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News & Resources

Aggregated Claims May be Subject to Arbitration

October 24, 2014 | Category: Subro News and Cases

In State Farm Fire & Casualty Co. v. Pentair, Inc., 2012 WL 3904104 (N.D. Ill. Sept. 7, 2012), a property insurer brought a subrogation action to recover over $900,000 in aggregate payments made to 108 homeowners based on the allegation that the defendant designed, manufactured and distributed defective sump pumps, which caused water damage. The defendant sought to compel arbitration because both State Farm and the defendant were signatories to an intercompany arbitration agreement. The agreement required mandatory arbitration when the “company claim” amount was less than or equal to $100,000. Here, the individual claims were less than $100,000, although the aggregate clearly exceeded the amount. The Plaintiff argued that because the term “company claim” was undefined in the arbitration agreement, all claims could be aggregated to exceed the $100,000 threshold and proceed to litigation. The court, however, concluded that the “company claim” issue was a matter of “procedure” under the arbitration agreement, and held the arbitrator should decide the interpretation of the arbitration agreement. The matter was transferred to arbitration, and the case was stayed pending that decision.