137 A.3d 696
R.I.2016Background
- Pedestrian Joseph Lemerise was injured by an uninsured motorist in Rhode Island in August 2011; he sought uninsured-motorist benefits under his mother's policy issued by The Commerce Insurance Company.
- Parties agreed the tortfeasor was at fault but disputed extent of injury and amount of recovery; they stipulated to stay the Superior Court action pending arbitration "pursuant to the terms of the plaintiff's uninsured motorist policy."
- A single arbitrator (who was not given the insurance policy) awarded $150,000 in damages plus 12% prejudgment interest ($47,550), totaling $197,550.
- Lemerise moved in Superior Court to confirm the award; Commerce moved to modify the award to the $100,000 policy limit and introduced the policy and the arbitrator’s testimony at the confirmation/modification hearing.
- The trial justice admitted the policy and the arbitrator’s testimony, concluded he could modify the award, reduced the award to $100,000, and denied confirmation of the full award. Lemerise appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court properly modified the arbitration award to conform to the $100,000 policy limit under §10-3-14 | Lemerise: modification improper because statutory grounds for modification do not exist; Wheeler controls — errors of law by arbitrator are not a basis to modify | Commerce: arbitrator awarded damages against the tortfeasor, not insurer liability; award exceeding policy limits was a matter not submitted to arbitrator so court may modify | Court: modification was improper; vacated trial court order and directed confirmation of the full arbitration award |
| Whether the trial court could expand the arbitration record by admitting the insurance policy and calling the arbitrator as a witness at a §10-3-14 review | Lemerise: trial justice erred by conducting de novo review, admitting new evidence, and examining the arbitrator — review is limited to the award and arbitration record | Commerce: supplementing record justified to resolve coverage/choice-of-law issues | Court: trial justice exceeded statutory authority; admitting new evidence and examining the arbitrator was impermissible in a §10-3-14 review |
| Whether prejudgment interest and choice-of-law arguments could support modification | Lemerise: arbitrator was empowered to award prejudgment interest; policy/choice-of-law issues not submitted to arbitrator and thus waived | Commerce: Massachusetts law allegedly bars prejudgment interest; policy limits should control | Court: choice-of-law/policy arguments were waived because policy not submitted to arbitrator; even if raised, an error of law is not a statutory ground for modification |
Key Cases Cited
- Sentry Ins. Co. v. Grenga, 556 A.2d 998 (R.I. 1989) (arbitrators may award prejudgment interest and should add it unless parties agree otherwise)
- Balian v. Allstate Ins. Co., 610 A.2d 546 (R.I. 1992) (insurer liable for full arbitration award including prejudgment interest even if total exceeds policy limits)
- Allstate Ins. Co. v. Pogorilich, 605 A.2d 1318 (R.I. 1992) (distinguishing Sentry; arbitrators not requested to determine insurer’s liability — policy limits may not be expanded to include prejudgment interest when recovery from insurer was not submitted to arbitrators)
- Wheeler v. Encompass Ins. Co., 66 A.3d 477 (R.I. 2013) (trial court may not modify arbitration award based on perceived legal error by arbitrators; review under the Arbitration Act is extremely limited)
- Murino v. Progressive N. Ins. Co., 785 A.2d 557 (R.I. 2001) (Sentry controls where arbitrator was asked to determine amount due under insurer’s UM coverage, allowing prejudgment interest even if it exceeds policy limits)
- Aponik v. Lauricella, 844 A.2d 698 (R.I. 2004) (arbitration review is limited; failure to present an issue to arbitrator constitutes waiver)