Mercury Ins. Group v. Superior Court

• Decision Date: 09 November 1998
• Docket Number: No. S067462,S067462
• Citation: 965 P.2d 1178,79 Cal.Rptr.2d 308,19 Cal.4th 332
• Parties: , 965 P.2d 1178, 98 Cal. Daily Op. Serv. 8305, 98 Daily Journal D.A.R. 11,525 MERCURY INSURANCE GROUP, Petitioner, v. The SUPERIOR COURT of San Bernardino County, Respondent; Ronald A. Wooster et al., Real Parties in Interest
• Court: California Supreme Court

Page 308

79 Cal.Rptr.2d 308

19 Cal.4th 332, 965 P.2d 1178, 98 Cal. Daily Op. Serv. 8305,

98 Daily Journal D.A.R. 11,525

MERCURY INSURANCE GROUP, Petitioner, v. The SUPERIOR COURT of San Bernardino County, Respondent Ronald A. Wooster et al., Real Parties in Interest.

No. S067462.

Supreme Court of California

Nov. 9, 1998.

Williamson, Raleigh & Doherty, John K. Raleigh and Jeffrey H. Leo, Los Angeles, for Petitioner.

No appearance for Respondent.

Magana, Cathcart & McCarthy, Richard L. Bisetti and Marnie S. Skeen, Los Angeles, for Real Parties in Interest.

Anthony P. David, San Francisco as Amicus Curiae on behalf of Real Parties in Interest.

MOSK, Justice.

We granted review to address an important question of law: Does a trial court have authority to "consolidate" a contractual arbitration proceeding between an insurer and an insured as to uninsured motorist coverage in the insured's pending action against third parties -- strictly speaking, does it have authority to join the insurer as a defendant as to uninsured motorist coverage issues -- for all purposes, including trial, in order to avoid conflicting rulings on a common issue of law or fact? As we shall explain, we conclude that the answer that we must give is: Yes.

I

Although it contains some gaps and ambiguities, the record on review may be read to this effect.

Following a motor vehicle accident on a rural highway in San Bernardino County, Ronald A. and Andrea Wooster, who are husband and wife, filed a complaint in that county's superior court seeking damages for personal injury, and specifically bodily injury, against persons and entities including: a motorist named Samuel Lewis Hull; Hull's employer, Mountain Top Rentals; and, by fictitious name, an unidentified motorist who fled the scene. They demanded trial by jury.

Prior to the accident, the Woosters had been issued an automobile liability insurance policy by Mercury Insurance Group (hereafter Mercury). As required by the uninsured motorist coverage law, the policy included coverage for damages for bodily injury caused by an uninsured motorist. As also required by the uninsured motorist law, the policy provided that 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 the [insurer] or, in the event of disagreement, by arbitration" -- meaning contractual arbitration, which generally results in a binding and final decision. The Woosters presented Mercury with a claim for damages caused by the unidentified, and effectively uninsured, motorist. The Woosters and Mercury apparently disagreed. The Woosters then made a demand on Mercury for contractual arbitration. A contractual arbitration proceeding commenced.

Over Mercury's opposition, the Woosters moved to "consolidat[e]" the contractual arbitration proceeding with Mercury as to the uninsured motorist coverage issues with the pending action against Hull and Mountain Top Rentals -- in effect, to join Mercury as a defendant as to these questions -- "for all purposes," including trial, in order to avoid conflicting rulings on a common issue of law or fact. The superior court generally granted the motion. In its order, it broadly "consolidat[ed]" the contractual arbitration proceeding with the pending action. But it did not "decide[ ]" whether to do so "as to ... trial."

The superior court subsequently diverted the now-consolidated action to judicial arbitration, which generally does not result in a binding or final decision. A judicial arbitration hearing was later scheduled.

Over the Woosters' opposition, Mercury moved for separate judicial arbitration and contractual arbitration. Specifically, it sought an order for: (1) judicial arbitration as to the consolidated action generally -- apparently distinct from the uninsured motorist coverage issues -- to result in a decision that would not be binding or final as between the Woosters and Hull and Mountain Top Rentals; and (2) contractual arbitration as to the uninsured motorist coverage issues -- apparently distinct from the consolidated action generally -- to result in a decision that would be binding and final as between the Woosters and itself. The superior court denied the motion by order. In so doing, it made a "clarification" to the effect that the consolidation of the contractual arbitration proceeding with the pending action was "for all purposes, including trial."

