ARBITRATION UNDER KUAA: FISCHER V. MBNA AMERICA BANK, N.A. (COA 3/16/2007)

FISCHER V. MBNA AMERICA BANK, N.A.
ARBITRATION:  KUAA; no written agreement or court order  to arbitrate issue on appeal
2006-CA-000525
PUBLISHED: REVERSING AND REMANDING WITH DIRECTIONS; TAYLOR (SJ PAISLEY PARTICIPATING)
DATE RENDERED: 3/16/2007

This appeal addresses the interpretation and application of various provisions of the Kentucky Uniform Arbitration Act (KUAA) set forth in Kentucky Revised Statutes (KRS) 417.045 et seq.

Elaina Fischer appeals Jefferson Circuit Court order which had stricken Elaina’s Answer and Counterclaim in response to MBNA’s Petition and Application to Confirm and Enforce Arbitration Award pursuant to KRS 417.150 and KRS 417.180. COA reverses and remands with directions.

Elaina objected to the arbitration of the claim, asserting that there was no “written agreement” between the parties and as a result, Elaina could not be required to arbitrate the claim.

On August 12, 2004, the arbitrator from the NAF entered an award in favor of MBNA in the amount of $14,338.66. Elaina alleges that she did not participate in this arbitration proceeding since she had objected to the proceeding on the grounds that there did not exist a written agreement and that MBNA had failed to obtain a court order pursuant to KRS 417.060 to compel arbitration between the parties. MBNA then filed its Petition and Application To Confirm And Enforce Arbitration Award in the Jefferson Circuit Court which did not hear witnesses before entering judgment nor make any factual findings that would have been considered clearly erroneous.

Thus, the COA review was limited to questions of law which are reviewed de novo and legal conclusions made thereon by the circuit court will not be disturbed absent an abuse of discretion.

The COA did not find any written agreement between the parties to arbitrate the controversy now on appeal. In response to MBNA’s notice of its intention to arbitrate this dispute before the NAF, Elaina did file an objection and motion to dismiss on the grounds that there is in existence no “written agreement” between the parties allowing for, or requiring, arbitration and she could not be required to arbitrate the claim and declined to plead further in the NAF proceeding. This response clearly reflected Elaina’s refusal to arbitrate on the grounds that there did not exist a written agreement, which is mandatory for any party to proceed to arbitration under the KUAA.

In this case, MBNA did not proceed to court to obtain an order to arbitrate the dispute when placed upon notice that Elaina was challenging the proceeding on the ground that there existed no written agreement. The Jefferson Circuit Court failed to address this issue which is clearly reversible error under the KUAA and an abuse of discretion in our opinion. The circuit court erred in granting an Order of Judgment on the arbitration award.

Digested by Michael Stevens 

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