Moresi v. Nationwide Mut.

• Decision Date: 03 April 1990
• Citation: 789 P.2d 667,309 Or. 619
• Court: Oregon Supreme Court
• Parties: Magdalena MORESI, Respondent on review, v. NATIONWIDE MUTUAL, Petitioner on review. TC 87-189 CV; CA A48571; SC S36179.

Page 667

789 P.2d 667

309 Or. 619

Magdalena MORESI, Respondent on review, v. NATIONWIDE MUTUAL, Petitioner on review.

TC 87-189 CV; CA A48571; SC S36179.

Supreme Court of Oregon.

Argued and Submitted Sept. 29, 1989.

Decided April 3, 1990.

Hugh B. Collins, Medford, argued the cause and filed the petition for petitioner on review.

George W. Kelly, Eugene, argued the cause for the respondent on review.

Before PETERSON, C.J., and LINDE, ^* CARSON, JONES, GILLETTE, VAN HOOMISSEN and FADELEY, JJ.

VAN HOOMISSEN, Justice.

Magdalena Moresi's family vehicles were insured by Nationwide Mutual. The policy contained an uninsured motorist (UM) provision which provided:

"If [Nationwide] and the insured do not agree about the insured's right to recover damages or the amount of damages, the following arbitration procedure will be used: after written demand for arbitration by either party, each party will select a competent and disinterested arbitrator. The two so selected will select a third."

The policy also provided:

"Under the Uninsured Motorist Coverage any arbitration or legal action against [Nationwide] must begin within the time limit allowed for bodily injury or death actions in the state in which the accident occurred."

ORS 12.110 provides in part:

"(1) An action for assault, battery, false imprisonment, or for any injury to the person or rights of another, not arising on contract, and not especially enumerated in this chapter, shall be commenced within two years * * *."

On June 28, 1985, Moresi was injured in Oregon in an accident involving an uninsured motorist. She demanded $50,000 from Nationwide under the policy's UM coverage. Nationwide offered her $4,000.

On June 23, 1987, five days before the ORS 12.110(1) two year period expired, Moresi filed a "Petition to Arbitrate" in the circuit court. After a hearing on stipulated facts ¹ in March 1988, the trial court concluded that because petitioner had failed to make a timely written demand for arbitration, respondent was not in breach of the agreement to arbitrate. Accordingly, the trial court dismissed Moresi's petition.

The Court of Appeals reversed and remanded the case to the circuit court with instructions to enter an order compelling arbitration, ruling that the question as to whether Moresi had made a timely written demand was an issue to be determined by the arbitrator. Moresi v. Nationwide Mutual, 96 Or.App. 61, 771 P.2d 301 (1989). We reverse the decision of the Court of Appeals and reinstate the judgment of the circuit court.

Petitions to compel arbitration are governed by ORS 36.310. ² One of the purposes of arbitration agreements is to avoid litigation. Consistent with that purpose, ORS 36.310 requires that before a party can petition a court for an order compelling arbitration thereunder, the party seeking court-ordered arbitration be "aggrieved by the failure, neglect or refusal of another to perform under a contract or submission providing for arbitration." Whether there has been such a default is, by the terms of ORS 36.310, to be decided "summarily" by the court.

Although the statute might be interpreted as authorizing a court to compel arbitration for any failure, neglect, or refusal to perform under a contract, such an interpretation would be contrary to the clear intent of the statute to authorize the court to become involved in the arbitration process only where a party has refused to comply with a contract arbitration provision. We therefore interpret "failure, neglect, or refusal to perform under a contract * * * providing for arbitration" as conferring authority to compel arbitration only where a party has failed, neglected or refused to arbitrate in accordance with a contract arbitration provision.

Thus, Nationwide's failure to agree on the amount due under the UM clause is not a "failure, neglect or refusal * * * to perform" for purposes of ORS 36.310. The insurer, by offering $4,000, no more failed, neglected or refused to perform under the policy arbitration provision than did the insured by demanding $50,000. While their disagreement provided grounds for either party to demand arbitration under the contract, it did not provide grounds for the filing of a petition for arbitration under ORS 36.310.

Nationwide did not "fail, neglect, or refuse" to perform under the arbitration provision because it had no duty to perform under that provision until and unless a party made a written demand for arbitration. Moresi made no such demand. ³ Thus, there was no "failure, neglect, or refusal" that would satisfy the statutory condition precedent to court-ordered arbitration. ⁴ For that reason, the trial court's dismissal of the petition was proper.

The decision of the Court of Appeals is reversed. The judgment of the circuit court is reinstated.

PETERSON, Chief Justice, concurring.

I concur without reservation in the court's opinion, but write separately to express my opinion that the plaintiff's arbitration claim may still be "alive."

The trial court properly dismissed the request for court-ordered arbitration because the insurer had not failed, neglected or refused to arbitrate. The trial court was correct in holding that the insurer was not in "default." ¹

Whether the filing of a petition for court-ordered arbitration constitutes a "written demand for arbitration," and if so, whether...