Detroit Auto. Inter-Insurance Exchange v. Straw, INTER-INSURANCE

• Decision Date: 21 April 1980
• Docket Number: INTER-INSURANCE,Docket No. 78-4750
• Citation: 293 N.W.2d 704,96 Mich.App. 773
• Parties: DETROIT AUTOMOBILEEXCHANGE, Plaintiff-Appellee, v. Dollie STRAW, Defendant-Appellant.
• Court: Court of Appeal of Michigan — District of US

Page 704

293 N.W.2d 704

96 Mich.App. 773

DETROIT AUTOMOBILE INTER-INSURANCE EXCHANGE, Plaintiff-Appellee, v. Dollie STRAW, Defendant-Appellant.

Docket No. 78-4750.

Court of Appeals of Michigan.

April 21, 1980.

Released for Publication July 11, 1980.

Edward M. Miller, Southfield, for defendant-appellant.

Ronald R. Hanlon, Detroit, for plaintiff-appellee.

Before T. M. BURNS, P. J., and BASHARA and KAUFMAN, JJ.

BASHARA, Judge.

Defendant, Dollie Straw, alleged injury as a result of an accident with an uninsured motorist. Her insurance policy with the plaintiff provided uninsured motorist coverage. Defendant's daughter resided in the same household and also owned another vehicle which was insured with the plaintiff under a separate policy, identical in coverage.

Each of the policies contained a $20,000 limit for uninsured motorist coverage, an arbitration clause, as well as the following language in the uninsured motorist coverage:

"Definitions

"For the purpose of this coverage:

"(a) 'insured' means

(1) the individual insured named first in Item 1 of the Declaration Certificate, and while residents of the same household of such individual, the spouse and relatives of either,

"Exclusions

"The insurance afforded by this coverage does not apply:

"(1) to bodily injury to an insured sustained while occupying any automobile, other than an owned automobile, except a non-owned automobile to which there is applicable and available to such insured no insurance similar to that afforded by this coverage."

The policies also contain the following definitions:

"(d) 'owned automobile' means the vehicle described in the Declaration Certificate and, as defined herein, a temporary substitute automobile, a replacement automobile, and a trailer owned by the insured."

and

"(i) 'non-owned automobile' means any automobile or trailer, other than a temporary substitute automobile, not owned by, furnished or available for the frequent or regular use of the named insured, relative or other resident of the same household of such named insured."

Arbitration was demanded under both the policy issued to defendant on her own automobile and the policy issued to defendant's daughter on the daughter's automobile. Plaintiff objected to the arbitrators' jurisdiction to decide the issue of "stacking" the coverage of the policies, arguing that the arbitrators could only award damages pursuant to the language of the policies.

The arbitrators awarded the sum of $37,500 to the defendant without prejudice to resolve the issue of "stacking" in circuit court.

Plaintiff paid the $20,000 limit under the policy on defendant's automobile, but refused to pay the balance allocated to the daughter's vehicle. Plaintiff filed in circuit court a motion to vacate the arbitration award, which exceeded the $20,000 limit on the policy issued to defendant. Defendant moved for entry of a judgment on the full arbitration award.

The trial court found that the arbitrators exceeded their authority in considering the daughter's insurance as "an issue to be included in this award". The court vacated that portion of the award which exceeded the $20,000 policy limit of defendant's insurance as an unlawful exercise by the arbitrators of equity jurisdiction.

We concur with the conclusion reached by the trial court and affirm.

The scope of arbitration is determined by the contract of the parties, and the arbitrability of an issue is a matter for judicial determination. Kaleva-Norman-Dickson School District No. 6 v. Kaleva-Norman-Dickson School Teachers Ass'n, 393 Mich. 583, 227 N.W.2d 500 (1975). Paragraph (1)(c) of GCR 1963, 769.9 specifies the grounds for vacating an arbitration award in Michigan. This Court has construed the provision as follows:

"This would mean that the award herein could be vacated if this Court should determine that claim 3(b) was in fact nonarbitrable, such vacation being justified on the grounds that the arbitrator did not possess actual subject matter jurisdiction over the claim and thus inadvertently exceeded his authority in ruling thereon even if apparent jurisdiction over the claim was granted him by the fact of the submission." Detroit Demolition Corp. v. Burroughs Corp., 45 Mich.App. 72, 80, 205 N.W.2d 856, 860 (1973).

In American Fidelity Fire Ins. Co. v. Barry, 80 Mich.App. 670, 674-676, 264 N.W.2d 92 (1978), lv. den. 402 Mich. 915 (1978), we established a three-step process to ascertain the arbitrability of an issue:

"First, is there an arbitration agreement in a contract between the parties?

"Second, is the insured's claim 'on its face' . . . or 'arguably' . . . related to the contract?

"Third, is the dispute 'expressly exempt' by the terms of the contract? If not it is arbitrable. MCLA 600.5001(2); MSA 27A.5001(2)."

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