Auto Owners Insurance, Inc. v. Blackmon Insurance Agency, Inc.

99 So. 3d 1193, 2012 WL 677526, 2012 Ala. LEXIS 25
CourtSupreme Court of Alabama
DecidedMarch 2, 2012
Docket1100769
StatusPublished
Cited by11 cases

This text of 99 So. 3d 1193 (Auto Owners Insurance, Inc. v. Blackmon Insurance Agency, Inc.) is published on Counsel Stack Legal Research, covering Supreme Court of Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Auto Owners Insurance, Inc. v. Blackmon Insurance Agency, Inc., 99 So. 3d 1193, 2012 WL 677526, 2012 Ala. LEXIS 25 (Ala. 2012).

Opinion

MALONE, Chief Justice.

Auto Owners Insurance, Inc. (“Auto Owners”), appeals the denial by the Baldwin Circuit Court of its motion to dismiss or, in the alternative, to compel arbitration in an action against it filed by Blackmon Insurance Agency, Inc. (“Blackmon”). We reverse and remand.

Facts and Procedural History

The parties agree that in 1995 Black-mon, an Alabama insurance agency, and Auto Owners, an insurance company incorporated in Michigan, entered into an “agency agreement” authorizing Blackmon to act as an agent for the sale of Auto Owners’ insurance in Alabama (“the 1995 agreement”). The 1995 agreement, among other things, authorized Blackmon “to solicit and secure applications and to bind coverage, subject to [Auto Owners’] rules and regulations, for the classes of insurance for which a commission is specified in the attached state commission schedule(s).... ” The 1995 agreement also provided that the commission schedule or schedules could be modified from time to time and that “[Auto Owners] may from time to time prescribe rules and regulations respecting the conduct of business covered hereby....”

The 1995 agreement included an arbitration provision. That provision stated, in pertinent part:

“In the event of any dispute arising out of this Contract, the parties agree to submit such dispute to arbitration as follows[:]
“(a) There shall be three arbitrators^] one shall be selected by [Blackmon], one shall be selected by [Auto Owners], and a third shall be selected by the two arbitrators. If the two arbitrators cannot agree on the selection of a third, a Judge of Circuit Court for Eaton County, Michigan or the County of [Blackmon’s] residence, shall be requested to appoint such third arbitrator.
“(b) The arbitration shall be conducted in accordance with the procedure of the American Arbitration Association. [Blackmon] and [Auto Owners] shall pay the cost of their arbitrator and share equally in the expense of the third arbitrator.”

(Emphasis added.)

The status of another document in the record, ostensibly executed in 2005, is hotly contested. That document is entitled “Letter of Instructions” and is subtitled “Agent’s Agreement Concerning Limitations on the Use of Power of Attorney” (“the 2005 document”). Blackmon alleges that the 2005 document is a stand-alone agreement, independent of the 1995 agreement. Auto Owners, on the other hand, alleges that the 2005 document constitutes “rules and regulations ‘respecting the conduct of business,’ ” as contemplated by and therefore incorporated into the 1995 agreement. The 2005 document contains instructions governing the issuance of a vari[1195]*1195ety of bonds by an agency of Auto Owners, including construction-performance bonds. A copy of the 2005 document is included in the record, but Blackmon insists the signature denoting its assent is either forged or unauthorized. Also in the record is a 2007 commission schedule that lists the types of bonds discussed in the 2005 document among the insurance classifications for which a commission is specified. The 2005 document does not contain an arbitration provision and does not expressly refer to or incorporate any agency agreement.

Auto Owners also alleges, and Blackmon disputes, that the parties entered into a third agency agreement in 2009 (“the 2009 agreement”). Blackmon insists that its signature on the 2009 agreement is also either forged or unauthorized. The 2009 agreement contains an arbitration provision that is substantially identical to the arbitration provision in the 1995 agency agreement, except that the 2009 agreement provides that venue for any arbitration will be in Eaton County, Michigan.

On December 22, 2010, Blackmon filed a complaint in the circuit court seeking a declaratory judgment as to the arbitrability of a dispute between Blackmon and Auto Owners as to which Auto Owners had already initiated arbitration proceedings. In its complaint, Blackmon alleged that Auto Owners had initiated the arbitration proceedings against Blackmon in Eaton County, Michigan. Blackmon also alleged that in the Michigan arbitration proceeding Auto Owners bases its claims on the 2005 document and 2009 agreement.

On January 21, 2011, Auto Owners filed in the Baldwin Circuit Court a motion to dismiss Blackmon’s declaratory-judgment action or, in the alternative, to compel arbitration. It argued that the arbitration proceedings it had initiated in Michigan involved only disputes that were arbitrable under the 1995 agreement and that the circuit court did not have subject-matter jurisdiction to adjudicate Blackmon’s declaratory-judgment action.

On January 24, 2011, the circuit court scheduled Auto Owners’ motion for a hearing on February 15, 2011. On February 14, Blackmon filed its brief in opposition to Auto Owners’ motion. After the hearing, the circuit court, on February 17, 2011, denied Auto Owners’ motion. On March 16, without having filed a motion seeking reconsideration of the circuit court’s ruling, Auto Owners filed a response to Blackmon’s February 14, 2011, brief, which the circuit court apparently treated as a motion to alter or amend its ruling. On March 31, 2011, after another hearing held the same day, the circuit court entered an amended order reaffirming its order of February 17 denying Auto Owners’ motion. Auto Owners filed its notice of appeal with this Court on March 31, 2011.1

Standard of Review

This Court’s standard of review of a ruling on a motion to compel arbitration is well settled. Bowen v. Security Pest Control, Inc., 879 So.2d 1139, 1141 (Ala.2003). A direct appeal is the proper procedure by which to seek review of such an order, Rule 4(d), Ala. R.App. P., and this Court reviews the lower court’s order de novo. Bowen, 879 So.2d at 1141. The party seeking to compel arbitration has the initial burden of presenting evidence of the existence of a contract calling for arbitration and of proving that that contract involves interstate commerce. Polaris Sales, Inc. v. Heritage Imports, Inc., 879 So.2d 1129, 1132 (Ala.2003). Once the [1196]*1196moving party meets its initial burden, the party opposing arbitration has the burden of presenting evidence tending to show that the arbitration agreement is invalid or that it does not apply to the dispute in question. Bowen, 879 So.2d at 1141. See also Title Max of Birmingham, Inc. v. Edwards, 973 So.2d 1050, 1052-53 (Ala. 2007).

Discussion

The Federal Arbitration Act, 9 U.S.C. § 1 et seq. (“the FAA”), governs this case. Section 2 of the FAA provides, in pertinent part:

“A written provision in ... a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”

Neither party disputes that the 1995 agreement involves interstate commerce.

“The federal policy favoring arbitration is so strong that, as a matter of law, ‘any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.... ’ Ameriquest Mortg. Co. v. Bentley, 851 So.2d 458, 463 (Ala.

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Cite This Page — Counsel Stack

Bluebook (online)
99 So. 3d 1193, 2012 WL 677526, 2012 Ala. LEXIS 25, Counsel Stack Legal Research, https://law.counselstack.com/opinion/auto-owners-insurance-inc-v-blackmon-insurance-agency-inc-ala-2012.