Opinion ID: 1844233
Heading Depth: 1
Heading Rank: 2

Heading: arbitration of claims and waiver of jury trial

Text: Merit Life Insurance Co. and I hereby acknowledge that the transactions covered by the Policy being applied for involve interstate commerce. We agree that all claims, disputes, or controversies of every kind and nature between us shall be resolved by arbitration including (i) those based on contract, tort, or statute, (ii) those arising out of or relating to the transaction(s) evidenced by a policy, the disclosures relating to a policy, any documents executed at or about the same time a policy was executed or (iii) the relationships which result from these transactions or any other previous transactions between us. Merit Life Insurance Co. and I further agree that all issues and disputes as to the arbitrability of claims must also be resolved by the arbitrator. WE UNDERSTAND THAT EACH HAS THE RIGHT TO LITIGATE SUCH DISPUTES THROUGH A COURT, AND WE VOLUNTARILY AND KNOWINGLY WAIVE ANY RIGHT WE HAVE TO A JURY TRIAL OR JUDGE TRIAL OF SUCH DISPUTES. . . . . WE AGREE THAT THE ARBITRATOR MAY AWARD PUNITIVE DAMAGES ONLY UNDER CIRCUMSTANCES WHERE A COURT OF COMPETENT JURISDICTION COULD AWARD SUCH DAMAGES. HOWEVER, IN NO EVENT SHALL AN AWARD OF DAMAGES EXCEED FIVE (5) TIMES THE ECONOMIC LOSS SUFFERED BY THE PARTY. MERIT LIFE INSURANCE CO. AND I FURTHER AGREE THAT THE ARBITRATOR SHALL NOT CONDUCT ANY CLASS-WIDE PROCEEDINGS AND WILL BE RESTRICTED TO RESOLVING THE INDIVIDUAL DISPUTES BETWEEN THE PARTIES. This arbitration clause shall be binding upon the assigns, directors, officers, representatives, employees, agents, parent companies, affiliated companies, subsidiaries and successors of Merit Life Insurance Co. and my administrators, assigns, executors, heirs and representatives. In addition, the parties agree to submit to arbitration not only the foregoing claims or disputes against each other, but also all claims or disputes they have against (i) all other persons or entities involved with the transactions subject to this clause, (ii) all persons or entities who signed or executed any of the documentation subject to this clause, and (iii) all persons or entities who may be jointly or severally liable to any of the parties to this agreement regarding matters or events relating to the transactions and documentation subject to this clause. Merit Life Insurance Co. and I agree that if any provision of this arbitration clause is invalid or unenforceable under the Federal Arbitration Act, the provision which is found to be invalid or unenforceable shall be inapplicable and deemed omitted, but shall not invalidate the remaining provisions of this arbitration clause, and shall not diminish the parties' obligation to arbitrate the disputes subject to this clause. (Capitalization in original.) Above the signature line on this arbitration agreement was written THIS DOCUMENT EXPLAINED AND UNDERSTOOD BY APPLICANT; an X, presumably Jimmy Ashby's mark, is shown on the signature line. Although Anderson admits that he never received any training from American General Finance on how to explain an arbitration agreement to customers, he says that he explained the arbitration agreements to the Ashbys. Mrs. Ashby claims that Anderson never explained or mentioned to them the arbitration agreements contained in the loan and credit-life insurance documents. She also claims that she was within hearing distance of Mr. Ashby and Anderson during the entire closing and that Anderson never explained or mentioned arbitration to Mr. Ashby in connection with the credit-life insurance documents. On December 2, 1999, Mr. Ashby died. Mrs. Ashby filed a claim for the death benefit provided under the credit-life insurance policy Mr. Ashby had obtained from Merit Life. Merit Life did not pay the claim; instead, it rescinded the policy issued to Mr. Ashby. Merit Life alleged that Mr. Ashby had answered the questions on the insurance application regarding his health inaccurately. Mrs. Ashby alleges that Anderson, who read the questions to them, never asked them any questions about Mr. Ashby's health. On April 17, 2000, Mary Jean Ashby filed this action in the Limestone Circuit Court, as the personal representative of the estate of her deceased husband Jimmy Ashby, and in her individual capacity. Mrs. Ashby seeks compensatory and punitive damages as a result of Merit Life's refusal to pay benefits under the credit-life insurance policy issued in connection with the American General Finance loan. [4] Anderson, American General Finance, and Merit Life each moved to stay the proceedings and to compel arbitration, relying upon the arbitration agreements contained in the note and security agreement and executed as part of the application for credit-life insurance. Mrs. Ashby opposed those motions to compel, asserting that the arbitration agreements were unconscionable and that they were obtained through fraud. On January 22, 2002, after receiving briefs and conducting hearings, the trial court denied the motions to compel arbitration on the grounds that the arbitration agreement contained in the note and security agreement was unconscionable and that fraud in the factum had occurred with regard to the arbitration agreement executed in connection with the application for credit-life insurance. On February 20, 2002, Anderson, American General Finance, and Merit Life moved, pursuant to Rule 59(e), Ala. R. Civ. P., to alter, amend, or vacate the trial court's order. On May 8, 2002, the trial court denied the defendants' Rule 59(e) motion. American General Finance, Anderson, and Merit Life appeal, asserting the following claims: that the trial court erred and usurped the arbitrator's authority by deciding the threshold issues of arbitrability; that the trial court erred in concluding that the arbitration agreement included in the note and security agreement was unconscionable; and that the trial court erred in concluding that Mr. Ashby's fraud claim presented a question for the jury.