Petition for Writ of Certiorari — Great American Insurance Company, Petitioner v. Crystal Shores Owners Association, Inc.

Supreme Court briefMar 21, 2024

Ask Donna

What actually matters in this document.

Text

No. 23In the

Supreme Court of the United States

GREAT AMERICAN INSURANCE COMPANY,

Petitioner,

CRYSTAL SHORES OWNERS ASSOCIATION, Inc.,

Respondent.

On Petition for a Writ of Certiorari

to the Supreme Court of A labama

PETITION FOR A WRIT OF CERTIORARI

Marc James Ayers

Michael R. Pennington

T. Brooks Proctor

Bradley A rant

Boult Cummings LLP

One Federal Place

1819 5th Avenue N

Birmingham, Alabama 35203

Scott Burnett Smith

Counsel of Record

Hunter Pearce

Schyler B. Burney

Bradley A rant

Boult Cummings LLP

200 Clinton Avenue W, Suite 900

Huntsville, Alabama 35801

(256) 517-5100

ssmith@bradley.com

Counsel for Petitioner

327497

(800) 274-3321 • (800) 359-6859

QUESTIONS PRESENTED

Does federal law or state law govern what qualifies

as an “arbitration” provision under the Federal

Arbitration Act?

II. Does a contract’s dispute resolution provision

requiring parties to submit property loss valuation

disputes to an independent appraisal panel for binding

resolution qualify as “arbitration” under the FAA?

PARTIES TO THE PROCEEDING

Petitioner is Great American Insurance Company.

Petitioner was the appellant below.

Respondent is Crystal Shores Owners Association,

Inc. Respondent was the appellee below.

iii

CORPORATE DISCLOSURE STATEMENT

Pursuant to United States Supreme Court Rule 29.6,

Petitioner states as follows:

Great American Insurance Company is a wholly owned

subsidiary of American Financial Group, Inc. American

Financial Group, Inc. is a publicly traded company that

owns 10% or more of Petitioner’s stock.

STATEMENT OF RELATED PROCEEDINGS

This case is directly related to the follow ing

proceedings:

Bowen-Wilson Inc. d/b/a ServPro of Montgomery v.

Crystal Shores LLC, and Crystal Shores Owners Ass’n,

Inc., No. CV-2021-900497, Circuit Court of Baldwin

County, Alabama. Judgment entered Jan. 6, 2023.

Great American Ins. Co. v. Crystal Shores Owners

Ass’n, Inc., No. SC-2023-0092, Supreme Court of Alabama.

Judgment entered Dec. 22, 2023.

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED . . . . . . . . . . . . . . . . . . . . . . . i

PARTIES TO THE PROCEEDING . . . . . . . . . . . . . . . . ii

CORPORATE DISCLOSURE STATEMENT . . . . . . iii

STATEMENT OF RELATED PROCEEDINGS . . . . . iv

TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . v

TABLE OF APPENDICES . . . . . . . . . . . . . . . . . . . . . viii

TABLE OF CITED AUTHORITIES . . . . . . . . . . . . . ix

PETITION FOR A WRIT OF CERTIORARI . . . . . . . 1

OPINIONS BELOW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

STATUTORY PROVISION INVOLVED . . . . . . . . . . . 3

STATEMENT OF THE CASE . . . . . . . . . . . . . . . . . . . . 3

A. The Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

B. The Instant Action . . . . . . . . . . . . . . . . . . . . . . . . . 5

REASONS FOR GRANTING THE PETITION . . . . . 8

Table of Contents

Page

This issue involves a well-acknowledged split

of authority on whether federal law or state law

governs “arbitration” under the FAA. . . . . . . . . . 9

A. Applying federal law to determine

whether a dispute resolution provision

qualifies as “arbitration” is consistent

w ith the FA A and cong ressional

intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

B. The two courts applying state law to

determine whether a dispute resolution

provision qualifies as “arbitration” fail to

meaningfully analyze the FAA . . . . . . . . . . 15

II. The Alabama Supreme Court’s decision

illustrates the need for a uniform federal

rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

III. The questions presented are exceptionally

important, recurring, and warrant this

Court’s review . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

A. T he spl it of a ut hor it y r e s u lt s

i n i nconsist ent appl icat ion of a

policy intended to create national

uniformity . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

B. The split further results in direct

contradiction among courts . . . . . . . . . . . . . 24

vii

Table of Contents

Page

IV. This case is an ideal vehicle. . . . . . . . . . . . . . . . . 26

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

viii

TABLE OF APPENDICES

Page

A P P E N DI X A — O P I N ION O F T H E

SUPREME COURT OF ALABAMA, DATED

DECEMBER 22, 2023 . . . . . . . . . . . . . . . . . . . . . . . . 1a

TABLE OF CITED AUTHORITIES

Page

Cases

Advanced Bodycare Sols., LLC v.

Thione Int’l, Inc.,

524 F.3d 1235 (11th Cir. 2008) . . . . . . . . . . . . . 22, 23

Allied-Bruce Terminix Companies, Inc. v. Dobson,

513 U.S. 265 (1995) . . . . . . . . . . . . . . . . . . . . . . . . . 1, 17

AMF Inc. v. Brunswick Corp.,

621 F. Supp. 456 (E.D.N.Y. 1985) . . . . . . . . . . . . 22, 23

AT&T Mobility LLC v. Concepcion,

563 U.S. 333 (2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Bakoss v. Certain Underwriters at Lloyds of

London Issuing Certificate No. 0510135,

707 F.3d 140 (2d Cir. 2013) . . . . . . . . . . . . 11, 13, 15, 23

Citizens Bank v. Alafabco, Inc.,

539 U.S. 52 (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 17

Dean Witter Reynolds, Inc. v. Byrd,

470 U.S. 213 (1985) . . . . . . . . . . . . . . . . . . . . . . . . 18, 19

Evanston Ins. Co. v. Cogswell Props., LLC,

683 F.3d 684 (6th Cir. 2012) . . . . . . . . . . . . . . 11, 14, 25

Fit Tech, Inc. v.

Bally Total Fitness Holding Corp.,

374 F.3d 1 (1st Cir. 2004) . . . . . . . . . . . . . 11, 13, 15, 22

Cited Authorities

Page

Genesco, Inc. v. T. Kakuchi & Co., Ltd.,

815 F.2d 840 (2d Cir. 1987) . . . . . . . . . . . . . . . . . . . . . 13

Great American Ins. Co. v.

Crystal Shores Owners Ass’n, Inc.,

2023 WL 8858165, __ So. 3d __

[Ms. SC-2023-0092] (Ala., Dec. 22, 2023) . . . . . . . . . 2

Harrison v. Nissan Motor Corp. in U.S.A.,

111 F.3d 343 (3rd Cir. 1997) . . . . . . . . . . . . 9, 11, 21, 24

Hartford Lloyd’s Ins. Co. v. Teachworth,

898 F.2d 1058 (5th Cir. 1990) . . . . . . . . . . . . . . . . 11, 15

Int’l Longshoremen’s Ass’n, AFL-CIO v. Davis,

476 U.S. 380 (1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

KPMG LLP v. Cocchi,

565 U.S. 18 (2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Martinique Properties, LLC v.

Certain Underwriters at Lloyd’s London,

567 F. Supp. 3d 1099 (D. Neb. 2021) . . . . . . . . . . . . . 25

McDonnel Douglas Fin. Corp. v.

Pa. Power & Light Co.,

858 F.2d 825 (2d Cir. 1988) . . . . . . . . . . . . . . . . . . 23, 25

Milligan v. CCC Info. Servs. Inc.,

920 F.3d 146 (2d Cir. 2019) . . . . . . . . . . . . . . . 23, 25, 26

Cited Authorities

Page

Miss. Band of Choctaw Indians v. Holyfield,

490 U.S. 30 (1989) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Mitsubishi Motors Corp. v.

Soler Chrysler-Plymouth, Inc.,

473 U.S. 614 (1985) . . . . . . . . . . . . . . . . . . . . . . . . 10, 17

Moses H. Cone Mem’l Hosp. v.

Mercury Constr. Corp.,

460 U.S. 1 (1983) . . . . . . . . . . . . . . . . . . . . . . . . . . 10, 19

Perry v. Thomas,

482 U.S. 483 (1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Portland Gen. Elec. Co. v. U.S. Bank Trust Nat.

Ass’n as Trustee for Trust No. 1,

218 F.3d 1085 (9th Cir. 2000) . . . . . . . . . . . . . . . . 14, 15

Positano Place at Naples I Condo. Ass’n, Inc. v.

Empire Indem. Ins. Co.,

84 F.4th 1241 (11th Cir. 2023) . . . . . . . . . . . . . . . . . . 11

Salt Lake Trib. Publ’g Co., LLC v.

Mgmt. Plan., Inc.,

390 F.3d 684 (10th Cir. 2004) . . . . . . . . . . . . . 13, 14, 23

Southland Corp. v. Keating,

465 U.S. 1 (1984) . . . . . . . . . . . . . . . . . . . 1, 2, 10, 12, 20

United States v. Bankers Ins. Co.,

245 F.3d 315 (4th Cir. 2001) . . . . . . . . . . . . . . . . . . . . 11

xii

Cited Authorities

Page

Wasyl, Inc. v. First Boston Corp.,

813 F.2d 1579 (9th Cir. 1987) . . . . . . . . . . . . . . . . 11, 15

York Int’l v. Alabama Oxygen Co.,

465 U.S. 1016 (1984) . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Statutes

9 U.S.C. § 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 8

9 U.S.C. § 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

28 U.S.C. § 1257(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

A la. Code § 8-1-41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Federal Arbitration Act . . . 1, 2, 4, 6, 7, 8, 9, 10, 11, 12, 13,

14, 15, 16, 17, 18, 19, 21, 22,

23, 24, 25, 26, 27, 28

Other Authorities

Ala. R. App. P. 4(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6, 8

Black’s Law Dictionary (11th ed. 2019) . . . . . . . . . . . . . 7

Cyclopedic Law Dictionary (2d ed. 1922) . . . . . . . . . . . . 6

xiii

Cited Authorities

Page

Emily H. Slay, Evanston Insurance Co. v.

Cogswell Properties: Which Definition of

“Arbitration” Should Control?, 38 Am. J.

Trial Advoc. 377 (2014) . . . . . . . . . . . . . . . . . . . . . 10, 26

James Dawson, Comment , Contract af ter

Concepcion: Some Lessons from the State Courts,

124 Yale L.J. 233 (2014) . . . . . . . . . . . . . . . . . . . . . . . 10

Sup. Ct. R. 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

1 Thomas H. Oehmke & Joan M. Brovins,

Commercial Arbitration § 1.11 (3d ed. 2023) . . 24, 27

PETITION FOR A WRIT OF CERTIORARI

This case concerns an important question of law

under the Federal Arbitration Act (“FAA”). The FAA

was created to bring national uniformity across courts in

validating and enforcing dispute resolution procedures—

an oft-threatened uniformity further endangered by this

latest in a long line of Alabama Supreme Court decisions

hostile to arbitration.

Since this Court’s decision in Southland Corp. v.

Keating, 465 U.S. 1 (1984), this Court has strongly

defended the FAA against various state court efforts to

avoid enforcing arbitration agreements, often through

attempted impositions of state law barriers to enforcement

erected by states like Alabama. See, e.g., Allied-Bruce

Terminix Companies, Inc. v. Dobson, 513 U.S. 265 (1995);

Citizens Bank v. Alafabco, Inc., 539 U.S. 52 (2003). Despite

Great American’s stance that federal law governs what

qualifies as an “arbitration” provision under the FAA,

the Alabama Supreme Court purported to analyze the

provision under state law and federal law.

The decision below reached a remarkable conclusion

inconsistent with the FAA and this Court’s precedent.

A split of authority currently exists over whether (as

the First, Second, Sixth, and Tenth Circuits have held)

federal law governs what qualifies as an “arbitration”

provision under the FAA, or whether (as the Fifth and

Ninth Circuits have held) state law governs. Although

the Alabama Supreme Court acknowledged the longrecognized split, the court applied both federal and state

law. Such an approach runs afoul of established FAA

precedent that federal law preempts conflicting state

law. It would be untenable—and inconsistent with this

Court’s precedent—for both federal and state law to apply.

Analyzing an arbitration provision under both federal and

state law would allow state courts to apply state law so as

to undermine arbitration rights protected by federal law.

Not only is the Alabama Supreme Court’s decision

wrong, but it is also in direct conflict with numerous other

courts. This Court should grant certiorari to resolve the

recognized circuit split regarding whether federal law

or state law governs what qualifies as an “arbitration”

provision under the FAA. And, if it holds federal law

governs, this Court should clarify that the alternative

dispute process here qualifies as “arbitration.” This

case presents the perfect vehicle for resolving the wellacknowledged conflict surrounding dispute resolution

procedures that are, in all but name, arbitration provisions.

