Metro. Cas. Ins. Co. v. Lammers

• Decision Date: 14 March 2016
• Docket Number: CASE NO. C15-5369 JRC
• Court: U.S. District Court — Western District of Washington
• Parties: METROPOLITAN CASUALTY INSURANCE COMPANY, Plaintiff, v. BRENDA LAMMERS and MICHAEL LAMMERS, Defendants.

METROPOLITAN CASUALTY INSURANCE COMPANY, Plaintiff, v. BRENDA LAMMERS and MICHAEL LAMMERS, Defendants.

CASE NO. C15-5369 JRC

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT TACOMA

March 14, 2016

ORDER ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

This Court has jurisdiction pursuant to 28 U.S.C. § 636(c), Fed. R. Civ. P. 73 and Local Magistrate Judge Rule MJR 13 (see also Joint Status Report, Dkt. 11, p. 2). This matter is before the Court on plaintiff's motion for summary judgment (Dkt. 14) and has been fully briefed (see Dkts. 14, 15, 16, 17, 18, 19).

Plaintiff Metropolitan Casualty Insurance Company ("MetLife") asks the Court to enter an order as a matter of law that defendants Brenda and Michael Lammers are collaterally estopped from claiming UIM coverage under the MetLife automobile policy issued to defendants for damages arising from a motor vehicle accident in Arizona on April 19, 2010 (Dkt. 14). Defendants litigated their personal injury and loss of consortium claims in a binding high/low arbitration in Maricopa County, Arizona. The arbitration award was $84,130.92 to defendant Brenda Lammers, which was less than the third party tort feasor's policy of $100,000.00. That arbitration award did not result in a judgment, but rather a stipulation and order of dismissal with prejudice. Washington law states that a party to an action is not collaterally estopped unless the previous case resulted in a "judgment." A stipulation and order of dismissal with prejudice, under either Washington law or Arizona law, is not a "judgment." Therefore, defendants are not collaterally estopped from making a claim under the Under Insured Motorist provisions of their insurance policy even though the matter was previously arbitrated for a lesser amount.

Therefore, plaintiff's motion for summary judgment is denied.

FACTUAL SUMMARY

The facts are largely undisputed. Ms. Lammers was on a motorcycle and was involved in an accident with Anthony Bivona in Maricopa County, Arizona. Mr. Bivona was insured by Allstate at the time of the collision with liability limits of $100,000 (Dkt. 14, p. 2). Defendants filed a lawsuit against Mr. Bivona in Maricopa County. The parties litigated the action in Maricopa County, but finally stipulated to submit the case to binding high/low arbitration (Ex. A, Decl. of Stephanie Yedinak (hereinafter "Yedinak Decl.," Dkt. 15, p. 5)). The parties stipulated and agreed that plaintiff would not receive less than $30,000 and not more than $100,000 (id., p. 9, ¶ 5). The agreement also specified that after the arbitration, the case would be dismissed with prejudice and eachside would bear its own fees and costs (id.). After an arbitration, on January 23, 2015, the arbitrator issued an award in favor of Ms. Lammers in the amount of $84,130.92 (id., Ex. C at p. 2, line 20, p. 3, line 9). The arbitrator did not award Mr. Lammers any damages for loss of consortium (id. at p. 3, lines 12-13). Mr. Bivona's insurer promptly paid the arbitration award and on March 16, 2015 the parties filed in Maricopa County a notice of settlement and a stipulation to dismiss with prejudice (id. at Ex. D, Ex. E). The court dismissed the case with prejudice on March 19, 2015 (id., Ex. F).

On February 17, 2015, defendants filed a policy limit demand with their own underinsured motorist carrier, MetLife, for $250,000 on (id., Ex. G).

Plaintiff MetLife filed this lawsuit claiming that it had no obligations under the insurance policy because defendants are collaterally estopped from claiming that the amount they are legally entitled to collect as a result of the accident is in excess of $84,130.92 (Dkt. 1, p. 5, ¶ 18).

Defendants filed their answer and counterclaim, alleging that plaintiff unreasonably denied coverage and seeks affirmative relief including reasonable attorney's fees and costs for violation of the Insurance Fair Conduct Act (Dkt. 7, pp. 6-7).

Summary Judgment Standard

Summary judgment is appropriate if the "'pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as matter of law.'" Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (quoting FRCP 56(c)). Whether collateral estoppel is available to a litigant is a questionof law that is properly resolved on summary judgment. Resolution Trust Corp. v. Keating, 186 F.3d 1110, 1114 (9^th Cir. 1999) (citation omitted).

