Gordon v. G.R.O.U.P., Inc.

Citation49 Cal.App.4th 998,56 Cal.Rptr.2d 914
Decision Date27 September 1996
Docket NumberNo. A069452,A069452
CourtCalifornia Court of Appeals
Parties, 96 Cal. Daily Op. Serv. 7294, 96 Daily Journal D.A.R. 11,916 Anthony GORDON et al., Plaintiffs and Respondents, v. G.R.O.U.P., INC., Defendant and Appellant; Paratransit Insurance Corporation, Appellant.

Cheasty, Davis & Pollack, Robert C. Cheasty, Kim R. Tulsky, Berkeley, for Plaintiffs and Respondents.

St. Clair, McFetridge, Griffin & Legernes, Bruce Legernes, Gayle L. Gough, San Francisco, for Defendants and Appellants.

PHELAN, Presiding Justice *.

Respondents Anthony Gordon, Dan Jackson, George King, James Rudisill, Lonnie Williams, and Taruk Ben-Ali (respondents), filed suit against Melvin Johnson (Johnson), G.R.O.U.P., Inc. (GROUP), and Herman Sally, Jr. (Sally), for personal injuries sustained in a motor vehicle accident. In this appeal, GROUP and its uninsured motorist carrier, Paratransit Insurance Corporation (hereinafter, collectively, appellants), seek review of an order and judgment confirming an arbitrator's award of damages, plus statutory and arbitration costs, in favor of respondents. GROUP and Paratransit contend that the trial court erred by denying GROUP's request for a trial de novo after a "combined" arbitration of respondents' claims pursuant to statutes which require, respectively, judicial arbitration for claims under $50,000 (Code Civ. Proc., § 1141.10 et seq.), 1 and contractual arbitration for claims under the uninsured motorist provisions of GROUP's insurance policy (Ins.Code, § 11580.2).

We conclude that the trial court acted within its authority and discretion when it ordered the parties to proceed simultaneously with the judicial arbitration and the uninsured motorist arbitration before a court-appointed arbitrator, and correctly concluded that the arbitrator's award under GROUP's uninsured motorist coverage is binding on appellants. Accordingly, we affirm.


The underlying facts of this case are very simple, and essentially undisputed. On December 24, 1991, respondents were passengers in a van driven by Sally and owned by GROUP. As Sally backed the van into the street, it was hit by a Chevrolet Camaro, which was owned by Johnson. Johnson was not insured and the driver of Johnson's car, who had allegedly stolen the vehicle, was never identified after fleeing the scene of the accident. Respondents incurred medical expenses ranging from $1,255 to $3,500, and claimed wage loss as a result of the incident. GROUP was either self-insured or insured by Paratransit. Sally was insured through GROUP, and ultimately recovered benefits pursuant to GROUP's uninsured motorist coverage.

The procedural history of the case is far more complicated. Respondents' first amended complaint was filed on December 22, 1992, against GROUP (for negligently training or supervising Sally as a driver), Sally (for negligent operation of the van), Johnson (for negligent operation or entrustment of the Camaro), and the Camaro driver (as a Doe defendant). GROUP and Sally filed a joint answer to the main complaint denying liability, and a cross-complaint against Johnson and the Camaro driver for indemnity and property damage. Sally also retained separate counsel, John McDougall, to proceed on a cross-complaint against GROUP, Johnson and the Camaro driver for personal injuries, indemnity, and property damage. Because of the conflict between GROUP and Sally, GROUP initially had two sets of attorneys in the proceedings below, as follows: Walter K. Dods, to defend GROUP and Sally on the main complaint and to prosecute the cross-complaint against Johnson and the Camaro driver; and Patricia M. Fama, of St. Clair, McFetridge & Griffin (the St. Clair law firm), to defend GROUP against the uninsured motorist claims alleged in Sally's cross-complaint. 2 The St. Clair law firm represents appellants GROUP and Paratransit in this appeal. 3

On May 21, 1993, 4 the trial court issued an order to show cause for failure to follow the local rules. 5 In response to the order to show cause, GROUP (through Ms. Fama) argued that Sally was making an uninsured motorist claim, and should do so only in a "binding arbitration between [GROUP] and Sally under the provisions of the Insurance Code." "In order to invoke the provisions of Insurance Code Section 11580.2," Ms. Fama continued, "Sally need only demand arbitration." However, Ms. Fama objected to a "combined" arbitration of respondents' complaint and Sally's cross-complaint.

