Azpell v. Old Republic Ins. Co.

• Decision Date: 18 April 1989
• Citation: 382 Pa.Super. 255,555 A.2d 168
• Parties: John AZPELL, Appellant, v. OLD REPUBLIC INSURANCE COMPANY, Appellee.
• Court: Pennsylvania Superior Court

Page 168

555 A.2d 168

382 Pa.Super. 255

John AZPELL, Appellant, v. OLD REPUBLIC INSURANCE COMPANY, Appellee.

Superior Court of Pennsylvania.

Argued Jan. 9, 1989.

Filed March 6, 1989.

Reargument Denied April 18, 1989.

Jeffrey M. Azpell, Upper Darby, for appellant.

Paul R. Bartolacci, Media, for appellee.

Before WIEAND, MONTEMURO and HOFFMAN, JJ.

MONTEMURO, Judge.

This is an appeal from the June 15, 1988, order of the Court of Common Pleas of Delaware County, wherein the court vacated an arbitration award which had granted the appellant, John Azpell, a recovery of $15,000.00 against the Old Republic Insurance Company, the appellee. The trial court then entered judgment in favor of the Old Republic Insurance Company. We affirm.

The facts underlying the present appeal are not in dispute. In October of 1986, the appellant was injured when he was involved in a car accident while operating a vehicle owned and insured by his employer, Darby Township. Appellant's vehicle was struck by an uninsured motorist. At the time of the accident, the appellant was acting within the course and scope of his employment as a Darby Township police officer. Appellant therefore received workmen's compensation benefits from Darby Township for his medical bills and lost wages. Appellant then filed a claim for uninsured motorist benefits with Old Republic.¹ Old Republic had issued a Business Auto Policy to the Township of Darby for the period of January 1, 1986 through January 1, 1987, which provided uninsured motorist protection. When Old Republic refused to provide appellant with uninsured motorist benefits, the matter proceeded to arbitration in accordance with the terms of the insurance policy.

We have reviewed the transcript from the arbitration hearing which was conducted on November 11, 1987. During this hearing, the appellant argued that his receipt of workmen's compensation benefits was not his exclusive remedy with regard to his employer and his employer's insurance carrier. Appellant relied upon Boris v. Liberty Mutual Insurance Company, 356 Pa.Super. 532, 515 A.2d 21 (1986), an en banc decision of this Court which does support this position. Counsel for Old Republic acknowledged the Boris precedent, but emphasized that the question of whether the Workmen's Compensation Act² precludes an employee from recovering uninsured motorist benefits from his employer for a work-related automobile accident was then pending before the Pennsylvania Supreme Court. Counsel for Old Republic also pointed out that, prior to the Boris decision, panel decisions of the Superior Court had reached conflicting results on this issue.

Old Republic's petition to vacate the arbitration award included the following as grounds upon which the trial court could vacate the award:

1. The arbitrators committed an error of law in not finding that the sole remedy available to John Azpell was the Pennsylvania Workmen's Compensation Act ...

R.R. at 13a. The trial court vacated the arbitration award in reliance upon a decision of the Pennsylvania Supreme Court, handed down after the arbitrators had entered their award in the instant case. In Lewis v. School District of Philadelphia, 517 Pa. 461, 538 A.2d 862 (1988), the Court reviewed three appeals, wherein "the courts below concluded that section 303(a) of the Workmen's Compensation Act immunized the employer from the employee's claim for uninsured motorist benefits." Id. at 464, 538 A.2d at 863. The Lewis Court held that an employee, injured in a work-related automobile accident, cannot recover uninsured motorist benefits from his employer, but must rely upon the Workmen's Compensation Act as the exclusive remedy against the employer for injuries sustained in the course and scope of employment. In the present case, the appellant first argues that the trial court lacked the requisite grounds to vacate the arbitration award, as set forth in 42 Pa.C.S.A. § 7314. This argument was also advanced by the appellant in his Statement of Matters Complained of on Appeal. We do not have the benefit of the trial court's resolution of this issue, however, because the trial court failed to address it in its opinion, filed July 28, 1988. This is indeed unfortunate because this issue is not without difficulty.

