Opinion ID: 2536792
Heading Depth: 2
Heading Rank: 1

Heading: Vitality of the arbitration agreement

Text: Quoting Kenworth of Birmingham, Inc. v. Langley, 828 So.2d 288, 290 (Ala.2002), Crews argues that in order to compel arbitration, Markel has the burden of proving the existence of a contract containing an arbitration agreement and proving that that contract evidences a transaction affecting interstate commerce. Crews argues that Markel failed to carry its burden of proving that a contract containing an arbitration agreement exists because, Crews says, neither he nor Markel ever signed a policy application or a policy that contained an arbitration agreement. He directed the trial court's attention to the language on page 2 of the renewal policy that follows the words countersigned on: 10/8/2003 by: and two blank lines. Those words read: In Witness Whereof, we have executed this policy, which shall not be valid unless countersigned by our duly authorized representative. He further argues that he received the amendatory endorsement containing the arbitration agreement after he accepted the policy by paying the premium, so that there was no meeting of the minds on the arbitration agreement. In its brief on appeal Markel argues: Crews'[s] assent to the arbitration agreement was manifested in at least one of three ways. Specifically, the arbitration agreement became part of the renewal Policy because: (1) the renewal Policy specifically authorized amendatory endorsements, and the arbitration endorsement accompanied the renewal Policy provided to Crews; and/or (2) Crews did not cancel the renewal Policy after receiving notice of the arbitration endorsement; and/or (3) Crews made a claim under the renewal Policy and has sued Markel for, among other things, breach of contract for denying that claim. Crews initially manifested assent to the arbitration endorsement because the renewal Policy specifically incorporated amendatory endorsements, and the arbitration endorsement accompanied the renewal Policy provided to Crews. This Court has long recognized that endorsements are effective when they are specifically referenced in a contract. See Philadelphia American Life Ins. Co. v. Bender, 893 So.2d 1104 (Ala.2004). Market's brief, at 15-16. In Philadelphia American Life Insurance Co. v. Bender, 893 So.2d 1104 (Ala. 2004), the plaintiff's spouse signed an application for health insurance for both the plaintiff and the spouse that included a comprehensive arbitration agreement. The plaintiff's spouse was subsequently denied coverage, but a health-insurance policy was issued for the plaintiff, Bender, who paid the premiums and made claims under the policy. When the insurer denied certain claims, Bender sued the insurer, which moved the trial court for an order compelling arbitration. The motion was denied after Bender opposed the motion, claiming that he had not received the policy until two years after it was effective, that he had not signed the application containing the arbitration agreement, and that he was unaware that an arbitration agreement existed. On appeal by the insurer, this Court determined that it was undisputed that the endorsement containing the arbitration agreement was attached to the policy. The endorsement containing the arbitration agreement also stated that it was incorporated by reference into any policy or certificate issued, and the policy itself stated that its terms included any endorsements, riders, attached papers, the application, and all enrollment applications. This Court also noted that an unsigned endorsement is valid if it is attached to the policy and referenced therein. See Bender, 893 So.2d at 1108 (citing Ex parte Rager, 712 So.2d 333 (Ala.1998)). Markel asserts that like the policy of insurance in Bender, its renewal policy specifically references endorsements and incorporates any endorsements when it states that [i]n return for the premium payment and compliance with all applicable provisions and any endorsements, we agree to provide the insurance coverage you have selected as shown on the Declarations Page, which is part of this policy. Markel states: [L]ike the arbitration agreement in Bender, the arbitration endorsement in this case notified Crews that it became part of the renewal Policy, stating: `THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.' . . . ([capitalization] in original). Markel's brief, at 18-19. An unsigned endorsement is valid if it is attached to the policy and is referenced in the policy. See Greene v. Hanover Ins.Co., 700 So.2d 1354, 1357 n. 3 (Ala.1997). The renewal policy clearly references General Amendatory Endorsement YHBP 0201, the endorsement that contains the arbitration agreement. The endorsement document itself states in bold print: THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. (Capitalization in original.) Crews told the trial court that he received the endorsement after he had renewed the policy. He does not argue that he had not received the endorsement before he suffered his loss, and he offers no explanation regarding his failure to reject the policy by returning it when he did receive the endorsement containing the arbitration agreement, which was his contractual remedy. [U]nder Alabama law, [Crews] manifested [his] assent to the arbitration provision in several ways. First, [he] failed to exercise [his] right to cancel the policy. See Ex parte Rager, 712 So.2d [333,] 335 (Ala.1998). . . . Third, [Crews] submitted a claim under the policy. See [ Southern United Fire Ins. Co. v.] Howard, 775 So.2d [156,] 162-63 [(Ala.2000)]. Southern Foodservice Mgmt., Inc. v. American Fid. Assur. Co., 850 So.2d 316, 320 (Ala.2002). We find no error in the trial court's finding that a contract containing an arbitration agreement exists.