Alabama Supreme Court Compels Non-Signatories to Arbitrate Homeowner Insurance Claims
08.10.15
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(Article from Insurance Law Alert, July/August 2015)
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The Supreme Court of Alabama ruled that homeowners were bound by an arbitration provision in their property policies even though they had not signed the arbitration forms and had allegedly not received notice of the arbitration requirement. Am. Bankers Ins. Co. of Fla. v. Tellis, 2015 WL 3935260 (Ala. June 26, 2015).
Several homeowners sued American Bankers, alleging breach of contract, negligence and fraud based on excessive premium charges. In each case, American Bankers moved to compel arbitration pursuant to an arbitration provision in the homeowners’ policies. The homeowners opposed the motions, arguing that they had not consented to arbitration. More specifically, the homeowners claimed that they had not received the two particular “forms” in the policies that expressly referenced arbitration. In addition, it was undisputed that none of the homeowners had signed the arbitration forms even though they contained a policyholder signature line. The trial courts denied American Bankers’ motions to compel arbitration. On appeal, the Alabama Supreme Court reversed.
The Alabama Supreme Court ruled that notwithstanding the absence of signed consent to the arbitration provision, the homeowners “manifested their assent to arbitration . . . by accepting and acting upon the insurance policies containing the arbitration provision.” The court further reasoned that even if the homeowners did not receive the particular forms that referenced arbitration, they presumably received the policy’s declarations page, which explicitly referenced the list of “forms and endorsements” that comprised the policy, including the two forms that contained the arbitration provision. The court held that the homeowners therefore “had some duty to investigate the contents of those forms.” In so ruling, the court noted that under Alabama law, a signature or express consent is not required to enforce an arbitration provision where the factual record establishes implied consent via the parties’ continued adherence to other contract terms.