Beal v. Allstate Ins. Co.
| Decision Date | 11 March 2010 |
| Docket Number | Docket: Was-09-205. |
| Parties | Patricia Ruth BEAL v. ALLSTATE INSURANCE COMPANY. |
| Court | Maine Supreme Court |
Catherine R. Connors, Esq. (orally), Pierce Atwood LLP, Portland, ME, Daniel I. Billings, Esq., J. William Druary, Jr., Esq., Marden, Dubord, Bernier & Stevens, Waterville, ME, for Allstate Insurance Company.
Panel: SAUFLEY, C.J., and ALEXANDER, LEVY, MEAD, GORMAN, and JABAR, JJ.
[¶ 1] This appeal presents questions related to a high-low settlement agreement—between a person injured in an automobile collision and an underinsured tortfeasor—and the interplay of that agreement with the injured party's underinsured motorist insurance policy and Maine's underinsured motorist coverage statute, 24-A M.R.S. § 2902 (2009).
[¶ 2] Patricia Ruth Beal, who was injured in an automobile collision, appeals from a summary judgment entered in the Superior Court (Washington County, Cuddy, J.) in favor of her insurer, Allstate Insurance Company, concluding that, for purposes of her underinsured motorist claim, Beal was no longer "legally entitled to recover damages" after settling her claim for damages against the tortfeasor at the limits of his insurance. We conclude that Allstate may remain responsible to pay Beal pursuant to her underinsured motorist policy and section 2902, and we vacate the summary judgment entered in favor of Allstate. We affirm an earlier partial summary judgment entered in the Superior Court (Hunter, J.) in favor of Beal, collaterally estopping Allstate from relitigating the issue of the extent of Beal's damages.
[¶ 3] At first blush, the facts established on the summary judgment record are straightforward. Patricia Beal, while a passenger in her parents' car, sustained injuries in a collision with a vehicle operated negligently by Toby Prosky. At the time of the collision, Prosky had $100,000 of automobile liability insurance coverage through Allstate. Beal had underinsured motorist (UIM) coverage through her parents' Maine Bonding and Casualty Insurance Company policy in the amount of $100,000 and through her own policy, coincidentally with Allstate, in the amount of $50,000, for a total of $150,000 in UIM coverage. See Connolly v. Royal Globe Ins. Co., 455 A.2d 932, 935 (Me.1983). Because Beal's total UIM coverage exceeded Prosky's total liability coverage by $50,000, Prosky was underinsured in the amount of $50,000. See id. at 936. The parties agree that Beal's parents' Maine Bonding UIM coverage was primary. See Cobb v. Allstate Ins. Co., 663 A.2d 38, 39-40 (Me. 1995). To the extent that her damages exceeded $100,000, Beal would ordinarily be entitled to UIM benefits through Allstate in an amount up to the $50,000 UIM policy limit. See 24-A M.R.S. § 2902(1); Connolly, 455 A.2d at 935, 936.
[¶ 4] As is often the case, however, the facts here are not that simple. In Beal's suit against Prosky, the parties agreed to liability on the part of Prosky and executed an agreement for "final determination" of Beal's damages through arbitration. The agreement stated: "Although strict conformity to the Rules of Evidence shall not be necessary, evidence, to be admitted [by the arbitrator], must be of a type that reasonable people would rely upon in addressing serious matters in their lives." The agreement also provided that the parties give advance notice of any witnesses and documents or medical records that they intended to introduce at the arbitration hearing.
[¶ 5] Entering arbitration, Prosky and his attorney sought to limit any recovery against Prosky personally to the $100,000 liability limit of his Allstate policy. To that end, the arbitration agreement contained a high-low provision that capped Beal's recovery from Prosky at $100,000:
The parties agree that regardless of the amount the arbitrator shall award, Plaintiff shall receive from Defendant or his insurer no less than $60,000 and no more than $100,000, except that the Defendant/Allstate shall get credit for prior payments totaling $1,714.49 on any amount due to Plaintiff. There shall be no prejudgment interest added to any amount awarded by the arbitrator. . . . The arbitrator shall not be advised of this part of the arbitration agreement.
(Emphasis added.) According to the terms of the agreement, the award would be reduced to judgment if not paid within fourteen days of the decision or, if the award were not reduced to judgment, Beal would execute a release and stipulation of dismissal in favor of Prosky.
