Fawver v. Allstate Ins. Co.

• Decision Date: 13 December 1973
• Citation: 516 P.2d 743,267 Or. 292
• Parties: George A. FAWVER and Jane E. Fawver, husband and wife, Appellants, v. ALLSTATE INSURANCE COMPANY, Respondent.
• Court: Oregon Supreme Court

Page 743

516 P.2d 743

267 Or. 292

George A. FAWVER and Jane E. Fawver, husband and wife, Appellants, v. ALLSTATE INSURANCE COMPANY, Respondent.

Supreme Court of Oregon.

Argued and Submitted Sept. 13, 1973.

Decided Dec. 13, 1973.

Terry G. Hannon, Gresham, argued the cause and filed the brief for appellants.

Stanley C. Jones, Jr., Klamath Falls, argued the cause for respondent. With him on the brief was J. Anthony Giacomini, Klamath Falls.

Before O'CONNELL, C.J., and DENECKE, TONGUE, HOWELL and BRYSON, JJ.

DENECKE, Justice.

The plaintiffs made a claim against the defendant, Allstate Insurance Company, their insurer, under the uninsured motorist provision of their policy. A dispute arose and the plaintiffs sought and received arbitration of the dispute. The arbitrator found for Allstate, plaintiffs filed exceptions to the award, the trial court affirmed the award and plaintiffs appeal.

The first exception was: '(T)here was evident partiality or corruption on the part of the arbitrator(s) * * *.' ORS 33.320(2). Plaintiffs contend the partiality is proved because all of the arbitrator's negligence practice consisted of representing defendants. This was made known to the plaintiffs' counsel. He could have objected; however, with such knowledge he agreed to accept the arbitrator. We agree with the trial court that this constitutes a waiver of plaintiffs' right to claim partiality on this ground.

ORS 33.320 provides that arbitration awards may be set aside if '(4) The arbitrators exceeded their powers * * *.' Plaintiffs contend the arbitrator in this case exceeded his powers.

The plaintiffs claim their injuries were caused by a 'phantom vehicle,' which is within the insurance contract definition of an uninsured vehicle. ¹ The policy provides insurance coverage in this situation. However, ORS 743.792(2) (g)(B) provides the insured is covered in such situation only if: 'The facts of such accident can be corroborated by competent evidence other than the testimony of the insured or any person having an uninsured motorist claim resulting from the accident.' The arbitrator held there was insufficient corroborating evidence.

Plaintiffs contend the arbitrator was not authorized to decide whether the other car involved, if there was another car, was a 'phantom vehicle.' The policy provided:

'SECTION II

PROTECTION AGAINST BODILY INJURY BY UNINSURED AUTOMOBILES

'The determination as to whether the insured shall be legally entitled to recover damages, and if so entitled the amount thereof, shall be made by agreement between the insured and Allstate.

'In the event of disagreement and upon written demand of the insured, the matter or matters upon which the insured and Allstate 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 may be entered in any court having jurisdiction thereof. The insured and Allstate each agrees to consider itself bound and to be bound by any award made by the arbitrator pursuant to this Section II.'

The policy is not in the record; however, the parties agree that these are the only provisions which pertain to arbitration. ²

Several jurisdictions have decided this question with policy provisions identical or similar to those in Allstate's policy and they have disagreed. ³

A bare majority in Rosenbaum v. American Surety Company of New York, 11 N.Y.2d 310, 229 N.Y.S.2d 375, 183 N.E.2d 667 (1962), decided the policy limited arbitration 'to fault ('legally entitled') and as to damages if fault should be established. No language in the endorsement can be read as an agreement to send to arbitrators a disagreement as to whether there was or was not liability insurance covering a car which should injure the insured.' 11 N.Y.2d at 314, 229 N.Y.S.2d at 378, 183 N.E.2d at 668. The policy provisions were similar to those in the present policy and what differences there were would tend to limit arbitration.

Connecticut and Illinois, construing similar policies, held in accord with the majority of the New York court. Frager v. Pennsylvania General Ins. Co., 155 Conn. 270, 231 A.2d 531, 29 A.L.R.3d 321 (1967); Flood v. Country Mutual Insurance Company, 41 Ill.2d 91, 242 N.E.2d 149 (1968).

The minority of the New York court in Rosenbaum v. American Surety Company of New York, supra (11 N.Y.2d at 315, 229 N.Y.S.2d at 379, 183 N.E.2d at 669), were of the opinion that the phrase in the policy provision that in the event of disagreement "the Matter or Matters upon which the insured and the company do not agree shall be settled by arbitration" provides for arbitration of the issue of whether the tortfeasor's vehicle was insured.

Massachusetts and Pennsylvania followed the reasoning of the dissent in Rosenbaum and held that whether the tortfeasor's vehicle was an insured vehicle was a matter of arbitration. Employers' Fire Insurance Company v. Garney, 348 Mass. 627, 205 N.E.2d 8 (1965); National Grange Mutual Insurance Co. v. Kuhn, 428 Pa. 179, 236 A.2d 758 (1968).

We have decided the most reasonable interpretation is that whether the tortfeasor's vehicle is an uninsured vehicle is an issue that the policy provides can be submitted to arbitration. The language of the policy is reasonably susceptible of that interpretation. Whether the tortfeasors' vehicle was uninsured is 'a matter * * * upon which the insured and Allstate do not agree.' We are of the opinion that public policy should favor the settlement of all disagreements between the insured and the insurer in one proceeding. The policy provides that the insured, alone, has the option of proceeding to arbitration. If the insured is of the opinion that arbitration is not the most favorable method of determining the issues, the insured can have them decided in a court proceeding. We are also influenced by the fact that Oregon has no antipathy toward arbitration...