Detroit Auto Inter Ins. Exchange v. McMillan

• Citation: 296 N.W.2d 147,97 Mich.App. 687
• Decision Date: 02 June 1980
• Docket Number: Docket No. 78-2573
• Parties: DETROIT AUTOMOBILE INTER INSURANCE EXCHANGE, Plaintiff-Appellant, v. Patricia McMILLAN, Individually and as parent and natural guardian of TamaraMcMillan, minor, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 147

296 N.W.2d 147

97 Mich.App. 687

DETROIT AUTOMOBILE INTER INSURANCE EXCHANGE, Plaintiff-Appellant, v. Patricia McMILLAN, Individually and as parent and natural

guardian of TamaraMcMillan, minor, Defendant-Appellee.

Docket No. 78-2573.

Court of Appeals of Michigan.

June 2, 1980.

Released for Publication Sept. 24, 1980.

Charles A. Pfeffer, Detroit, for plaintiff-appellant.

William L. Fisher, Troy, for defendant-appellee.

Before J. H. GILLIS, P. J., and ALLEN and BEASLEY, JJ.

GILLIS, Presiding Judge.

Plaintiff appeals, as of right, ¹ the denial of its motion to correct, modify or vacate an arbitration award of $40,000 in favor of the defendant.

This is an automobile no-fault insurance action. The following recitation of facts is taken from the statement of facts certified by order of the lower court dated September 1, 1978.

On January 10, 1976, Tamara Ann McMillan, a minor at the time, was a passenger in a vehicle owned by her grandfather, Clarence Perkins, which was being driven with permission by her boyfriend, Steven P. Geister. At the intersection of Woodward and Buckingham in Royal Oak, this vehicle was struck on the right side by an unknown vehicle which fled the scene without stopping. After impact, Mr. Geister lost control of the vehicle which spun around, striking a sign and a lamp post in the median.

Miss McMillan suffered serious injuries, including a compound fracture of the right leg which healed at a slight angulation with shortening. There was also a permanent soft tissue deficit in the right leg where the fracture occurred and a permanent hematoma in her left leg.

On August 2, 1977, a demand for arbitration was filed with the American Arbitration Association. This demand was made under the Detroit Automobile Inter-Insurance Exchange policy issued to Miss McMillan's mother, Patricia McMillan. It was not until December 19, 1977, that demand for arbitration was made under the policy issued by the Detroit Automobile Inter-Insurance Exchange to Clarence Perkins.

Miss McMillan, her mother and her grandfather all resided at 1628 N. Pleasant, Royal Oak, at the time of this accident.

On January 19, 1978, the arbitration panel heard this matter with all parties present with their attorneys. Besides the issues of liability and damages there also existed the question of whether "stacking" of the policies of Mrs. McMillan and Mr. Perkins was to be permitted. Certain oral arguments were made by both sides. At the conclusion of the hearing the panel requested that the two attorneys submit briefs on this issue as well as stipulate to the contents of the insurance policy.

On or about January 31, 1978, a stipulation was filed with the American Arbitration Association attached to which was the policy issued to Mrs. McMillan and to Mr. Perkins by the Detroit Automobile Inter-Insurance Exchange.

All briefs were filed by March 7, 1978, as requested by the panel.

On April 21, 1978, the award, as determined by a two to one majority of the panel, was distributed. That award was $5,000 to Patricia McMillan, individually, and $35,000 to Patricia McMillan as parent and natural guardian of Tamara McMillan, a minor.

Plaintiff then filed a motion to correct or modify the arbitration award or, in the alternative, to vacate the award on May 10, 1978. This motion was heard June 2, 1978, before Wayne County Circuit Judge George Martin. On June 13, 1978, Judge Martin denied the motion and entered an order affirming the award. It is this final disposition that plaintiff-appellant now appeals to the Court of Appeals.

Subsequent to plaintiff's filing of its claim of appeal, the defendant twice filed pleadings designated as motions to dismiss. The grounds upon which the motions were based were not those stated in GCR 1963, 817.5(2). The relief sought was peremptory affirmance of the lower court order confirming the arbitration award. Accordingly, the motions were treated as motions to affirm. GCR 1963, 817.5(3). The motions were denied by this Court without comment in orders dated November 30, 1978, and August 8, 1979.

This Court's review of judgments confirming or denying arbitration awards is extremely limited in scope. North American Steel Corp. v. Siderius, Inc., 75 Mich.App. 391, 399-400, 254 N.W.2d 899 (1977), 6 C.J.S. Arbitration, § 125, p. 372, 5 Am.Jur.2d, Arbitration & Award, § 167, pp. 643-644. GCR 1963, 769.9(1) provides the specific and sole grounds for vacating an arbitration award. One of those stated grounds is the situation wherein the arbitrators exceed their powers. GCR 1963, 769.9(1)(c).

