The Subrogation Strategist

In Taylor Building Corp. of America v. Milton, No. 25A-PL-1290, 2025 Ind. App. LEXIS 367, homeowners Brett and Amanda Milton (collectively, the Miltons) contracted with Taylor Building Corp. (Taylor) to construct a home. The agreement required disputes to be resolved first through mediation using the American Arbitration Association (AAA) and, if unsuccessful, through mandatory arbitration. The issue centered on whether the trial court erred in denying Taylor’s motion to compel mediation and arbitration after the Miltons filed suit, under the construction agreement.

Following construction of the residence in August 2023, the Miltons sent a letter to Taylor notifying it of multiple alleged construction defects. The Miltons claimed that Taylor never responded. After retaining counsel and sending a second letter, the Miltons stated that Taylor threatened to stop construction and also failed to cure the defects. In January 2025, the Miltons filed suit, bypassing the mediation requirement. They asserted breach of contract, negligence, warranty, nuisance, and fraud in their complaint. Taylor moved to compel mediation and arbitration, and the trial court denied the motion. Taylor appealed the decision.

The appellate court reversed and remanded, directing the trial court to enforce the dispute resolution provisions. In its ruling, the appellate court noted that Indiana favors mediation and arbitration clauses within contracts. The language within the construction contract specifically stated that the parties “shall endeavor” to attempt mediation, which meant that mediation was not optional. In its analysis, the appellate court further noted that claims related to construction defects fell squarely within the construction agreement’s “broad” arbitration clause.

The Miltons argued that Taylor waived its right to mediation/arbitration by failing to respond to their letters notifying it of the supposed construction defects. The court dismissed this argument, stating that Indiana’s construction defect statute pertaining to notice does not override contractual mediation/arbitration provisions.

This ruling should serve as a reminder to subrogation professionals that, in Indiana, courts will uphold mediation and arbitration provisions in instances involving construction contracts.