Indiana Supreme Court: Natare Corp. v. DSI Case Analysis and Ruling

This case study analyzes the Indiana Supreme Court's decision in Natare Corporation v. D.S.I., Duraplastec Systems, Inc., Stewart J. Jason Mart, and Aquatic Renovation Systems, Inc. The case involves a dispute between competing businesses, Natare Corporation and the Appellee companies, stemming from a breach of a prior agreement not to disparage each other and to settle future disputes through arbitration. The case focuses on whether the arbitrator exceeded his powers under the Uniform Arbitration Act, particularly regarding attorney fees. The arbitrator awarded liquidated damages but denied attorney fees, leading Natare to challenge the decision. The trial court and the Court of Appeals had differing views. The Supreme Court of Indiana ultimately upheld the arbitrator's decision, finding that the arbitrator did not exceed his powers and that Natare was not entitled to relief under the Indiana Code. The case highlights the importance of arbitration agreements and the limited scope for modifying arbitration awards, establishing a precedent regarding the enforcement of such agreements and the implications of failing to submit attorney fees during arbitration proceedings.

NATARE CORPORATION V. D.S.I., DURAPLASTEC SYSTEMS, INC.,D.S.I.,
STEWART J. JASON MART AND AQUATIC RENOVATION SUSTEMS, INC., 855
N.E. 985 (2006)
Decision by the Supreme Court of Indiana
FACTS:
Natare Corporation and the Appellee companies are involved competing businesses. Upon
having settled two cases against each other in the year 1998, both agreed not to disseminate
disparaging information about each other. It was agreed that in the event of any dispute
arising between the companies in future, the matter will be referred to arbitration. Further,
they also agreed that in the case of breach of the terms, the breaching party would be liable to
pay a minimum amount of $ 5,000 to the non-breaching party as liquidated damages in
addition to other incidental expenses such as attorney fees and expenses incurred in settling
the dispute.
In 2002, Natare failed to win a contract from a potential client from Colorado, and alleged
that the Appellees caused disparagement. Therefore, arbitration was entered into by the
parties in which Natare sought a relief of $45,000 as actual damages. Arbitrator Jerry Pitt
awarded $ 5,000 as liquidated damages for establishing breach but not actual damages or
attorney fees.
Natare filed a petition at the trial court against the order of arbitrator Pitt specifically, in not
awarding attorney fees. The trial court denied relief to Natare. It held that neither did Natare
submit any attorney fees, nor had the arbitrator had not exceeded his power and that the
provisions under Indiana Law did not justify modification of the award.
Natare Corporation appealed in the Court of Appeals against the trial court decision. The
court reversed the decision of trial court and remanded the matter back to the arbitrator for
fresh consideration. Later, the transfer was granted and an appeal is sought against the order.
LEGAL QUESTION:
Whether the arbitrator has exceeded his powers granted under the provisions of Uniform
Arbitration Act, Indiana Code and whether modification or correction of the Arbitrator’s
award is permissible in the act. Is Natare entitled to relief by seeking attorney fees under
Section 34-57-2-13(a)-14(a) (Justicia US Law) of the Act?
DECISION:
Held, no, the arbitrator has not exceeded his power. Natare is not entitled to any relief for
modification or corrections under the provisions of the Act.
COURT’S RATIONALE:
While the act emphasises the limited scope to modify arbitration awards, Natare has, due to
his inadvertence not submitted the attorney fees. Hence, the arbitrator was right in granting

Zero as the reasonable fees. Judge Sullivan held that there are a number of “plausible
explanations for why the arbitrator could conclude that the reasonable amount of attorney
fees in this circumstance is zero”. (in.gov) As to whether Natare is entitled to relief under
Section 14(a) (2), in deciding whether the arbitrator awarded a matter not submitted, the
Court concurred with the decision of the trial court. It was held that the party was neither
entitled to an award of attorney fees nor was there a need to conduct further proceedings to
complete the arbitration. Therefore, in a majority ruling the court opined that Natare is not
entitled for any relief under the Indiana Code Section 34-57-2-14(a)(2).
DISSENTING OPINION: This is a majority decision and was concurred by Shepart, C.J.,
Dickson, Boehm and Rucker, J.J.
SIGNIFICANCE OF THE CASE:
This case establishes the precedent that although Arbitration is an effective means of dispute
resolution there is an equivocal voice in support of the enforcement of arbitration agreements.
This is a landmark decision given by the Indiana court that establishes the fact that the
arbitration award should not be set aside unless prescribed under the rules of the Act.
REFERENCES
in.gov. "in.gov/judiciary/opinions." 16 October 2016
<http://www.in.gov/judiciary/opinions/pdf/10310601fsj.pdf>.
Justicia US Law. 2011 Indiana Code, Chapter 2. Arbitration: Uniform Arbitration Act. 2016. 17
October 2016 <http://law.justia.com/codes/indiana/2011/title34/article57/chapter2>.
natare corporation v Dsi duraplastec. No. No. 49S05-0512-CV-637 . The Supreme Court of Indiana. 31
October 2006.
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