Cotterman v. Allstate Ins. Co.

• Decision Date: 18 December 1995
• Citation: 446 Pa.Super. 202,666 A.2d 695
• Parties: Marjorie COTTERMAN v. ALLSTATE INSURANCE COMPANY, Appellant.
• Court: Pennsylvania Superior Court

Page 695

666 A.2d 695

446 Pa.Super. 202

Marjorie COTTERMAN v. ALLSTATE INSURANCE COMPANY, Appellant.

Superior Court of Pennsylvania.

Argued Aug. 8, 1995.

Filed Oct. 16, 1995.

Reargument Denied Dec. 18, 1995.

Joseph P. Lenahan, Scranton, for appellant.

Joseph P. Coviello, Clarks Summit, for appellee.

Before ROWLEY, President Judge, and CIRILLO and HOFFMAN, JJ.

CIRILLO, Judge:

Allstate Insurance Company ("Allstate") appeals from the order entered in the Court of Common Pleas of Lackawanna County denying Allstate's petition to vacate, modify and/or correct a statutory arbitration award. We affirm.

Appellee Marjorie Cotterman ("Cotterman") sustained personal injuries as a result of an automobile accident which occurred on March 11, 1991. The accident occurred in Huntington Township, Luzerne County, while Cotterman was riding as a passenger in a vehicle driven by Zane Welch ("Welch"). The driver of the other automobile was Timothy Yarnell ("Yarnell").

At the time of the accident, Yarnell was insured by The Harleysville Insurance Companies ("Harleysville"), policy number 738695. Cotterman carried automobile insurance issued by Allstate, policy number 008315273. On or about August 26, 1992, Harleysville paid to Cotterman the limits of Yarnell's liability policy--$91,831.16. ¹ Allstate paid to Cotterman the limits of its liability for first party benefits--$5,000.00 for lost wages, and $10,000.00 for medical expenses.

Cotterman then made a claim for underinsurance (UIM) benefits under the Allstate policy. The matter proceeded to arbitration pursuant to the Uniform Arbitration Act ("UAA"), 42 Pa.C.S.A. § 7301 et seq. Prior to the arbitration hearing, Allstate requested permission to conduct an examination under oath (hereinafter an "EUO") of Cotterman. The arbitration panel denied this request, finding that no basis existed under either the insurance policy at issue or the applicable law to permit an EUO of Cotterman.

Cotterman's vocational and economic expert testified that the value of Cotterman's future wage loss ranged from $181,800.00 to $281,800.00, depending on age of retirement. The arbitrators also considered expert testimony regarding the value of Cotterman's household services. The expert based his opinion upon a two person household because, at the time of the accident, Cotterman had been residing with Welch for some time.

Other than the wage loss benefits paid to Cotterman in the amount of $5,000.00, the panel was not apprised of the amounts previously paid to Cotterman--i.e., the amount of $91,831.16 paid by Harleysville, plus the limits of Allstate's first party benefits. The parties agreed, however, that the arbitrators' award would be molded to reflect Harleysville's payment of $91,831.16.

On September 15, 1994, the arbitrators issued an award in favor of Cotterman in the amount of $299,000.00. Allstate received notice of the award and filed a timely petition to vacate, modify or correct the award before the Court of Common Pleas of Lackawanna County. The Honorable Frank P. Eagen denied the petition, molded the award to reflect Harleysville's payment of its limits of liability ($91,831.16), and entered judgment in favor of Cotterman in the amount of $207,168.84. Judge Eagen also awarded to Cotterman interest on the judgment from the date of the award, September 15, 1994, at an annual rate of six percent.

Allstate filed this timely appeal. Allstate presents five questions for our consideration:

(1) Did the trial court err as a matter of law in upholding the arbitrators' decision to deny Allstate's request, in accordance with the insurance contract, for an examination under oath of the Plaintiff (Cotterman) prior to the arbitration hearing?

(2) Did the trial court err as a matter of law in failing to modify the arbitrators' award reflecting reduction of $5,000.00 wage loss previously paid by Allstate under first party benefits?

(3) Did the trial court err as a matter of law in failing to modify the arbitrators' award to an unmarried Plaintiff for loss of her own household services when:

(a) she incurred no out-of-pocket expenses to hire someone to provide household services, and

(b) damages were speculative by her own expert's testimony?

(4) Did the trial court err as a matter of law in failing to mold the arbitrators' award to conform to the contractual liability limit of the policy?

(5) Did the trial court err as a matter of law in granting interest dating from the September 15, 1994, award at an annual rate of six percent?

