## Facts

- Jack Yother, doing business as Mickey Motors, insured a 1979 International Harvester tractor-truck under a policy issued by Casualty Indemnity Exchange (CIE).
- The tractor was stolen from Yother’s business premises and was never recovered; the parties agreed the loss was covered.
- Yother submitted a proof of loss seeking $40,000 (the policy limit); CIE rejected it, disputing the tractor’s actual cash value and asserting it was no greater than $35,000.
- CIE’s adjuster advised Yother that, because a dispute had arisen, he could invoke the policy’s “arbitration” provision; the referenced policy term was titled “Appraisal.”
- The clause required each side to select a competent, disinterested appraiser; the appraisers would select an umpire; and a written award signed by any two would determine the amount of loss.
- Yother twice requested an opportunity to appear and present evidence to the appraisers but received no response.
- The two appraisers disagreed on value; without a hearing, notice, or party participation, the umpire set the amount, and both appraisers signed the resulting award.
- Yother moved in state trial court to set aside the award for lack of notice and opportunity to be heard; the trial court vacated the award, and CIE appealed.

## Issues

1. Whether the policy’s “Appraisal” provision should be treated as an appraisal outside arbitration rules, or as arbitration in substance given that it produced a binding determination of a disputed valuation.
2. Whether a binding valuation award is enforceable when rendered without notice to the insured and without an opportunity to be heard and present evidence.

## Decision

- The Alabama Supreme Court affirmed the trial court’s order setting aside the award.
- The court treated the clause as arbitration in substance, emphasizing that it submitted a disputed matter to neutral decision-makers for a binding written determination.
- The court held the award was properly vacated because it was made without notice to Yother and without allowing him to present evidence or be heard.

## Legal Principles

- Courts look to how a dispute-resolution mechanism operates; a process that functions as binding arbitration may be treated as arbitration even if labeled “appraisal.”
- A binding arbitration-type determination of parties’ rights must provide at least notice and an opportunity to be heard and present relevant evidence; an ex parte award may be set aside.
- A party’s own characterization and use of the clause (including calling it “arbitration”) may support treating the procedure as arbitration rather than a nonadjudicative valuation method.

## Conclusion

Because the policy mechanism operated as a binding arbitration-type process and the award was reached without notice or a meaningful chance for the insured to present evidence, the valuation award was invalid and was correctly vacated.


Cas. Indem. Exch. v. Yother, 439 So. 2d 77 (Ala. 1983)