OPINIONS BELOW

The opinion of the Supreme Court of Alabama is

reported as Great American Insurance Co. v. Crystal

Shores Owners Association, Inc., 2023 WL 8858165, __

So. 3d __ [Ms. SC-2023-0092] (Ala., Dec. 22, 2023) and is

reproduced at Petition Appendix 1a–40a.

JURISDICTION

The Supreme Court of Alabama issued its opinion on

December 22, 2023, and entered its certificate of judgment

on January 10, 2024. App. 1a–40a. Great American invokes

this Court’s jurisdiction under 28 U.S.C. § 1257(a). The

Alabama Supreme Court’s decision is final for purposes

of this Court’s review. See Southland Corp. v. Keating,

465 U.S. 1, 6–7 (1984) (holding state judgment denying

arbitration is reviewable final judgment). There is no

adequate or independent state law ground because

application of Alabama’s procedural rule for review

turns on the substantive federal question presented. Int’l

Longshoremen’s Ass’n, AFL-CIO v. Davis, 476 U.S. 380,

388 (1986) (“If the Alabama procedural ruling under state

law implicates an underlying question of federal law, . . .

the state law is not an independent and adequate state

ground supporting the judgment . . . .”).

STATUTORY PROVISION INVOLVED

This case involves the Federal Arbitration Act, 9

U.S.C. § 1 et seq. Section 2 of the Act provides: “A written

provision in any maritime transaction or a contract

evidencing a transaction involving commerce to settle by

arbitration a controversy thereafter arising out of such

contract or transaction, or the refusal to perform the

whole or any part thereof, or an agreement in writing to

submit to arbitration an existing controversy arising out

of such a contract, transaction, or refusal, shall be valid,

irrevocable, and enforceable, save upon such grounds as

exist at law or in equity for the revocation of any contract

or as otherwise provided in chapter 4.”

STATEMENT OF THE CASE

This case asks whether federal or state law governs

what qualifies as an “arbitration” provision under the

Federal Arbitration Act. Once that issue is resolved, the

case also asks whether a dispute resolution provision in a

contract evidencing a transaction “involving” interstate

commerce and requiring parties to submit any property

loss valuation disputes to an external, independent

appraisal panel for binding resolution qualifies as

“arbitration” under the FAA.

A. The Policy

The case turns on a commercial property insurance

policy Great American issued to Crystal Shores Owners

Association, Inc. (“Crystal Shores”). App. 2a. Under the

Policy, disputes as to the value of the property, the amount

of Net Income and operating expense, or the amount of

loss are to be arbitrated by appraisers (plus an umpire)

for binding resolution:

If [Great American] and [Crystal Shores]

disagree on the value of the property, the

amount of Net Income and operating expense,

or the amount of loss, either may make written

demand for an appraisal of the loss. In this

event, each party will select a competent and

impartial appraiser. The two appraisers will

select an umpire. If they cannot agree, either

may request that selection be made by a judge of

a court having jurisdiction. The appraisers will

state separately the value of the property, the

amount of Net Income and operating expense,

or the amount of loss. If they fail to agree, they

will submit their differences to the umpire. A

decision agreed to by any two will be binding.

Each party will:

1. pay its chosen appraiser; and

2. bear the other expenses of the appraisal and

umpire equally.

If there is an appraisal, we will still retain our

right to deny the claim.

Neither the appraisers nor the umpire shall

attempt to resolve any issue of insurance

coverage, policy exclusions, compliance with

the Policy terms and conditions, or any issues

concerning the Limits of Insurance available

under the Policy.

App. 7a–8a.

The Policy further provides that no lawsuit may be

filed against Great American without complying with all

policy provisions, which includes the appraisal provision:

No one may bring a legal action against [Great

American] under this Coverage Part unless:

1. there has been full compliance with all of the

terms of this Coverage Part . . .

App. 8a–9a.

B. The Instant Action

Crystal Shores submitted insurance claims seeking

payment for damage to property at the Crystal Shores

Condominium complex caused by two separate events in

2020: a bathtub overflow and Hurricane Sally. As for the

bathtub overflow claim, it is undisputed Great American

determined there was coverage for the property damage,

and before it was sued, Great American had already paid

over a million dollars on the claim. App. 11a. A dispute

arose concerning the amount of the bathtub overflow

loss, however, when Crystal Shores claimed to be entitled

to additional payments due to its assertion of a higher

damage valuation.

Crystal Shores filed suit against Great American for

alleged insufficient payment on the bathtub overflow claim,

without having complied with the Policy requirement

to first submit the dispute to appraisal. App. 5a–6a.

Great American invoked the appraisal provision and

filed a motion to dismiss or in the alternative to stay

and compel compliance with the appraisal provision.

App. 1a, 7a. Preserving the federal claim presented,

Great American argued that “[u]nder the FAA, written

arbitration agreements affecting interstate commerce

must be enforced as a matter of federal law.” Pet’r’s

Mot. to Dismiss, or in the alternative, Stay and Compel

Compliance, at ¶ 10; see also Pet’r’s Ala. Sup. Ct. Op. Br.,

at 16.

The trial court denied that motion without explanation.

App. 12a.

Great American appealed the trial court’s denial to

the Alabama Supreme Court pursuant to Alabama Rule

of Appellate Procedure 4(d), which provides an appeal

as of right from any order denying a motion to compel

“arbitration.” App. 12a. Great American emphasized

the established meaning of an agreement to “arbitrate”

as a written agreement to submit specific kinds of

disputes to third parties, rather than a court, for binding

resolution—which the parties’ appraisal provision plainly

directs with regard to any dispute concerning the value

of a property loss. See Cyclopedic Law Dictionary (2d

ed. 1922) (defining arbitration as “[t]he investigation

and determination of a matter or matters of differences

between contending parties, by one or more unofficial

persons, chosen by the parties and called ‘arbitrators,’

or ‘referees.’”); see also Black’s Law Dictionary (11th

ed. 2019) (defining arbitration as “[a] dispute-resolution

process in which the disputing parties choose one or more

neutral third parties to make a final and binding decision

resolving the dispute”). Relying on the definitions set

forth in federal law, Great American asserted that the

“FAA preempts state law and renders enforceable any

pre-dispute arbitration agreement in a contract that

involves interstate commerce.” Pet’r’s Ala. Sup. Ct. Op.

Br., at 16. And when the necessary criteria are met, a

dispute resolution procedure is enforceable as a matter

of federal law.

The Alabama Supreme Court opined “that a threshold

issue faced by federal courts in determining whether

a certain procedure qualifies as ‘arbitration’ under the

FAA is whether federal or state law defines that term

in the statute.” App. 16a. The court also acknowledged

that courts applying federal law “provide various

formulations” in defining “arbitration.” It held that the

dispute resolution process did not meet requirements

of “classic arbitration” as a matter of federal law. App.

18a. Great American did not contend the definition of

“arbitration” should be determined under state law. See

App. 28a (explaining defining “arbitration” under federal

law was “the only standard argued by Great American”).

Because it concluded that the appraisal procedure was

not an agreement to “arbitrate” enforceable under the

FAA, the Alabama Supreme Court determined that Great

American had no right to appeal the trial court’s denial of

the motion to compel as a denial of arbitration under Ala.

R. App. P. 4(d). App. 38a.

Great American sought to stay the issuance of the

court’s certificate of judgment and maintain the court’s

previously-issued stay of the trial court proceedings

pending the filing of a petition for a writ of certiorari

with this Court. The Alabama Supreme Court denied

that request on January 10, 2024, and on the same day

issued its certificate of judgment, returning jurisdiction

of the case to the trial court. Great American also moved

in this Court to stay the trial proceedings, which Justice

Thomas denied on January 31, 2024. With this case now

proceeding towards trial in Baldwin County Circuit

Court, Great American turns to this Court to enforce

its right to arbitrate rather than litigate the valuation

dispute, a right protected by federal law.

REASONS FOR GRANTING THE PETITION

This case concerns an important question of law

under the Federal Arbitration Act—an act created to

bring national uniformity across courts in validating and

enforcing dispute resolution procedures. The Alabama

Supreme Court reached a remarkable conclusion

inconsistent with the FAA and this Court’s precedent.

The court engaged in a misguided analysis under

federal law, but it also discussed its own decisions

holding that an appraisal provision is not an agreement

to “arbitrate” and therefore not enforceable under the

Federal Arbitration Act, 9 U.S.C. § 1 et seq. If the Alabama

Supreme Court’s decision stands, it will reinvigorate

historic hostility to arbitration agreements that the FAA

was intended to extinguish by allowing state courts to

define arbitration as narrowly as they wish under state

law. Accordingly, this case is a prime candidate for this

Court’s review. Sup. Ct. R. 10.

This issue involves a well-acknowledged split of

authority on whether federal law or state law

governs “arbitration” under the FAA.

This case presents an opportunity for the Court to

clarify a longstanding, broad split of authority. Sup. Ct. R.

10; see also Harrison v. Nissan Motor Corp. in U.S.A., 111

F.3d 343, 350 (3rd Cir. 1997) (“We note first that the FAA

does not define the term ‘arbitration,’ and both courts and

commentators have struggled to do so.” (emphasis added)).

There is a well-recognized and entrenched conflict of

authority on whether federal law or state law governs what

qualifies as “arbitration” under the FAA. This split has

naturally led to a second split of authority on determining

what qualifies as “arbitration” under the FAA. These

outcome-determinative disagreements are creating

precedent that runs contrary to the FAA and this Court’s

precedent. To permit continued conflict will only bolster

already-existing hostility to arbitration agreements. The

Alabama Supreme Court’s erroneous decision is the latest

conflicting holding among federal circuits and state courts

of last resort. These deeply rooted conflicts—and the

confusion stemming from them, as seen in this case—have

called for correction and clarification by this Court for

many years. This Court should accept this case to answer

this important question.

When presented with an arbitration agreement, “the

first task of a court . . . is to determine whether the parties

agreed to arbitrate that dispute. The court is to make

this determination by applying ‘federal substantive law

of arbitrability, applicable to any arbitration agreement

within the coverage of the act.’” Mitsubishi Motors Corp.

v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985)

(quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr.

Corp., 460 U.S. 1, 24 (1983) (emphasis added)). Where

parties have a contract to arbitrate, parties may not

“ignore the contract and resort to the courts.” Southland

Corp., 465 U.S. at 7.

This Court has made clear that the “primary

substantive provision of the [Federal Arbitration] Act,”

9 U.S.C. § 2, “is a congressional declaration of a liberal

federal policy favoring arbitration agreements.” Moses

H. Cone, 460 U.S. at 24. The very enactment of the FAA

exhibited Congress’s “inten[t] to foreclose state legislative

attempts to undercut the enforceability of arbitration

agreements.” Southland Corp., 465 U.S. at 16.

It is well-established that courts are openly and

intractably divided regarding what law, state or federal,

provides the definition of “arbitration” under the

FAA. In fact, the Alabama Supreme Court’s decision

acknowledged this divide and noted that “[c]ircuit unity

is highly improbable until the [Supreme Court of the

United States] grants certiorari and issues an opinion.”

App. 17a (quoting Emily H. Slay, Evanston Insurance Co.

v. Cogswell Properties: Which Definition of “Arbitration”

Should Control?, 38 Am. J. Trial Advoc. 377, 383 (2014)

(footnotes omitted)); see also James Dawson, Comment,

Contract after Concepcion: Some Lessons from the State

Courts, 124 Yale L.J. 233, 239 (2014) (“The courts of

appeals currently are divided over the question of whether

to define ‘arbitration’ under the FAA by reference to state

law or by reference to federal law.”).

Four circuit courts, the First, Second, Sixth, and

Tenth Circuits, have held federal law governs what

qualifies as “arbitration.” See Fit Tech, Inc. v. Bally Total

Fitness Holding Corp., 374 F.3d 1, 6 (1st Cir. 2004); Bakoss

v. Certain Underwriters at Lloyds of London Issuing

Certificate No. 0510135, 707 F.3d 140, 143–44 (2d Cir. 2013);

Evanston Ins. Co. v. Cogswell Props., LLC, 683 F.3d 684,

693 (6th Cir. 2012); Salt Lake Trib. Publ’g Co., LLC v.

Mgmt. Plan., Inc., 390 F.3d 684, 688–89 (10th Cir. 2004).

On the other hand, the Fifth and Ninth Circuits

hold state law governs “arbitration” under the FAA. See

Hartford Lloyd’s Ins. Co. v. Teachworth, 898 F.2d 1058,

1062–63 (5th Cir. 1990); Wasyl, Inc. v. First Boston Corp.,

813 F.2d 1579, 1582 (9th Cir. 1987).

Three other circuit courts have recognized this split of

authority. See generally Harrison v. Nissan Motor Corp.

in U.S.A., 111 F.3d 343, 350 (3d Cir. 1997) (explaining

“FAA does not define the term ‘arbitration,’ and both

courts and commentators have struggled to do so”);

United States v. Bankers Ins. Co., 245 F.3d 315, 322 (4th

Cir. 2001) (“Whether an agreement to enter into a nonbinding arbitration process is enforceable under the FAA

is a matter not well-settled in the federal courts, and we

have not yet directly addressed the question.”); Positano

Place at Naples I Condo. Ass’n, Inc. v. Empire Indem.

