In Jody James Farms, J.V. v. Altman Group, Inc., 547 S.W.3d 624 (Tex. 2018), the insurance agent failed to timely submit a hail and rain claim on behalf of the insured to the insurance company. The agent was then sued by the policyholder, alleging breach of fiduciary duty and deceptive trade practices. The insurance agency moved to compel arbitration, which was granted by the Texas District Court. The case then proceeded through arbitration and resulted in a panel finding in favor of the agency. The trial court then affirmed the arbitration award. However, the Texas Supreme Court reversed the trial court’s ruling.
The Court began its analysis, as a preliminary matter, finding that courts, and not arbitrators, decide the threshold issue of whether a dispute is arbitrable, unless the parties specifically agree otherwise. No such agreement existed between the policyholder and the insurance agency in this case. The agency argued that the insurance policy contained an arbitration clause that required all coverage disputes to be resolved through arbitration. The agency argued that the arbitration agreement’s incorporation of the American Arbitration Association rules was evidence that the contracting parties intended to arbitrate the issue of arbitrability. The Court found, however, that even if the intent argument was true regarding the parties to the agreement, that same principle would not govern situations which involved a nonsignatory to the agreement. The Court then ruled that the arbitration agreement in the policy did not govern the dispute between the policyholder and the insurance agency. This was so because the agency’s alleged failure to provide timely notice did not arise from a disagreement between the insurance company and the policyholder.