African Methodist Episcopal Church, Inc. v. Smith, [Ms. 1141100, 1141101, 1150055, 1150156, Aug. 19, 2016] __ So. 3d __ (Ala. 2016). This plurality opinion (Stuart, J., and Bolin, Shaw, and Wise, JJ., concurring; Parker, J., concurring in the result) reverses consolidated decisions of the Jefferson Circuit Court and Montgomery Circuit Court denying motions to compel arbitration in the context of purchases of group life insurance benefits from Lincoln National Life Insurance Company and that insurer's declination of claims for life insurance policy benefits.
Citing Elizabeth Holmes, L.L.C. v. Gantt, 882 So. 2d 313 (Ala. 2003), the opinion first notes (Ms. *8-9) that it "reviews de novo the denial of a motion to compel arbitration" as it "is analogous to a motion for a summary judgment."
Distinguishing its holding in Aetna Insurance Co. v. Word, 611 So. 2d 266, 267-69 (Ala. 1992) (where the Court, in reliance on § 27-14-8, Ala. Code 1975, affirmed a trial court's judgment finding an insurance policy endorsement form void when it had not first been filed with and approved by the Commissioner of the Alabama Department of Insurance), the Court (Ms. *10-13) adopts the reasoning of Waikar v. Royal Insurance Co. of America, Inc., 765 So. 2d 11, 16 (Ala. Civ. App. 1999), and endorses Lincoln National's use of forms that had previously been approved by the Commissioner of the Department of Insurance for Lincoln National's predecessor-in-interest.
Next, citing Advance Tank & Construction Co. v. Gulf Coast Asphalt Co., 968 So. 2d 520, 528-29 (Ala. 2006), the Court at Ms. *14-16 rejects the argument that Lincoln National's failure to comply with the Alabama Department of Insurance's published guidelines for arbitration agreements rendered the arbitration provision in the group policy void. Instead, holding that courts may not "invalidate arbitration agreements under state laws applicable only to arbitration provisions," the Court holds that Advance Tank is to be construed as holding that federal law would prohibit any state requirement that an arbitration provision in an insurance contract be specially disclosed or executed separately from the main contract.
Citing Blue Cross Blue Shield of Alabama v. Rigas, 923 So. 2d 1077 (Ala. 2005), the Court (Ms. *16-26) rejects several contentions that the arbitration provision was substantively unconscionable and therefore unenforceable. Specifically, the Court rejects the holding of Ting v. AT&T, 319 F.3d 1126 (9th Cir. 2003)(which held that an arbitration provision's confidentiality clause preventing parties from disclosing "the existence, content or result of any arbitration" was unconscionable). Instead, the Court embraces the holdings of Caley v. Gulfstream Aerospace Corp., 428 F.3d 1359, 1378-79 (11th Cir. 2005) and Iberia Credit Bureau, Inc. v. Cingular Wireless, LLC, 379 F.3d 159, 175-76 (5th Cir. 2004) that such confidentiality requirements are not so "one-sided as to make the arbitration provision substantively unconscionable." Ms. *21.
The Court also rejects the contention premised upon the holding in Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal. 4th 83, 99 Cal. Rptr. 2d 745, 6 P.3d 669 (2000) where the Supreme Court of California held an arbitration provision unconscionable when it was asymmetrical, i.e., it purported to require only one side of the contract to arbitrate claims. Ms. *23-4. Instead, citing its earlier conclusion in Ex parte McNaughton, 728 So. 2d 592, 598-599 (Ala. 1998) where the Court had rejected any mutuality-of-remedy requirement in the context of arbitration proceedings, the Court holds that because plaintiffs may seek a remedy at law or equity, there is no one-sidedness problem.
The Court next rejects the contention that the arbitration provision should not be enforced against the plaintiffs because they did not sign an arbitration agreement or ever assent to arbitration. Holding that because the plaintiffs assert claims dependent upon the existence of the contract containing an arbitration provision, Custom Performance, Inc. v. Dawson, 57 So. 3d 90, 97-98 (Ala. 2010) requires plaintiffs to be equitably estopped from avoiding the consequences of arbitration. See Ms. *26-29.
The Court also rejects plaintiffs' contention that arbitration should be rejected because Lincoln National failed to meet all the conditions precedent to arbitration. Citing Brasfield and Gorrie, L.L.C. v. Soho Partners, L.L.C., 35 So. 3d 601, 606 (Ala. 2009), the Court determines that the arbitrator, not the trial court, should decide whether conditions precedent to arbitration have been met. See Ms. *30-33.
Next, relying upon Metropolitan Life Ins. Co. v. Glisson, 295 F.3d 1192 (11th Cir. 2002), the Court (Ms. *33-39) rejects an argument by one of the appellants that a merger clause contained within the group policy barred any amendment containing the arbitration provision. Because, as in Glisson, the amendment containing the arbitration provision was physically attached to and made reference to the underlying contract, the amendment containing the arbitration provision complied with the requirements of the underlying insurance contract's merger provision.
Lastly, the Court rejects another plaintiff's contention that Lincoln National waived the right to enforce the arbitration provision by substantially invoking the litigation process to the plaintiff's prejudice. Acknowledging that Kennamer v. Ford Motor Credit Co., 153 So. 3d 752, 759 (Ala. 2014) "explained how a party might waive its right to enforce a valid arbitration provision and how the party opposing arbitration can establish that waiver," the Court (Ms. *39-53) finds there was no substantial invocation despite a. three answers by Lincoln National containing no mention of arbitration, b. participation in merits-based discovery, c. filing a dispositive motion to dismiss and arguing that motion before the trial court, and d. waiting approximately eleven months after the initiation of the action to first move to invoke arbitration. The Court rejects plaintiff's reliance upon decisions it characterizes as "on point," namely In re Mirant Corp., 613 F.3d 584 (5th Cir. 2010) and Hooper v. Advance America Cash Advance Centers of Missouri, Inc., 589 F.3d 917 (8th Cir. 2009). Because of this Court's prior holding "that finding a waiver of the right to arbitration is disfavored and that any doubts concerning an allegation of waiver must be resolved in favor of arbitration (Ms. *52, quoting Crews v. National Boat Owners Ass'n Marine Ins. Agency, Inc., 46 So. 3d 933, 941 (Ala. 2010)), the Court holds that Lincoln National did not substantially invoke the litigation process such that it may not be deemed to have waived its right to invoke arbitration.
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