292 P.3d 118
Wash.2013Background
- James River issued two surplus line policies covering WSDOT; WSDOT added as insured.
- Arbitration clauses in the policies required binding arbitration for disputes.
- WSDOT tendered defense under the policies; James River demanded arbitration.
- WSDOT sought declaratory judgment to void arbitration and challenged under RCW 48.18.200(1)(b) and RCW 48.15.150(1).
- The trial court voided the arbitration clauses as to enforceability and did not reach the contract-formation argument; James River appealed, and the court affirmed.
- Underlying claims arose from a 2009 traffic accident linked to Scarsella’s highway project for WSDOT; King County suit later included Scarsella and WSDOT.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether RCW 48.18.200 and RCW 48.15.150 bar binding arbitration in surplus line contracts? | James River: arbitration does not deprive jurisdiction and is permissible. | WSDOT: binding arbitration violates the statutes and deprives state courts of action against insurer. | Yes; RCW 48.18.200(l)(b) prohibits binding arbitration in insurance contracts. |
| Whether McCarran-Ferguson reverse preemption shields RCW 48.18.200(l)(b) from FAA preemption? | FAA preempts state law; RCW 48.18.200 is not shielded. | RCW 48.18.200(l)(b) regulates the business of insurance and is protected by McCarran-Ferguson. | Yes; RCW 48.18.200(l)(b) is shielded from FAA preemption. |
Key Cases Cited
- Price v. Farmers Ins. Co. of Wash., 133 Wn.2d 490 (1997) (distinction between original action and arbitration-review jurisdiction)
- Kruger Clinic Orthopaedics, LLC v. Regence BlueShield, 157 Wn.2d 290 (2006) (distinction between original action vs limited arbitration review; WAC/RCW limits affect ‘judicial remedies’)
- Dickie Manufacturing Co. v. Sound Construction & Engineering Co., 92 Wash. 316 (1916) (arbitration statute affected court jurisdiction to enforce/modify awards)