Detroit Auto. Inter-Ins. Exchange v. Ayvazian

• Decision Date: 11 June 1975
• Docket Number: INTER-INSURANCE,No. 2,Docket No. 20350,2
• Citation: 233 N.W.2d 200,62 Mich.App. 94
• Parties: DETROIT AUTOMOBILEEXCHANGE, Plaintiff-Appellant, v. Steve AYVAZIAN, Individually and as parent and guardian of Kathleen Ayvazian, a minor, Defendant-Appellee
• Court: Court of Appeal of Michigan — District of US

Page 200

233 N.W.2d 200

62 Mich.App. 94

DETROIT AUTOMOBILE INTER-INSURANCE EXCHANGE, Plaintiff-Appellant, v. Steve AYVAZIAN, Individually and as parent and guardian of Kathleen Ayvazian, a minor, Defendant-Appellee.

Docket No. 20350.

Court of Appeals of Michigan, Division No. 2.

June 11, 1975.

Released for Publication Oct. 6, 1975.

Mather, Glime & Daoust by Herbert J. Rusing, Mt. Clemens, for plaintiff-appellant.

Kenneth S. Halsey, Mt. Clemens, for defendant-appellee.

Before LESINSKI, C.J., and BRONSON and KAUFMAN, JJ.

KAUFMAN, Judge.

Plaintiff, Detroit Automobile Inter-Insurance Exchange (DAIIE), appeals from a Macomb County Circuit Court denial of its motion to vacate an arbitration award rendered in defendant's favor against plaintiff. The arbitration was conducted pursuant to a contract of insurance between DAIIE and defendant Ayvazian which provided that any disputed claims be 'settled by arbitration in accordance with the rules of the American Arbitration Association and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof'.

The disputed claim arose out of an automobile accident which occurred on the evening of February 15, 1972. Defendant Steve Ayvazian and his minor daughter Kathleen were proceeding in an easterly direction on Metropolitan Beach Highway in Harrison Township at approximately 8:45 p.m. Steve Ayvazian was driving at approximately 45 to 50 mph on a roadway covered with blowing snow. Steve Ayvazian testified, and a panel of three arbitrators found, that he was in the process of passing an unidentified vehicle when the other vehicle struck his car on its right side. This collision caused Ayvazian to lose control of his vehicle and veer off the highway onto a median. The Ayvazian vehicle collided with a tree located on the median and both Steve Ayvazian and his daughter Kathleen suffered severe and permanent injuries. The collision caused both occupants of the vehicle to be trapped inside for some time before they were removed by officers of the Sheriff's Department and Fire Department of Harrison Township. The driver of the other vehicle did not stop at the scene of the accident and was never identified.

After hearing several witnesses, the arbitrators stated:

'It is the finding of the arbitrators that plaintiff Steve Ayvazian Could collect to the extent of $50,000 against the defendant insurance company and that the plaintiff Kathleen Ayvazian Could collect to the extent of $50,000 against the defendant insurance company.' (Emphasis in original.)

DAIIE petitioned the Macomb County Circuit Court to vacate the arbitrators' award. The circuit court in denying the motion to vacate, stated:

'If the Arbitrators have acted within the lines of duty laid upon them their action will not generally be interfered with. * * * The Court finds that the Arbitrators did not abuse their discretion in this case.' (Citations omitted.)

I

On appeal, DAIIE raises five claims of error. Our review of judgments confirming or denying arbitration awards is extremely limited in scope. Detroit Demolition Corp v. Burroughs Corp., 45 Mich.App. 72, 205 N.W.2d 856 (1973). At common law,

'(t)he arbitrator's determination on the merits will not be reviewed by the court since his decision on issues of fact and law has been agreed by the parties as final and binding upon them. His award is conclusive where proof of fraud, corruption or other misconduct is absent. The measure of court review is limited far beyond review of a lower court's decision.' Domke, Commercial Arbitration, p. 312.