Chapter 73 of the Judicial Code regulates statutory, common law and judicial arbitration. More specifically, sections 7301 through 7320 of Chapter 73 regulate statutory arbitration, 42 Pa.C.S.A. §§ 7301-20 (Uniform Arbitration Act ("UAA")), while sections 7341 and 7342 regulate common law arbitration, 42 Pa.C.S.A. §§ 7341-42.

When an agreement to arbitrate is not clear as to whether common law or statutory arbitration rules shall apply, the common law rules regulate the enforcement of the agreement and the award unless, subsequent to the agreement, the parties expressly, or by implication, agree that the statutory arbitration rules shall govern. 42 Pa.C.S.A. § 7302(a). See Brennan v. General Acc. Fire and Life Assur. Corp., 524 Pa. 542, 574 A.2d 580 (1990); Elkins & Co. v. Suplee, 371 Pa.Super. 570, 538 A.2d 883 (1988). In the case at bar, the parties sought arbitration pursuant to the insurance policy which stated that "arbitration will take place as provided under the Pennsylvania Uniform Arbitration Acts of 1927 and 1980." This language constitutes an express provision, by the parties, for statutory arbitration. Bowdren v. Aetna Life and Casualty, 404 Pa.Super. 595, 601, 591 A.2d 751, 754 (1991).

Pursuant to 42 Pa.C.S.A. § 7302(d), a statutory arbitration award will be modified or corrected where the award is contrary to law, but only in the following circumstances:

(i) The Commonwealth government submits a controversy to arbitration.

(ii) A political subdivision submits a controversy with an employee or a representative of employees to arbitration.

(iii) Any person has been required by law to submit or to agree to submit a controversy to arbitration pursuant to this subchapter.

Id.

In the instant case, neither the Commonwealth nor a political subdivision is a party to the arbitration. Therefore, section 7302(d)(iii) is appellant's only possible recourse for judicial review. We have previously stated, however, that there are only two cases which, without more, shall be viewed as falling within section 7302(d)(iii):

(1) agreements to arbitrate made prior to December 4, 1980, the effective date of the 1980 Act, expressly providing for arbitration pursuant to the laws of the Commonwealth; and

(2) agreements to arbitrate, made either before or after 1980, expressly providing for arbitration under the 1927 Act [which provided for a contrary to law standard for review].

Popskyj v. Keystone Ins. Co., 388 Pa.Super. 429, 441, 565 A.2d 1184, 1190 (1989) (en banc ), alloc. denied, 525 Pa. 602, 575 A.2d 567 (1990).

Here, the Allstate insurance policy was executed after the effective date of the 1980 Act. The policy's arbitration provision, however, expressly provides that arbitration will be governed by both the 1927 Act and the 1980 Act. As such, the contrary to law standard is seemingly applicable to the instant arbitration award. 42 Pa.C.S.A. § 7302(d)(iii). See Geisler v. Motorists Mut. Ins. Co., 382 Pa.Super. 622, 556 A.2d 391 (1989) (holding that contrary to law standard of review applied to dispute between insurer and insureds involving uninsured motorist coverage where insurance policy provided that if either party demanded arbitration to resolve a dispute involving uninsured motorist coverage arbitration shall be conducted in accordance with 1927 Act).

Notwithstanding the above, the instant arbitration provision also provides that the 1980 Act is applicable to UM/UIM arbitrations. The 1980 Act sets forth a more stringent standard for vacating, modifying and/or correcting statutory arbitration awards. Section 7314, in part, permits a court to vacate an award where:

(i) the court would vacate the award under section 7341 (relating to common law arbitration) if this subchapter were not applicable; ²

(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 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 proceeding under section 7304 and the applicant-party raised the issue of the existence of an agreement to arbitrate the hearing.

42 Pa.C.S.A. § 7314(a)(1). Section 7315 of the Uniform Arbitration Act permits the court to modify or correct an arbitration award where:

(1) there was an evident miscalculation of figures or an evident mistake in the description of any person, thing or property referred to in the award;

(2) the arbitrators awarded upon a matter not submitted to them and the award may be corrected without affecting the merits of the decision upon the issues submitted; or

(3) the award is deficient in a matter of form, not affecting the merits of the controversy.

42 Pa.C.S.A. § 7315(a).

Before we can reach Allstate's substantive issues, we must determine which standard governs our review--the contrary to law standard of the 1927 Act, the more strict 1980 Act, or a combination thereof? As of the date of this opinion, this precise issue has not been addressed by the appellate courts of this Commonwealth.

This court has...