Ins. Co., 84 F.4th 1241, 1255 (11th Cir. 2023) (“We have

not decided the question of whether an appellate court

looks to state or federal law in determining whether an

appraisal process falls within the definition of ‘arbitration’

for purposes of the FAA, nor has the Supreme Court

directly addressed the question.”).

At the center of this split are significant questions

originating from this Court’s precedent regarding the

interplay between federal and state law in interpreting

and enforcing arbitration agreements. See Perry v.

Thomas, 482 U.S. 483, 492 n.9 (1987) (“[S]tate law . . . is

applicable if that law arose to govern issues concerning

the validity, revocability, and enforceability of contracts

generally. A state-law principle that takes its meaning

precisely from the fact that a contract to arbitrate is at

issue does not comport with this requirement of § 2.”);

see also Southland Corp., 465 U.S. at 20 (Stevens, J.,

concurring in part and dissenting in part) (“[T]he lower

courts generally look to State law regarding questions of

formation of the arbitration agreement under § 2, which

is entirely appropriate so long as the state rule does not

conflict with the policy of § 2.”). What this dynamic means

in application, however, is unclear and takes on different

forms in different courts. Circuits applying federal law

to define “arbitration” align with this Court’s precedent,

the FAA’s intent, and the instant facts.

Applying federal law to determine whether

a dispute resolution provision qualifies as

“arbitration” is consistent with the FAA and

congressional intent.

The FAA requires that courts use federal law to define

“arbitration” under the FAA. The circuits applying federal

law have properly reconciled this Court’s precedent

regarding the relationship between state and federal law

by focusing on the purpose of the FAA. The First Circuit

explained “the substance of [an] . . . agreement—who

promised to do what—is governed by state law . . ., but

whether what has been agreed to amounts to ‘arbitration’

under the Federal Arbitration Act depends on what

Congress meant by the term in the federal statute.

Assuredly Congress intended a ‘national’ definition for a

national policy.” Fit Tech, Inc., 374 F.3d at 6.

Similarly, the Second Circuit has long held that

whether parties are bound by an arbitration provision

under the FAA “is determined under federal law, which

comprises generally accepted principles of contract law.”

Genesco, Inc. v. T. Kakuchi & Co., Ltd., 815 F.2d 840, 845

(2d Cir. 1987). That court reaffirmed the application of

federal common law in defining “arbitration,” explaining

that “‘Congress sometimes intends that a statutory term

be given content by the application of state law,’ but absent

‘a plain indication to the contrary’ we presume that ‘the

application of the federal act is not dependent on state

laws.’” Bakoss, 707 F.3d at 143 (cleaned up) (quoting

Miss. Band of Choctaw Indians v. Holyfield, 490 U.S. 30,

43 (1989)). In fact, it noted the potential problems with

applying anything but federal law in these scenarios,

in that “[a]pplying state law would create a patchwork

in which the FAA will mean one thing in one state and

something else in another.” Id. at 144 (internal quotations

omitted).

Recognizing a similar concern, the Tenth Circuit held

that “[n]either the language nor the legislative history

of the FAA demonstrate that Congress plainly intended

state law to define the FAA’s central term. Not only does

the FAA lack a plain indication that state law should

govern, it is silent as to what law defines ‘arbitration.’

[The court could not], on the basis of congressional

muteness, conclude that state law should define the FAA’s

pivotal word.” Salt Lake Trib. Publ’g, 390 F.3d at 688–89.

Reaching this conclusion, the court opined that to define

“arbitration” using state law “would empower states to

define arbitration as they choose, thus limiting the FAA’s

utility.” Id. Such an outcome is contrary to the intent of

the FAA and this Court’s precedent.

Ultimately, and as the Sixth Circuit noted, “it seems

counter-intuitive to look to state law to define a term in

a federal statute on a subject as to which Congress has

declared the need for national uniformity.” Evanston Ins.

Co., 683 F.3d at 693 (quoting Portland Gen. Elec. Co. v.

U.S. Bank Trust Nat. Ass’n as Trustee for Trust No. 1,

218 F.3d 1085, 1091 (9th Cir. 2000) (Tashima & Lay, JJ.,

concurring)); see also Salt Lake Trib. Publ’g, 390 F.3d

at 689 (“In passing the FAA to curb state attempts to

eliminate arbitration provisions, Congress likely did not

delegate to the states the power to define arbitration in a

way that would circumscribe its availability.”).

The Alabama Supreme Court’s decision expressly

acknowledged this threshold split regarding whether

federal law or state law governs what qualifies as

“arbitration.” App. 16a.

The court also recognized that the question-of-law

issue naturally led to a second split of authority on how

to determine what qualifies as “arbitration” under the

FAA. App. 18a (“Cases seeking to describe a federal-law

definition of ‘arbitration’ provide various formulations.”).

If this Court holds federal law governs what qualifies as

“arbitration,” it then has the opportunity to clarify the

correct formulation for determining what constitutes

“arbitration” for purposes of the FAA.

B. The two courts applying state law to determine

whether a dispute resolution provision qualifies

as “arbitration” fail to meaningfully analyze

the FAA.

Contrary to the majority of circuits, the Fifth and

Ninth Circuits apply state law to define “arbitration”

under the FAA. See Teachworth, 898 F.2d at 1062–63;

Wasyl, Inc., 813 F.2d at 1582.

In Wasyl, the Ninth Circuit decided w ithout

substantive analysis that state law controlled the definition

of “arbitration” because California law “d[id] not conflict

in any way with the federal policy favoring arbitration

agreements, and in fact seem[ed] to promote such policy.”

Wasyl, Inc., 813 F.2d at 1582. Notably, Wasyl has since

been questioned by Ninth Circuit judges. See Portland

Gen. Elec. Co., 218 F.3d at 1091 (Tashima & Lay, JJ.,

concurring) (writing “separately to express . . . doubts

as to whether Wasyl . . ., by which [the court was] bound

and which govern[ed] the disposition of th[e] case, was

correctly decided”).

Simply following the Ninth Circuit, the Fifth Circuit in

Teachworth has applied Texas law to define “arbitration.”

Teachworth, 898 F.2d at 1062–63.

Neither circuit has expanded on applying state law

as opposed to federal law. See Bakoss, 707 F.3d at 144

(explaining “circuits that apply state law have ‘articulated

few reasons for doing so’” and noting the “Ninth Circuit

decision in Wasyl ‘assumed without real analysis that state

law governed’” (first quoting Liberty Mut. Grp., Inc. v.

Wright, No. 12–CV–0282, 2012 WL 718857, at *4 (D.Md.

Mar. 5, 2012); then quoting Fit Tech, 374 F.3d at 6)).

II. The Alabama Supreme Court’s decision illustrates

the need for a uniform federal rule.

Acknowledging that there was a clear and longstanding

split of authority among the federal circuit courts as to

“whether state or federal law should define arbitration” and

that “[c]ases seeking to describe a federal-law definition of

‘arbitration’ provide various formulations,” App. 17a–18a,

the Alabama Supreme Court purported to analyze the

issue under both federal and Alabama law. Ultimately,

however, the court’s approach in applying federal and state

law is inconsistent with this Court’s precedent requiring

federal preemption to the extent state law conflicts. The

court disregarded Great American’s position that only

federal law controlled, and its purported analysis failed

to apply federal law accurately. See App. 28a. The court

was not only incorrect, but its ruling conflicts with the

decisions of numerous other courts.

The court’s federal-law analysis acknowledged that

courts have identified various formulas to determine

whether a dispute resolution procedure qualifies as

“arbitration” under the FAA. App. 18a. Recognizing that

no uniform formula exists, the court held the dispute

resolution provision did not “fulfill multiple elements of

so-called ‘classic arbitration.’” App. 18a. Further, the

court proceeded to focus on the treatment of appraisal

provisions under Alabama law as a test for whether the

FAA applied.

The Alabama Supreme Court’s analysis, applying

federal and state law, opens the door for any state to avoid

the FAA with unreasonable state law restrictions—e.g.,

restricting the right of the parties agreeing to arbitration

to “select their own procedure,” or to agree to arbitrate

some things and not others. See AT&T Mobility LLC v.

Concepcion, 563 U.S. 333 (2011); Mitsubishi Motors Corp.,

473 U.S. at 628.

The cou r t ’s opinion here ref lects A labama’s

longstanding hostility towards arbitration. See A la. Code

§ 8-1-41 (“The following obligations cannot be specifically

enforced: . . . (3) An agreement to submit a controversy to

arbitration . . . .”). The Court has previously recognized

the Alabama Supreme Court’s misapplications of the FAA

and controlling authority when reviewing agreements to

arbitrate. See York Int’l v. Alabama Oxygen Co., 465 U.S.

1016 (1984) (summarily reversing, in light of Southland,

Alabama Supreme Court’s opinion that the FAA did not

apply in state courts); Allied-Bruce Terminix Companies,

Inc. v. Dobson, 513 U.S. 265 (1995) (reversing Alabama

Supreme Court’s opinion that the FAA’s requirement

that the contract containing the arbitration agreement

“involves commerce” did not reach the limit of Congress’s

Commerce Clause authority); Citizens Bank v. Alafabco,

Inc., 539 U.S. 52 (2003) (summarily reversing Alabama

Supreme Court’s opinion that each contract containing

an arbitration agreement had to itself have a “substantial

effect on interstate commerce” to be enforceable under

the FAA).

Here, once again, the Alabama Supreme Court

inserted new barriers to arbitration in the form of

definitional standards—standards not recognized by this

Court or federal circuit courts—regarding what qualifies

a dispute resolution process as arbitration under federal

law.

For example, the Alabama Supreme Court held the

parties’ agreed-to dispute resolution procedure was

not “arbitration” under the FAA because the entire

controversy—meaning all asserted claims—between

Great American and Crystal Shores (relating to coverage

for Hurricane Sally damage) could not be resolved

through that procedure. App. 24a. By imposing this new

“all claims” requirement, discussed infra, the Alabama

Supreme Court improperly added an undue restriction

to the established understanding of “arbitration.” This

restriction directly conflicts with this Court’s precedent

and FAA principles. The court’s erroneous construction of

“arbitration” is primarily driven by its misunderstanding

that, to be classified as “arbitration,” either under state

or federal law, the dispute resolution procedure must

“resolve[] the entire dispute between the parties.” App.

24a–28a; see also id. at 32a–33a. In other words, the

court explained that a dispute resolution procedure is

only considered “arbitration” when it resolves all claims

between the parties.

This approach directly conflicts with this Court’s

settled precedent that the terms of a parties’ agreement to

submit a particular kind of dispute to binding arbitration

must be enforced under the FAA, even if that results

in “piecemeal” treatment of claims (i.e., arbitration of

some claims between parties but litigation of others). See

Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 221

(1985) (“The preeminent concern of Congress in passing

the [FAA] was to enforce private agreements into which

parties had entered, and that concern requires that we

rigorously enforce agreements to arbitrate, even if the

result is ‘piecemeal’ litigation . . . .”).

Building on Dean Witter, this Court further explained

that, under the FAA, “if a dispute presents multiple claims,

some arbitrable and some not, the former must be sent to

arbitration even if this will lead to piecemeal litigation.”

KPMG LLP v. Cocchi, 565 U.S. 18, 19 (2011) (citing Dean

Witter, 470 U.S. at 217). Resolving different claims in

different forums “is not the result of any choice between

the federal and state courts [but] occurs because the

relevant federal law requires piecemeal resolution when

necessary to give effect to an arbitration agreement.”

Moses H. Cone, 460 U.S. at 20; see also Dean Witter,

470 U.S. at 217–18 (holding “the Act leaves no place for

the exercise of discretion by a district court, but instead

mandates that district courts shall direct the parties to

proceed to arbitration on issues as to which an arbitration

agreement has been signed,” and that the FAA requires a

court to “compel arbitration of pendent arbitrable claims

when one of the parties files a motion to compel, even where

the result would be the possibly inefficient maintenance

of separate proceedings in different forums”).

Instead of looking to the language of the dispute

resolution procedure, the court clung to the parties’ use

of the word “appraisal” to describe the binding out-ofcourt procedure they were agreeing to. App. 29a–37a

(emphasizing that Alabama Supreme Court’s prior

rulings concluded “insurance-appraisal clauses” are

not “arbitration clauses” and explaining “Alabama law

would not automatically construe an appraisal clause

to be an arbitration clause”). The court engaged in

minimal analysis of whether the characteristics of the

dispute resolution procedure qualified as arbitration. In

doing so, it ignored controlling authority and diminished

the structure of the process provided. The fallacy of

its reasoning is perhaps best illustrated by imagining

that the parties used the word “arbitration” in place of

appraisal. That would change nothing about the procedure

they agreed to nor its binding effect. Nonetheless, the

Alabama Supreme Court effectively relied on the label

“appraisal” as a complete definition of the procedure

without analyzing the substantive aspects of the dispute

resolution procedure. Despite its purported analysis of the

dispute resolution provision under both federal and state

law, the court misapplied federal law and reinvigorated

Alabama law’s historic hostility towards arbitration.