See also Werner v. The Travelers Indemnity Co., 55 Mich.App. 390, 222 N.W.2d 254 (1974). ¹

In this jurisdiction, GCR 1963, 769.9(1) provides the specific and sole grounds for vacating an arbitration award:

'(1) Upon application of a party, the court shall vacate an award where:

(a) The award was procured by corruption, fraud or other undue means;

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

(c) The arbitrators exceeded their powers; or

(d) The arbitrators refused to postpone the hearing upon sufficient cause being shown therefor or refused to hear evidence material to the controversy or otherwise so conducted the hearing as to prejudice substantially the rights of a party. But the fact that the relief was such that it could not or would not be granted by a court of law or equity is not ground for vacating or refusing to confirm the award.' ²

Several of DAIIE's claims of error concern the arbitrator's findings of fact and law and, as such, are not cognizable, under Rule 769.9(1), on appeal. DAIIE does not dispute the propriety of submitting all issues to the arbitrators. DAIIE argues that defendant's failure to give notice of the hit-run accident pursuant to the insurance policy caused the policy to be void. The arbitrators clearly found that, given the severity of his injuries, defendant's notice was reasonably given under the circumstances.

Plaintiff also attacks the constitutionality of allowing defendant to 'stack' insurance policies on two other cars onto the policy covering the car in which he was injured and to recover on all three. The arbitrators correctly found that the Supreme Court in Blakeslee v. Farm Bureau Mutual Insurance Co. of Michigan, 388 Mich. 464, 201 N.W.2d 786 (1972), and Boettner v. State Farm Mutual Insurance Co., 388 Mich. 482, 201 N.W.2d 795 (1972), has upheld the constitutionality of 'stacking'.

DAIIE also contends that defendant should not have been allowed to recover on one of his policies because his daughter had cancelled it. Evidence showed that one of the insurance policies under which defendant claimed recovery covered a 1968 Mercury Cougar which was totally demolished in a November, 1971 accident. In March 1972, three weeks after defendant's accident, his daughter Sheryl, who was the first-named insured on this policy, contacted DAIIE in order to cancel it. She was informed that she could make her cancellation retroactive to November, 1971 and get a refund of pre-paid insurance premiums from November, 1971 through March, 1972. Apparently unaware of the effect of such a retroactive cancellation on her father's claim, she effected such a cancellation.

Although the arbitrators made no specific finding, the continuing vitality of this policy seems implicit in their finding that defendant could recover on all three insurance policies. ³ The arbitrators did find that, at the time of the accident, both parties believed the premium paid on the disputed policy to be in existence. The trial court held that '(s)ince coverage existed at the time the accident occurred that coverage would have continued from that moment on regardless of the subsequent acts of the parties'.

An examination of the law supports the circuit court's holding. If the arbitrators resolved this issue, review is precluded. If not, it is clear that:

'The liability of the insurer with respect to insurance * * * becomes absolute whenever injury or damage covered by such policy occurs. The policy may not be canceled or annulled as to such liability by agreement between the insurer and the insured after the occurrence of the injury or damage.' 1 Long, The Law of Liability Insurance, § 3.25, pp. 3--83--84.

See also Nash v. New York Life Insurance Co., 272 Mich. 680, 262 N.W. 441 (1935). The first-named insured needs the consent of other named insured parties before the accrued rights of the others may be abrogated. 17 Couch on Insurance 2d, § 67:230, p. 532. Defendant's daughter's actions cannot be held to abrogate defendant's rights which had accrued on the date of the accident.

DAIIE next claims that defendant's recovery under his policies with plaintiff should be reduced by an $18,000 workmen's compensation award received by defendant. The arbitrators were not presented with this claim, but the trial court rejected the contention. DAIIE contends that it is obligated by contract to pay 'all sums which the insured shall be legally entitled to recover as Damages * * *'. (Emphasis in original.) It argues that, if the other driver were known and if Ayvazian had brought suit, then he would have to reimburse the compensation carrier out of his recovery for compensation payments. Thus, plaintiff claims, defendant should get no more from his uninsured motorist coverage than he could get as a result of suing a known tort feasor. Having found neither statutory nor contractual basis for this claim we reject DAIIE's argument. First, the workmen's compensation scheme specifically sets out a right of subrogation for the compensation carrier, and does not extend it to a private carrier, M.C.L.A. § 418.827(5); M.S.A. § 17.237(827)(5). DAIIE presents nothing to show the invalidity of this legislative classification. Second, the contractual term 'legal damages', in the absence of a specific provision for workmen's compensation benefits, refers only to the amount of damages recoverable in a court of law--that amount required to compensate for injuries. Third, as defendant states, Michigan law requires a specific contractual provision for reduction for workmen's compensation benefits, Bonney v. Citizens' Mutual Automobile Insurance Co., 333...