Friday, January 9. 2004
Judges’ Power to Reduce Uninsured Motorist Arbitration Awards Limited
By DAVID WATSON, Staff Writer
A trial judge ruling on a motion to confirm a damages award in excess of policy limits in an uninsured or underinsured motorist arbitration must confirm the entire award if the insurer did not make a timely motion to vacate or correct the award, this district’s Court of Appeal has ruled.
The court’s Div. Seven suggested that legislation may be needed if such awards are as common as lawyers for the insurer contended.
Justice Fred Woods, writing for the court, said Wednesday that Los Angeles Superior Court Judge Jon Mayeda properly ruled he lacked discretion to modify the arbitrator’s $1.1 million award in favor of Morton and Roberta Weinberg, even though the Weinbergs’ policy with Safeco Insurance Company of America limited their underinsured motorist coverage to $250,000 and they had already lost their bad faith suit.
Woods noted that the issue of an insurer’s liability—as distinct from that of the uninsured or underinsured motorist—is not made subject to arbitration by Insurance Code Sec. 11580.2(f). He pointed out that the appellate court’s unpublished Aug. 11 decision in the case relied on that fact in reversing Mayeda.
“Although this court originally concluded the trial court did not confirm the award as made when it entered judgment, after granting a petition for rehearing and giving the matter due consideration, that conclusion depended on our interpretation of what the arbitrator should have done, but not necessarily what the arbitrator intended to do,” Woods explained. “The actual language of the award is an award of damages. In essence, both below and on appeal, Safeco did not argue the arbitrator exceed[ed] his powers by awarding damages, but instead argued the arbitrator only issued a limited declaration of rights. Resolving such an issue of interpretation is properly done through a request for correction or vacation made to either the arbitrator or the trial court, not saved for argument on appeal.”
Under Code of Civil Procedure Sec. 1288, Woods observed, a request to vacate or correct an arbitration award must be made within 100 days after the award is served. Under the circumstances, the justice said, Mayeda correctly determined he had no authority to do anything other than convert the entire amount of the award into a money judgment against Safeco.
If, as lawyers for Safeco argued, arbitration awards are frequently issued in this form, Woods said it is up the Legislature to remedy the situation.
The justice wrote:
“Unless and until the Legislature provides for a mechanism to address what is to be done when an arbitrator is not asked to determine the insurer’s liability, but issues an award of damages, it is incumbent upon the parties to see that the arbitrator does not make an award of damages, but instead issues a declaration of liability or of rights. This court realizes that often the insured will not move to confirm the entire award against the insurer, but will accept payment of the policy limits from the insurer and then seek to collect the balance from the UIM. However, if the arbitrator makes an award of damages in excess of the policy limits, then the insurer must move in a timely manner, either before the arbitrator or in court, to vacate the award or correct it or risk having the court confirm the entire award upon a motion to confirm by the insured.”
Turning to another issue in the consolidated appeals, Woods said Los Angeles Superior Court Judge James Chalfant was correct in ruling that Safeco’s offer under Code of Civil Procedure Sec. 998 to settle the Weinbergs’ bad faith case for $150,001 was invalid because it was made to Morton and Roberta Weinberg jointly and was not apportioned between them.
The Weinbergs’ situation was not like that of the couple in Vick v. DaCorsi (2003) 110 Cal.App.4th 206, a case in which the Court of Appeal ruled an unapportioned joint Sec. 998 offer to be valid, Woods asserted. That couple, he said, had “an equal, undivided half-interest in the lawsuit and would have the same interest in the settlement proceeds because the complaint did not allege any occurrence involving only one of the Vicks nor did it seek damages on behalf of one of the Vicks.”
The justice reasoned:
“Even though Roberta’s claim was based on Safeco’s alleged mishandling of Morton’s UIM claim, that is a separate, not derivative claim.”
Citing Delos v. Farmers Insurance Group (1979) 93 Cal.App.3d 642, Woods observed that the plaintiffs in a bad faith action may suffer differing degrees of emotional distress.
“Respondents did not have a single, indivisible injury,” he declared. “Thus, appellant’s joint 998 offer was not valid as it was not apportioned among respondents.”
Attorneys Raymond H. Goettsch and Scott K. Murch of the Long Beach firm of LaTorraca and Goettsch represented Safeco on appeal. Los Angeles attorney Evan D. Marshall and Santa Monica lawyers Ian Herzog and Amy Ardell represented the Weinbergs.
The case is Weinberg v. Safeco Insurance Company of America, 04 S.O.S. 144.
Copyright 2004, Metropolitan News Company