American Universal Ins. Co. v. DelGreco, 13067

• Decision Date: 01 September 1987
• Docket Number: No. 13067,13067
• Parties: AMERICAN UNIVERSAL INSURANCE COMPANY v. Herman DelGRECO, Administrator (ESTATE OF James M. DelGRECO).
• Court: Connecticut Supreme Court

Page 171

530 A.2d 171

205 Conn. 178

AMERICAN UNIVERSAL INSURANCE COMPANY v. Herman DelGRECO, Administrator

(ESTATE OF James M. DelGRECO).

No. 13067.

Supreme Court of Connecticut.

Argued June 11, 1987.

Decided Sept. 1, 1987.

Jon S. Berk, with whom, on brief, were Julie A. Harris and Julie P. Apter, Hartford, for appellant (plaintiff).

Michael C. Jainchill, with whom, on brief, was Kathryn Calibey, Hartford, for appellee (defendant).

Before ARTHUR H. HEALEY, SHEA, CALLAHAN, SANTANIELLO and GLASS, JJ.

CALLAHAN, Justice.

This is an appeal from a decision of the trial court, which confirmed the award of an arbitration panel in favor of the defendant Herman DelGreco, administrator of the estate of James DelGreco. ¹

The matter was decided by the arbitration panel upon a stipulation of facts submitted by the parties. Those pertinent to this inquiry are as follows: On December 5, 1983, James M. DelGreco sustained serious injuries, when his automobile was struck by one being driven by Ronald J. Fields, Jr. DelGreco died as a result of his injuries on July 7, 1984. Herman DelGreco, the administrator of James DelGreco's estate, pursued claims against Fields and, pursuant to General Statutes § 30-102, the Dram Shop Act, ² against David's Restaurant. The estate was paid the $20,000 limit under Fields' motor vehicle liability policy by the Allstate Insurance Company. It also received the $20,000 policy limit under David's Restaurant's dram shop policy, which had been issued by the Great American Insurance Company. It was stipulated that the damages to the estate were in excess of $100,000. Thereafter, the defendant administrator made a claim for the underinsured motorist benefits provided by an automobile insurance policy issued to the defendant's decedent by American Universal Insurance Company. That policy provided underinsured motorist benefits in the amount of $40,000 per accident and $5000 in basic reparations benefits. American Universal paid $2335.80 in basic reparations benefits but refused to pay any underinsured motorist benefits claiming that it was entitled, under the policy and Connecticut law, to a setoff, not only of the $20,000 paid by Allstate under Fields' automobile policy and $2335.80 in basic reparations benefits it had paid, but also, of the $20,000 paid to the estate under the dram shop policy issued to David's Restaurant. The parties stipulated that the plaintiff is entitled to a credit for the $20,000 paid by Allstate on Fields' policy and for the $2335.80 the plaintiff paid in basic reparations benefits. Therefore the entitlement to $17,664.20 of the $40,000 underinsured motorist benefits remains at issue.

Pursuant to § 38-175c(a)(1) ³ of the General Statutes, and the provisions of the automobile policy issued to the defendant's decedent, the parties submitted the following issue to the panel of arbitrators: Whether, "under the policy language and Connecticut law, the American Universal Insurance Company is entitled to an additional [setoff] in the amount of $20,000 which was paid on behalf of the dram shop." The arbitration panel, in a memorandum of decision dated July 22, 1986, held that the setoff provisions of § 38-175c(b)(1) and the insurance regulations applied only to payments made by virtue of automobile bodily injury policies, and also that the dram shop payment was not made by or on behalf of "any person responsible for the injury" as required by § 38-175a-6(d)(1) of the Regulations of Connecticut State Agencies. ⁴ The panel, therefore rendered an award in favor of the defendant, holding that the plaintiff was not entitled to a setoff for the dram shop payment of $20,000 made to the decedent's estate.

Thereafter, in accordance with the provisions of General Statutes § 52-418, ⁵ the plaintiff filed an application to vacate the arbitration award in the Superior Court, arguing that the panel exceeded its powers and/or imperfectly executed them. The defendant moved, pursuant to General Statutes § 52-417, for an order confirming the arbitration award. The trial court reviewed the stipulated facts and the law, and after an "independent construction of the law," held that the arbitration panel's interpretation of the applicable law and its conclusions were "legally and logically correct" and confirmed the award. The plaintiff took a timely appeal to the Appellate Court. Thereafter, the appeal was transferred to this court pursuant to Practice Book § 4023.

The dispositive questions raised by this appeal are: (1) What is the proper scope of judicial review of a compulsory arbitration decision and award; and (2) did the arbitration panel and the trial court err in holding that the plaintiff was not entitled to a setoff for dram shop payments under the underinsured coverage provisions of the general statutes and the insurance regulations?

I

We are first called upon to decide the proper standard of judicial review of a compulsory arbitration award. The trial court, in interpreting dictum in Wilson v. Security Ins. Group, 199 Conn. 618, 509 A.2d 467 (1986), determined that: "Wilson requires the reviewing court to consider these elements [the applicable statutes, insurance regulations and the contract of insurance] to determine whether the panel's interpretation or conclusions of the law are legally and logically correct." (Emphasis added.) The trial court then conducted an independent review and concluded that the arbitration panel's decision was correct and confirmed the award.

