We noted that “to (1996) (where 926 P.2d par- “a knowingly misstate the contents of writ- ty’s apparent assent to a written contract ing and to purposely misstate facts which negated by is fraud in inception, there would cause the signing of the same is is simply no arbitration to be fraud.” Id. enforced”; parties cannot “have intended Hilligoss perhaps is best un arbitration under a contract wholly void derstood involving as case “fraud in the execution”); for fraud its 21 Richard A. execution” or “factum” rather than fraud Lord, (4th § Williston on Contracts 57:14 is, in the inducement. That a misrep “[i]f 2001) (“[T]he ed. defense of fraud in the resentation as to the character or essential execution of a contract be raised to proposed terms of a contract induces con attempt defeat an disputes arbitrate appears duct that to be a manifestation of contract.”); involving the see also Granite — assent one who neither knows nor has Teamsters, Rock v.Co. Int’l Bhd. of opportunity reasonable to know of the -, 2847, 2855-56, U.S. 130 S.Ct. character or essential pro terms of the (2010) (“[W]here L.Ed.2d 567 dispute posed his conduct is not effective formation, at issue concerns contract as a manifestation of assent.” Restate dispute decide.”); generally for courts to (Second) (1981). ment § of Contracts Buckeye, at 444 n. U.S.
“The party may (“The believe that he is not issue of the contract’s validity assenting contract or that he is is different from the issue whether any assenting to a contract entirely different alleged obligor between the *10 proposed concluded.”); from the contract.” obligee Id. at cmt. was ever Goebel v. Inc., agree- the enrollment challenges tiffs’ Toys, Brand & Marbles Blocks (“[A] 552, and (Ind.Ct.App.1991) ments would have been non-arbitrable N.E.2d 556-57 agree adjudication. arbitration He conclud- appropriate of whether an for question n ... is a ed, however, a question plaintiffs’ for that the execution ment ever was made denied; court.”), Alan reh’g compelled 13D Charles ar- separate of arbitration forms al., Practice and Proce Wright purports et Federal Brown Mackie bitration. 2008) (“An (3d argument § 3569 ed. “cross-appeal” Judge dure the rationale of Sve- any of con attacking very the existence that argues tanoff s order. Brown court.”). be determined the tract is to whether or not the “it makes no difference Assocs., Inc. v. R.M. Perez & But see Separate Arbitration signed Students (5th Cir.1992) Welch, 960 F.2d us to find “that the Agreement” and asks between claims of (drawing no distinction Agreements, in addition to the Enrollment in the and claims of fraud fraud execution Agreements, signed Separate Arbitration for of arbitra- purposes in the inducement mandate that the Students’ by all Students Emp. Fed. v. bility); C.B.S. Credit Union Ap- claims be submitted to arbitration.” Donaldson, Corp., & Sec. Jenrette pellee’s p.Br. Lufkin Cir.1990) (6th (same). 912 F.2d party appeal “A cannot from a Here, hand, on the the other to him.” v. judgment favorable Clark allegations have advanced no substantive (Ind.1914). Stout, 569, 569 One 105 N.E. in of fraud the execution so as show appeal judgment in his favor un cannot ineffective assent and failure to form an aggrieved he is in some manner there less simply There no clandes- agreement. was Co., by. Beverage Indianapo Nehi Inc. of comparable tine substitution-of-terms Petri, (Ind.Ct.App. v. lis shenanigans by Brown Mackie this case. denied; 1989), v. trans. Givan United contrary suggestion, And Pera’s States, 425, 427, 133 N.E.2d Ind.App. alleged the fact that Brown Mackie’s mis- (1956); see also Roo California appears on representation of accreditation 307, 311, ney, 483 U.S. agreement does not convert the enrollment (1987) (“This reviews L.Ed.2d 258 Court involving case into one fraud in the this opinions.... not statements in judgments, actually the contract. It does execution of Here, the judgment Appeal Court plaintiffs’ opposite supports and favor The fact entirely the State’s is, fraudulent inducement claim—that reached Appeal that the Court of its deci ac- agreement’s enrollment statement of through analysis sion different than this very representation creditation is the make it might have used does not Court un- recognized, claim to have ... appropriate prevailing party for derstood, executing when and relied on request us to review it.... Court of them contracts. analysis have Appeal’s use of reasons, grounds on the For these and long-term been adverse to the State’s in supra, defenses articulated not allow the State to claim terests does exclusively sound in fraudulent inducement losing party purposes status as a for unconscionability are insufficient cita (quotations this review.” Court’s provisions to circumvent omitted)). tions their enrollment materials. “Cross-Appeal” VII. Brown Mackie’s granted order Judge Svetanoffs request Mackie’s for arbitration Judge Svetanoff found that without forms, respect plaintiffs subject to this plain- supplemental *11 materials, appeal. judgment entirely vertising that “accredita- pertained Brown Mackie’s favor as it allegedly tion” was insufficient to allow plaintiffs before us. Brown Mackie graduates to take required exam for cross-appeal only thus cannot order surgical technology certification. Indiana reasoning. the trial assail court’s Presum- here, likely hornswoggled residents ably, Brown Mackie desires to broaden and I am powerless frustrated we are ruling compels Svetanoff s so that it to intervene. I must trust that an arbitra- belonging arbitration of claims to other fairly will tor consider the students’ claims. student who not have exe- I fully, concur but grudgingly. separate cuted arbitration forms. Those other student are not parties to appeal parties
this and were not made supposed cross-appeal.
Brown Mackie’s
Brown Mackie even admits that “this
Court should consider the order appealed it pertains Brumley
from as Stu- only.” Appellee’s p.
dents Br. 4 n. 4. So to Tywan GRIFFIN, Appellant- requests the extent Brown Mackie D. we Defendant, prune Judge Svetanoff s order to the detri- ment of non-parties, necessarily we de- cline. Indiana, Appellee-Plaintiff. STATE of The order of the trial court compelling No. 49A02-1007-CR-774. arbitration is affirmed. Affirmed. Appeals Court of of Indiana. BAKER, J., concurs. March BARNES, J., concurs with separate
opinion.
BARNES, Judge, concurring.
I concur in full with the majority opin- I
ion. do so because it is clear to me that Supreme precedent,
United States Court Rent-A-Center,
such as Prima Paint
compels this outcome. I have argu- no provisions
ment with arbitration se. per contracts,
Parties often include them in law are free to so. do recognize
I allegations that the students’ are, Still, point, unproven.
here at this if
true, plainly it evident that Brown at disingenuous best was in its
advertising, actively and at worst was dis- in touting surgical technology
honest
degree it Although offered. Brown Mack- trumpeted
ie being “accredited” in its ad-