66 A.3d 477
R.I.2013Background
- Wheeler was injured in a motor-vehicle collision with an underinsured driver on October 19, 2007.
- The tortfeasor carried $25,000 in bodily-injury liability coverage with Progressive; Progressive paid the policy limits.
- Wheeler sought uninsured/underinsured motorist (UM/UTM) recovery under Encompass’s policy, which provided up to $100,000.
- Arbitrators awarded $172,750 total, including prejudgment interest on the tortfeasor payment and on the balance, based on a formula following Barry.
- The Superior Court vacated the portion of the award exceeding $100,000 policy limits but otherwise confirmed the award, and Wheeler appealed.
- The Rhode Island Supreme Court vacated the Superior Court’s order, holding the trial court erred in modifying the award and directed reinstatement of the full arbitration award.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Authority to exceed policy limits | Arbitrators can award prejudgment interest against the insurer when determining damages against the tortfeasor. | Insurer liability and damages cannot exceed policy limits; arbitrators cannot award beyond the policy. | Arbitration award reinstated in full; trial court’s modification improper. |
| Modification under § 10-3-14(a) | Objection to confirmation satisfied the 'application' triggering modification review. | Modification was proper to reflect policy limits and correct a supposed error. | Court held modification was not permissible where no valid grounds existed to modify the award; must confirm. |
| Scope of arbitrable issues under the policy | Arbitration panel could decide damages against tortfeasor as specified in the policy. | Panel decided issues beyond the arbitrable scope (insurer liability and policy limits). | Panel exceeded its authority by deciding non-submitted issues; nevertheless, the award was to be reinstated. |
Key Cases Cited
- Metropolitan Property and Casualty Insurance Co. v. Barry, 892 A.2d 915 (R.I. 2006) (prejudgment interest in UM arbitrations follows specific formula from injury date until payment date)
- Pogorilich v. Allstate Insurance Co., 605 A.2d 1318 (R.I. 1992) (uninsured motorist cases may allow prejudgment interest beyond policy limits when applicable)
- Allstate Insurance Co. v. Lombardi, 773 A.2d 864 (R.I. 2001) (limits-based analysis of prejudgment interest in UMRA cases; deference to policy limits where appropriate)
- Aponik v. Lauricella, 844 A.2d 698 (R.I. 2004) (arbitration awards reviewed narrowly; error of law alone is not grounds to disturb award)
- Purvis Systems, Inc. v. American Systems Corp., 788 A.2d 1112 (R.I. 2002) (arbitrator may frame issues when the agreement authorizes arbitration of those matters)
- Bush v. Nationwide Mutual Insurance Co., 448 A.2d 782 (R.I. 1982) (arbitration clause is narrow; arbitrator cannot decide about policy coverage beyond agreed issues)
- City of East Providence v. United Steelworkers of America, Local 15509, 925 A.2d 246 (R.I. 2007) (examines triggering review when objection to confirmation is raised; supports continuation of inquiry when petition to confirm is filed)