139 Wash. App. 891 | Wash. Ct. App. | 2007
¶1 — Appellant Ralph Mercier’s suit against his insurance company for underinsured motorist benefits was submitted to mandatory arbitration under chapter 7.06 RCW. The arbitrator awarded $36,000 in damages. The superior court entered judgment for $1,000 after subtracting the amounts Mercier had already received in medical benefits and from the other driver’s insurance. Mercier contends that the superior court improperly “amended” the arbitration award and that the court should have instead entered judgment on the award for the full $36,000.
FACTS
¶3 Ralph Mercier’s car was rear-ended while he was stopped at a stop sign on August 4, 2004. Mercier sustained injuries. The other driver had liability insurance coverage with limits of $25,000. Mercier had an auto insurance policy with GEICO Indemnity Company with limits of $100,000 per person in underinsured motorist coverage and $10,000 in personal injury protection coverage. Mercier’s policy provided that amounts paid by GEICO under the UIM coverage for damages that Mercier was legally entitled to recover would be reduced by sums paid on behalf of the at-fault driver.
¶4 GEICO paid Mercier $10,000 for his medical expenses under the personal injury protection coverage. The tortfeasor’s insurance company paid Mercier the limits of $25,000. Mercier notified GEICO that he had a claim for underinsured motorist benefits, as he believed the sum of $35,000 did not fully compensate him for his injuries. GEICO and Mercier were unable to agree on what amount, if any, Mercier was entitled to receive.
1. If you and we do not agree (i) whether you are legally entitled to recover damages under this coverage based upon the liability facts of the accident or (ii) to the proper amount of such damages, the dispute may be resolved:
(a) in a binding, voluntary arbitration proceeding as described in paragraph 2 below, or
(b) by civil lawsuit brought by you in a court of competent jurisdiction.
2. ... If agreement cannot be reached on selection of an arbitrator, paragraph 1(b) of this section shall apply . . . ,[3]
Mercier and GEICO could not agree on the selection of a private arbitrator, so Mercier proceeded under paragraph 1(b). He filed suit in King County Superior Court in October 2005.
¶6 Counties have statutory authority to provide for mandatory arbitration for all civil actions where “the sole relief sought is a money judgment” and where no party asserts a claim in excess of a certain dollar limit. RCW 7.06.020. King County has approved mandatory arbitration for claims not in excess of $50,000. Mercier moved his case into mandatory arbitration in December 2005. The issue raised by Mercier’s complaint was whether he was entitled to judgment against GEICO “for UIM insurance coverage benefits in the amount of his collision damages, as proven.”
¶7 In a private arbitration the task of the arbitrator is typically limited by the insurance contract to a determina
¶8 Shortly before the arbitration, arbitrator Joel Bradshaw ruled that references to amounts of money available from insurance would be inadmissible in the arbitration. Mercier asked him to reconsider this ruling. Mr. Bradshaw refused in a letter dated July 6, 2006, which reads, in its entirety, as follows:
I have now had an opportunity to review both parties’ submittals on Plaintiff’s Motion for Reconsideration of my earlier ruling that UIM insurance limits and underlying liability limits for that matter, are inadmissible in the mandatory arbitration ruling.
My interpretation of Price v. Farmers Insurance Company of Washington, 133 Wn.2d 490, 946 P.2d 388 (1997), leads me to conclude that issues of liability injuries and damages are properly matters for arbitration where the policy so provides. On the other hand, it is appropriate for courts to determine the question of coverage, which relates to limits. This would typically be resolved by a declaratory judgment action.
It is not my understanding that the parties have agreed to submit both damages and coverage issues to an arbitrator. Additionally, I do not believe that coverage issues would be appropriate for determination under Rules of Mandatory Arbitration. This leads me to the conclusion that the thrust of the Plaintiff’s complaint in this instance was to establish the Plaintiff’s damages. Coverage issues would necessarily need to be resolved subsequently, either by agreement of the parties, or by declaratory judgment.
*897 Therefore, the decision remains the same; limits shall be inadmissible at the arbitration hearing.[6]
¶9 The arbitration began on July 10, 2006. The decision issued by Mr. Bradshaw on July 19, 2006 stated: “I make the following award in favor of the Plaintiff in the amount of $36,000.00, inclusive of Plaintiff’s medical expenses and income loss.”
¶10 A party who is aggrieved by the decision of a MAR arbitrator may file a notice of appeal and request a trial de novo in the superior court on all issues of law and fact. RCW 7.06.050. A trial de novo is conducted as though no arbitration proceeding had occurred. MAR 7.2(b)(1). “If no appeal has been filed at the expiration of twenty days following filing of the arbitrator’s decision and award, a judgment shall be entered and . . . when entered shall have the same force and effect as judgments in civil actions.” RCW 7.06.050(2). “A judgment so entered is subject to all provisions of law relating to judgments in civil actions, but it is not subject to appellate review and it may not be attacked or set aside except by a motion to vacate under CR 60.” MAR 6.3.
