Campbell v. Farmers Ins. Exchange

• Decision Date: 14 March 1968
• Citation: 260 Cal.App.2d 105,67 Cal.Rptr. 175
• Court: California Court of Appeals Court of Appeals
• Parties: In the Matter of the Arbitration between Kirby CAMPBELL et al., Respondents, v. FARMERS INSURANCE EXCHANGE, Petitioners and Appellants. Civ. 8615.

Page 175

67 Cal.Rptr. 175

260 Cal.App.2d 105

In the Matter of the Arbitration between Kirby CAMPBELL et al., Respondents, v. FARMERS INSURANCE EXCHANGE, Petitioners and Appellants.

Civ. 8615.

Court of Appeal, Fourth District, Division 2, California.

March 14, 1968.

Rehearing Denied April 4, 1968.

[260 Cal.App.2d 107] Thompson & Colegate and Michael R. Raftery, Riverside, for petitioners and appellants.

Matthew E. Hennes, Los Angeles, for respondents.

OPINION

TAMURA, Associate Justice.

Farmers Insurance Exchange (Farmers) appeals from a judgment confirming an arbitration award made under an uninsured motorist clause of an automobile liability policy.

Respondents Kirby Campbell and Myrtle Campbell are husband and wife. Myrtle suffered bodily injuries as a result of a two car collision with an uninsured motorist. Kirby was not in or near the vehicle. At the time of the accident an automobile liability policy issued by Farmers to Kirby was in effect.

When settlement negotiations failed the Campbells filed a demand for arbitration in which Myrtle claimed $10,000 damages for bodily injuries and Kirby claimed $5,000 damages for the loss of his wife's services. Following arbitration hearings, conducted pursuant to the rules of the American Arbitration Association as required by the policy, the arbitrator made an award of $10,000 to Myrtle and $5,000, less $1,000 medical payments advanced by Farmers, to Kirby.

Within the statutory period Farmers peitioned the superior court to correct the award on the ground that the arbitrator exceeded his powers in awarding a sum in excess of $10,000 inasmuch as only one person suffered bodily injury. Campbells responded alleging, in substance, that the award was consistent with the terms of the policy, that Farmers made no objection to the demand for arbitration or to the introduction of evidence in support of the claims of both Myrtle and Kirby, and that under the terms of the policy and the rules of the American Arbitration Association Farmers was bound by the award.

The court denied the petition to correct the award, made findings in accordance with the allegations of the response, ordered confirmation of the award and entered judgment accordingly.

Farmers contends that the limit of its liability under the uninsured motorist coverage of its policy is $10,000 when only one insured suffers bodily injury. It, therefore, urges that in making an award in excess of that amount the arbitrator exceeded his powers and that the award should have been corrected pursuant to the provisions of section 1286.6 of the Code of Civil Procedure. ¹

The policy limits under the uninsured motorist coverage of Farmers' policy are expressed as follows:

'The limits of the Company's liability under this Part II shall be $10,000 on account of bodily injury sustained by one insured as a result of any one accident and, subject to the above provision respecting one insured, shall be $20,000 on account of bodily injury sustained by two or more insureds as the result of any one accident.

'The insurance afforded by this Part II applies separately to each insured, but the inclusion herein of more than one insured shall not increase the limits of the Company's liability.'

We agree with Farmers' interpretation of the foregoing provisions.

While we find no California decisions on the precise question here presented, similar questions have arisen under the ordinary public liability provisions of a policy. In Perkins v. Fireman's Fund Indem. Co., 44 Cal.App.2d 427, 429--431, 112 P.2d 670, a husband and wife sued the insurance company on a $10,000--$20,000 public liability policy on a judgment recovered against the tortfeasor. The wife who was the only one suffering injury in the accident had already been paid $10,000. The court upheld the insurer's contention that under the terms of its policy the limit of liability where only 'one person' suffers bodily injury is $10,000. Under a like provision of a public liability policy this court held in Valdez v. Interinsurance Exchange etc., 246 Cal.App.2d 1, 4--7, 54 Cal.Rptr. 906, that where only one person was killed in an accident, the policy limit was $10,000 regardless of the number of heirs damaged. Cases from other jurisdictions are in accord with the foregoing decisions. (Brustein v. New Amsterdam Casualty Co., 255 N.Y. 137, 174 N.E. 304; New Amsterdam Casualty Co. v. Hart of Detroit, Mich., 153 Fla. 840, 16 So.2d 118; Williams v. Standard Acc. Ins. Co. of Detroit, Mich., 5 Cir., 188 F.2d 206; Hutton v. Martin, 43 Wash.2d 574, 262 P.2d 202; 15 Couch, Insurance, p. 710.)

