Insurance Disputes And Arbitration

Insurance lawyers will be looking to see what happens in a case taken up by the Texas Supreme Court.  The case is an appeal from the Amarillo Court of Appeals who had agreed with the trial court decision to compel arbitration.

This is a dispute between an insurance agency “The Altman” and Jody James Farms (JJF) and is a petition for review.

The conflict began in 2010 after JJF purchased a Crop Revenue Coverage Insurance Policy from Rain and Hail LLC.  Altman Group was the insurance agency which sold the insurance to JJF through Rain & Hail LLC.

The policy in dispute was issued for the 2010 crop year under the Federal Crop Insurance Act.

JJF suffered a loss on an insured grain and notified the Altman Group agent, Laurie Diaz.

Rain & Hail denied the claim, saying JJF had not submitted the claim in a timely manner.  An arbitrator upheld the denial of the claim.  This resulted in JJF suing Altman saying Altman violated the Texas Deceptive Trade Practices Act by not submitting the claim in time.

JJF argued that there was no arbitration agreement between the parties but the trial court sent the case to arbitration anyway.  After the arbitrator’s ruling in favor of Altman, the trial court made the final decision.

JJF asked the Texas Supreme Court to get involved in the dispute, saying the lower appelant court’s ruling “compelled arbitration between litigants who had no arbitration agreement.”

In the petition filed by JJF, it argued that “By its ruling, the Amarillo court has created a new road block in the path to resolution which drastically alters a party’s right to have its disputes adjudicated in court.”  “Without clarification of the distinction between compelling those who are signatories to arbitration agreements and those who are not, arbitrability of a dispute will become the only means of resolution with no fork in the path leading to the courthouse.”

The Amarillo court had agreed that an arbitrator would whether the conflict would be arbitrated.  The Court said “The arbitrator did not exceed his authority by resolving that question contrary to JJF’s position.”

Altman argued the Federal Crop Insurance Contract’s are different from other contracts.  Altman said “laws apply differently to FCIC situations.”

Altman asserts “When this special scenario is joined with a producer trying to sue an agent, the laws of arbitration, contract and the FCIC collide into a unique scenario that the trial and appellant courts and arbitrator correctly handled.”  Altman says ‘The claims asserted by JJF are within the scope of the arbitration clause because they involve factual determinations as set forth within the policy.”

The policy has a section that’s titled Mediation, Arbitration, Appeal, Reconsideration and Administrative and Judicial Review.

The section describes how different types of disputes between the parties can be resolved.

In the respondents brief on the merits, the court cited the policy which says “If (the insured) and (the insurer) fail to agree on any determination made by the insurer except those specified in Section 20(d), the disagreement may be resolved through mediation.”

If the resolution can’t be reached through mediation or the parties don’t agree to mediation, the policy says the disagreement must be solved through arbitration.

This case was set for argument on March 20, 2018.  A few months later a decision should be rendered.