Price v. Farmers Insurance Company of Washington
| Decision Date | 13 November 1997 |
| Docket Number | No. 64257-5,64257-5 |
| Citation | 946 P.2d 388,133 Wn.2d 490 |
| Court | Washington Supreme Court |
| Parties | Cline PRICE, Petitioner, v. FARMERS INSURANCE COMPANY OF WASHINGTON, Respondent. |
Luvera, Barnett, Brindley, Beninger & Cunningham, David M. Beninger, Seattle, Maltman, Reed, North, Ahrens & Malnati, Douglass North, Seattle, for Petitioner.
Merrick, Hofstedt & Lindsey, P.S., Sidney R. Snyder, Jr., Ronald S. Dinning, Seattle, for Respondent.
Harbaugh & Bloom, Gary N. Bloom, Spokane, Debra L. Stephens, Bryan P. Harnetiaux, Spokane, for Amicus Curiae, for the Washington State Trial Lawyers Association.
This dispute centers upon whether previously paid personal injury protection benefits are properly offset against an underinsured motorist award. In a special proceeding to confirm an arbitration award the trial court determined setoff was clearly inappropriate under policy language. Subsequently the Court of Appeals held applicable policy language clearly required the opposite. We agree the answer is clear: neither the trial court in an arbitration confirmation proceeding nor the appellate court which reviews the confirmed award has jurisdiction to even consider the question.
Facts relevant to this disposition are relatively simple. Cline Price, an insured of Farmers Insurance Company of Washington (Farmers), was injured in an automobile accident on March 30, 1991. His "E-Z-Reader Car Policy" provided multiple coverages for underinsured motorists (UIM), personal injury protection (PIP), and liability. Ultimately Price settled with the tortfeasor for the limits of the tortfeasor's liability policy, and Farmers paid Price $24,339.00 in PIP benefits. Claiming his actual damages exceeded tortfeasor liability limits, Price pressed Farmers for yet a further award under his UIM coverage. However, Price and Farmers were unable to agree on the total amount of the damages sustained, requiring the matter to be determined pursuant to the policy arbitration clause. This clause provided:
Arbitration
If an insured person and we do not agree (1) that the person is legally entitled to recover damages from the owner or operator of an underinsured motor vehicle, or (2) as to the amount of payment under the Part, either that person or we may demand that the issue be determined by arbitration.
Ultimately a majority of the three arbitrators entered an arbitration award which simply stated: "The award in the above-referenced matter was $275,000 with Mr. Petersen dissenting." CP at 41. We assume that figure represents a calculation of total damages incurred by the insured as a proximate result of the subject accident without adjustment, setoff, or reduction for any other reason. 1 No other issues were determined by the arbitrators except their own fees.
Thereafter Price, the insured, sought statutory confirmation in a special superior court proceeding which he commenced pursuant to RCW 7.04. That chapter specifically provides:
Confirmation of award by court
At any time within one year after the award is made, unless the parties shall extend the time in writing, any party to the arbitration may apply to the court for an order confirming the award, and the court shall grant such an order unless the award is beyond the jurisdiction of the court, or is vacated, modified, or corrected, as provided in RCW 7.04.160 and 7.04.170....
RCW 7.04.160 provides various limited grounds for vacating the arbitrators' award, none of which are applicable here. RCW 7.04.170 also authorizes the superior court to modify or correct the award on several specific grounds, none of which apply here, with the possible exception of subsection three. See footnote one, supra.
However Price's statutory confirmation noticeably expanded the scope of the arbitration proceeding beyond that which was actually submitted to the arbitrators by the insurance contract. The court proceeding further purported to determine, adverse to Farmers, the net judgment should not be reduced by offsetting the $24,339.00 in previously paid PIP benefits. 2 Ultimately the trial court entered an amended order confirming the arbitration award in favor of insured Price against Farmers in the net amount of $66,585.00 plus statutory costs, without any reduction for the previously paid PIP payment, finding it "clear under the insurance policy involved that respondent [Farmers] is not entitled to an offset." CP at 99.
From there the matter proceeded to the Court of Appeals, Division 1. Price v. Farmers Ins. Co., 82 Wash.App. 20, 916 P.2d 949 (1996) reversed the superior court for its failure to offset the $24,339.00 in PIP payments and directed the offset, concluding the policy provision allegedly requiring such a setoff was "clear and unambiguous." Id. at 24, 916 P.2d 949. Price then petitioned this court for review, which we accepted. 130 Wash.2d 1007, 928 P.2d 415 (1996).