On June 14, the court notified the parties that the case had been assigned to judicial arbitration, and sent a list of proposed arbitrators. The hearing in the judicial arbitration was set for August 12.

On July 23, GROUP (through Ms. Fama) moved for judgment on the cross-complaint or, in the alternative, to sever Sally's cross-complaint and compel arbitration of the cross-action under Insurance Code section 11580.2. In this latter regard, Ms. Fama asserted that GROUP is "self-insured." Respondents opposed GROUP's motion, suggesting that the court instead hold a case management conference or order the following: "[A] single arbitration [to] be held to determine all issues, including settling and awarding recovery (if any is found supported) under either theory, i.e., whether this is an uninsured-motorist claim against [GROUP,] or whether it is an action against [GROUP] and its driver, [Sally]. The matter, if found to be properly an uninsured-motorist claim, will produce a binding result, otherwise not." On August 5, GROUP (through James P. Molinelli of the St. Clair law firm) objected to respondents' suggestion, arguing that the combined arbitration of uninsured motorist and third-party liability issues would be a "procedural oddity," but that GROUP's motion for severance and to compel arbitration of Sally's cross-complaint had "absolutely no effect " on the main action. On August 6, before the court could rule on GROUP's motion, Sally voluntarily dismissed his cross-complaint against GROUP.

The parties thereafter stipulated to remove the case from the arbitration calendar and requested a case management conference, which was scheduled for October 1. In their case management conference statement, respondents requested a combined arbitration of their uninsured motorist claims and their claims of third-party (Sally's) negligence. 6 In a joint response, GROUP and Sally said they had no objection to an uninsured motorist arbitration, but argued through Mr. Dods that respondents should choose whether to litigate their claims under either an uninsured motorist theory or a third-party liability theory. Ms. Fama did not respond to the respondents' request and, instead, asked to be removed from the court's service list on the theory that GROUP was no longer a cross-defendant because of the dismissal of Sally's uninsured motorist claim. At the case management conference, which was held on October 15, the court granted Ms. Fama's request to be relieved of further appearances in this action.

On November 4, respondents petitioned the court to order a combined arbitration of their claims pursuant to section 1141.10 et seq., and California Rules of Court, rule 1600 (judicial arbitration), and Insurance Code section 11580.2 (binding uninsured motorist arbitration). Mr. Dods objected to such an arbitration, in which the respondents would proceed under both uninsured motorist and third-party liability theories, because that "would allow plaintiffs to proceed on one theory where an unfavorable decision may be rendered and then allow them to present their case a second time." However, Mr. Dods acknowledged that the matter was "suitable for arbitration" and, indeed, argued on behalf of GROUP and Sally that an order "[r]equiring plaintiffs to proceed under the uninsured motorist arbitration" statute would solve the procedural problem presented. 7 Mr. Dods raised no objection to the forum, the arbitrator, or any other procedural aspect of the proposed arbitration proceedings. Although she was served with respondents' petition to compel arbitration, neither Ms. Fama nor any other attorney from the St. Clair law firm filed a written response.

After a hearing on November 29, the trial court granted the respondents' petition to compel arbitration and ruled, in relevant part, as follows: "IT IS HEREBY ORDERED THAT this matter, per plaintiffs' election for arbitration under Rules of Court, Rule 1600 and Code of Civil Procedure sections 1141.10 et seq. [sic ] and Insurance Code section 11580.2, that arbitration under all code sections shall be combined and held before a single arbitrator simultaneous [sic ] for purposes of judicial economy and to avoid the possibility of inconsistent results from multiple forums. This is done pursuant to Alameda County Superior Court Rules, [r]ule 4.12(n) which provides authority for orders as appropriate for expediting adjudication for the case." As far as this record discloses, no party sought review of this order compelling arbitration. 8

The court-ordered arbitration was held on March 31, 1994. The arbitrator found that, although she had notice of the proceedings, Ms. Fama "objected to the hearing going forward on issue of uninsured motorist claims and Third Party claim," and elected not to appear. 9 However, Mr. Dods did appear on behalf of GROUP and Sally. On April 8, 1994, the arbitrator filed an award of damages in favor of respondents and against "[GROUP] under its uninsured motorist coverage," and found "no fault" as to Sally and "[n]o evidence of liability" as to Johnson. Implicit in this award is a finding that the driver of the Camaro was wholly responsible for the accident that injured respondents. Respondents were also awarded statutory and arbitration costs.

After declining to appear at the arbitration, Ms. Fama filed a request on behalf of GROUP for trial de novo of respondents' "claims for...

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