Bush v. Nationwide Mut. Ins. Co., 80-119-A

• Citation: 448 A.2d 782
• Decision Date: 30 July 1982
• Docket Number: No. 80-119-A,80-119-A
• Parties: Peter BUSH et al. v. NATIONWIDE MUTUAL INSURANCE CO. ppeal.
• Court: United States State Supreme Court of Rhode Island

Page 782

448 A.2d 782

Peter BUSH et al. v. NATIONWIDE MUTUAL INSURANCE CO.

No. 80-119-Appeal.

Supreme Court of Rhode Island.

July 30, 1982.

Resmini, Fornaro, Colagiovanni & Angell, Ronald J. Resmini, Providence, for plaintiffs.

Carroll, McHugh & Pirraglia, John G. Carroll, Douglas H. Smith, Providence, for defendant.

OPINION

BEVILACQUA, Chief Justice.

This is a consolidated appeal from a Superior Court justice's denial of a request to enjoin an arbitration proceeding and the subsequent denial of a petition to vacate an arbitrator's award brought under G.L.1956 (1969 Reenactment) § 10-3-12(d). ¹ The pertinent facts are as follows.

On June 29, 1978, in Providence, Rhode Island, an uninsured motorist struck the vehicle in which plaintiffs Peter Bush and James DeSomma were riding. At the time of the collision, there was an insurance policy in effect between defendant Nationwide Mutual Insurance Company and Bush's wife, Nancy Gamba, for a different vehicle. The plaintiffs sought recovery under the uninsured-motorist provisions of that policy. The policy provided in part that

"[i]n any uninsured motorists claim, we will jointly determine with the insured or his legal representative whether there is legal right to recover damages, and if so in what amount. If agreement cannot be reached with regard to liability or amount of damages, the matter will be decided by arbitration. Any judgment against the insured of liability or amount of damages will be binding only if it was obtained with our written consent.

" * * *

"If we and the insured do not agree about the insured's right to recover damages or the amount of damages, the following arbitration procedure will be used [arbitration procedure follows]." (Emphasis added.)

When the parties could not agree upon plaintiffs' right to recover under the terms of the policy, plaintiffs filed a demand for arbitration pursuant to the policy provisions.

Initial arbitration hearings were held on March 23, 1979, and on April 26, 1979. Although no transcripts of these hearings were made, the parties apparently discussed the issues that were to be arbitrated. The plaintiffs have conceded that at both hearings defendant raised the issue of whether the vehicle in which plaintiffs were riding at the time of the accident was covered under the terms of the policy. On May 23, 1979, another hearing convened, at which hearing the attorney for plaintiffs contended (apparently for the first time) that under the terms of the policy's arbitration clause, the arbitrator had the authority to consider only questions concerning plaintiffs' liability for the collision and the amount of damages arising from the collision, not questions relating to coverage under the policy. This argument was repeated at the next hearing, which occurred on July 19, 1979. At the later hearing, the arbitrator decided to continue arbitration in order to allow plaintiffs' attorney to introduce further evidence on the issues raised.

On September 28, 1979, plaintiffs filed an amended complaint in Superior Court, in which complaint plaintiffs sought injunctive relief in the form of a stay of the arbitration proceedings until the Superior Court could render a declaratory judgment deciding the issue of whether the arbitrator could decide any questions aside from liability and the amount of damages. The request for a stay was denied, from which denial plaintiffs filed a notice of appeal to this court. The trial justice also declined to stay the arbitration proceedings pending the appeal of his order denying injunctive relief and ordered that arbitration might continue.

On December 11, 1979, the arbitrator issued a decision in which he found that the vehicle in which plaintiffs were riding was not covered under the uninsured-motorist provisions of the policy. ² Consequently, the arbitrator ruled, he was "without jurisdiction to make an award in this matter." The plaintiffs thereupon petitioned the Superior Court to vacate the arbitrator's award on the ground that the arbitrator exceeded his powers.

In denying the petition, the trial justice ruled that plaintiffs' initial acquiescence to defendant's insistence that the coverage issue was arbitrable resulted in a waiver of the question of whether the arbitrator could rule on that issue. Consequently, the trial justice held, the arbitrator's decision that there was no coverage was proper. From the denial of this petition, as well as from the earlier denial of their request for an injunction against further arbitration, plaintiffs have appealed.

We initially consider whether plaintiffs have waived their right to contest the arbitrability of the issue of policy coverage. This court has ruled that a party is not barred from obtaining judicial review of the question of the arbitrability of a dispute so long as the party stated its objection to the arbitrability of the grievance at the arbitration hearing. Providence Teachers' Union Local 958--American Federation of Teachers v. Providence School Committee, R.I., 433 A.2d 202, 204 (1981). In the instant case, although plaintiffs' attorney apparently did not voice his objection to the arbitrability of the issue of coverage at the preliminary arbitration hearings, he so objected repeatedly thereafter and timely sought a stay of arbitration pending a judicial resolution of the question. Under such circumstances, plaintiffs cannot be deemed to have waived their right to a judicial determination of the arbitrability of the coverage issue.

We now turn to the question of whether the issue of coverage should be resolved by the arbitrator or by the trial court. The answer to this question depends upon the meaning given to the arbitration clause contained in the policy. That clause provides that "[i]n any uninsured motorist claim * * * [i]f agreement cannot be reached with regard to liability or amount of damages, the matter will be decided by arbitration." (Emphasis added.)

This court has not previously ruled on the scope of an arbitration clause contained in the uninsured-motorist provisions of an insurance policy. See Dutson v. Nationwide Mutual Insurance Co., 119 R.I. 801, 806 n.3, 383 A.2d 597, 600 n.3 (19...