Market Ins. Corp. v. Integrity Ins. Co.

Opinion

EAGLESON, J.

We hold that the arbitration clause in two general agency agreements applies to an insurance agent’s action against an insurance company to collect commissions under the contracts. We therefore reverse the trial court’s order denying appellant Integrity Insurance Company’s petition to compel arbitration.

Facts

In two similar 1979 and 1982 contracts, respondent Market Insurance Corporation agreed to act as appellant Integrity Insurance Company’s general agent in various insurance transactions. A large part of each written contract contained complex formulas for calculating respondent’s commissions on the basis of premiums collected and losses reported. Both contracts also provided that “differences of opinion of interpretation” of the contract “shall be submitted for arbitration to two officers or executives ... of insurance companies,” one to be chosen by each party. The one-page arbitration provision also stated that the arbitrators must meet in Paramus, New Jersey, which is where appellant’s corporate headquarters are located.

Contract negotiations were conducted primarily by Mr. Stem, then vice president of appellant Integrity, and Mr. Uritz, president of respondent Market. The two men exchanged drafts of the contracts in which they had changed and corrected terms. Mr. Uritz even made changes in the arbitration clause contained in the 1979 contract. The signatories to the contracts also initialed each page.

Disagreements eventually developed over the payment of commissions. Respondent filed this action for declaratory relief, an accounting, breach of contract, and breach of the covenant of good faith and fair dealing. The central theme in each count was that if all premiums and losses were accounted for, and if the payment formulas were accurately interpreted and applied, then appellant would be found to owe respondent money.

Shortly after respondent filed its California complaint, appellant filed a similar suit against respondent in New Jersey. No further steps were taken, however, in pursuing that action. Instead, appellant answered respondent’s California complaint and petitioned for an order compelling arbitration of all disputes between the parties.

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