Although the propriety of a PIP offset under these circumstances and this policy language is a fascinating question, which the superior court and the Court of Appeals have answered in a "clearly" irreconcilable manner, the question of jurisdiction is fundamental and, in this case, dispositive.
Arbitration in this state is controlled by RCW 7.04, a statute that "amounts to a code of arbitration." Northern State Constr. Co. v. Banchero, 63 Wash.2d 245, 249, 386 P.2d 625 (1963). The statute provides:
Two or more parties may agree in writing to submit to arbitration, in conformity with the provisions of this chapter, any controversy which may be the subject of an action existing between them at the time of the agreement to submit, or they may include in a written agreement a provision to settle by arbitration any controversy thereafter arising between them out of or in relation to such agreement. Such agreement shall be valid, enforceable and irrevocable save upon such grounds as exist in law or equity for the revocation of any agreement.
Arbitration is a statutorily recognized special proceeding. The rights of the parties are controlled by the statute. Northern State Constr. Co., 63 Wash.2d at 249, 386 P.2d 625. Arbitration traces its existence and jurisdiction first to the parties' contract 3 and then to the arbitration statute itself. Thorgaard Plumbing & Heating Co. v. King County, 71 Wash.2d 126, 132, 426 P.2d 828 (1967). Arbitrators are to determine the question submitted in writing. Barnett v. Hicks, 119 Wash.2d 151, 156, 829 P.2d 1087 (1992).
After the arbitrators' award, RCW 7.04.150 provides any party may apply to the court for an order confirming the award "and the court shall grant such an order unless the award is beyond the jurisdiction of the court, or is vacated, modified, or corrected, as provided in RCW 7.04.160. and 7.04.170." Those referenced statutes state the grounds upon which the trial court may vacate or modify the award; however, it is undisputed this trial court found no such grounds here, and from the face of the award no such grounds appear to exist. The confirming court does not have collateral authority to go behind the face of the award or to determine whether additional award amounts are appropriate. Dayton v. Farmers Ins. Group, 124 Wash.2d 277, 280, 876 P.2d 896 (1994). Nor is a trial court permitted to conduct a trial de novo upon confirmation or search the four corners of the document to discern the parties' intent. Boyd v. Davis, 127 Wash.2d 256, 262-63, 897 P.2d 1239 (1995). Although a party may apply to the court to confirm an arbitration award, that is not the same as bringing an original action to obtain a monetary judgment. Thorgaard Plumbing & Heating Co., 71 Wash.2d at 132, 426 P.2d 828. A confirmation action is no more than a motion for an order to render judgment on the award previously made by the arbitrators pursuant to contract. Id. If the court does not modify, vacate, or correct the award, the court exercises a mere ministerial duty to reduce the award to judgment. Id.
Here the arbitration submittal, as is typical for such UIM arbitration clauses, 4 was limited to determination of tortfeasor liability and calculation of total damages. 5 These are not coverage questions and therefore do not allow the insured to recover reasonable attorney fees pursuant to Olympic S.S. Co. v. Centennial Ins. Co., 117 Wash.2d 37, 811 P.2d 673 (1991). See Dayton, 124 Wash.2d 277, 876 P.2d 896. Although an arbitration clause could submit coverage questions to arbitration, that is not our case, 6 nor is that the usual practice. When or if the arbitration award is brought to the superior court for confirmation, the jurisdiction of the superior court is limited by the nature of the special statutory proceeding to resolve only those questions properly submitted to the arbitrators and costs; so as to reduce to judgment only such matters properly submitted to arbitration and as the parties may otherwise agree. 7 Here, as in most cases, coverage questions were not submitted to the arbitrators for disposition and were therefore beyond the jurisdiction of the superior court to determine, absent agreement in result. 8
Jurisdictional limitations on the scope of arbitration are recognized in at least 16 other states. 2 Alan I. Widiss, Uninsured and Underinsured Motorist Insurance § 24.4 at 277 (2d ed.1992). This state also recognizes jurisdictional limitations in general on the scope of arbitration. See Detweiler v. J.C. Penney Cas. Ins. Co., 110 Wash.2d 99, 113, 751 P.2d 282 (1988) ( ) (footnotes omitted); Cantwell v. Safeco Ins. Co., 37 Wash.App. 133, 136, ...
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