Aetna Casualty & Surety Co. v. Grabbert

590 A.2d 88, 1991 R.I. LEXIS 66, 1991 WL 64120
CourtSupreme Court of Rhode Island
DecidedApril 23, 1991
Docket89-253-Appeal
StatusPublished
Cited by46 cases

This text of 590 A.2d 88 (Aetna Casualty & Surety Co. v. Grabbert) is published on Counsel Stack Legal Research, covering Supreme Court of Rhode Island primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Aetna Casualty & Surety Co. v. Grabbert, 590 A.2d 88, 1991 R.I. LEXIS 66, 1991 WL 64120 (R.I. 1991).

Opinion

OPINION

SHEA, Justice.

This matter comes before the Supreme Court on Thomas A. Grabbert’s appeal from a judgment of the Superior Court vacating an arbitration award granting him $32,500 plus 34 percent interest and costs. The total award, exclusive of costs, was $43,550. We reverse.

The facts in this matter are not in dispute. On February 16, 1985, Thomas A. Grabbert (Grabbert) was involved in an automobile accident with an uninsured motorist, as a result of which he sustained personal injuries. Grabbert made a claim under the uninsured-motorist provision of his automobile-insurance policy with Aetna Casualty & Surety Company (Aetna). The parties failed to reach a satisfactory settlement, and Grabbert requested that the dispute be submitted to arbitration pursuant to the arbitration provision of the insurance policy. The arbitration provision provided:

“If we and a covered person do not agree:
1. Whether that person is legally entitled to recover damages from the owner or operator of an uninsured motor vehicle; or
2. on the amount of damages;
either party may make a written demand for arbitration. In this event, each party will select an arbitrator. The two arbitrators will select a third. If they cannot agree within 30 days, either may request that selection be made by a judge of a court having jurisdiction. Each party will:
1. Pay the expenses it incurs; and
2. Bear the expense of the third arbitrator equally.
“Unless both parties agree otherwise, arbitration will take place in the county and state in which the covered person lives. Local rules of law as to procedure and evidence will apply. A decision agreed to by two of the arbitrators will be binding. However, either party may make a written demand for a trial if the amount of damages awarded is greater than the minimum limit for bodily injury liability specified by the financial responsibility law of the state in which your covered auto is principally garaged. If this demand is not made within 60 days of the arbitrators’ decision, the amount of damages awarded by the arbitrators will be binding.”

The dispute proceeded to arbitration. The parties each appointed an arbitrator, and the two party-appointed arbitrators selected a third arbitrator to complete the tripartite arbitration panel. Aetna appointed James McKenna (McKenna) as its arbitrator, and Grabbert appointed Ronald J. Resmini (Resmini or party-appointed arbitrator). 1 McKenna and Resmini selected W. Kenneth O’Donnell (O’Donnell) as the third arbitrator.

*90 On December 16, 1987, O’Donnell issued the unanimous arbitrators’ award. The arbitrators awarded Grabbert $32,500 plus 34 percent interest and costs. The total award, exclusive of costs, was $43,550. On December 31, 1987, Grabbert’s counsel, John Andrew Thompson (Thompson), requested through Aetna’s counsel that the insurer pay Grabbert’s arbitration costs as awarded by the arbitrators. These costs were listed as $4,355 for his party-appointed arbitrator’s fee and $100 for Grabbert’s expense in initiating the arbitration. In response, Aetna’s counsel requested on January 5, 1988, that Thompson forward a detailed copy of the party-appointed arbitrator’s bill for review.

It was significant that Grabbert’s party-appointed arbitrator’s bill for $4,355 was exactly 10 percent of the award. The party-appointed arbitrator and Thompson each stated at separate depositions that no agreement concerning the arbitrator’s fee existed prior to the award. However, the party-appointed arbitrator acknowledged that it was his practice to charge a contingent fee of 10 percent of an award. He said that when no award was made, he would not receive payment for his services.

Sometime after Thompson’s request of Aetna to pay Grabbert’s arbitration costs but prior to his sending Aetna’s counsel a copy of the party-appointed arbitrator’s bill, Thompson telephoned the arbitrator to express his concern about the amount of the bill. The party-appointed arbitrator and Thompson concur that even at this late date they still had not agreed upon the arbitrator’s fee. Both agree that the party-appointed arbitrator’s fee had not been a topic of conversation up until this point. The party-appointed arbitrator testified that during this telephone conversation he agreed to reduce his bill from $4,355 to $435, under the guise of a typographical error, because of the apparent financial situation of both Thompson and Grabbert. He stated:

“In the course of the conversation, he indicated to me, you know, that his client had financial difficulties and it was kind of the understanding that or clear to me that the attorney’s financial situation certainly wasn’t significant and that any money that was going to be paid apparently to me may have been coming out of whatever fee that he was receiving on it. So, based on that conversation I had with him, again I arbitrarily just took another form and charged him something significantly less and indicated to him that in my conversation with him, that for the record which was treated as a typographical error, and that’s how I left it with him. My feeling on that is for years I did things for a lot of fellows and I didn’t get anything or little to nothing out of it, and the time I spent answering things or over the phone for him I don’t get anything, and for me, it was just another form of charity. That didn’t really bother me especially in examining the person that I was dealing with, so I didn’t have any trouble, although there is a tremendous difference between the first bill and the second bill.”

Thompson went along with the party-appointed arbitrator’s suggestion to treat the first bill as a typographical error, and Thompson later informed Aetna’s counsel of such error in a letter dated January 14, 1988. The letter stated that the correct amount of the bill was $435. Thompson explained in the letter that the fact that the party-appointed arbitrator had spent only four hours at the arbitration hearing and deliberated for “a couple hours” highlighted the obviousness that a typographical mistake had been made.

On January 18, 1988, Aetna’s counsel notified Thompson by letter that Aetna would not pay Grabbert’s party-appointed arbitrator’s fee. This letter specifically referred to the language in the insurance policy that provided that each party must pay the expenses it incurs in the arbitration, including the expense of its own arbitrator, and that the expense of the third arbitrator was to be divided equally. Aet-na’s counsel contended that the arbitrators were not free to ignore this contractual language in awarding costs to Grabbert. Moreover, by the same January 18, 1988 letter, Aetna’s counsel also notified Thompson of Aetna’s intention to demand a trial *91 by jury on the issue of damages under the terms of the insurance policy whereby either party may exercise this option if the arbitrators’ award exceeds the financial-responsibility limit of the state in which the covered auto was principally garaged.

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Bluebook (online)
590 A.2d 88, 1991 R.I. LEXIS 66, 1991 WL 64120, Counsel Stack Legal Research, https://law.counselstack.com/opinion/aetna-casualty-surety-co-v-grabbert-ri-1991.