III. The questions presented are exceptionally

important, recurring, and warrant this Court’s

review.

Arbitration is a Congressionally endorsed procedure

permitting parties to secure a fair and reasonable private

method of resolving disputes. Parties routinely execute,

and courts routinely give effect to, agreements containing

dispute resolution provisions. See Southland Corp., 465

U.S. at 7 (criticizing state court judgment that “nullif[ed]

a valid contract made by private parties under which they

agreed to submit all contract disputes to final, binding

arbitration”). Thus, the instant facts are emblematic of

how cases underlying these splits of authority generally

arise. When drafting these agreements, parties need

clarity as to what requirements it must comply with to

ensure the alternate dispute processes are valid and

enforceable.

The split of authority results in inconsistent

application of a policy intended to create

national uniformity.

In the key respects at issue here, the Federal

Arbitration Act—a federal statute that Congress intended

to create uniform national policy—is currently being

applied haphazardly across the federal circuits and state

courts of last resort. The well-defined split of authority

has been noted by most circuit courts of appeals and many

commentators. See Harrison, 111 F.3d at 350 (“We note

first that the FAA does not define the term ‘arbitration,’

and both courts and commentators have struggled to do

so.” (emphasis added)). To permit this divide to continue

growing denigrates the sole purpose of the FAA and

reinvigorates historic hostility towards arbitration

agreements.

Absent this Court making clear that a uniform

federal definition of “arbitration” controls under the FAA,

courts are currently left to guess whether “arbitration”

in 9 U.S.C. § 2 is defined via state law or federal law. And

parties are left to blindly draft agreements without a clear

grasp on the controlling law or whether their agreement

to submit a particular dispute over a particular issue to

binding resolution by a third party rather than a court—

as in the agreement at issue here—will be considered

“arbitration.” Such variation creates outcomes that run

directly contrary to the central purpose of the FAA:

to overcome hostility to, and to create uniformity in

enforcement of, arbitration agreements.

These diverging approaches are a direct result of the

split of authority and this Court not defining “arbitration”

under the FAA. Circuits using federal law to define

“arbitration” are left with the “interesting question”

of determining “how closely the specified procedure

resembles classic arbitration and whether treating the

procedure as arbitration serve[s] the intuited purposes

of Congress.” Fit Tech, Inc., 374 F.3d at 7. As courts and

commentators have grappled with this definition, what

the courts consider “classic arbitration” takes on different

iterations with varying levels of specificities.

The First Circuit in Fit Tech recognized that

“common incidents of arbitration” include “an independent

adjudicator, substantive standards (the contractual terms

of the pay-out), and an opportunity for each side to present

its case.” Id. Acknowledging this approach, the Eleventh

Circuit has outlined elements of “classic arbitration”:

(i) an independent adjudicator, (ii) who applies

substantive legal standards (i.e. the parties’

agreement and background contract law), (iii)

considers evidence and argument (however

formally or informally) from each party, and

(iv) renders a decision that purports to resolve

the rights and duties of the parties, typically by

awarding damages or equitable relief.

Advanced Bodycare Sols., LLC v. Thione Int’l, Inc.,

524 F.3d 1235, 1239 (11th Cir. 2008). In contrast, the

Second Circuit held that “under the FAA ‘an adversary

proceeding, submission of evidence, witnesses and crossexamination are not essential elements of arbitration.’”

Bakoss, 707 F.3d at 143 (emphasis added) (quoting AMF

Inc. v. Brunswick Corp., 621 F. Supp. 456, 460 (E.D.N.Y.

1985)).

Placing weight on whether the provision provides

for definitive settlement between the parties, the Bakoss

court affirmed that a contractual provision was an

“arbitration clause because the parties agreed to submit

a medically-related policy dispute to a third Physician

who would make a final and binding decision.” Bakoss, 707

F.3d at 143 (cleaned up) (first citing McDonnell Douglas

Fin. Corp. v. Pa. Power & Light Co., 858 F.2d 825, 830

(2d Cir. 1988); then citing AMF Inc., 621 F. Supp. at 460);

see also Milligan v. CCC Info. Servs. Inc., 920 F.3d 146,

151–52 (2d Cir. 2019) (“A contractual provision that clearly

manifests an intention by the parties to submit certain

disputes to a specified third party for binding resolution

is arbitration within the meaning of the FAA.” (internal

quotations omitted)).

Consistent with this approach, the Tenth Circuit

explained that “[c]entral to any conception of classic

arbitration is that the disputants empowered a third

party to render a decision settling their dispute.” Salt

Lake Tribune, 390 F.3d at 689–90 (quoting McDonnell

Douglas, 858 F.2d at 830 (“[W]hat is important is whether

the parties clearly intended to submit some disputes to

their chosen instrument for the definitive settlement of

grievances under the Agreement.” (cleaned up)).

In addition to the courts’ attempts to outline

qualifying criteria, see Advanced Bodycare, 524 F.3d

at 1239, commentators have also attempted to provide

uniform guidance to determine whether a dispute

resolution procedure qualifies as “arbitration.” These

criteria include:

• neutral arbiter or tripartite panel with

the umpire selected by the parties or their

party-arbitrators

• some modicum of discovery

• a n ev ident ia r y hea r i ng i nclud i ng

examination of witnesses

• both parties having an opportunity to make

arguments

• the resulting appraisal is final and binding

as to value

• the parties have agreed to an “entry of

judgment” provision required by FAA § 9

1 Thomas H. Oehmke & Joan M. Brovins, Commercial

Arbitration § 1.11 (3d ed. 2023). Yet, because each circuit

places emphasis on different factors, the courts analyze

dispute resolution processes differently. This results in

an inconsistent application of federal law across federal

courts.

B. The split further results in direct contradiction

among courts.

Whereas dispute resolution procedures resulting in

definitive settlement are more likely to clearly fall within

the FAA’s control, the analysis is not truncated when a

process suggests nonbinding resolution. Rather, when

the binding nature of the dispute process is questioned,

the analysis reveals a deeper split. See Harrison, 111

F.3d at 350 (explaining that debate regarding definition

of “arbitration,” “has occurred largely in the context of

whether the FAA applies to nonbinding arbitration”).

In Milligan, the Second Circuit enforced a dispute

resolution procedure that contained a reservation-ofrights clause that stated, “[w]e will not waive our rights

by any of our acts relating to appraisal.” Milligan, 920

F.3d at 149. The court reasoned that an agreement need

not state the words “arbitrate,” “final,” or “binding” to

qualify as a procedure under the FAA. Id. at 151–52.

If the provision “clearly manifests an intention by the

parties to submit certain disputes to a specified third

party for binding resolution,” the procedure falls within

the meaning of the FAA. Id. at 152 (quoting McDonnell

Douglas, 858 F.2d at 831).

On the other hand, the Sixth Circuit in Evanston,

held that a reservation-of-rights provision disqualifies a

dispute resolution process from the benefits of the FAA.

Evanston Ins. Co., 683 F.3d at 693–94. It explained that

when an insurer retained rights to deny the claim after

the parties submitted the “determination of the amount of

loss and the value of the [b]uilding” to an alternate dispute

process, such a provision did not provide for “final and

binding remedy by a neutral third party.” Id. at 693–94.

Notably, the court’s analysis of this reservation-of-rights

clause was dicta because it was unnecessary for the court

resolving the case. These differing applications of federal

law inevitably result in inconsistent outcomes.

Various district courts have grappled with provisions

that permit a party to retain its right to deny a claim. See

Martinique Properties, LLC v. Certain Underwriters at

Lloyd’s London, 567 F. Supp. 3d 1099, 1107–08 (D. Neb.

2021) (collecting cases). Such divergence under federal

law reflects the complex nature of this deeply engrained

split of authority.

As the Alabama Supreme Court conceded, and as is

repeatedly demonstrated by the federal courts, “[c]ircuit

unity is highly improbable until the court grants certiorari

and issues an opinion.” App. 17a (quoting Emily H. Slay,

Evanston Insurance Co. v. Cogswell Properties: Which

Definition of “Arbitration” Should Control?, 38 Am. J.

Trial Advoc. 377, 383 (2014) (footnotes omitted)). This issue

calls for uniformity in federal and state courts. Federal

law should govern, and the Court needs to clarify what

qualifies as arbitration.

IV. This case is an ideal vehicle.

This case concerns a dispute resolution procedure

that is, in all but its name, an arbitration provision. The

provision itself evidences characteristics that courts

have determined qualify as arbitration. Despite its

clear characteristics, the Alabama Supreme Court was

deterred by the absence of the word “arbitration” in the

provision. App. 37a (“The language of the clause reflects

that the parties intended the clause to be what it states

it is: an appraisal clause.”). Although some courts have

acknowledged that magic words need not be present to

bring a provision within the protection of the FAA, this

is not consistent across the courts. See Milligan, 920 F.3d

at 149.

The provisions affected by the Alabama Supreme

Court’s ruling on this issue are not in the mine run of

arbitration cases. These cases involve a small, specific set

of dispute resolution provisions that do not expressly use

the word “arbitration.” But federal law requires focus on

the substance of the provision, not the labels used.

The Alabama Supreme Court’s decision seized on

linguistic form over substance to resurrect its antiarbitration stance. App. 34a. Unwilling to look past the

label to the elements of the procedure the parties agreed

to in the dispute resolution provision, the court denied

the parties the agreed-to forum for resolution. Oehmke &

Brovins, Commercial Arbitration § 1.11 (“Under the FAA,

an appraisal should be treated as an arbitral award . . .

when the valuation is achieved by the traditional trappings

of arbitration . . . .”). But, as discussed supra, this is

not the same approach employed by many other courts.

Because courts are handling these differently, there is

a critical need to make clear that a uniform federal law

defines what constitutes arbitration under the FAA, so

that the same definition applies consistently in federal

courts and state courts. The drafters of the FAA sought

to provide protection for private dispute resolution, not

protection to use of specific labels.

This case presents the perfect vehicle for answering

the long-percolating questions here presented.

CONCLUSION

For the foregoing reasons, this Court should grant the

petition for a writ of certiorari and resolve the circuit split

on whether federal law or state law governs what qualifies

as an “arbitration” provision under the FAA. Additionally,

the court should grant certiorari to provide clarity on

whether a contract’s dispute resolution provision requiring

parties to submit property loss valuation disputes to

an independent appraisal panel for binding resolution

qualifies as “arbitration” under the FAA.

Respectfully submitted,

Scott Burnett Smith

Counsel of Record

Hunter Pearce

Schyler B. Burney

Bradley A rant

Boult Cummings LLP

200 Clinton Avenue W,

Suite 900

Huntsville, Alabama 35801

(256) 517-5100

ssmith@bradley.com

Counsel for Petitioner

Marc James Ayers

Michael R. Pennington

T. Brooks Proctor

Bradley A rant

Boult Cummings LLP

One Federal Place

1819 5th Avenue N

Birmingham, Alabama 35203

March 21, 2024

APPENDIX

TABLE OF APPENDICES

Page

A P P E N DI X A — O P I N ION O F T H E

SUPREME COURT OF ALABAMA, DATED

DECEMBER 22, 2023 . . . . . . . . . . . . . . . . . . . . . . . . 1a

Appendix OF

A THE SUPREME

APPENDIX A — OPINION

COURT OF ALABAMA, DATED

DECEMBER 22, 2023

SUPREME COURT OF ALABAMA

OCTOBER TERM, 2023-2024

December 22, 2023, Released

SC-2023-0092

GREAT AMERICAN INSURANCE COMPANY

CRYSTAL SHORES OWNERS ASSOCIATION, INC.

Appeal from Baldwin Circuit Court.

(CV-21-900497).

PER CURIAM.

Great A mer ican Insurance Company (“Great

American”) appeals from the Baldwin Circuit Court’s

order denying its motion to invoke the appraisal procedure

contained in a commercial-property insurance policy Great

American issued to Crystal Shores Owners Association,

Inc. (“Crystal Shores”), concerning the Crystal Shores

Condominium complex (“the property”) located on West

Beach Boulevard in Gulf Shores. We dismiss the appeal.

Appendix A

I. Facts

According to Crystal Shores’ complaint, on September

30, 2019, RSUI Indemnity Company (“RSUI”) and

Landmark American Insurance Company (“Landmark”)

issued a commercial-property insurance policy to Crystal

Shores for a period of one year from the date of issuance.1

On the same date, the complaint alleged, Great American

issued a commercial-property insurance policy to Crystal

Shores for a period of one year from the date of issuance. 2

On September 16, 2020, Hurricane Sally made landfall

on the Alabama Gulf Coast. Crystal Shores’ complaint

alleged that Hurricane Sally caused “substantial damages

to the Crystal Shores Condominium.” According to its

complaint, Crystal Shores “timely and properly reported

its Hurricane Sally claim to the Third-Party Defendants

[Great American, RSUI, and Landmark] for damage to

[the property] sustained as a result of the storm event.”

