Am. Bankers Ins. Co. of Fla. v. Tellis
| Decision Date | 26 June 2015 |
| Docket Number | 1131384,1131244,1131514,1131264,1131245 |
| Citation | 192 So.3d 386 |
| Court | Alabama Supreme Court |
| Parties | AMERICAN BANKERS INSURANCE COMPANY OF FLORIDA v. Gladys TELLIS. American Bankers Insurance Company of Florida v. Sherry Bronson. American Bankers Insurance Company of Florida v. Gwendolyn Moody. American Bankers Insurance Company of Florida v. Nadine Ivy. American Bankers Insurance Company of Florida v. Uneeda Trammell. |
S. Andrew Kelly, Charles T. Greene, and Nikaa Jordan of Lightfoot, Franklin & White LLC, Birmingham, for appellant.
Ted L. Mann of Mann & Potter, P.C., Birmingham, for appellees.
STUART
, Justice.
Gladys Tellis, Sherry Bronson, Gwendolyn Moody, Nadine Ivy, and Uneeda Trammell (hereinafter referred to collectively as “the policyholders”) initiated separate actions against American Bankers Insurance Company of Florida (“American Bankers”), asserting generally that American Bankers had sold them homeowner's insurance policies providing a level of coverage they could never receive, even in the event of a total loss involving the covered property. American Bankers thereafter moved the trial court hearing each action to compel arbitration pursuant to arbitration provisions it alleged were part of the subject policies; however, the trial courts denied those motions, and American Bankers now appeals. We consolidated the five appeals for the purpose of writing one opinion. We reverse and remand.
The facts underlying each of these five consolidated appeals are substantially identical. Sometime in 2012 or 2013 each of the policyholders renewed a homeowner's insurance policy he or she had previously obtained from American Bankers. Thereafter, each concluded that he or she was paying excessive premiums inasmuch as the policies provided a level of coverage that allegedly far exceeded the value of the covered properties; in other words, the policyholders allege that they were overinsured inasmuch as they could never receive the policy limits even if the covered property was declared a total loss. In February 2014, the policyholders separately sued American Bankers, alleging breach of contract, several species of fraud, unjust enrichment, and negligence and/or wantonness.
American Bankers thereafter moved the trial courts in which these actions were filed—the Bullock Circuit Court, the Chambers Circuit Court, and the Macon Circuit Court—to compel arbitration pursuant to the following arbitration provision it alleged was contained in the policyholders' policies:
The policyholders opposed the motions to compel arbitration, arguing that they had never consented to arbitrate their claims, that they had not signed any documents containing an arbitration provision, and that the arbitration provision in the policies was unconscionable. The trial courts thereafter denied each of American Bankers' motions to compel arbitration, and American Bankers separately appealed those denials to this Court pursuant to Rule 4(d), Ala. R.App. P
. This Court consolidated the appeals based on the similarity of the facts and the issues presented.
Our standard of review of a ruling denying a motion to compel arbitration is well settled:
“ ‘This Court reviews de novo the denial of a motion to compel arbitration. Parkway Dodge, Inc. v. Yarbrough, 779 So.2d 1205 (Ala.2000)
. A motion to compel arbitration is analogous to a motion for a summary judgment. TranSouth Fin. Corp. v. Bell, 739 So.2d 1110, 1114 (Ala.1999). The party seeking to compel arbitration has the burden of proving the existence of a contract calling for arbitration and proving that the contract evidences a transaction affecting interstate commerce. Id. “[A]fter a motion to compel arbitration has been made and supported, the burden is on the non-movant to present evidence that the supposed arbitration agreement is not valid or does not apply to the dispute in question.” Jim Burke Automotive, Inc. v. Beavers, 674 So.2d 1260, 1265 n. 1 (Ala.1995) ().’ ”
Elizabeth Homes, L.L.C. v. Gantt, 882 So.2d 313, 315 (Ala.2003)
(quoting Fleetwood Enters., Inc. v. Bruno, 784 So.2d 277, 280 (Ala.2000) ).
In order to answer the ultimate question in these cases—whether the trial courts erred in denying American Bankers' motions to compel arbitration—we must address three issues: (1) whether the parties agreed to arbitrate the claims asserted in the policyholders' complaints; (2) whether the underlying transactions, i.e., the sale of the insurance policies, affected interstate commerce; and (3) whether the arbitration provision in the subject policies is unconscionable. With regard to the first issue, American Bankers submitted to the respective trial courts a copy of the policy allegedly issued to each of the policyholders. Included as part of those policies are basically two forms referencing arbitration: form AJ9821EPC–0608 and form N1961–0798.1 Form AJ9821EPC–0608 is entitled “Arbitration Provision Alabama” and contains a general arbitration provision, part of which is quoted above. Form N1961–0798 is entitled “Important notice about the policy/certificate of insurance for which you have applied” and explains generally what arbitration is and states that the policy contains a binding arbitration agreement pursuant to which the insured and the insurer waive the right to trial in a court of law. Although form N1961–0798 contains a signature line for the applicant, a co-applicant, and a witness, it is undisputed that none of the policyholders executed this form. The policyholders have further executed affidavits swearing that they never received or signed either form—or any other document related to their American Bankers' policies purporting to be an arbitration provision—when applying for insurance or at anytime thereafter until the commencement of this litigation. They further state that they never would have purchased coverage from American Bankers had they been presented with the arbitration provision American Bankers now seeks to enforce.
American Bankers concedes that the policyholders never signed form N1961–0798 or separate arbitration agreements, but it argues that they nevertheless assented to the arbitration provision in their policies. In support of its argument that an arbitration provision in an insurance policy can be effective even if not disclosed in the application and even without the insured's signature, American Bankers cites Southern United Fire Insurance Co. v. Howard, 775 So.2d 156, 162–63 (Ala.2000)
, which provides:
and 8–9–2, nor is it made contingent upon the condition precedent that it be signed by [the plaintiff]. [The plaintiff] accepted and acted upon [the defendant's] insurance policy, which contained the arbitration provision, by paying premiums, renewing the policy, and submitting a claim under the policy. Therefore, because [the plaintiff] ratified the policy, the absence of his signature does not render the policy, or the arbitration provision contained in it, unenforceable.”
(Footnote omitted.) American Bankers similarly maintains that the policyholders have manifested their assent to arbitration in these cases by accepting and acting upon the insurance policies containing the arbitration provision.
Our caselaw supports American Bankers' position. Beyond Howard, this Court has considered multiple other appeals in which parties have sought to avoid arbitration provisions in insurance policies by claiming that the arbitration provisions were not disclosed to them or that they never received a copy of the policy containing the arbitration provision. In Ex parte Rager, 712 So.2d 333, 335 (Ala.1998)
, the plaintiffs argued that they never agreed to arbitrate their claims because their application for insurance did not mention arbitration and because they did not sign the endorsement attached to the policy that contained the arbitration clause. This Court rejected those arguments, noting that “[m]any parts of an insurance policy are not mentioned in the application” and explaining...
To continue reading
Request your trial