Justia Arbitration & Mediation Opinion Summaries

This appeal arose from fourteen lawsuits brought by various plaintiffs against (1) Laura Willis, an insurance agent; (2) Jesse Dantice, the insurance broker who hired Willis and made her the agent in charge of the insurance office; (3) their insurance agency, Southern Risk Insurance Services, LLC (Southern Risk), and (4) six insurance companies for which their office sold policies (the Insurers). The plaintiffs in the lawsuits were Willis's customers (the Insureds) and other insurance agents (the Agents) in competition with Willis and Southern Risk. The Insureds filed twelve of the lawsuits, asserting claims against Willis, Dantice, and Southern Risk for, inter alia, violations of the Unfair Trade Practices Act (UTPA), common law unfair trade practices, fraud, and conversion. They also named the Insurers as defendants on a respondeat superior theory of liability for failing to adequately supervise or audit Willis and Southern Risk. The question before the South Carolina Supreme Court was whether arbitration should have been enforced against nonsignatories to a contract containing an arbitration clause. The circuit court denied the motion to compel arbitration. The court of appeals reversed and remanded, holding equitable estoppel was applicable to enforce arbitration against the nonsignatories. The Supreme Court reversed and remanded, finding the circuit court properly denied the motion to compel arbitration. View "Wilson v. Willis" on Justia Law

After its workers’ compensation insurance premiums rapidly increased, Jackpot believed that Applied Underwriters had mishandled its claims and had wrongfully failed to disclose how it calculated premiums. Jackpot filed suit. Applied sought to compel arbitration based on the arbitration agreement contained in a Request to Bind. Jackpot argued that the arbitration agreement was invalid. Applied contended that, under the Federal Arbitration Act, only the arbitrator could decide the threshold question of whether the arbitration agreement was enforceable. The trial court held that the arbitration agreement was invalid. The court of appeal affirmed. In light of Jackson’s specific arguments that the arbitration provision was unenforceable due to fraud, ambiguity, and unconscionability, the trial court was obligated to consider its validity. Allied violated California law in issuing the Request to Bind without first submitting it for regulatory approval. The policy does not provide for arbitration but allows for administrative review by the Insurance Commissioner for certain disputes and otherwise leaves Jackpot’s rights to judicial review intact. The Request to Bind’s arbitration agreement, which compels arbitration in Nebraska for a wide array of disputes, materially changes the policy's dispute-resolution terms and constituted “a collateral agreement that should have been filed and endorsed to the Policy” under Insurance Code section 11658. View "Jackpot Harvesting, Inc. v. Applied Underwriters, Inc." on Justia Law

Defendant appealed the district court's vacatur of the arbitration award plaintiff received against his insurer, Great American, for wrongfully denying his claim for damage to his corn crop. The court vacated and remanded for further proceedings, holding that vacatur of the arbitration award was improper because the arbitrators rendered a sufficiently mutual, final, and definite award. The court held that the arbitration panel's failure to break down the award by county did not mean that it was so imperfectly executed such that it rendered no mutual, final, and definite award. The court also found that the panel's written explanation for the award amount was adequate. View "Great American Insurance Co. v. Russell" on Justia Law

The employer, Luxor Cabs, obtained workers' compensation insurance through AUCRA under an EquityComp program. The EquityComp workers’ compensation insurance program has garnered nationwide attention from administrative agencies and judicial tribunals. In 2016, the California Insurance Commissioner issued an administrative decision concluding that the EquityComp program violated state insurance laws and that the reinsurance participation agreement (RPA) between AUCRA and the insured employer, in that case, was void as a matter of law. In 2018, the Fourth Appellate District came to a similar decision in a case essentially identical to this one involving arbitrability under an RPA. Luxor, unhappy with AUCRA's handling of claims, filed suit. The court of appeal affirmed the denial of AUCRA’s motion to compel arbitration pursuant to the terms of an RPA between an employer, Luxor Cabs, and AUCRA. The trial court properly rejected an argument that the validity of the arbitration clause should, itself, have been referred to arbitration in accordance with the RPA’s “delegation clause.” Both the delegation clause and the arbitration provision in the RPA were void and unenforceable because they each separately constituted an “endorsement” to the Policy which was not properly vetted and approved as required by Insurance Code section 11658. View "Luxor Cabs, Inc. v. Applied Underwriters Captive Risk Assurance Co." on Justia Law

The lower courts in this case erred by requiring a signatory to arbitrate its non-contractual claims against non-signatories.Jody James Farms, JV purchased a crop revenue coverage insurance policy from Rain & Hail, LLC through the Altman Group. The insurance policy contained an arbitration clause. Neither the Altman Group nor any of its employees signed the agreement. After Rain & Hail denied coverage for a grain sorghum crop loss suffered by Jody James and the parties arbitrated the dispute, Jody James sued the Altman Group and its agent (collectively, the Agency) for breach of fiduciary duty and deceptive trade practices. The Agency successfully moved to compel arbitration under the insurance policy. At arbitration, Jody James asserted that it had a right to proceed in court against the Agency because the Agency was a non-signatory to the arbitration agreement. The arbitrator resolved that issue and the merits of the dispute in the Agency’s favor. The trial court confirmed the award. The court of appeals affirmed. The Supreme Court reversed because (1) Jody James and the Agency did not agree to arbitrate any matter; and (2) Jody James may not be compelled to arbitrate under agency, third-party-beneficiary, or estoppel theories. View "Jody James Farms, JV v. Altman Group, Inc." on Justia Law

