AUSTIN – In a dispute between insurance agency The Altman and Jody James Farms (JJF), the Texas Supreme Court has decided to grant JJF’s petition for review.
The Supreme Court’s Feb. 16 decision comes after Texas' 7th Court of Appeals looked at the insurance policy between the two parties and said a trial court correctly sent the claims to arbitration.
The conflict began in 2010 after JJF purchased a Crop Revenue Coverage Insurance Policy from Rain & Hail LLC. Altman Group was the insurance agency which sold the insurance to JJF through Rain & Hail LLC.
The policy was issued for the 2010 crop year under the Federal Crop Insurance Act.
Having suffered a loss on an insured grain, JJF said it notified the Altman Group agent, Laurie Diaz.
Rain & Hail denied the claim, saying it was not submitted in a timely manner. An arbitrator upheld the denial of the claim.
JJF then sued Altman saying it violated the Texas Deceptive Trade Practices Act by not submitting the claim in time.
A trial court sent the case to arbitration, but JJF argued that there was no arbitration agreement between the parties.
After the arbitrator ruled in favor of Altman, the trial court made the final decision accordingly.
JJF asked the Texas Supreme Court to get involved in the dispute, saying the lower appellate court's ruling “compelled arbitration between litigants who had no arbitration agreement.”
“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,” JJF said in its petition for review filed on Feb. 27, 2017. “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.”
In October 2016, the appellate court said JFF had agreed that an arbitrator would decide whether the conflict would be arbitrated.
“The arbitrator did not exceed his authority by resolving that question contrary to JJF's position,” the Court of Appeals of Texas, Amarillo said in its decision.
Altman made its argument, saying Federal Crop Insurance Contracts, such as the one with JJF, are different than other contracts. Altman said “laws apply differently to FCIC situations.”
“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 appellate courts and arbitrator correctly handled,” Altman said in the response to petition for review filed on July 24, 2017. “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 filed on Dec. 12, 2017, 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.
The Supreme Court set oral arguments in the case for March 20.