Mercier v. GEICO Indem. Co.

165 P.3d 375
CourtCourt of Appeals of Washington
DecidedJuly 30, 2007
Docket58813-3-I
StatusPublished
Cited by5 cases

This text of 165 P.3d 375 (Mercier v. GEICO Indem. Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mercier v. GEICO Indem. Co., 165 P.3d 375 (Wash. Ct. App. 2007).

Opinion

165 P.3d 375 (2007)

Ralph MERCIER, a married man in his individual capacity, Appellant,
v.
GEICO INDEMNITY COMPANY, a foreign insurer, Respondent.

No. 58813-3-I.

Court of Appeals of Washington, Division 1.

July 30, 2007.

*376 Kevin M. Winters, Hawkes Law Firm PS, Seattle, WA, for Appellant.

Paul Lawrence Crowley, Mary E. Owen & Associates, Seattle, WA, for Respondent.

BECKER, J.

¶ 1 Appellant Ralph Mercier's suit against his insurance company for underinsured motorist benefits was submitted to mandatory arbitration under RCW 7.06. 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 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.

¶ 2 Mandatory arbitration is conceptually distinct from private contractual arbitration.[1] The case remains within the superior court's jurisdiction at all times. If an arbitrator determines that a particular issue is beyond the permitted scope of arbitration, the superior court can decide the issue and its decision is not an improper "amendment" of the arbitration award. Here, because the arbitrator ruled that he lacked authority to decide issues of setoff and offset, the superior court needed to decide these issues in order to complete the adjudication of the case. We conclude the court properly deducted sums previously paid to Mercier from the total damage award before entering judgment.

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.[2]

¶ 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.

¶ 5 The contract of insurance between GEICO and Mercier provides that such a dispute may be resolved in a private arbitration or alternatively in court:

1. If you and we do not agree (i) whether you are legally entitled to recover damages under this coverage based upon *377 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."[4] GEICO's answer put the amount of such damages into dispute, and it also alleged, as an affirmative defense, GEICO's entitlement to "a setoff of any monies paid on its behalf."[5]

¶ 7 In a private arbitration the task of the arbitrator is typically limited by the insurance contract to a determination of the tortfeasor's liability and calculation of total damages, while coverage issues — including the insurance company's right to a setoff — are to be resolved by a court. See Price v. Farmers Ins. Co., 133 Wash.2d 490, 498-99, 946 P.2d 388 (1997). GEICO contends that this division of labor must also occur when the matter is referred to mandatory arbitration. Mercier contends that there is no such limitation on what the arbitrator can decide. In his view, the arbitrator not only has to determine the total collision damages, but must also deduct the amount of liability coverage available, in order to arrive at an award establishing the net UIM payment owed by the insurer.

¶ 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 Wash.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.
*378 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 20, 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."[7]

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Cite This Page — Counsel Stack

Bluebook (online)
165 P.3d 375, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mercier-v-geico-indem-co-washctapp-2007.