Nielsen Contracting, Inc. and T&M Framing, Inc. (collectively Nielsen) sued several entities (defendants) alleging these entities fraudulently provided workers' compensation policies to Nielsen that were illegal and contained unconscionable terms. Defendants moved to compel arbitration and stay the litigation under an arbitration provision in one defendant's contract, titled Reinsurance Participation Agreement (RPA). Nielsen opposed the motion, asserting the arbitration provision and the provision's delegation clause were unlawful and void. After briefing and a hearing, the trial court agreed and denied defendants' motion. Defendants appealed, arguing: (1) the arbitrator, and not the court, should decide the validity of the RPA's arbitration agreement under the agreement's delegation clause; and (2) if the court properly determined it was the appropriate entity to decide the validity of the delegation and arbitration provisions, the court erred in concluding these provisions are not enforceable. The Court of Appeal rejected these contentions and affirmed. View "Nielsen Contracting, Inc. v. Applied Underwriters, Inc." on Justia Law

The Court of Appeal affirmed the trial court's order denying defendants' petition to compel arbitration of a dispute with plaintiffs. The court held that the threshold issue of whether the Federal Arbitration Act (FAA), 9 U.S.C. 1-16, applies or is preempted by the McCarran-Ferguson Act, 15 U.S.C. 1001-1015, and section 25- 2602.01(f) of the Nebraska Uniform Arbitration Act (NUAA) was for the court, and not the arbitrator, to decide; the trial court did not err by concluding that section 25-2602.01(f) of the NUAA is a statute that regulates the business of insurance within the meaning of the McCarran-Ferguson Act; application of the FAA would operate to invalidate or impair section 25-2602.01(f) of the NUAA; the trial court did not err by concluding that the McCarran-Ferguson Act applies and reverse preempts the FAA; section 25-2602.01(f) of the NUAA applies to the Reinsurance Participation Agreement (RPA) and renders the arbitration provision contained in the RPA unenforceable; and thus the trial court did not err by denying the petition to compel arbitration. View "Citizens of Humanity v. Applied Underwriters" on Justia Law

The district court lacked jurisdiction to vacate an arbitration award under the Federal Arbitration Act (FAA).Matt Karo and Michael Karo obtained federally reinsured crop insurance policies serviced by NAU Country Insurance Company (NAU). The Karos submitted “prevented planting” claims under their crop insurance policies alleging that they were unable to plant corn on certain acres due to wet conditions. NAU denied the Karos’ prevented planting claims. The parties then submitted their disputes to binding arbitration pursuant to a mandatory arbitration clause in the crop insurance policies. The arbitrator denied coverage. The Karos then sought to vacate the arbitration award under section ten of the FAA. The district court vacated the arbitration award, finding that the arbitrator exceeded his powers and manifestly disregarded the law. The Supreme court vacated the district court’s judgment and dismissed this appeal for lack of jurisdiction, holding that the district court lacked jurisdiction to enter a judgment vacating the arbitration award under the FAA because the Karos failed to comply with the three-month notice requirement of section twelve of the FAA. View "Karo v. NAU Country Insurance Co." on Justia Law

The Fourth Circuit held that the district court correctly denied Applied Underwriters' motion to compel arbitration in a suit alleging that Applied Underwriters engaged in the business of insurance in Virginia without complying with Virginia insurance and workers' compensation laws. However, the court held that the district court reversibly erred in applying the doctrine of judicial estoppel to hold that the agreement between Applied Underwriters and plaintiff constituted an insurance contract for purposes of Virginia law. Therefore, the court affirmed in part, reversed in part, and remanded for further proceedings. View "Minnieland Private Day School v. Applied Underwriters Captive Risk Assurance Co." on Justia Law

Plaintiff Carmen Zubillaga was injured in an automobile accident. The other driver was at fault. Her insurer, defendant Allstate Indemnity Company (Allstate), rejected her demand for $35,000, the full amount of her remaining underinsured motorist (UIM) coverage, although it made her a series of offers increasing to $15,584 instead. After an arbitrator awarded plaintiff $35,000, the amount of her demand, she sued Allstate for breach of the implied covenant of good faith and fair dealing. While an insurance company has no obligation under the implied covenant of good faith to pay every claim its insured makes, the insurer cannot deny the claim, without fully investigating the grounds for its denial. To protect its insured’s contractual interest in security and peace of mind, it is essential that an insurer fully inquire into possible bases that might support the insured’s claim before denying it. The Court of Appeal found the problem in this case was that the undisputed facts showed the insurer’s opinions were rendered in October and November 2012, but insurer continued to rely on them through the arbitration in September 2013, without ever consulting with its expert again or conducting any further investigation. Summary judgment in favor of the insurer was reversed and the matter remanded for further proceedings. View "Zubillaga v. Allstate Indemnity Company" on Justia Law