Washington's Collateral Estoppel Standard

Both parties agree that the law of the forum state applies to determine the preclusive effect of the Arizona arbitration award. See Plaintiff's Motion (Dkt. 14, p. 8); Defendants' Response, (Dkt. 17, p. 11). The parties also agree on the standard applied by Washington courts to determine if defendants are collaterally estopped from bringing suit. Plaintiff cites Renninger v. Dept. of Corrections, 134 Wn.2d 437, 449, 951 P.2d 782 (1998) (Dkt. 14, p. 7) and defendant cites Gurtz v. New Hampshire Insurance, 65 Wn. App. 419, 422-23, 828 P.2d 90 (1992) (Dkt. 17, p. 6). Both cases use basically the same standard. As stated by plaintiff:

For collateral estoppel to apply, the party seeking application of the doctrine must establish that (1) the issue decided in the earlier proceeding was identical to the issue presented in the later proceeding; (2) the earlier proceeding ended in a judgment on the merits; (3) the party against whom collateral estoppel is asserted was a party to, or in privity with a party to, the earlier proceeding; and (4) application of collateral estoppel does not work an injustice on the party against whom it is applied. Renninger v. Dep't of Corrections, 134 Wn.2d 437, 449,

951 P.2d 782 (1998).

(Dkt. 14, pp. 6-7. See Defendants' Response, Dkt. 17, p. 6, (citing Gurtz, supra at 422-23).

The parties also agree that one of the critical issues is whether or not the arbitration award in Arizona, which resulted in the parties filing a stipulation and order of dismissal constitutes a "judgment," as defined in the second prong of the above standard. See Plaintiff's Motion (Dkt. 14, p 8), Defendants' Response (Dkt. 17, pp. 13-15).

The parties disagree regarding which state's law should apply when it comes to defining what constitutes a "judgment." Plaintiff claims that Arizona law applies. (Dkt. 14, pp. 8-14). Defendants claim that Washington law applies; however none of the cases cited by defendants confronts the issue of whether an arbitration proceeding results in a final judgment. (Dkt. 17, pp. 11-13 (citing Corley v. Hertz Corp., 76 Wn. App. 687 (1994); W. Am. Ins. Co. v. Macdonald, 68 Wn. App. 191 (1992); Van Vonno v. Hertz Corp., 120 Wn.2d 416 (1992))). As stated by the Washington Court of Appeals: "To determine whether the Oregon arbitration proceeding resulted in a final judgment, we look to Oregon law, [because] '[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.'" Larsen v. Farmers Insurance Co., 80 Wn. App. 259, 263, 909 P.2d 935, 937 (1996) (citing Taylor v. Basye, 119 Wn. 263, 205 P. 16 (1922)) (quoting Restatement (Second) of Conflicts of Laws § 107, comment (c) (1971)). According to the Restatement (Second) of Conflicts of Laws § 107, comment (c), as "between States of the United States, application of the local law of the State of rendition to determine whether a judgment is final is required by the Constitution." However, this Court sees no substantive difference between the law of Washington and Arizona on this issue. Neither state considers a stipulation and order of dismissal with prejudice a "judgment", as that term is commonly applied.

Arizona Rule of Civil Procedure 76 provides for the entry of "judgment" upon a compulsory arbitration award where no appeal has been filed, if a party seeks to have such judgment entered. Ariz. R. Civ. P. 76(c) ("Upon expiration of the time for appeal, ifno appeal has been filed, any party may file to have judgment entered on the award"). In this case, however, the parties agreed to enter a stipulation for binding arbitration and, following the arbitration, to dismiss the case with prejudice upon the completion of the arbitration. See Declaration, Dkt. 15, Exhibits E, F. Therefore, the compulsory arbitration rules, which allow for the entry of a judgment do not apply, although they do suggest that an arbitration award, by itself, is not a judgment and that a party must file with the court an order for entry of judgment on the arbitration award. Nevertheless, for all other arbitrations, Arizona has adopted the Arizona Arbitration Act, Ariz. Rev. Stat. Ann. § 12-1514, which provides, in part, that a party may seek a "judgment or decree" and provides a mechanism for confirming an arbitration award and entering a "judgment." See Ariz. Rev. Stat. Ann. § 12-1514. According to this Arizona statute, upon "the granting of an order confirming, modifying or correcting an award, judgment or decree shall be entered in conformity therewith and be enforced as any other judgment or decree." Id. This is not dissimilar from Washington law, which has similar provisions and will be discussed more below. See, e.g., RCW 7.04A.220 ("after a party to the arbitration proceeding receives notice of an award, the party may file a motion with the court for an order confirming the award, at which time the court shall issue such an order unless the award is modified or corrected under RCW 7.04A .200 or 7.04A.240 or is vacated under RCW 7.04A.230").

A "judgment" is a clearly defined judicial decree that results in a number of specific rights, including the right to execute on the judgment, see, e.g., Byers v. Wik, 169 Ariz. 215, 218-19 (Ariz. App. Ct. 1991) (citing Ariz. Rev. Stat. § 12-1553(2)), provide alien on real property, see, e.g., Freeman v. Winthroath Pumps-Div. of Worthington Corp., 475 P.2d 274, 276 (...