Crystal Shores alleged that the main water line to

the property had been turned off in preparation for the

imminent landfall of Hurricane Sally. However, the owner

1. In its answer to Crystal Shores’ complaint, RSUI agreed

that Landmark had issued a commercial-property insurance policy to

Crystal Shores, but it denied that RSUI was a party to the Landmark

insurance policy. That dispute is not before us in this appeal.

2. The Great American insurance policy listed “Crystal Shores

Condominium” as the “Named Insured,” but there appears to be

no dispute that “Crystal Shores Owners Association, Inc.,” is the

holder of the policy.

Appendix A

of Unit 606 had left on the faucet to the bathtub in that

unit before vacating the premises because of the hurricane

emergency. After Hurricane Sally had passed, the water

flow was restored to the property, and the faucet in Unit

606 ran for over 24 hours before it was discovered by

persons returning to the property. Crystal Shores alleged

that the constant running of water in the bathtub of Unit

606 resulted in an overflow of water that flooded an entire

stack of condominium units. Crystal Shores alleged that it

“timely submitted the Unit 606 tub overflow claim to thirdparty defendants RSUI, Landmark, Great American

[and fictitiously named defendants] seeking coverage to

mitigate and remediate the damage resulting from this

covered loss.”

According to Crystal Shores’ complaint, it

“retained Bowen Wilson, Inc., d/b/a Servpro

of Montgomery to mitigate and remediate

damage caused by Hurricane Sally as well as

the Unit 606 tub overflow claim. Crystal Shores

timely submitted to Third-Party Defendants

all invoicing and supporting documentation

provided by Servpro pertaining to mitigation

and remediation scopes of work performed

by Servpro to mitigate and repair damage

caused by Hurricane Sally and the Unit 606

tub overflow claim.

“27. However, third-party defendants RSUI,

Landmark, Great American, and [fictitiously

named defendants] have fa i led to f ully

Appendix A

compensate [Crystal Shores] for the Unit 606

tub overflow claim and have further refused

to compensate [Crystal Shores] for services

allegedly rendered by Servpro to mitigate and

remediate damage caused by both Hurricane

Sally and the Unit 606 tub overflow.”

On May 6, 2021, Bowen-Wilson, Inc., d/b/a Servpro

of Montgomery (“Servpro”), commenced an action in

the Baldwin Circuit Court by filing a complaint against

Crystal Shores. In that complaint, Servpro alleged that

Crystal Shores had not fully compensated Servpro for the

mitigation and construction work Servpro had performed

on the property pursuant to a contract between Servpro

and Crystal Shores. On June 11, 2021, Crystal Shores

filed an answer and counterclaim in response to Servpro’s

complaint.

On June 24, 2022, Crystal Shores filed in the Baldwin

Circuit Court a “Motion for Relief to File Third-Party

Complaint” in which Crystal Shores alleged that one

reason it had not fully paid Servpro’s invoices was that

“Third-Party Defendants RSUI, Landmark

and Great American refused to compensate

[Crystal Shores] for all invoices [Crystal Shores]

received from Servpro pertaining to the scopes

of work allegedly performed by Ser vpro

pertaining to both losses [the Hurricane Sally

loss and the Unit 606 tub-overflow claim].

Accordingly, [Crystal Shores] was unable to

fully compensate Servpro for services allegedly

Appendix A

rendered mitigating and remediating the

losses.”

Crystal Shores thus sought leave to file a third-party

complaint against RSUI, Landmark, and Great American

“[s]o that this case can be fully and fairly litigated.” On

July 8, 2022, the circuit court granted Crystal Shores’

motion.

On July 28, 2022, Crystal Shores filed a third-party

complaint against RSUI, Landmark, Great American, and

fictitiously named defendants. As we already have noted,

Crystal Shores’ complaint alleged that it filed insurance

claims for damage to the property stemming from both

Hurricane Sally and the Unit 606 bathtub overflow. In

addition to the allegations we already have detailed,

Crystal Shores’ complaint asserted:

“30. Third-Party Plaintiff Crystal Shores

has incurred significant costs mitigating

interior damage, replacing the roof and

repairing exterior damage, as well as other

damage the building sustained as a result of

Hurricane Sally and the unit 606 tub overflow,

all of which has been timely and properly

reported to the third-party Defendants.

“31. However, third-party Defendants

RSUI, Landma rk, Great A mer ican and

[fictitiously named defendants] have failed to

promptly and/or properly investigate [Crystal

Shores’] losses.

Appendix A

“32. Defendants RSUI, Landmark, Great

American and [fictitiously named defendants]

have further failed to timely and/or properly

compensate Crystal Shores for losses sustained

as a result of Hurricane Sally and the unit 606

tub overflow.

“33. Defendants RSUI, Landmark, Great

American and [fictitiously named defendants]

have further failed to submit [Crystal Shores’]

claims to a cognitive evaluation or review and

have breached the insuring agreements and

committed bad faith by refusing to compensate

[Crystal Shores] for damage the building and

units sustained as a result of Hurricane Sally

and the unit 606 tub overflow.”

Count I of Crystal Shores’ complaint asserted against

Great American and the other third-party defendants

bad-faith claims: failure to pay insurance proceeds and

failure to investigate. That count included the allegation

that Great American and the other third-party defendants

had “intentionally and/or recklessly failed to timely and/

or properly investigate and/or pay [Crystal Shores’] claim

for damages sustained as a result of the storm event and

the Unit 606 tub overflow.” Count II of Crystal Shores’

complaint asserted claims against Great American and

the other third-party defendants alleging breach of

“the terms and conditions of the insurance policies ... by

failing to timely and properly investigate and pay [Crystal

Shores] for losses sustained as a result of the storm event

and the Unit 606 tub overflow, said losses occurring during

Appendix A

the policy periods.” Crystal Shores attached copies of the

insurance policies -- including a copy of the commercialproperty insurance policy issued by Great American -- to

its complaint.

On September 30, 2022, Great American filed in the

circuit court a “Motion to Dismiss, or in the Alternative

to Stay and Compel Compliance with the Appraisal

Procedure Specified in the Policy.” In that motion, Great

American argued that the parties’ dispute about the

amount of the loss suffered by Crystal Shores was subject

to an appraisal procedure described in the insurance

policy. Specifically, the appraisal clause in the Great

American insurance policy provided:

“B. Appraisal

“If [Great American] and [Crystal Shores]

disagree on the value of the property, the

amount of Net Income and operating expenses,

or the amount of loss, either may make written

demand for an appraisal of the loss. In this

event, each party will select a competent and

impartial appraiser. The two appraisers will

select an umpire. If they cannot agree, either

may request that selection be made by a judge of

a court having jurisdiction. The appraisers will

state separately the value of the property, the

amount of Net Income and operating expenses,

or the amount of loss. If they fail to agree, they

will submit their differences to the umpire. A

decision agreed to by any two will be binding.

Each party will:

Appendix A

“1. pay its chosen appraiser; and

“2. bear the other expenses of the

appraisal and umpire equally.

“If there is an appraisal, [Great American]

will still retain [its] right to deny the claim.

“Neither the appraisers nor the umpire

shall attempt to resolve any issue of insurance

coverage, policy exclusions, compliance with

the Policy terms and conditions, or any issues

concerning the Limits of Insurance available

under the Policy.”

(Bold typeface in original.) In its motion, Great American

also noted that a previous section of the insurance policy

provided:

“SELECT BUSINESS POLICY CONDITIONS

“This Coverage Part is subject to the

following conditions.

“General Conditions

“....

“D. Legal Action Against Us

“No one may bring a legal action against

[Great American] under this Coverage Part

unless:

Appendix A

“1. there has been full compliance with all

of the terms of this Coverage Part; and

“2. the action is brought within 2 years

after the date on which the direct physical loss

or damage occurred.”

(Bold typeface in original.)

In its September 30, 2022, motion, Great American

asserted:

“8. The individual appraisal process

mandated by the Great American Policy fully

encompasses the claims set forth against Great

American in the Third-Party Complaint, and

Crystal Shores’ compliance with it will establish

the amount of loss associated with the claims

made under the Great American Policy for

damages sustained by the Property. Crystal

Shores does not contend that it has complied

with the appraisal provision.”

Because, according to Great American, “the appraisal

provision in the Great American Policy is mandatory once

invoked,” and because “[t]he appraisal, once conducted,

will resolve this controversy in its entirety, since all

claims in this action hinge upon the determination of the

amount of the ‘loss’ sustained by the Property,” Great

American contended that the appraisal clause was a

written arbitration agreement pursuant to the Federal

Arbitration Act (“the FAA”), 9 USC § 1 et seq. Great

10a

Appendix A

American therefore requested that the circuit court

dismiss Crystal Shores’ claims against it or stay the action

and order Crystal Shores “to submit to the individual

appraisal process required under the express terms of

the policy.”

On December 1, 2022, Crystal Shores filed a response

in opposition to Great American’s motion to compel

an appraisal of the dispute over the amount of the loss

incurred by Crystal Shores. In that response, Crystal

Shores asserted that Great American had denied payment

on its submitted hurricane-damage insurance claim based

on “certain exclusions and ‘coverage issues,’” not based on

a disagreement over the amount of the loss. In support of

that argument, Crystal Shores cited -- and attached to its

response -- an October 27, 2020, letter Great American

had sent to Crystal Shores. Relying on that letter and on

Rogers v. State Farm Fire & Casualty Co., 984 So. 2d 382,

392 (Ala. 2007), which Crystal Shores argued stood for

the proposition that “‘[q]uestions of coverage and liability

should be decided only by the courts, not [by] appraisers,’”

Crystal Shores contended that its action should not be

stayed for purposes of an appraisal because there were

questions about coverage, not just the amount of the loss,

at issue in the case.

On December 19, 2022, Great American filed a

“Supplemental Submission in Support of its Motion

to Dismiss, or in the Alternative to Stay and Compel

Compliance with the Appraisal Procedure Specified in the

Policy.” In that supplemental submission, Great American

argued that the coverage-issues dispute between Crystal

11a

Appendix A

Shores and Great American had concerned Crystal

Shores’ claim for damage stemming from Hurricane

Sally and that “[t]he Hurricane Sally Claim has been

resolved between Great American and Crystal Shores.

The Hurricane Sally Claim is also not part of Crystal

Shores’ Third-Party allegations against Great American.”

The supplemental submission further asserted that

“[t]here are no coverage issues related to the Unit 606

Claim [the bathtub-overflow claim] under Great American’s

policy, and the Hurricane Sally Claim was resolved in

Great American’s December 16, 2020, correspondence

disclaiming coverage.” In support of those contentions,

Great American attached to its supplemental submission a

December 16, 2020, letter from Great American adjuster

Mark Erlandson, which stated that Great American had

“completed its investigation into this claim involving wind

and water damage to the Crystal Shores Condominium

building that occurred during Hurricane Sally” and that

“the facts of the loss and the Policy terms ... require us to

decline coverage for a portion of the claim as submitted.”

Additionally, Great American attached to its supplemental

submission an affidavit from Erlandson stating that

“Great American has not received any correspondence

from Crystal Shores or its attorneys disputing Great

American’s handling of the [Hurricane Sally] claim itself.”

Because, according to Great American, none of Crystal

Shores’ claims against it involved insurance-coverage

issues, Great American argued that its motion to compel

an appraisal of the dispute over the amount of the loss

incurred by Crystal Shores should be granted.

12a

Appendix A

On January 6, 2023, the circuit court entered an order

denying Great American’s motion to dismiss or to stay the

action and compel compliance with the insurance policy’s

appraisal procedure. The order did not specify the circuit

court’s reasons for its decision. On February 2, 2023, Great

American appealed. On April 14, 2023, Great American

filed in the circuit court a motion to stay the proceedings

in the circuit court pending resolution of its appeal; the

circuit court did not rule on that motion.

On May 11, 2023, Crystal Shores filed in this Court

a motion to dismiss Great American’s appeal for lack of

jurisdiction because, Crystal Shores argued, the appeal

stemmed from a nonfinal interlocutory order. Specifically,

Crystal Shores contended that Great American’s appeal

was not cognizable under Rule 4(d), Ala. R. App. P.,

because the appeal did not stem from “[a]n order granting

or denying a motion to compel arbitration.” In support

of its argument, Crystal Shores attached to its motion

a copy of this Court’s order dismissing an appeal by

Baldwin Mutual Insurance Company (“Baldwin Mutual”)

in Baldwin Mutual Insurance Co. v. Dixon (No. 1100162,

Jan. 12, 2011), in which the Court stated that “the appeal

is dismissed as from a non-appealable order.” In order

to provide context for that order, Crystal Shores also

attached to its motion to dismiss a copy of Baldwin

Mutual’s appellate brief in Dixon, seeking to demonstrate

that Baldwin Mutual had, like Great American in this case,

appealed from a circuit court’s order denying a motion to

dismiss and demand for an appraisal.