[¶ 6] After the arbitrator determined that Beal's damages totaled $135,000, Allstate promptly paid $100,000 to Beal pursuant to the terms of the high-low provision. That payment was equal to the liability limits of Prosky's policy, and it offset Maine Bonding's primary UIM coverage.1 See Cobb, 663 A.2d at 41. Beal and Prosky filed a stipulation of dismissal, and the court dismissed Beal's suit with prejudice without reducing the arbitration award to a judgment.
[¶ 7] Beal then sought to recover the remaining $35,000 in damages, plus interest and medical costs, from Allstate pursuant to her policy's UIM and medical payments benefits clauses.2 Allstate declined to pay, and Beal brought this action seeking those payments. The court (Hunter, J.) first entered a partial summary judgment in favor of Beal, declaring that Allstate was collaterally estopped from relitigating the issue of total damages ($135,000) as determined by the arbitrator. The court (Cuddy, J.) later entered a summary judgment in favor of Allstate, denying Beal's claim for UIM benefits because it concluded that, after the high-low provision capped Beal's recovery from Prosky at $100,000, she was no longer "legally entitled to recover damages" pursuant to the terms of her UIM policy. Beal appeals from this judgment, and Allstate cross-appeals from the earlier judgment regarding collateral estoppel.
[¶ 8] The execution of the high-low agreement between Beal and Prosky presents three issues. The first issue is whether Allstate, in its role as Beal's UIM carrier, is bound by the arbitrator's determination of the extent of Beal's damages. We agree with the court (Hunter, J.) that Allstate is collaterally estopped from relitigating the extent of Beal's damages.
[¶ 9] The second issue is whether Beal and Prosky intended the language of the high-low provision, which limited Beal's recovery "from Defendant or his insurer" to $100,000, to encompass Allstate's separate responsibility to provide UIM coverage to Beal because Allstate was also coincidentally "his insurer." We conclude that the plain language of the agreement did not limit Allstate's responsibility to provide UIM coverage to Beal.
[¶ 10] The third issue is whether, after the implementation of the high-low provision, Beal was still "legally entitled to recover damages" from Prosky within the meaning of her UIM policy and 24-A M.R.S. § 2902(1). We conclude, contrary to the court's determination, that Beal's settlement with Prosky did not extinguish her legal entitlement to recover damages for the purposes of section 2902.
[¶ 11] The trial court's decisions, first precluding Allstate from relitigating the issue of damages and then concluding that the high-low settlement extinguished Beal's legal entitlement to receive UIM benefits, were entered on partial and then final summary judgments. We review a court's entry of summary judgment de novo, viewing the evidence in the light most favorable to the nonprevailing party to determine whether the parties' statements of material facts and the record evidence to which the statements refer demonstrate that "there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law." Molleur v. Dairyland Ins. Co., 2008 ME 46, ¶ 8, 942 A.2d 1197, 1200 (quotation marks omitted).
[¶ 12] Collateral estoppel applies to factual issues "determined by a prior final judgment." Portland Water Dist. v. Town of Standish, 2008 ME 23, ¶ 9, 940 A.2d 1097, 1100 (quotation marks omitted). Allstate contends that applying collateral estoppel in this case is not proper because the arbitration award was not reduced to a final judgment that was adopted or confirmed by the court. Whether a judicially unconfirmed arbitration award can be preclusive for the purposes of offensive collateral estoppel is an issue of first impression in Maine.
[¶ 13] In an analogous context, we have relied on the Restatement (Second) of Judgments to determine when a nonjudicial or quasi-judicial determination should be treated as a final judgment. In Town of North Berwick v. Jones, we held that a final adjudication in an administrative proceeding before a quasi-judicial municipal body had the same preclusive effect as a final judgment in a court proceeding because the administrative proceeding entailed the essential elements of adjudication. 534 A.2d 667, 670-71 (Me.1987) (citing 2 Restatement (Second) of Judgments § 83 (1982)); see also Maines v. Sec'y of State, 493 A.2d 326, 328-29 (Me.1985) (). There, we based our analysis on the Restatement's recitation of the essential elements of adjudicatory procedure. See Town of N. Berwick, 534 A.2d at 670. These elements include:
(1) adequate notice, (2) the right to present evidence and legal argument and to rebut opposing evidence and argument, (3) a formulation of issues of law or fact to apply rules to specified parties concerning a specified transaction, (4) the rendition of a final decision, and (5) any other procedural elements as...
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