In the Court of Appeal, Fourth Appellate District, Division Two, Mercury filed a petition for a writ of mandate against the superior court relating to its order denying its motion for separate judicial arbitration and contractual arbitration, and requested a stay of the scheduled judicial arbitration hearing. The Court of Appeal summarily denied the petition and the request.

In the superior court, Mercury filed a notice of appeal from the order denying its motion for separate judicial arbitration and contractual arbitration, describing the order as one "denying" a "[m]otion ... for an [o]rder compelling arbitration." In the Court of Appeal, it filed a docketing statement identifying the "[n]ature of order or judgment appealed" as "[o]rder denying [m]otion [c]ompelling [a]rbitration."

At the threshold, the Court of Appeal declined to treat Mercury's appeal as such. It stated that the "question of appealability was far from clear in advance...." It noted that an order denying a petition to compel contractual arbitration would be appealable. It concluded that, if Mercury's motion for separate judicial arbitration and contractual arbitration could properly be characterized as such a petition, then the superior court's order denying its motion could properly be characterized as an order denying such a petition, and would therefore be appealable. It asserted, however, that the condition was not satisfied.

Treating Mercury's appeal as a petition for writ of mandate -- which it concluded was not "preclude[d]" by its summary denial of the previous one -- the Court of Appeal proceeded to find its position meritorious.

Relying on Prudential Property & Casualty Ins. Co. v. Superior Court (1995) 36 Cal.App.4th 275, 42 Cal.Rptr.2d 227 (hereafter sometimes Prudential Property & Casualty ), the Court of Appeal concluded, in substance, that, as a general matter, a trial court has authority to consolidate a contractual arbitration proceeding between an insurer and an insured as to uninsured motorist coverage in the insured's pending action against third parties in order to avoid conflicting rulings on a common issue of law or fact. In the words of Prudential Property & Casualty, such consolidation " 'may be an important tool where an auto accident victim has claims against several defendants, one of whom is uninsured....' " (Id. at p. 279, 42 Cal.Rptr.2d 227 (per curiam ), quoting Knight et al., Cal. Practice Guide: Alternative Dispute Resolution (The Rutter Group 1994) p 4:328, p. 4-70.) " '[A]rbitration could be dangerous for [the victim] ... because [his] insurance carrier may attempt to shift responsibility to the other (insured) defendants; and later, at trial, they are likely to blame the uninsured motorist!' " (36 Cal.App. 4th at p. 279, 42 Cal.Rptr.2d 227.)

But relying on Gordon v. G.R.O.U.P., Inc. (1996) 49 Cal.App.4th 998, 56 Cal.Rptr.2d 914 (hereafter sometimes Gordon ), the Court of Appeal concluded, in substance, that a trial court does not have authority to consolidate for all purposes, including trial, even to avoid conflicting rulings on a common issue of law or fact, because of what it believed was a preemptive effect arising from what it believed was a requirement under the uninsured motorist coverage law that, in the event of disagreement between the insurer and the insured, uninsured motorist coverage issues may be resolved only by means of contractual arbitration, or at least only by means of some kind of "arbitration" resulting in a binding and final decision.

Applying the abuse of discretion standard of review, the Court of Appeal then held that the superior court erred by denying Mercury's motion for separate judicial arbitration and contractual arbitration. Its reasoning appears to have been this: In denying Mercury's motion, the superior court consolidated the contractual arbitration proceeding with the pending action for all purposes, including trial; it was not authorized, however, to do so.

In its judgment, the Court of Appeal caused issuance of a peremptory writ of mandate compelling the superior court (1) to vacate its order denying Mercury's motion for separate judicial arbitration and contractual arbitration, and (2) to make a new and different order directing the Woosters, Hull, Mountain Top Rentals, and Mercury to participate in what appears to be a "consolidated" contractual/judicial arbitration proceeding that would result in a decision that would be binding and final as to the uninsured motorist coverage issues as between the Woosters and Mercury, but not binding or final as to the pending action as between the Woosters and Hull and Mountain Top Rentals.

On the Woosters' petition, we granted review. We now reverse.

II

Before we address the question whether a trial court has authority to consolidate a contractual arbitration proceeding between an insurer and an insured as to uninsured motorist coverage in the insured's pending action against third parties -- that is, to join the insurer as a defendant as to uninsured motorist coverage issues -- for all purposes, including trial, in order to avoid conflicting rulings on a common issue of law or fact, we must consider the laws on financial responsibility, uninsured motorist coverage, contractual arbitration, and judicial arbitration, and their interrelationship.

First is the financial responsibility law, which appears at Vehicle Code section 16000 et seq. This law requires the owners and operators of...