In Sheffield v. American Indemnity Company, 245 S.C. 389, 140 S.E.2d 787, the precise issue before us involving policy limits under an uninsured motorist endorsement was considered. The endorsement in that case defined the policy limits in substantially the same terms as in Farmers' policy. ² . The wife suffered bodily injuries as a result of a collision with an uninsured motorist and was paid $10,000 under the uninsured motorist coverage. Subsequently the husband, who was not in or near the collision, sued and obtained a judgment against the tortfeasor for damages for loss of his wife's services and sought to recover the amount of the judgment from his insurer. The court, relying upon decisions interpreting policy provisions relating to limits of liability under public liability coverage, including Perkins v. Fireman's Fund Indem. Co., supra, 44 Cal.App.2d 427, 112 P.2d 670, held that the wife being the only one who suffered bodily injuries, the company's liability under its uninsured motorist endorsement had been exhausted by the payment to her of $10,000.

The relevant language of the policy in the instant case is unambiguous; it clearly provides that the limit of the company's liability where only one person suffers bodily injury is $10,000. We are not, as suggested by respondents, bound by the interpretation placed on the provision by the trial court. (Parsons v. Bristol Development Co., 62 Cal.2d 861, 865, 44 Cal.Rptr. 767, 402 P.2d 839.)

But a resolution of the foregoing issue does not dispose of this appeal. Respondents contend, in effect, that the question respecting the limit of Farmers' liability under the terms of its policy was an arbitrable issue and that the parties are, therefore, bound by the award.

The powers of an arbitrator are determined by the terms of the submission agreement. (O'Malley v. Petroleum Maintenance Co., 48 Cal.2d 107, 110, 308 P.2d 9; Commercial Ins. Co. of Newark, New Jersey v. Copeland, 248 Cal.App.2d 561, 564, 56 Cal.Rptr. 794; Aetna Cas. & Surety Co. v. Superior Court, etc., 233 Cal.App.2d 333, 337, 43 Cal.Rptr. 476.) The arbitration clause of Farmers' policy provides:

'In the event the insured and the Company do not agree that the insured is legally entitled to recover damages from the owner or operator of an uninsured motor vehicle under this Part II Or do not agree as to the amount of payment which may be owing hereunder, then, upon written demand of either, the matter or matters upon which the insured and the Company do not agree shall be settled by Arbitration in accordance with the rules of the American Arbitration Association, and judgment upon the award rendered by the Arbitrator(s) may be entered in any court having jurisdiction thereof. The insured and the Company each agree to consider itself bound and to be bound by any award made by the Arbitrator(s) pursuant to this Part II.' (Emp. supplied.)

The italicized portion of the arbitration clause renders it broader in scope than the minimum required by statute. (Ins.Code, § 11580.2; Farmers Ins. Exch. v. Ruiz, 250 Cal.App.2d 741, 744, 59 Cal.Rptr. 13; Fisher v. State Farm Mut. Auto. Ins. Co., 243 Cal.App.2d 749, 751, 52 Cal.Rptr. 721.) The statutory requirement for arbitration is limited to the issues relating to the liability of the uninsured motorist and the amount of damages recoverable from him; it does not include the issue of the amount of money the insurance company is obligated to pay the insured. (Farmers Ins. Exch. v. Ruiz, supra, 250 A.C.A. p. 851, 59 Cal.Rptr. 13; Fisher v. State Farm Mut. Auto. Ins. Co., supra, 243 Cal.App.2d pp. 751--753, 52 Cal.Rptr. 721.) The italicized portion of the arbitration clause in the present case relates not merely to the amount of damages recoverable from the uninsured motorist, but includes the issue of the amount payable...