Arbitrators exceed their powers when they make a clear error of law. Detroit Automobile Inter-Ins. Exchange v. Spafford, 76 Mich.App. 85, 87, 255 N.W.2d 780 (1977); Howe v. Patron's Mutual Fire Ins. Co. of Michigan, 216 Mich. 560, 569-570, 185 N.W. 864 (1921). A "clear error of law" exists where the arbitrators have exhibited a manifest disregard of the law as distinguished from a mere error in the interpretation of the law. Detroit Automobile Inter-Ins. Exchange v. Ayvazian, 62 Mich.App. 94, 98, fn. 1, 233 N.W.2d 200 (1975); Lotoszinski v. State Farm Mutual Automobile Ins. Co., 94 Mich.App. 164, 288 N.W.2d 369 (1979); Detroit Automobile Inter-Ins. Exchange v. Standfest, 96 Mich.App. 71, 292 N.W.2d 164 (1980). See Domke, Commercial Arbitration, p. 313. The question becomes whether the arbitrators made such a clear error of law in permitting the defendant to "stack" the insurance policies involved and to recover on both. An examination of the certified statement of facts shows that Tamara McMillan suffered injuries as a guest passenger in the automobile owned by her grandfather, Clarence Perkins. Perkins had uninsured motorist liability coverage with the plaintiff. Tamara's mother had a similar but independent policy of insurance issued to her by the plaintiff upon her own vehicle that gave her the same protection for injuries caused by an uninsured motorist.

The plaintiff paid $20,000 to the injured guest passenger under the grandfather's policy. Plaintiff refused to pay under the mother's policy due to restrictive clauses in the policy.

The plaintiff first contends that the arbitration panel exceeded its powers in permitting "stacking" in that the insurance policies involved contained "other insurance" clauses.

Uninsured motorist protection is no longer required in Michigan as M.C.L. § 500.3010; M.S.A. § 24.13010 (which mandated uninsured motorist coverage), was repealed by 1972 P.A. 345, effective January 9, 1973. ² Nevertheless, such coverage is frequently purchased by automobile owners in their desire to have full insurance coverage. Commonly, as in this case, uninsured motorist provisions contain an "other insurance" clause. The "other insurance" clauses in the automobile insurance policies here involved provide:

"With respect to bodily injury to an insured sustained while occupying an automobile or through being struck by an uninsured automobile, if such insured is a named insured under other similar insurance available to him, then the damages shall be deemed not to exceed the higher of the applicable limits of liability of this insurance and such other insurance, and the Exchange shall not be liable under this coverage for a greater proportion of the applicable limit of liability of this coverage than such limit bears to the sum of the applicable limits of liability of this insurance and such other insurance.

"Subject to the foregoing paragraph, if the insured has other similar insurance available to him against a loss covered by this coverage, the Exchange shall not be liable under this coverage for a greater proportion of such loss than the applicable limit of liability hereunto bears to the total applicable limits of liability of all valid and collectible insurance against such loss."

It must be determined whether such a clause precludes the defendant from recovering on behalf of her daughter under the policy issued by the plaintiff.

"Stacking" refers to the ability of the insured, when covered by more than one policy, to obtain benefits from a second policy on the same claim when recovery from the first policy alone would be inadequate. Blakeslee v. Farm Bureau Mutual Ins. Co. of Michigan, 388 Mich. 464, 473, 201 N.W.2d 786 (1972).

The instant case involves a single insurer which issued multiple insurance policies. With respect to such a factual setting, different panels of this Court had, at the time of the arbitration award in the instant case, reached opposite conclusions as to the permissibility of "stacking". Compare Kozak v. Detroit Automobile Inter-Ins. Exchange, 79 Mich.App. 777, 262 N.W.2d 904 (1977), wherein stacking was precluded, with Fletcher v. Aetna Casualty & Surety Co., 80 Mich.App. 439, 264 N.W.2d 19 (1978), lv. gtd. 402 Mich. 950 § (1978), wherein stacking was permitted.

Due to the unsettled nature of the Michigan law at the time of the arbitration award, we hold that the arbitrators' decision to permit stacking does not evidence a manifest disregard of the law. ³ Detroit Automobile Inter-Ins. Exchange v. Ayvazian, supra. The arbitrators cannot be said to have exceeded their powers in failing to give the other insurance clause its literal effect. See Lotoszinski v. State Farm Mutual...