Dallas COA Dismisses Arbitration Award for Lack of Jurisdiction

Texas’ Fifth District Court of Appeals in Dallas has invalidated an arbitration award for lack of jurisdiction.  In American Modern Home Ins. Co. v. Allstate Ins. Co., No. 05-11-00997-CV (Tex. App. – Dallas, August 7, 2013), an apartment complex tenant was insured by American Modern Home insurance Company (“AMH”).  The insured allegedly caused a fire that resulted in approximately $18,000 in damage to the property of an individual who was insured by Allstate Insurance Company (“Allstate”) as well as additional damage to other apartments.  Following the fire, Allstate reportedly paid its insured for the resulting damage and filed a subrogation claim against AMH.  Both companies agreed to engage in arbitration for any property losses that did not exceed $100,000.

Following arbitration, Allstate sought to confirm an arbitral award for about $18,000 that was issued in the company’s favor.  AMH challenged the award by claiming that arbitration was not merited since the total property damage that resulted from the fire was at least $600,000.  After the award was vacated by Arbitration Forums, Inc., the arbitration association that oversaw the dispute, a trial court vacated the association’s decision and confirmed the original award.  AMH then filed an appeal with the Dallas court.

The appeals court overturned the trial court’s confirmation of the award by stating there was no subject matter jurisdiction for review.  Because no jurisdiction existed, the Dallas court reversed the trial court’s decision and ordered the lower court to dismiss Allstate’s application to confirm the arbitral award.