In Wilson, this court raised doubts as to the propriety of applying the standard of judicial review applicable to voluntary arbitration proceedings to a compulsory arbitration proceeding under General Statutes § 38-175c. We specifically held that "[t]he issue of the appropriate scope of judicial review of a compulsory arbitration award is not ... properly raised by this appeal but must await the result of the arbitration that has been ordered." Id., 630, 509 A.2d 467. Additionally, we noted that voluntary and compulsory arbitrations are fundamentally different; id., 629, 509 A.2d 467; and that some states have recognized the need to broaden the scope of judicial review when arbitration is mandated by statute. Id., 629-30, 509 A.2d 467. We did not, however, determine the extent of judicial review of compulsory arbitration awards.

Ordinarily, arbitration is a creature of contract whereby the parties themselves, by agreement, define the powers of the arbitrators. O & G/O'Connell Joint Venture v. Chase Family Limited Partnership No. 3, 203 Conn. 133, 145, 523 A.2d 1271 (1987); Board of Education v. AFSCME, 195 Conn. 266, 269, 487 A.2d 553 (1985); Carroll v. Aetna Casualty & Surety Co., 189 Conn. 16, 20, 453 A.2d 1158 (1983); Malecki v. Burnham, 181 Conn. 211, 212-13, 435 A.2d 13 (1980); Waterbury v. Waterbury Police Union, 176 Conn. 401, 403, 407 A.2d 1013 (1979); Ramos Iron Works, Inc. v. Franklin Construction Co., 174 Conn. 583, 587, 392 A.2d 461 (1978). Parties who have contracted to arbitrate certain matters have no duty to arbitrate other matters which they have not agreed to arbitrate. Nor can the courts, absent a statute, compel the parties to arbitrate those other matters. See Security Ins. Co. of Hartford v. DeLaurentis, 202 Conn. 178, 182-83, 520 A.2d 202 (1987); Wilson v. Security Ins. Group, supra, 199 Conn. at 622, 509 A.2d 467; John A. Errichetti Associates v. Boutin, 183 Conn. 481, 488, 439 A.2d 416 (1981); Frager v. Pennsylvania General Ins. Co., 155 Conn. 270, 274, 231 A.2d 531 (1967). Where the parties have voluntarily and contractually agreed to submit to arbitration and have delineated the powers of the arbitrator through their submission, then the scope of judicial review of the award is limited by the terms of the parties' agreement and by the provisions of General Statutes § 52-418. See Bruno v. Department of Consumer Protection, 190 Conn. 14, 18, 458 A.2d 685 (1983); Carroll v. Aetna Casualty & Surety Co., supra, 189 Conn. at 21, 453 A.2d 1158; Bic Pen Corporation v. Local No. 134, 183 Conn. 579, 583, 440 A.2d 774 (1981); Waterbury v. Waterbury Police Union, supra, 176 Conn. at 403, 407, 407 A.2d 1013; American Motorists Ins. Co. v. Brookman, 1 Conn.App. 219, 221-22, 470 A.2d 253, cert. denied, 193 Conn. 801, 473 A.2d 1226 (1984). Thus, in determining whether an arbitrator has exceeded his authority or improperly executed the same under § 52-418(a), the courts need only examine the submission and the award to determine whether the award conforms to the submission. Wilson v. Security Ins. Group, supra, 199 Conn. at 626-27, 509 A.2d 467; Board of Education v. AFSCME, supra, 195 Conn. at 271, 487 A.2d 553; Caldor, Inc. v. Thornton, 191 Conn. 336, 340, 464 A.2d 785 (1983), aff'd, 472 U.S. 703, 105 S.Ct. 2914, 86 L.Ed.2d 557 (1985); Waterbury Construction Co. v. Board of Education, 189 Conn. 560, 563, 457 A.2d 310 (1983); Bic Pen Corporation v. Local No. 134, supra, 183 Conn. at 584, 440 A.2d 774; Malecki v. Burnham, supra, 181 Conn. at 213, 435 A.2d 13; Waterbury v. Waterbury Police Union, supra, 176 Conn. at 404, 407 A.2d 1013; Ramos Iron Works, Inc. v. Franklin Construction Co., supra, 174 Conn. at 587-88, 590, 392 A.2d 461; Board of Education v. Bridgeport Education Assn., 173 Conn. 287, 291, 377 A.2d 323 (1977). Under an unrestricted submission, the arbitrators' decision is considered final and binding; thus the courts will not review the evidence considered by the arbitrators nor will they review the award for errors of law or fact. Wilson v. Security Ins. Group, supra, 199 Conn. at 626-27, 509 A.2d 467; Bruno v. Department of Consumer Protection, supra, 190 Conn. at 18-19, 458 A.2d 685; Carroll v. Aetna Casualty & Surety Co., supra, 189 Conn. at 19, 453 A.2d 1158; Bridgeport v. Bridgeport Police Local 1159, 183 Conn. 102, 105-106, 438 A.2d 1171 (1981); Milford Employees Assn. v. Milford, 179 Conn. 678, 683, 427 A.2d 859 (1980); Waterbury v. Waterbury Police Union, supra; ...