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ATTORNEYS FOR APPELLANT William Bock, III David E. Wright Indianapolis, Indiana

ATTORNEY FOR APPELLEES Brent D. Taylor Indianapolis, Indiana

______________________________________________________________________________

In the

Indiana Supreme Court
_________________________________ No. 49S05-0512-CV-637 NATARE CORPORATION, Appellant (Plaintiff below), v. D.S.I., DURAPLASTEC SYSTEMS, INC., D/B/A D.S.I., STEWART J. "JASON" MART, AND AQUATIC RENOVATION SYSTEMS, INC., Appellees (Defendants below). _________________________________ Appeal from the Marion Superior Court, No. 49D02-9704-CP-459 The Honorable Kenneth H. Johnson, Judge _________________________________ On Petition to Transfer from the Indiana Court of Appeals, No. 49A05-0408-CV-430 _________________________________ October 31, 2006 Sullivan, Justice.

Natare Corporation filed this lawsuit, contending that an arbitrator had wrongly denied it attorney fees to which it was entitled. Indiana law specifies limited bases upon which an arbitrator's award may be challenged in a trial court. We agree with the trial court that neither of the bases advanced by Natare is available to it here: the arbitrator did not exceed his authority in de-

nying Natare attorney fees, nor did he make his decision to deny Natare attorney fees before the attorney fee issue was presented to him.

Background

Appellant Natare Corporation and Appellees D.S.I., Duraplastec Systems, Inc., d/b/a D.S.I., Stewart J. "Jason" Mart, and Aquatic Renovation Systems, Inc. (collectively, "D.S.I.") compete against each other in business. They settled two pending lawsuits against each other in 1998 by agreeing not to disseminate disparaging information about each other. They also agreed to submit to arbitration in the event of a future dispute "arising out of or relating to" the agreement. Lastly, they agreed that if one party breached the settlement agreement, the non-breaching party would be entitled to a minimum of $5,000 in liquidated damages, actual damages if shown, and reasonable attorney fees, costs, and other expenses incurred in pursuit of the claim.

In 2002, Natare sought but failed to receive a contract from a potential customer in Colorado. Natare complained that it had lost the contract because of disparagement on D.S.I.'s part, and that it had suffered $45,000 in actual damages. The parties entered into arbitration based on their settlement agreement.

After a hearing, arbitrator Jerry Pitt found that although D.S.I. had breached its agreement with Natare by disparaging Natare while Natare was seeking the Colorado contract, Natare had failed to show actual damages. The arbitrator awarded Natare $5,000 in liquidated damages for the breach, but no actual damages. The arbitrator further found that neither party was entitled to attorney fees or costs in the matter.

Natare sought judicial review of the arbitrator's decision, specifically challenging the arbitrator's failure to grant Natare attorney fees. The trial court upheld the arbitration award, finding that the arbitrator had not exceeded his power and that Indiana law did not justify modification or correction of the award. The Court of Appeals reversed the trial court's decision, holding the arbitrator had indeed exceeded his authority, and remanded the case to the arbitrator for consideration of reasonable attorney fees. Natare Corp. v. D.S.I., Duraplastec Sys., Inc., 833 N.E.2d

2

76, 80-84 (Ind. Ct. App. 2005). D.S.I. sought, and we granted, transfer. Natare Corp. v. D.S.I., Duraplastec Sys., Inc., 841 N.E.2d 192 (Ind. 2005) (table).

Discussion

Arbitration is a long-established method of dispute resolution in Indiana. PSI Energy, Inc. v. AMAX, Inc., 644 N.E.2d 96, 98 (Ind. 1994). We have consistently supported an Indiana policy that favors both arbitration as a means of dispute resolution and the enforcement of arbitration agreements. MPACT Constr. Group, LLC v. Superior Concrete Constructors, Inc., 802 N.E.2d 901, 905 (Ind. 2004); PSI Energy, Inc., 644 N.E.2d at 98-99. But it is statute and not common law that provides the legal infrastructure for arbitration in Indiana. The Legislature's prescription in this regard is contained in the Uniform Arbitration Act ("the Act"), Indiana Code sections 34-57-2-1 to -22 (2005). 1 We have held that an arbitration award should not be set aside unless grounds specified in the Act have been shown, and appellate review of an arbitration award is limited to the determination of such a showing. Sch. City of E. Chi., Ind. v. E. Chi. Fed'n of Teachers, Local No. 511, A.F.T., 622 N.E.2d 166, 168 (Ind. 1993).

The statutory grounds on which Natare seeks attorney fees are sections 34-57-2-13(a) and 34-57-2-14(a) of the Act. They provide:

Upon application of a party, the court shall vacate an award where: (1) the award was procured by corruption or fraud; (2) there was evident partiality by an arbitrator appointed as a neutral or corruption in any of the arbitrators or misconduct prejudicing the rights of any party; (3) the arbitrators exceeded their powers and the award can not be corrected without affecting the merits of the decision upon the controversy submitted; (4) the arbitrators refused to postpone the hearing upon sufficient cause being shown therefor or refused to hear evidence
1

As its name suggests, the Indiana Uniform Arbitration Act is based on a national model developed by the National Conference of Commissioners on Uniform State Laws, an organization consisting of judges, law professors, and other legal experts from throughout the country, including Indiana. Many states have adopted the Uniform Arbitration Act. Prefatory Note to Uniform Arbitration Act, 7 U.L.A. 2 (2000). Among the advantages of uniformity is that the decisions of the courts in other adopting states are available to help us decide questions that arise under our Act. See I.C.

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