In the case of Watts Water Technologies, Inc. v. State Farm Fire & Casualty Co. a/s/o Richard Lucka, Lucka sustained damage to his home for an alleged faulty water heater sold by Watts in November of 2014. Lucka was insured by State Farm Insurance and State Farm paid damages for the property damage to his home. At this time, both Watts Water and State Farm were under the Property Subrogation Arbitration Agreement which meant that the parties would submit their property claims to Arbitration Forums, Inc. in the event of an accident or dispute. On January 1, 2015, the Arbitration Agreement was amended to removed mandatory arbitration and replaced the clause with optional arbitration.

On July 23, 2015, State Farm filed suit against Watts Water alleging their water heater caused damage to Lucka’s home. State Farm paid damages to Lucka and sought to recover them against Watts. Watts Water filed a motion to dismiss the claim or in alternatively stay in the proceedings and compel arbitration. The trial court denied Watts’ motion and Watts would promptly appeal the decision.

When seeking to compel arbitration, the party has the burden of demonstration the existence of an enforceable arbitration agreement. The Indiana Court of Appeals held that since the claim was filed after the date in which the arbitration agreement was amended to remove mandatory arbitration and replace it with optional arbitration, State Farm Insurance was not compelled to submit the claim to arbitration. The Court affirmed the trial court’s order denying Watts Water’s motion to compel arbitration.

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