Larsen v. Farmers Ins. Co., 18176-2-II

• Decision Date: 08 January 1996
• Docket Number: No. 18176-2-II,18176-2-II
• Citation: 909 P.2d 935,80 Wn.App. 259
• Court: Washington Court of Appeals
• Parties: Rick L. LARSEN and Merrilie Larsen, husband and wife, Respondents, v. FARMERS INSURANCE COMPANY, Appellant.

Page 259

80 Wn.App. 259

909 P.2d 935

Rick L. LARSEN and Merrilie Larsen, husband and wife, Respondents, v. FARMERS INSURANCE COMPANY, Appellant.

No. 18176-2-II.

Court of Appeals of Washington Division 2.

Jan. 8, 1996.

Reconsideration Denied Feb. 13, 1996.

Mark Stanley Brumbaugh, Walstead, Mertsching, Husemoen, Donaldson & Barlow, Longview, for Appellant.

Lance Eugene Palmer, Levinson, Friedman, Vhugen, Duggan & Bland, Seattle, for Respondents.

MORGAN, Judge.

A panel of arbitrators found that collateral estoppel barred Rick Larsen's underinsured motorist claim. The superior court reversed, and the insurer appealed. We affirm the superior court.

At all pertinent times, Larsen resided in Lewis County, Washington. His auto policy, written by Farmers, included UIM coverage. It provided, among other things, that a UIM claim would be arbitrated "in the county where the insured person lives." ¹

On October 5, 1989, Larsen was involved in an auto accident in Multnomah County, Oregon. The driver of the other car, Victor Dahl, had liability coverage in the amount of $25,000.

On September 4, 1991, Larsen sued Dahl in the Multnomah County Circuit Court. On July 13, 1992, Larsen moved to have the case transferred to "court-annexed arbitration," ² Oregon's equivalent of Washington's mandatory arbitration. ³ The motion was granted, and an arbitration hearing was held before a single arbitrator. On October 9, 1992, the arbitrator awarded Larsen $21,366, but thereafter he did not file the award with the court.

On November 3, 1992, the Multnomah County Circuit Court issued an order stating that if the award were not filed with the court within 14 days, Larsen's complaint would be dismissed. Larsen and Dahl responded by filing the following written stipulation:

IT IS STIPULATED by and between the parties that this case, having been compromised and fully settled, be dismissed with prejudice and without costs to any party.

Clerk's Papers (Vol. II) at 18. On January 21, 1993, the Multnomah County Circuit Court dismissed Larsen's complaint with prejudice.

Meanwhile, on June 8, 1992, Larsen submitted a UIM claim to Farmers. On December 29, 1992, a UIM arbitration hearing was convened in Lewis County, Washington, before a panel of three arbitrators. Relying on collateral estoppel, Farmers moved for an order precluding Larsen from seeking more than the $21,366 awarded in Oregon. The panel granted the motion. It also terminated the arbitration hearing, because the amount of Dahl's liability coverage (i.e., $25,000) exceeded the $21,366 awarded in Oregon. ⁴

In February 1993, Larsen filed suit in the Lewis County Superior Court. His position was that the Oregon arbitration award was not a final judgment, and that he was not precluded from seeking, in the UIM arbitration, damages exceeding $21,366. The superior court agreed and ordered that the Lewis County arbitration be reconvened. Farmers then filed this appeal.

Generally, a party who has adjudicated an issue to finality is estopped from readjudicating it in a subsequent action. ⁵ It does not matter whether the prior adjudication occurred in arbitration or in litigation, so long as it resulted in a final judgment. ⁶ The party is directly estopped from readjudicating the issue in a subsequent action on the same claim, and collaterally estopped from readjudicating the issue in a subsequent action on a different claim. ⁷

To determine whether a party is estopped, it is necessary to address four questions: (1) Was the issue decided in the prior adjudication identical with the one presented in the action in question? (2) Was there a final judgment on the merits? (3) Was the party against whom the plea is asserted a party or in privity with a party to the prior adjudication? And (4) will the application of the doctrine not work an injustice on the party against whom the doctrine is to be applied? ⁸ If each of these questions is answered affirmatively, the party is estopped.

Here, we answer the first question affirmatively. The Oregon arbitrator decided damages, and Larsen wants to argue that issue again in Washington.

We also answer the third and fourth questions affirmatively. Larsen was a party to the Oregon adjudication, and there is no claim that estoppel would work injustice peculiar to this case.