¶11 Neither party asked for a trial de novo. Mercier moved for entry of final judgment on the arbitrator’s award. He proposed a judgment for $36,000. GEICO responded that the judgment should be reduced by $35,000 to account for the medical payments and settlement that Mercier had already received.
¶12 Mercier replied that under the rules of mandatory arbitration, the award of $36,000 had to be regarded as his net damages. He moved to strike the documents submitted
¶13 The trial court denied both of Mercier’s motions to strike and entered a judgment for Mercier in the amount of $1,000 after finding that Mercier’s proposed judgment for $36,000 “relies upon misstatements and misrepresentations of fact, law and contract.”
MANDATORY ARBITRATION
¶14 Mercier maintains the arbitrator’s award of $36,000 was a net award that resolved the entire controversy. He claims the court’s decision to consider the other payments was unauthorized because the statute and rules for mandatory arbitration do not permit a trial court to “hold additional hearings” or “allow the parties to supplement the MAR record.”*
¶15 GEICO responds that coverage issues, including issues of offset and setoff, are specifically reserved for the courts and therefore beyond the scope of mandatory arbitration. GEICO relies solely on case law developed in the context of private arbitration of underinsured motorist claims. In that context, it is well established that issues of coverage are reserved for the courts because they are akin to a declaratory judgment. See Price, 133 Wn.2d at 498-99.
¶16 Unlike in Price, this was not a special proceeding to confirm a private arbitration award. Mandatory arbitration, a statutory system, was designed to take relatively small and simple cases off the superior court’s docket and resolve them quickly and inexpensively.
Arbitration applies only to cases “where the sole relief sought is a money judgment. . . .” Thus, by definition, arbitration does not apply to cases that seek, alone or in conjunction with other claims, remedies other than a money judgment. For example, actions to dissolve a marriage or to enjoin a party are not subject to arbitration under this statute. Similarly, claims which involve foreclosure of a security agreement or a lien, rescission, specific performance, exoneration of a bond, accounting, receivership, a declaration of rights or similar actions are not subject to mandatory arbitration under this statute. However, the statute should be read more broadly than simply applying to actions which seek damages and conversely not applying to actions which seek equitable remedies. For example, if a party asserts a claim for restitution, such a claim, although equitable in nature, only seeks a “money judgment” and would therefore be subject to arbitration.
The rationale for excluding claims other than for a money judgment is in keeping with the idea that mandatory arbitra*900 tion is better suited for smaller and simpler claims. Claims seeking remedies other than money judgments are often complex and sometimes require continuing supervision by the court. The arbitration program was not designed for these kind of cases.[13]
¶17 In this case the pleadings heralded a relatively small and simple action. Even though Mercier styled his lawsuit a “Complaint for Declaratory Judgment and Damages,”
¶18 According to M. Wayne Blair, author of a chapter on chapter 7.06 RCW in a Washington State Bar Association deskbook, arbitrators who conduct mandatory arbitrations should construe their authority broadly. When issues in the case are left undecided in the arbitration, they must be referred back to the court and this undermines the objectives of the system:
The authority of an arbitrator begins at the point the arbitrator is assigned to a case. Under MAR 3.2, the arbitrator has authority to decide all procedural issues, examine any site or object relevant to the case, issue subpoenas, administer oaths, rule on evidence, determine the facts, decide the law, make an award and generally perform acts authorized by the statute and rules.
The rules should be interpreted by the arbitrator as a broad grant of authority. An arbitrator should hesitate before deciding that he or she does not have authority to make a particular ruling or decide a matter. If an arbitrator so determines, then the matter must be referred to the court. Such uncertainty on the part of the arbitrator only adds to the time and expense of resolving a case.[15]
¶19 Although the arbitrator could have resolved the whole case, he did not. He determined that he lacked authority to do anything but determine collision damages. The question on appeal is whether the superior court erred by resolving the coverage issues that the arbitrator left undecided.
¶20 A party to a mandatory arbitration who does not ask for a trial de novo thereby accepts the arbitrator’s award “and may not alter it by requesting action by the Superior Court which would amend that award.” Trusley v. Statler, 69 Wn. App. 462, 465, 849 P.2d 1234 (1993). Mercier contends that by entering judgment for only $1,000, the superior court improperly amended the arbitration award, contrary to the holding of Trusley. He maintains the court was obliged to assume that the arbitrator’s award of $36,000 was a net award that resolved the entire controversy.
¶21 In Trusley, the defendants’ pleadings asked for an award of attorney fees under RCW 4.84.185 for defending a frivolous action. The arbitrator dismissed the plaintiff’s complaint but denied the defendants’ request for fees. When the defendants moved in superior court for judgment on the award, they asked for attorney fees on a different basis — RCW 4.84.250, the offer of settlement statute. The superior court granted this request. On appeal the fee award was reversed. “Since the Statlers did not ask the arbitrator to exercise his delegated authority and award them attorney fees under RCW 4.84.250 for the arbitration
¶22 In Trusley, the arbitrator’s authority to award attorney fees was not in dispute. The arbitrator considered the request for attorney fees but rejected it. By awarding fees on a basis not considered by the arbitrator, the superior court was revisiting an issue already decided and modifying the arbitrator’s decision on that issue. In contrast, here the arbitrator decided that GEICO’s right to setoff and offset was a coverage issue reserved for the court and beyond the scope of arbitration. As the comment above by M. Wayne Blair indicates, if the arbitrator finds himself unauthorized to decide an issue, it “must be referred to the court.”