13a

Appendix A

On May 15, 2023, the Supreme Court Clerk’s Office

issued a show-cause order requiring Great American to

respond to Crystal Shores’ motion to dismiss the appeal.

On the same date, Great American filed with this Court

an emergency motion to stay the proceedings in the circuit

court pending resolution of the appeal. On May 19, 2023,

Great American filed with this Court its response to the

show-cause order. Great American contended that “courts

across the country have recognized [that], ‘[u]nder the

Federal Arbitration Act, [9 U.S.C. § 1 et seq.], appraisal

provisions are regularly treated as arbitration provisions

by the courts and enforced in the same manner.’ Walker

v. Allstate Prop. & Cas. Ins. Co., No. 2:19-CV-701-RDP, ...

n.3, 2020 U.S. Dist. LEXIS 41160 (N.D. Ala. Mar. 10,

2020).” Great American further asserted that the order

issued in Dixon “contains no stated rationale and has no

precedential value.” In support of that assertion, Great

American attached to its response a copy of Baldwin

Mutual’s response to a show-cause order from this Court

requiring it to explain why its appeal should not be

dismissed in which Baldwin Mutual had argued that “in

Alabama appraisal under an insurance policy is considered

analogous to demands for arbitration and this Court has

applied the same standards to both.” In contrast, Great

American contended, it had cited multiple cases from other

jurisdictions showing that appraisal clauses are treated

as arbitration clauses.

On May 23, 2023, Crystal Shores filed a reply to

Great American’s response to the show-cause order. In

its reply, Crystal Shores argued that the case relied

upon by Great American, Walker v. Allstate Prop. & Cas.

14a

Appendix A

Ins. Co., No. 2:19-CV-701-RDP, 2020 U.S. Dist. LEXIS

41160, Mar. 10, 2020 (N.D. Ala. 2020) (not reported in

Federal Supplement), “has no applicability to the present

issue before this Court because the Walker Court “did

not analyze whether an appellate court has jurisdiction

pursuant to Rule 4(d)[, Ala. R. App. P.,] for purposes of

reviewing the denial of an interlocutory non-final order

such as the one presently before this Court.” Crystal

Shores further argued that if Great American wanted

to “avail itself of the procedural mechanism within Rule

4(d) of the Alabama Rules of Appellate Procedure to

appeal the denial of a motion to compel arbitration, Great

American simply could have added an arbitration clause

to its contract of insurance.”

On May 26, 2023, this Court entered an order

granting Great American’s emergency motion to stay the

proceedings in the circuit court pending resolution of the

appeal and placing Crystal Shores’ motion to dismiss the

appeal under submission.

II. Analysis

As the rendition of facts details, the threshold issue in

this case is whether this Court has jurisdiction to consider

Great American’s appeal of the circuit court’s order

denying its motion to dismiss or to stay the action and

compel compliance with the insurance policy’s appraisal

procedure. It is undisputed that Great American’s only

asserted basis for jurisdiction is Rule 4(d), Ala. R. App.

P., which provides:

15a

Appendix A

“An order granting or denying a motion to

compel arbitration is appealable as a matter of

right, and any appeal from such an order must

be taken within 42 days (6 weeks) of the date

of the entry of the order, or within the time

allowed by an extension pursuant to Rule 77(d),

Alabama Rules of Civil Procedure.”

(Emphasis added.) Jurisdiction under Rule 4(d) necessarily

requires Great American to contend that the appraisal

clause is, in fact, an arbitration clause. Great American

does so by quoting snippets from a few federal cases that

have examined whether appraisal clauses in insurance

contracts should be treated as arbitration clauses. For

example, in Milligan v. CCC Information Services Inc.,

920 F.3d 146, 152 (2d Cir. 2019), the United States Court

of Appeals for the Second Circuit concluded:

“The appraisal process here constitutes

arbitration for purposes of the FA A. The

appraisal provision identifies a category

of disputes (disag reements between the

parties over ‘the amount of loss’), provides for

submission of those disputes to specified third

parties (namely, two appraisers and the jointlyselected umpire), and makes the resolution by

those third parties of the dispute binding (by

stating that ‘[a]n award in writing of any two

will determine the amount of the loss’).” 3

3. Great American also emphasizes the statement from a

footnote in Walker v. Allstate Prop. & Cas. Ins. Co., No. 2:19-CV701-RDP, 2020 U.S. Dist. LEXIS 41160, Mar. 10, 2020, n.3 (N.D.

16a

Appendix A

However, in citing Milligan and other federal cases,

Great American has neglected to mention that a threshold

issue faced by federal courts in determining whether a

certain procedure qualifies as “arbitration” under the

FAA is whether federal or state law defines that term in

the statute. That issue arises because, as the Milligan

court itself observed, “[t]he FAA does not define the term

‘arbitration.’” Milligan, 920 F.3d at 151. See also Evanston

Ins. Co. v. Cogswell Props., LLC, 683 F.3d 684, 693 (6th Cir.

2012) (same); Fit Tech, Inc. v. Bally Total Fitness Holding

Ala. 2020) (not reported in Federal Supplement), that, “[u]nder the

Federal Arbitration Act (‘FAA’), appraisal provisions are regularly

treated as arbitration provisions by the courts and enforced in the

same manner.” The Walker Court’s sole citation in support of that

assertion was 200 Leslie Condo. Ass’n v. QBE Ins. Corp., No. 1061984-CIV, 2011 U.S. Dist. LEXIS 65720, June 21, 2011 (S.D. Fla.

2011) (not reported in Federal Supplement), in which the Leslie

Condominium Association court stated that “‘[a]ppraisal provisions

in insurance policies ... have generally been treated as arbitration

provisions.’” But in making that statement, the Federal District

Court for the Southern District of Florida was discussing Florida

law and quoting from United States Fidelity & Guaranty Co. v.

Romay, 744 So. 2d 467, 469 (Fla. Dist. Ct. App. 1999). In doing so,

the federal district court apparently overlooked the Florida Supreme

Court’s decision in Allstate Insurance Co. v. Suarez, 833 So. 2d 762,

765 (Fla. 2002), in which it concluded that “an unambiguous provision

for appraisal” could not be “construed as an agreement to arbitrate

the underlying dispute.” See also Nationwide Mut. Fire Insurance

Co. v. Schweitzer, 872 So. 2d 278, 279 (Fla. Dist. Ct. App. 2004)

(“Suarez plainly held that an appraisal provision is not an agreement

to arbitrate. It follows from Suarez that an order granting or denying

an appraisal is not appealable as an order involving entitlement to

arbitration.”). Thus, Walker’s statement was not supported by ample

authorities.

17a

Appendix A

Corp., 374 F.3d 1, 6 (1st Cir. 2004) (“The [FAA] itself does

not define ‘arbitration.’”); Harrison v. Nissan Motor Corp.

in U.S.A., 111 F.3d 343, 350 (3d Cir. 1997) (“We note first

that the FAA does not define the term ‘arbitration,’ and

both courts and commentators have struggled to do so.”);

Martinique Props., LLC v. Certain Underwriters at

Lloyd’s London, 567 F. Supp. 3d 1099, 1104 (D. Neb. 2021)

(observing that “the law does not define what constitutes

an arbitration,” and that “the United States Courts of

Appeals are split on whether to use state law or federal

common law to define this term” and citing several cases to

illustrate that point). A commentator summarized current

federal-court treatment on the issue:

“The United States Supreme Court has yet

to issue an opinion on whether state or federal

law should define arbitration. Circuit unity

is highly improbable until the court grants

certiorari and issues an opinion. Currently, the

Fifth and the Ninth Circuits apply state law;

the First, Second, Sixth, and Tenth Circuits

apply federal common law.”

Emily H. Slay, Evanston Insurance Co. v. Cogswell

Properties: Which Definition of “Arbitration” Should

Control?, 38 Am. J. Trial Advoc. 377, 383 (2014) (footnotes

omitted). See also Positano Place at Naples I Condo. Ass’n

v. Empire Indem. Ins. Co., 84 F.4th 1241, 1255 (11th Cir.

2023) (“We have not decided the question of whether an

appellate court looks to state or federal law in determining

whether an appraisal process falls within the definition of

‘arbitration’ for purposes of the FAA, nor has the Supreme

Court directly addressed the question.”).

18a

Appendix A

A. Defining FAA “Arbitration” Using Federal Law

The federal circuits that have concluded that federal law

should determine the definition of the term “arbitration”

in the FAA have done so under the rationale that, as

the Sixth Circuit Court of Appeals stated in Evanston

Insurance Company, it would be “‘counter-intuitive to

look to state law to define a term in a federal statute on

a subject as to which Congress has declared the need for

national uniformity.’” 683 F.3d at 693 (quoting Portland

GE v. United States Bank Trust N.A., 218 F.3d 1085, 1091

(9th Cir. 2000) (Tashima & Lay, JJ., concurring)).

Cases seeking to describe a federal-law definition of

“arbitration” provide various formulations. According to

the Eleventh Circuit Court of Appeals,

“[o]ne widely-followed opinion asks whether the

parties have agreed to submit a dispute to a third

party for a decision. AMF Inc. v. Brunswick

Corp., 621 F. Supp. 456, 460 (E.D.N.Y. 1985)

(Weinstein, J.). Other authority considers how

closely the procedure chosen resembles ‘classic

arbitration’ and whether enforcing it serves

the intuited purposes of Congress. Fit Tech

v. Bally Total Fitness, 374 F.3d 1, 6-7 (1st Cir.

2004); Salt Lake Tribune Publ’g Co. v. Mgmt.

Planning Inc., 390 F.3d 684, 689-90 (10th Cir.

2004). These differing verbal formulations do

not constitute a real disagreement, because

submitting a dispute to a third party for a

binding decision is quintessential ‘classic

19a

Appendix A

arbitration.’ See Salt Lake Tribune, 390 F.3d

at 689 (‘classic arbitration’ is characterized

by ‘empower[ing] a third party to render a

decision settling [the] dispute’). Thus, when

there is a dispute about whether any particular

dispute resolution method chosen in a contract

is FAA arbitration, we will look for the ‘common

incidents’ of ‘classic arbitration,’ including (i)

an independent adjudicator, (ii) who applies

substantive legal standards (i.e. the parties’

agreement and background contract law), (iii)

considers evidence and argument (however

formally or informally) from each party, and

(iv) renders a decision that purports to resolve

the rights and duties of the parties, typically

by awarding damages or equitable relief.

See Fit Tech, 374 F.3d at 7. The presence or

absence of any one of these circumstances will

not always be determinative, and parties have

great flexibility under the FAA to select prepackaged dispute resolution procedures, or to

craft their own.”

Advanced Bodycare Sols., LLC v. Thione Int’l, Inc., 524

F.3d 1235, 1239 (11th Cir. 2008).

Although Great American fails to expressly state

that it believes federal law should govern the definition

of the term “arbitration” in the FAA, Great American’s

argument that the appraisal clause is an arbitration

clause generally appears to agree with the foregoing

understanding of a federal definition of “arbitration.”

20a

Appendix A

Great American asserts that the question to be answered

is: “[D]oes the [appraisal clause] say that the parties will

submit disputes of the type at issue to binding resolution

by third parties?” Great American’s brief at 18. Great

American contends that the appraisal clause fulfills those

elements of arbitration because the appraisal clause

provided that Crystal Shores and Great American “would

submit valuations disputes under the Policy to binding

resolution by third parties” and the appraisal clause

“contains the elements of an arbitration agreement: the

use of third-parties (appraisers and an umpire) to review

the evidence and resolve the dispute by issuing a binding,

final resolution of the dispute.” Id. at 19, 20.

One flaw in Great American’s argument is that the

procedure outlined in the appraisal clause does not, in fact,

fulfill multiple elements of so-called “classic arbitration”

highlighted in Advanced Bodycare Solutions. First,

although the appraisal clause provides for third parties to

determine the amount of the loss, there is nothing in the

appraisal clause that dictates that the appraisers or the

umpire must use some specific standard in determining

the value of the loss or that they must consider evidence

and arguments from the parties in doing so. That is

unsurprising given that insurance appraisals are often

contrasted with the formalities usually inherent in

arbitration proceedings.

“The similarities and differences between the

processes of appraisal and arbitration are not

well defined, although it is generally conceded

that appraisal is designed to be less formal

21a

Appendix A

than arbitration. [See, e.g., Allstate Ins. Co. v.

Martinez, 790 So. 2d 1151, 1152 (Fla. Dist. Ct.