This case is governed by the provisions of the Uniform Arbitration Act of 1980, 42 Pa.C.S.A. § 7301 et seq. The insurance contract issued by Old Republic to Darby Township expressly provides that any arbitration "shall be conducted in accordance with the Pennsylvania Uniform Arbitration Act." R.R. at 9a; 42 Pa.C.S.A. § 7302(a). The Arbitration Act of 1980 sets forth only five grounds upon which a court may properly review and vacate an arbitration award:³

(i) the court would vacate the award under section 7341 (relating to common law arbitration) if this subchapter were not applicable;

(ii) there was evident partiality by an arbitrator appointed as a neutral or corruption or misconduct in any of the arbitrators prejudicing the rights of any party;

(iii) the arbitrators exceeded their powers;

(iv) the arbitrators refused to postpone the hearing upon good cause being shown therefor or refused to hear evidence material to the controversy or otherwise so conducted the hearing, contrary to the provisions of section 7307 (relating to hearing before arbitrators), as to prejudice substantially the rights of a party; or

(v) there was no agreement to arbitrate and the issue of the existence of an agreement to arbitrate was not adversely determined in proceedings under section 7304 (relating to court proceedings to compel or stay arbitration) and the applicant-party raised the issue of the existence of an agreement to arbitrate at the hearing.

42 Pa.C.S.A. § 7314(a)(1). Although Old Republic has relied upon Section 7314(a)(1)(iii) in support of its position that the order of the trial court should be affirmed, we need not reach the issue of whether this section is applicable under the circumstances of this case. After careful review of the record before us and the applicable law, we find that Section 7314(a)(1)(i) supported the trial court's decision to vacate the arbitrator's award.

Section 7314(a)(1)(i) allows the trial court to vacate an arbitrator's award if such an award would be vacated under common law arbitration:

The award of an arbitrator in a nonjudicial arbitration ... is binding and may not be vacated or modified unless it is clearly shown that a party was denied a hearing or that fraud, misconduct, corruption or other irregularity caused the rendition of an unjust, inequitable, or unconscionable award.

42 Pa.C.S.A. § 7341. We are cognizant of the fact that important reasons underlie the narrow scope of review for common law arbitration awards. In Cargill v. Northwestern National Insurance Co. of Milwaukee, Wisconsin, 316 Pa.Super. 139, 142, 462 A.2d 833, 834 (1983), we stated:

Arbitration is "designed to provide an expeditious and inexpensive method of resolving disputes with the further winning attribute of helping ease congested court calendars ..." Allstate Insurance Co. v. Fioravanti, 451 Pa. 108, 116, 299 A.2d 585, 589 (1973). Consequently, judicial review of an arbitration award is severely circumscribed. It must be so; otherwise, " 'arbitration proceedings, instead of being a quick and easy mode of obtaining justice, would be merely an unnecessary step in the course of litigation, causing delay and expense, but settling nothing finally.' " Allstate Insurance Co. v. Fioravanti, supra, 451 Pa. at 114 n. 4, 299 A.2d at 589 n. 4 quoting Westinghouse Air Brake Co. Appeal, 166 Pa.Super. 91, 97, 70 A.2d 681, 684 (1950).

Thus, under the common law, the award of arbitrators will not be reversed even for a mistake of law. Gallagher v. Educator & Executive Insurers, 252 Pa.Super. 414, 381 A.2d 986 (1977). See also 42 Pa.C.S.A. § 7314(a)(2).

In the case presently before us, it may appear at first glance that the trial court erred in vacating the arbitration award because the arbitrators had, at most, made an error of law in determining that the Workmen's Compensation Act does not bar appellant's claim for uninsured motorist benefits. However, an exception to the narrow scope of review employed in common law arbitration cases has been recognized. First, in United Services Automobile Association Appeal, 227 Pa.Super. 508, 323 A.2d 737 (1974), this Court was presented with a claim that a provision of the uninsured motorist clause contained in an insurance policy was repugnant to the Uninsured Motorist Coverage Act, 40 P.S. § 2000.⁴ We held that the trial court had properly reviewed and vacated the arbitrators' award. After a review of a series of cases in which this Court or the Pennsylvania Supreme Court had reviewed the awards of arbitrators, we acknowledged the following rule of law:

Thus the rule, to which all of the cases conform, is that where the application or construction of the uninsured motorist clause is at issue the dispute is within the exclusive jurisdiction of the arbitrators; the courts will take jurisdiction only where the claimant attacks a particular provision of the clause itself as being contrary to a constitutional, legislative, or administrative mandate, or against public policy, or unconscionable.

Id. at 516, 323 A.2d at 741 (footnote omitted).

Following the decision of this Court in United Services Automobile Association Appeal, our Supreme Court granted allowance of appeal in a case which also involved a claim that an insurance policy provision, which defined an "uninsured automobile", was contrary to the Uninsured Motorist Coverage Act. This case, Davis v. Government Employees Insurance Company, 500 Pa. 84, 454 A.2d 973 (1982), contains the following footnote:

We must reject appellee's contention that the court of common pleas lacked authority to review the merits of the arbitrators' award. Where, as here, a claimant challenges a provision of an uninsured motorist clause...