¶23 Mercier contends the court should not have considered the documents GEICO submitted pertaining to coverage and the arbitrator’s ruling, and should have stricken GEICO’s surreply as belated and unauthorized under the local rules. Under the local rule in question a trial court may in its discretion accept materials that do not comply with the rules. A trial court does not abuse its discretion unless the exercise of its discretion is manifestly unreasonable or based upon untenable grounds or reasons. Burnside v. Simpson Paper Co., 123 Wn.2d 93, 107, 864 P.2d 937 (1994). Mercier did not provide the court with all relevant information when he proposed a judgment of $36,000. It was not an abuse of discretion for the court to accept the additional information from GEICO in order to be fully advised and avoid an unjust result.
INTEREST
¶25 Mercier raises two issues concerning interest. The final judgment established Mercier’s right to postjudgment interest to be calculated at the rate provided in RCW 4.56.110(3) for judgments “founded on the tortious conduct of individuals or other entities.” Mercier contends the rate should be 12 percent as provided in RCW 4.56.110(4) because GEICO’s obligation to pay underinsured motorist coverage benefits arises out of the insurance contract.
¶26 An underinsured motorist carrier stands in the shoes of the tortfeasor, and its liability to the insured is identical to the tortfeasor’s. Dayton v. Farmers Ins. Group, 124 Wn.2d 277, 281, 876 P.2d 896 (1994). Mercier would have received postjudgment interest at the tort rate if the judgment had been against the tortfeasor. Following Dayton, we affirm the trial court’s decision to allow post-judgment interest at the tort rate.
¶27 Mercier contends that the trial court erred in failing to award prejudgment interest for the one month between the date of the arbitration award and the date judgment was entered. Since GEICO conceded below that Mercier was entitled to prejudgment interest for this period, for purposes of this case we will assume that he was so
¶28 The judgment for $1,000 does not take into consideration GEICO’s obligation to pay a pro rata share of the legal expenses incurred in recovering medical payments. See Hamm v. State Farm Mut. Auto. Ins. Co., 151 Wn.2d 303, 308-09, 88 P.3d 395 (2004); Winters v. State Farm Mut. Auto. Ins. Co., 144 Wn.2d 869, 882-83, 31 P.3d 1164 (2001). Mercier asks that this omission be corrected. Since GEICO does not object, even though the request was not made below, we will permit this limited modification of the judgment.
¶29 Remanded for recalculation of the judgment in accordance with Hamm and to add prejudgment interest.
Appelwick, C.J., and Coleman, J., concur.
Review denied at 163 Wn.2d 1028 (2008).
M. Wayne Blair, Mandatory Arbitration in Washington, in Wash. State Bar Ass’n, Alternate Dispute Resolution Deskbook: Arbitration and Mediation in Washington § 2.3(7)(b), at 2-4 (2d ed. 1995).
Clerk’s Papers at 100 (Mercier’s Insurance Policy).
3 Clerk’s Papers at 100 (Mercier’s Insurance Policy).
Clerk’s Papers at 6 (Mercier’s Complaint, secs. 5.2, 5.3, and 5.4 (Oct. 26, 2005)).
Clerk’s Papers at 158 (GEICO’s Answer, sec. 6.5 (Dec. 13, 2005)).
6 Clerk’s Papers at 114 (Arbitrator’s Letter to Parties (July 6, 2006)).
Clerk’s Papers at 8 (Arbitration Award (July 19, 2006)).
Clerk’s Papers at 41, 48 (GEICO’s Resp. to Mercier’s Mot. for Entry of J. (Aug. 16, 2006)).
Clerk’s Papers at 108 (GEICO’s Surreply to Mercier’s Mot. for Entry of J. (Aug. 21, 2006)).
Clerk’s Papers at 143 (Final J. (Aug. 28, 2006)).
Appellant’s Opening Br. at 14.
Alternate Dispute Resolution Deskbook § 2.2(1), at 2-4.
13 Alternate Dispute Resolution Deskbook § 2.3(l)(b), at 2-11 (alteration in original).
Clerk’s Papers at 3 (Mercier’s Compl. (Oct. 27, 2005)).
15 Alternate Dispute Resolution Deskbook § 2.3(3)(b), at 2-26 (emphasis added).
Alternate Dispute Resolution Deskbook § 2.3(3)(b), at 2-26.
But see Dep’t of Corr. v. Fluor Daniel, Inc., 160 Wn.2d 786, 161 P.3d 372 (2007).