Casualty Indemnity Exchange v. Yother

Jack Yother (plaintiff) purchased an automobile insurance policy from Casualty Indemnity Exchange (Casualty) (defendant) to cover his tractor-truck. The policy included a provision stating that if the amount of loss for a claim was disputed, the dispute would be settled by two appraisers selected by the parties and a neutral umpire. The dispute process was never referred to as arbitration. Yother’s tractor was stolen and never recovered. The loss was covered under the insurance policy, and Yother submitted proof of the loss to Casualty. Casualty rejected the proof, disputing the cash value Yother claimed for the tractor. In Casualty’s rejection letter, Yother was notified that he could invoke the policy provision that provided for arbitration of the matter. Yother sent a return letter invoking the so-called arbitration clause. Both parties selected their appraisers, and the appraisers selected a neutral umpire. Yother submitted two requests to present evidence before the appraisers, but his requests were ignored. The appraisers disagreed on the value of the tractor, and without conducting a hearing, the umpire chose an amount without consulting either appraiser or the disputing parties for evidence of the tractor’s value. Yother appealed the umpire’s figure to an Alabama state court because he was not given notice of a hearing to decide the matter or the opportunity to present any evidence of the tractor’s value. The trial court set aside the award, and Casualty appealed to the Alabama Supreme Court. Casualty claimed that the process was an appraisal, not an arbitration, and that it was not subject to arbitration procedural rules.