App. 2001) (holding that the appraisal process

did not have to conform to rules of arbitration

requiring attorney participation, court reporter

transcriptions, and quasi-judicial hearing); Hirt

v. Hervey, 118 Ariz. 543, 545, 578 P.2d 624, 626

(Ct. App. 1978) (‘While appraisals are generally

less formal than arbitrations, both provide a

contractual method for settling questions in a

less complicated and expensive manner than

through court adjudication.’); In re Delmar Box

Co., 309 N.Y. 60, 62-66, 127 N.E.2d 808, 810-13

(1955) (noting that appraisal should not be given

the same recognition as arbitration because it

is limited to specific issues, conducted in a less

formal manner, is not bound by strict judicial

investigation, and requires no hearing).] ...

“....

“... In arbitration, parties want to present

witnesses and evidence, and to cross-examine

opponents’ witnesses. [Andrew L. Pickens,

Appraisement: An Old But Effective Form of

ADR for Contract Liabilities, 60 Tex. Bar J.

18, 20 (1997) (quoting City of Omaha v. Omaha

Water Co., 218 U.S. 180, 194, 30 S. Ct. 615,

54 L. Ed. 991 (1910)) (discussing differences

between appraisal and arbitration).] Appraisal,

on the other hand, has few clear rules. If the

appraisers do not find it necessary, there

22a

Appendix A

may not be a formal hearing, presentation of

witnesses, or taking of evidence. [See Richard

C. Bennett, Appraisal, in 2 Insuring Real

Property § 30.03[6] (Matthew Bender 2005).]

Appraisers ‘act independently and apply

their own skill and knowledge in reaching

their conclusions.’ [Budget Rent-A-Car of

Washington-Oregon, Inc. v. Todd Inv. Co., 43

Or. App. 519, 523, 603 P.2d 1199, 1201 (1979).]

Appraisers can generally make their own

decisions concerning what they wish to see

and how they see it.”

Timothy P. Law & Jillian L. Starinovich, What Is It

Worth? A Critical Analysis of Insurance Appraisal,

13 Conn. Ins. L.J. 291, 297-99 (2007) (emphasis added).

Those same differences in procedural formality were

highlighted by the Mississippi Supreme Court in Hartford

Fire Insurance Co. v. Jones, 235 Miss. 37, 41-42, 108 So.

2d 571, 572 (1959):

“‘Appraisement, in particular, is perhaps most

often confused with arbitration. While some of

the rules of law that apply to arbitration apply

in the same manner to appraisement, and the

terms have at times been used interchangeably,

there is a plain distinction between them.

In the proper sense of the term, arbitration

presupposes the existence of a dispute or

controversy to be tried and determined in a

quasi judicial manner, whereas appraisement

is an agreed method of ascertaining value

23a

Appendix A

or amount of damage, stipulated in advance,

generally as a mere auxiliary or incident feature

of a contract, with the object of preventing

future disputes, rather than of settling present

ones. Liability is not fixed by means of an

appraisal; there is only a finding of value, price,

or amount of loss or damage. The investigation

of arbitrators is in the nature of a judicial

inquiry and involves, ordinarily, a hearing and

all that is thereby implied. Appraisers, on the

other hand, where it is not otherwise provided

by the agreement, are generally expected to act

upon their own knowledge and investigation,

without notice of hearings, are not required to

hear evidence or to receive the statements of

the parties, and are allowed a wide discretion

as to the mode of procedure and sources of

information.’”

(Quoting 3 Am. Jur. Arbitration and Award § 3 at 830-31.)

See, e.g., City of Omaha v. Omaha Water Co., 218 U.S. 180,

198, 30 S. Ct. 615, 54 L. Ed. 991 (1910) (observing that “in

an appraisement ... the strict rules relating to arbitration

and awards do not apply, and the appraisers were not

rigidly required to confine themselves either to matters

within their own knowledge, or those submitted to them

formally in the presence of the parties; but might reject, if

they saw fit, evidence so submitted, and inform themselves

from any other source, as experts who were at last to act

upon their own judgment”); Fit Tech, 374 F.3d at 7 (holding

that “common incidents” of classic arbitration include

“an independent adjudicator, substantive standards...,

24a

Appendix A

and an opportunity for each side to present its case”);

Allstate Ins. Co. v. Suarez, 833 So. 2d 762, 765 (Fla.

2002) (overruling a Florida District Court of Appeals’

decision because it “went beyond the plain meaning of the

appraisal clause when it considered that the appraisers

would have to ‘exercise ... quasi-judicial authority to

resolve the dispute’” (quoting Florida Farm Bureau Cas.

Ins. Co. v. Sheaffer, 687 So. 2d 1331, 1334 (Fla. Dist. Ct.

App. 1997))); Black’s Law Dictionary 126 (11th ed. 2019)

(defining “appraisement” as “[a]n alternative-disputeresolution method used for resolving the amount or extent

of liability on a contract when the issue of liability itself

is not in dispute. ... Unlike arbitration, appraisement is

not a quasi-judicial proceeding but instead an informal

determination of the amount owed on a contract.”).

Second, authorities that rely upon the idea of “classic

arbitration” indicate that arbitration resolves the entire

dispute between the parties, whereas appraisal does

not. See, e.g., Rastelli Bros. v. Netherlands Ins. Co.,

68 F. Supp. 2d 440, 446 (D.N.J. 1999) (“‘An agreement

for arbitration, as that term is now generally used,

encompasses the disposition of the entire controversy

between the parties upon which award a judgment may be

entered, whereas an agreement for an appraisal extends

merely to the resolution of the specific issues of cash value

and the amount of loss, all other issues being reserved

for settlement by negotiation, or litigated in an ordinary

action upon the policy.’” (quoting George J. Couch, Ronald

A. Anderson, and Mark S. Rhodes, Couch on Insurance

§ 50:5 (2d ed. 1982))); 46A C.J.S. Insurance § 1900 (2018)

(“Appraisal establishes only the amount of a loss and

25a

Appendix A

not liability for the loss under the insurance contract,

whereas arbitration is a quasi-judicial proceeding that

ordinarily will decide the entire controversy.”). Indeed,

Great American steadfastly insists that “[t]he only dispute

remaining [between the parties] is whether Crystal Shores

is entitled to additional payments due to its assertion of a

higher damage valuation” and that this is one reason the

appraisal clause is, in fact, an arbitration clause. Great

American’s brief at 1.

However, Crystal Shores strenuously contends that

“coverage and causation issues clearly exist” apart from

the valuation dispute that would be settled by the appraisal

clause. Crystal Shores’ brief at 14. Specifically, Crystal

Shores argues that, from the time it originally filed its

insurance claims, Great American has disputed whether

the insurance policy covers damage stemming from

Hurricane Sally and “whether the water damage to the

condominium and units was caused by the tub overflow,

Hurricane Sally[,] or a combination of both.” Id. at 14-15.

Great American counters by arguing that

“because the Complaint limits the claims

against Great American to the bathtub overflow

claim, and because it is undisputed that Great

American has accepted coverage on the bathtub

overflow claim (and has actually already paid

over $1 million), the only remaining dispute

at issue in this lawsuit is one that the parties

agreed should be resolved only through the

appraisal procedure: the proper amount of

payment due under the bathtub overflow claim.”

26a

Appendix A

Great American’s reply brief at 2.

Great American’s argument does not comport,

however, with the allegations stated in Crystal Shores’

third-party complaint. As we related in the rendition of the

facts, in its complaint Crystal Shores expressly stated that

it had “timely and properly reported its Hurricane Sally

claim” to all of the third-party defendants, including Great

American. Crystal Shores then alleged in part that Great

American had “refused to compensate [Crystal Shores]

for services allegedly rendered by Servpro to mitigate

and remediate damage caused by ... Hurricane Sally ....”

Crystal Shores further alleged in part that, even though it

had timely and properly reported the damage “sustained

as a result of Hurricane Sally,” “third-party Defendants

RSUI, Landmark, Great American and [fictitiously

named defendants] have failed to promptly and/or properly

investigate [Crystal Shores’] losses” and “Defendants

RSUI, Landmark, Great American and [fictitiously

named defendants] have further failed to timely and/or

properly compensate Crystal Shores for losses sustained

as a result of Hurricane Sally ....” (Emphasis added.) The

specific counts of the third-party complaint also included

allegations against Great American with respect to

damage Crystal Shores allegedly had sustained because

of Hurricane Sally. Crystal Shores’ bad-faith claims in

part included the allegation that Great American had

“intentionally and/or recklessly failed to timely and/or

properly investigate and/or pay [Crystal Shores’] claim

for damages sustained as a result of the storm event ....”

Crystal Shores’ breach-of-contract claims in part included

the allegation that Great American had breached “the

27a

Appendix A

terms and conditions of the insurance policies ... by failing

to timely and properly investigate and pay [Crystal Shores]

for losses sustained as a result of the storm event ....”

In short, viewing the allegations in the complaint in

the light most favorable to Crystal Shores -- as we are

supposed to do in reviewing a motion to dismiss4 -- Crystal

Shores plainly leveled allegations against Great American

pertaining to damage caused by Hurricane Sally even

though Great American insists that “Crystal Shores’

third-party complaint did not name Great American in

the allegations regarding the Hurricane Sally loss and

did not accuse Great American of any wrong with regard

to that claim.” Great American’s brief at 11. In other

words, Crystal Shores has alleged that it was entitled to

coverage that Great American did not provide under the

insurance policy with respect to damage allegedly caused

by Hurricane Sally. Crystal Shores also asserts that

Great American’s denial of further payments on Crystal

Shores’ bathtub-overflow claim is tied to Great American’s

insistence that at least some of the remediation performed

by Servpro was for damage caused by Hurricane Sally,

compensation for which, Great American contends, it

is not responsible under the insurance policy. Thus,

outstanding coverage issues exist that would not be

resolved by the appraisal procedure, and so the appraisal

would not resolve the entire dispute between the parties. A

procedure that does not fully and finally settle the dispute

4. See, e.g., Morton v. Prescott, 564 So. 2d 913, 916 (Ala. 1990)

(“In considering a motion to dismiss, a court construes the allegations

of the complaint in a light most favorable to the plaintiff, with all

doubts and allegations resolved in his favor.”).

28a

Appendix A

between the parties does not comport with the definition

of “arbitration” under federal law.

In short, the appraisal clause does not require

the appraisers or the umpire to consider evidence and

arguments from the parties, the appraisal clause does

not require the appraisers or the umpire to base their

valuation on a substantive legal standard, and submission

of the valuation issue to the appraisal process would not

settle the entire dispute between Crystal Shores and

Great American. Thus, the appraisal clause fails to meet

most of the elements of “classic arbitration” described in

cases that have chosen to define the term “arbitration” in

the FAA using federal law. We must conclude, therefore,

that the appraisal clause is not an arbitration clause under

the FAA according to that standard -- the only standard

argued by Great American.

B. Defining FAA “Arbitration” Using State Law

The federal circuits that have concluded that state law

should determine the definition of the term “arbitration” in

the FAA have done so under the rationale that as long as

a state’s laws do not interfere with the goals of the FAA,

state law should apply because the FAA only preempts

state laws to the extent that they stand as an obstacle

to the accomplishment of the purposes and objectives

of the FAA. See, e.g., Portland Gen. Elec, 218 F.3d at

1089 (applying Oregon law); Hartford Lloyd’s Ins. Co.

v. Teachworth, 898 F.2d 1058, 1062-63 (5th Cir. 1990)

(applying Texas law); Wasyl, Inc. v. First Boston Corp.,

813 F.2d 1579, 1582 (9th Cir.1987) (applying California

29a

Appendix A

law). Cf. Volt Info. Scis. Inc. v. Bd. of Trs. of Stanford

Univ., 489 U.S. 468, 478, 109 S. Ct. 1248, 103 L. Ed. 2d

488 (1989) (holding that the FAA preempts state laws

to the extent that they “would undermine the goals and

policies of the FAA”).

Even if Great American had argued that the definition

of the term “arbitration” in the FAA should be determined

by Alabama law, the argument would have fared no better.

With respect to Alabama law, the parties bicker about

what can be read into our order dismissing Baldwin

Mutual’s appeal in Dixon, which stated that “the appeal

is dismissed as from a non-appealable order.” Crystal

Shores is correct that Baldwin Mutual contended that

its appeal from a circuit court’s order denying its motion

to dismiss and demand for appraisal was proper under

Rule 4(d), Ala. R. App. P. Conversely, Great American is

correct that Baldwin Mutual only argued that insurance

appraisals are “considered analogous to demands for

arbitration,” not specifically that an appraisal clause is

an arbitration clause, and Baldwin Mutual did not cite

the federal authorities Great American has cited to us.

Ultimately, Dixon is not decisive for either party in this

case because our order in Dixon did not expressly address

the issue presented here.

But our order in Dixon is revealing for the authorities

Baldwin Mutual did cite and those it could not. Baldwin

Mutual had noted in its response to the show-cause order

that, in determining whether a party has waived its right

to invoke an appraisal clause, this Court has applied

the test it commonly uses to determine whether a party

30a

Appendix A

has waived its right to invoke an arbitration clause. See

Rogers, 984 So. 2d at 386 (“Although this Court has never

ruled on what standard should be applied to determine

whether there has been a waiver of the right to invoke an

appraisal clause in an insurance policy, the former Court

of Appeals previously indicated that the same standard

applies to both appraisal and arbitration clauses.”).

