Arbitration fought Default and Default Won

In PCG v. Restoration Specialists, the court of appeals had to address an issue of appealing a default judgment and a motion to compel arbitration.

In a nutshell, PCG served a complaint on Restoration, and Restoration did not answer within 30 days. PCG then filed an affidavit of default, and the circuit court granted the entry of default. The circuit court sent the case to the master in equity for final judgment. Restoration filed a motion to set aside the entry of default and also filed a motion to compel arbitration. Both motions were denied by the master. A final judgment has not yet been entered.

The issue for the court is whether Restoration has an appealable issue or if this issue is currently interlocutory. The reason that the case is in a gray area is because there are two ideas butting up against one another:

• "The denial of a motion to set aside an entry of default is not appealable until after final judgment."

• "Under Section 15-48-200, an appeal may be taken from an order denying an application to compel arbitration."

So which one controls?

The court says default wins.

Because Restoration failed to answer the complaint, they are in default and have conceded liability. Thus, there is no issue to arbitrate. The court held that it wouldn't be fair or following public policy to allow a defaulting party to compel arbitration at any time they would like:

For good measure, the court seems to also address some of the substance of the appeal. They hold that a party in default has effectively waived their right to arbitration: