Fisher v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 28 July 1966
• Citation: 52 Cal.Rptr. 721,243 Cal.App.2d 749
• Court: California Court of Appeals Court of Appeals
• Parties: In the Matter of the Arbitration between William Alexander FISHER and Linnie P. Fisher, Petitioners and Respondents, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant and Appellant. Civ. 28711.

Page 721

52 Cal.Rptr. 721

243 Cal.App.2d 749

In the Matter of the Arbitration between William Alexander FISHER and Linnie P. Fisher, Petitioners and Respondents, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant and Appellant.

Civ. 28711.

District Court of Appeal, Second District,

Division 3, California.

July 28, 1966.

Hearing Denied Sept. 28, 1966.

Spray, Gould & Bowers and Eugene R. Grace, Los Angeles, for appellant.

Wiener & Wiener and Albert C. Mour, Sherman Oaks, for respondents.

KAUS, Justice.

State Farm Mutual Automobile Insurance Company ('State Farm') appeals from a judgment entered in conformity with an arbitration award. (Code Civ.Proc. § 1287.4.)

The facts are very simple: State Farm issued an automobile liability policy to William Fisher. It contained the so-called 'uninsured motorist coverage' prescribed by section 11580.2 of the Insurance Code. The arbitration agreement contained in the policy under which the subject arbitration was held reads in part as follows: 'Arbitration. If any person making claim hereunder and the company do not agree that such person is legally entitled to recover damages from the owner or operator of an uninsured automobile because of bodily injury to the insured, Or do not agree as to the amount payable hereunder, when each party shall, upon written demand of either, select a competent and disinterested arbitrator * * *. The arbitrators shall then hear and determine the question or questions so in dispute, and the decision in writing of any two arbitrators shall be binding upon the insured and the company, * * *.' (Emphasis added.)

Without the necessity of judicial prodding the parties proceeded to arbitration. The award, after the usual recitals, reads as follows: 'That Respondent, STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, is required to pay to the Petitioner, WILLIAM A. FISHER, the sum of $70.00. That Respondent, STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, is required to pay the Petitioner, LINNIE P. FISHER, the sum of $5,756.37. This award is based on the evidence as submitted to the panel at the hearing on January 11, 1964, the includes special damages for the Petitioners WILLIAM A. FISHER and LINNIE P. FISHER as well as general damages for the Petitioner, LINNIE P. FISHER.'

There is no dispute about the fact that Linnie P. Fisher was an insured within the meaning of section 11580.2(b).

The Fishers then petitioned the superior court to confirm the award. The affidavits filed by the parties in connection with the proceedings seeking confirmation and State Farm's opposition thereto show quite clearly that under the so-called 'medical payment coverage' of the State Farm policy, the company had paid $1,000.00 to Linnie Fisher and $70.00 to William Fisher. These payments were all made before the date of the hearing before the arbitrators. The whole controversy centers on State Farm's contention that these payments should have been deducted from the award by the superior court.

Under section 11580.2(g)(2) any 'loss payable under the terms of the uninsured motorist * * * coverage * * * may be reduced' by the amounts thus paid under a medical payment coverage and the policy issued by State Farm expressly so provided. It is obvious from the declarations filed in the superior court that these payments were not brought to the attention of the arbitrators.

If only the issues declared to be arbitrable under section 11580.2 had been agreed to be submitted to arbitration, we would entertain serious doubts whether the award can stand In toto. These issues are 'whether the insured shall be legally entitled to recover damages, and if so entitled, the amount thereof * * *.' (Ins.Code, § 11580.2(e).) They relate clearly to the liability of the uninsured motorist to the insured and not to the amount of money which the insurance company must pay the insured under the uninsured motorist coverage. (Aetna Cas. & Surety Co. v. Superior Court, 233 Cal.App.2d 333, 337, 43 Cal.Rptr. 476.) The amounts paid under the medical payment coverage, on the other hand, are declared by subsection (g)(2) of section 11580.2 to be deductible from the 'loss payable' under the terms of the uninsured motorist coverage. This 'loss' is by no means synonymous with the liability of the third party to the insured, chiefly because it is limited to 'the financial responsibility requirements specified in Section 16059 of the Vehicle Code.' (Ins. Code, § 11580.2( a).) ¹ It is obvious, however, that under the arbitration agreement the parties herein contracted to submit to arbitration more than the statute requires. There is no rule of law which prevents them from doing so. The key words of the policy are: 'If any person making claim hereunder and the company do not agree that such person is legally entitled to recover damages from the owner or operator of an uninsured automobile because of bodily injury to the insured, Or do not agree as to the amount payable hereunder, * * *.' Having agreed to submit to arbitration not only the amount of liability of the uninsured motorist but also 'the amount payable hereunder,' ² State Farm should have submitted all matters pertaining to the 'amount payable' to the arbitrators. Having failed to do so, it cannot subvert the purposes of the arbitration procedure by asking the superior court to do it later.

In Sapp v. Barenfeld, 34 Cal.2d 515, 212 P.2d 233 the parties to the arbitration were the owner of a building and his contractor. The latter was to complete the job within 180 days. Disputes arose and the parties agreed to arbitrate. The arbitrators found that the contractor had failed to conform to the specifications in some respects, deducted the cost of the work necessary to remedy the defects from the balance due him under the contract and awarded him the difference. The superior court vacated the award, giving as one of its reasons that the arbitrators failed to pass on the owner's claim for damages for delay. One of the arbitrators filed an affidavit before the superior court to the effect that the item of damage from the delay had not been considered. Although this affidavit was held to be properly filed, the Supreme Court reversed the order vacating the award: 'The arbitrators were not required to consider the item of damages for failure to complete the construction within 180 days unless they were presented with evidence upon which a computation of damages could be based. A party who asserts a claim in an arbitration proceeding must produce evidence in support of that claim; if he fails to do so, he cannot attack the award on the ground that the claim was not considered by the arbitrators.' (Ibid., p. 524, 212 P.2d p. 240.)

A proper respect for the arbitration procedure compels us to hold that State Farm cannot have the superior court do for it what it should have asked the...