However, despite the fact that this Court had employed the

same test for waiver with respect to both types of clauses,

Baldwin Mutual merely contended that an appraisal clause

was “analogous to” an arbitration clause, not that it was

an arbitration clause. Why?

One problem was that the Rogers Court itself went on

to distinguish appraisal clauses from arbitration clauses

by hearkening back to this Court’s decision in Casualty

Indemnity Exchange v. Yother, 439 So. 2d 77 (Ala. 1983).

In Yother, the Court declared: “We agree that an appraisal

is distinguishable from arbitration and is not subject to

the various procedural requirements imposed upon the

arbitration process.” Id. at 79. The Yother Court went on

to explain:

“Arbitration and appraisal are generally

distinguished in the following manner:

“‘A distinction is often drawn between

an arbitration and a mere appraisal or

valuation, or proceeding in the nature

of an appraisal, the fundamental

difference between the two proceedings

being held to lie in the procedure to be

31a

Appendix A

followed and the effect of the findings.

In other words, the point is made

that appraisers, unlike arbitrators,

act w ithout hea r i ng or jud icia l

inquiry upon their own knowledge or

information acquired independent of

the evidence of witnesses; and that

the appraisal ordinarily settles only a

subsidiary or incidental matter rather

than the main controversy as does an

arbitration award.’

“6 C.J.S. Arbitration, § 3 (1975).”

Id. at 79-80 (emphasis added). The Rogers Court picked

up on and repeated the analysis in Yother:

“In Yother, this Court disting uished

arbitration clauses from appraisal clauses in a

situation in which the insured contended that

it was entitled to the procedural protections

applicable to arbitration as set forth in [Ala.

Code 1975,] § 6-6-1.5 The insurer contended that

it was subject to the law applicable to appraisals

and not § 6-6-1. At issue in Yother was the value

of a stolen tractor. The Court, quoting Corpus

5. Section 6-6-1, Ala. Code 1975, is the first section of the

Alabama Arbitration Act, providing: “It is the duty of all courts

to encourage the settlement of controversies pending before them

by a reference thereof to arbitrators chosen by the parties or their

attorneys and, on motion of the parties, must make such order and

continue the case for award.”

32a

Appendix A

Juris Secundum and American Jurisprudence,

noted typical differences between arbitration

and appraisal -- arbitration settles an entire

controversy, whereas an appraisal resolves a

subsidiary issue, such as the valuation of loss.

This Court observed:

“‘“An agreement for arbitration

ordinarily encompasses the disposition

of the entire controversy between the

parties upon which award a judgment

may be entered, whereas an agreement

for appraisal extends merely to the

resolution of the specific issues of

actual cash value and the amount of

loss, all other issues being reserved

for determination in a plenary action

before the cour t. Fur ther more,

appraisers are generally expected to

act on their own skill and knowledge;

they may reach individual conclusions

and are required to meet only for the

purpose of ironing out differences

in the conclusions reached; and they

are not obliged to give the rival

claimants any formal notice or to hear

evidence, but may proceed by ex parte

investigation so long as the parties are

given opportunity to make statements

and explanations w ith regard to

matters in issue.”’

33a

Appendix A

“439 So. 2d at 80 (quoting 5 A m. Jur.2d

Arbitration and Award § 3 (1962)). However,

the Court in Yother found it unnecessary

to determine whether the valuation at issue

there was the result of an arbitration or an

appraisal, because it disposed of the case on the

basis of applicable due-process considerations

independent of § 6-6-1, Ala. Code 1975. This

Court’s distinguishing of arbitration and

appraisal in Yother is consistent with other

jurisdictions. See Mer rimack Mut. Fire

Ins. Co. v. Batts, 59 S.W.3d 142, 150 (Tenn.

Ct. App. 2001) (‘Insurance appraisals are

generally distinguished from arbitrations....

[A]n arbitration agreement may encompass the

entire controversy between parties or it may be

tailored to particular legal or factual disputes.

In contrast, an appraisal determines only the

amount of loss, without resolving issues such as

whether the insurer is liable under the policy.’),

and Smithson v. United States Fid. & Guar.

Co., 186 W. Va. 195, 202, 411 S.E.2d 850, 857

(1991) (‘The narrow purpose of an appraisal

and the lack of an evidentiary hearing make it

a much different procedure from arbitration.’).”

984 So. 2d at 388-89. Thus, similar to the United States

Supreme Court in City of Omaha, the Florida Supreme

Court in Suarez, and the Mississippi Supreme Court in

Jones, this Court in both Yother and Rogers emphasized

the differences in scope and formality between arbitration

and appraisal.

34a

Appendix A

Tellingly, Great American does not discuss the

Yother and Rogers Courts’ distinctions between appraisal

and arbitration. Indeed, Great American fails to cite a

single case from our courts indicating that an insuranceappraisal clause is, in fact, an arbitration clause. The

dearth of Alabama authority is also telling because

insurance-appraisal clauses such as the one at issue in

this case have been adjudicated by our courts for a long

time. For example, in Headley v. Aetna Insurance Co.,

202 Ala. 384, 80 So. 466 (1918), this Court interpreted an

insurance-appraisal clause very similar to the one in this

case, and it distinguished between a predispute arbitration

clause and the appraisal clause at issue:

“A covenant in a contract, whether of

insurance or of other matters, to submit every

matter of dispute between the parties, growing

out of such contract, to arbitration or to a

board of appraisers, to the end of defeating the

jurisdiction of courts as to the subject-matter,

are universally held to be void, as against public

policy. There need be no such express intent to

so defeat the jurisdiction; if the necessary effect

of the covenant will inevitably so operate, it is

held to be void because against public policy.

Agreements, however, which merely provide a

mode or manner for ascertaining the value of

property, or the amount of damages, losses, or

profits, are valid, and may be made conditions

precedent to the right of action to recover

damages based on such values, damages, losses,

or profits. Western Assur. Co. v. Hall, 112 Ala.

35a

Appendix A

318, 20 South. 447 [(1896)]; Niagara [Fire] Ins.

Co. v. Bishop, 154 Ill. 9, 39 N.E. 1102, 45 Am.

St. Rep. 105 [(1894)]. The clause of the insurance

policy in question falls within the latter class,

and is valid and enforceable.”

202 Ala. at 385, 80 So. at 467.

That Alabama law would not automatically construe an

appraisal clause to be an arbitration clause is unsurprising

given that

“[a] trial court may not order arbitration of

the issue of arbitrability except upon ‘“‘clea[r]

and unmistakabl[e]’ evidence”’ that the parties

agreed to arbitrate that issue. Commercial

Credit Corp. v. Leggett, 744 So. 2d 890, 892 (Ala.

1999) (quoting First Options of Chicago, Inc. v.

Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 131

L.Ed.2d 985 (1995)).”

Custom Performance, Inc. v. Dawson, 57 So. 3d 90,

96 (Ala. 2010). The most direct evidence of the parties’

intent is the language of the agreement itself. See, e.g.,

id.; Strickland v. Rahaim, 549 So. 2d 58, 60 (Ala. 1989)

(“In order to ascertain the intention of the parties, the

clear and plain meaning of the terms of the contract are

to be given effect, and the parties are presumed to have

intended what the terms clearly state.”).

“When determining how to construe the

provisions of an insurance policy, this Court is

guided by the following principles:

36a

Appendix A

“‘“When analyzing an insurance

policy, a court gives words used in

the policy their common, everyday

meaning and interprets them as a

reasonable person in the insured’s

position would have understood them.

Western World Ins. Co. v. City of

Tuscumbia, 612 So. 2d 1159 (Ala.

1992); St. Paul Fire & Marine Ins. Co.

v. Edge Mem’l Hosp., 584 So. 2d 1316

(Ala. 1991). If, under this standard,

they are reasonably certain in their

meaning, they are not ambiguous

as a matter of law and the rule of

construction in favor of the insured

does not apply. Bituminous Cas. Corp.

v. Harris, 372 So. 2d 342 (Ala. Civ.

App. 1979). ...”

“‘B.D.B. v. State Farm Mut. Auto. Ins.

Co., 814 So. 2d 877, 879-80 (Ala. Civ.

App. 2001). ...’

“State Farm Mut. Auto. Ins. Co. v. Brown, 26

So. 3d 1167, 1169-70 (Ala. 2009).”

Mid-Century Ins. Co. v. Watts, 323 So. 3d 39, 50 (Ala.

2020).

In this case, the clause at issue seeks to settle disputes

between Great American and Crystal Shores involving

the amount of a loss by using appointed appraisers and an

37a

Appendix A

umpire. In other words, the clause seeks to appraise the

amount of the loss sustained to the property covered by

the insurance policy. The language of the clause reflects

that the parties intended the clause to be what it states

it is: an appraisal clause. There is no ambiguity in the

clause’s language that would lead to a conclusion that the

parties intended the clause to be anything other than

what it states. As Crystal Shores observes, “[h]ad Great

American desired to insert an arbitration clause in the

insurance contract [it] could have done so ....” Crystal

Shores’ brief at 33. Instead, the insurance policy contains

an appraisal clause.

It seems that Great American’s only response to such

reasoning is the Milligan court’s statement that “the

term ‘arbitrate’ need not appear in the contract in order

to invoke the benefits of the FAA.” Milligan, 920 F.3d at

151. But the Milligan court’s statement was made in the

context of concluding that federal common law defines the

term “arbitration” in the FAA, a subject we dealt with in

Part II.A. of this analysis. Here we address the definition

of the term “arbitration” under Alabama law. As we have

noted, Alabama cases have consistently drawn distinctions

between appraisal and arbitration, Alabama law focuses on

whether the parties to the contract intended to arbitrate

the dispute at issue based on the language of the contract,

and, despite the prolific presence of appraisal clauses

such as the one at issue in insurance contracts, our courts

have never held that “appraisal” is the same procedure as

“arbitration.” Therefore, we conclude that under Alabama

law an appraisal clause in an insurance contract does not

qualify as a clause calling for “arbitration” under the FAA.

38a

Appendix A

III. Conclusion

Based on the foregoing, we conclude that, regardless of

whether federal law or Alabama law controls the definition

of the term “arbitration” in the FAA, the appraisal clause

at issue in this case does not qualify as a clause calling for

“arbitration” under the FAA. Therefore, Great American’s

motion to compel an appraisal of the loss did not constitute

a motion to compel arbitration. It follows that the circuit

court’s denial of Great American’s motion was not “[a]n

order ... denying a motion to compel arbitration” under

Rule 4(d), Ala. R. App. P. Rule 4(d) is Great American’s

only claimed basis for jurisdiction to immediately appeal

the circuit court’s January 6, 2023, order. Accordingly,

we dismiss the appeal as one stemming from a nonfinal

judgment.

APPEAL DISMISSED.

Wise, Bryan, Sellers, Mendheim, Stewart, and Cook,

JJ., concur.

Shaw, J., concurs in the result.

Mitchell, J., concurs in the result, with opinion, which

Parker, C.J., joins.

39a

Appendix A

MITCHELL, Justice (concurring in the result).

In my view, the operative question in this appeal is

whether an appraisal is an “arbitration” under Rule 4(d),

Ala. R. App. P., not whether it is an “arbitration” under

the Federal Arbitration Act (“the FAA”), 9 U.S.C. § 1 et

seq. That is a question of Alabama law, and I believe our

law fully supplies the answer. Accordingly, I would dismiss

this appeal on State-law grounds only.

The main opinion focuses on the meaning of

“arbitration” under the FAA and discusses the two

leading standards applied by federal courts for defining

FAA arbitration. But the main opinion does not cite -and I am not aware of -- any precedent from our Court

tying the meaning of “arbitration” under Rule 4(d) to

the meaning of “arbitration” under the FAA. Thus,

what federal courts have done to interpret the meaning

of “arbitration” in the FAA is, at most, persuasive in

determining what “arbitration” means in Rule 4(d).

West v. American Tel. & Tel. Co., 311 U.S. 223, 236, 61

S. Ct. 179, 85 L. Ed. 139 (1940) (“[T]he highest court of

the state is the final arbiter of what is state law.”); Ex

parte James, 836 So. 2d 813, 834 (Ala. 2002) (Houston,

J., concurring specially) (“[T]he Supreme Court of

Alabama is the final arbiter of Alabama law.”). I see no

need to consider federal authority here because our own

precedents have determined that an appraisal does not

constitute arbitration. See Rogers v. State Farm Fire &

Cas. Co., 984 So. 2d 382, 388-89 (Ala. 2007); Casualty

Indem. Exch. v. Yother, 439 So. 2d 77, 79-80 (Ala. 1983);

Headley v. Aetna Ins. Co., 202 Ala. 384, 385, 80 So. 466,

40a

Appendix A

467 (1918). For that reason, I would dismiss the appeal

based on Alabama law alone.

Parker, C.J., concurs.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.