Hudson Insurance Company v. BVB Partners
13-15-00163-CV
| Tex. App. | May 21, 2015Background
- BVB Partners purchased crop insurance from Hudson for its 2013 cotton crop and alleges Hudson misrepresented the requirements to obtain a lower-priced enterprise-unit premium/subsidy.
- BVB claims it relied on Hudson's statement that combining 522.7 acres into one unit and planting a 20-acre block would secure the lower premium; when making a prevented-planting claim Hudson later determined BVB did not qualify, increasing BVB's premium and causing alleged damages (~$25,000).
- BVB sued in Hidalgo County Court at Law for negligent misrepresentation; Hudson moved to compel arbitration under the policy's arbitration clause and to stay proceedings.
- The trial court denied Hudson's motion to compel arbitration; interlocutory appeal followed under Texas Civ. Prac. & Rem. Code § 51.016.
- Central factual/legal dispute: whether BVB's negligent-misrepresentation claim falls within the policy's arbitration clause, which applies to disagreements about a "determination" made by the insurer.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether BVB's negligent-misrepresentation claim is within the policy's arbitration clause | BVB: clause is narrow — it covers only disputes about insurer "determinations," not torts for misrepresentations; no disagreement exists about a determination here | Hudson: BVB's suit challenges Hudson's premium determination and thus falls within the clause and must be arbitrated | Trial court (affirmed by appellee brief): Hudson failed to show BVB's claim falls within the clause; denial of motion to compel arbitration was proper |
| Scope/principle for compelling arbitration (burden on party seeking arbitration) | BVB: Hudson must prove the claim is within the arbitration scope per In Re Oakwood | Hudson: argues broader arbitration doctrines and estoppel can require arbitration | Held that the movant must establish coverage; Hudson did not meet that burden |
| Whether alleged misrepresentation is a "determination" subject to arbitration | BVB: misrepresentation is a tort distinct from an insurer "determination" and is for the court | Hudson: contends BVB effectively disputes Hudson's determination about premium/rate | Held the court found no actual disagreement over a determination; claim is misrepresentation, not an arbitration-covered determination |
| Application of direct-benefits estoppel or equitable doctrines to force arbitration | BVB: received ordinary policy benefits and is not estopped from litigating tort claims outside clause scope | Hudson: invoked estoppel/benefit doctrines to require arbitration | Held appellee argues these doctrines don't override the requirement that the movant show the claim falls within the clause; estoppel not applied to broaden clause scope here |
Key Cases Cited
- In Re Oakwood Mobile Homes, 987 S.W.2d 571 (Tex. 1999) (movant must establish claim falls within arbitration agreement)
- In Re D. Wilson Constr. Co., 196 S.W.3d 774 (Tex. 2006) (court may deny arbitration if contract language does not reasonably cover dispute)
- FD Frontier Drilling (Cypress) Ltd. v. Didmon, 438 S.W.3d 688 (Tex. App.—Houston [1st Dist.] 2014) (standard of review and deference to trial court fact findings in arbitration interlocutory appeals)
- In Re LaBatt Food Servs., 279 S.W.3d 640 (Tex. 2009) (deference to trial court factual findings)
- Nobles v. Rural Cmty. Ins. Servs., 303 F. Supp. 2d 1292 (M.D. Ala. 2004) (similar crop-insurance arbitration clause; post-arbitration state-law tort claims for misrepresentation were allowed to proceed in court)