The second question is the one in dispute. At the outset, the written stipulation quoted above makes it appear that Larsen and Dahl compromised and settled their dispute, rather than pursuing it to final judgment. Nevertheless, Farmers contends that the Oregon arbitration award was equivalent to a final judgment, and, implicitly, that Larsen's and Dahl's resolution of the matter should be treated as a satisfaction of judgment rather than a settlement. Larsen disagrees, as did the superior court.

To determine whether the Oregon arbitration proceeding resulted in a final judgment, we look to Oregon law. ⁹ "The local law of the state of rendition determines whether or not a judgment is final and, if not, what issue or issues remain subject to final determination." ¹⁰ Thus, "[a] judgment will not be recognized or enforced in other states insofar as it is not a final determination under the local law of the state of rendition." ¹¹ The governing Oregon law is ORS 36.425 and Oregon Uniform Trial Court Rule (UTCR) 13.220. ORS 36.425 provides:

(1) At the conclusion of arbitration under ORS 36.400 to 36.425 of a civil action, the arbitrator shall file the decision and award with the clerk of the court that referred the action to arbitration....

(2)(a) Within 20 days after the filing of a decision and award with the clerk of the court under subsection (1) of this section, a party against whom relief is granted by the decision and award or a party whose claim for relief was greater than the relief granted to the other party by the decision and award, but no other party, may file with the clerk a written notice of appeal and a request for a trial de novo....

(3) If a written notice is not filed under subsection (2)(a) of this section within the 20 days prescribed, the clerk of the court shall enter the arbitration decision and award as a final judgment of the court, which shall have the same force and effect as a final judgment of the court in the civil action and may not be appealed. [ ¹²

Supplementally, UTCR 13.220 provides:

(1) The arbitrator shall file the award with the trial court administrator who referred the action to arbitration, together with proof of service of a copy of the award, upon each party within the following times after the completion of the arbitration hearing:

(a) In dissolution cases within 21 days.

(b) In all other cases within 14 days.

....

(4) After the award is filed, the arbitrator shall return all documents and exhibits to the parties who originally offered them.... The parties shall retain all exhibits returned by the arbitrator until a final judgment is entered in the case.

Under these provisions, an arbitration award, without more, is not a final judgment. ORS 36.425 states that an arbitrator must file his or her award with the clerk of the court. ORS 36.425(1). After that is done, the parties must "retain all exhibits ... until a final judgment is entered in the case." UTCR 13.220(4). If the losing party does not appeal, "the clerk of the court shall enter the arbitration decision and award as a final judgment." ORS 36.425(3). Only after these conditions are satisfied does the award "have the same force and effect as a final judgment." ORS 36.425(3).

This interpretation is consistent with Loving v. Portland Postal Employees Credit Union, 124 Or.App. 373, 862 P.2d 556 (1993). In that case, the arbitration award was filed with the court on August 26, 1991. According to the Oregon Court of Appeals, however, a "final" judgment was entered on September 18, 1991. ¹³

This interpretation is also consistent with Channel v. Mills, 61 Wash.App. 295, 810 P.2d 67 (1991). That case, like this one, involved an auto accident. Channel made a UIM claim against her own insurer. Pursuant to RCW 7.04 and her insurance contract, an arbitration panel rendered an award stating that her total damages were $380,047 and that she was 15 percent at fault. The award was never reduced to judgment, because Channel and her insurer settled. Channel then sued Mills, who sought an order declaring as a matter of law that Channel's damages could not exceed $380,047, and that her fault was at least 15 percent. The trial court granted the order, but we reversed. We stated:

In our judgment, an arbitration award is not the same thing as a final judgment of a court. We reach this conclusion primarily because Washington's statutory scheme for arbitration, RCW 7.04.010 et seq., provides a rather elaborate process for the confirmation, vacation, correction or modification of an arbitration award in court and for the entry of a judgment which conforms with the court's final determination. RCW 7.04.150, .160, .170, .180, .190. We can only conclude from a plain reading of these statutes that the Legislature did not consider an award in arbitration to be equivalent to a final judgment of a court. If it had it would have been unnecessary to provide a process to reduce the award to judgment. We conclude, therefore, that an award of arbitrators that has not been reduced to judgment pursuant to the statutory framework discussed above, is not equivalent to a judgment. It is, in our view, more akin to a jury verdict or a trial court's memorandum opinion or oral decision, determinations which are not considered equivalent to a judgment. See State v. Mallory, 69 Wash.2d 532, 419 P.2d 324 (1966), and Bassett v. McCarty, 3 Wash.2d 488, 101 P.2d 575 (1940).

61 Wash.App. 299-300, 810 P.2d 67.

Channel and this case are different in that Channel involved RCW 7.04, while this case involves ORS 36.425. The difference is without significance, however, for both statutes provide that an arbitration...