Victor v. State Farm Fire and Cas. Co., A91-518 Civil.

CourtUnited States District Courts. 9th Circuit. District of Alaska
Citation795 F. Supp. 300
Docket NumberNo. A91-518 Civil.,A91-518 Civil.
PartiesMartin D. VICTOR, III and Patricia Victor, Plaintiffs, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant.
Decision Date31 July 1992

795 F. Supp. 300

Martin D. VICTOR, III and Patricia Victor, Plaintiffs,
v.
STATE FARM FIRE AND CASUALTY COMPANY, Defendant.

No. A91-518 Civil.

United States District Court, D. Alaska.

July 31, 1992.


795 F. Supp. 301

David A. Reineke of Raymond A. Nesbett, P.C., Anchorage, Alaska, for the Victors.

Joe M. Huddleston of Hughes, Thorsness, Gantz, Powell & Brundin, Anchorage, Alaska, for State Farm.

ORDER

SINGLETON, District Judge.

Martin D. Victor, III and his wife Patricia Victor commenced this action against State Farm Fire and Casualty Company ("State Farm") on October 3, 1991 in state superior court. State Farm removed this action to this Court.1 This is an action on the uninsured motorist provisions of an insurance policy which Martin Victor purchased from State Farm. Martin Victor was severely injured in an accident in which an uninsured motorist, one Smith, was alleged to have been at least partly at fault. Martin Victor obtained a default judgment against Smith which the Victors hope to collect from their insurer in this action.

State Farm seeks to arbitrate the question whether the default judgment against Smith is within the scope of the coverage which it sold to the Victors, relying upon a provision of the policy which requires arbitration of disputes. The Victors argue that State Farm waived the right to demand arbitration by failing to make a timely demand for arbitration, by dilatory investigation of the claim, and by abstaining from the underlying lawsuit against Smith while the Victors incurred the cost of obtaining a default judgment against him. Under applicable Alaska law, I conclude that State Farm has not waived arbitration, that all coverage disputes are susceptible to arbitration, and that resolution of Victor's claim in tort for breach of the covenant of good faith and fair dealing must await the outcome of the arbitration.

STATEMENT OF FACTS

The relevant facts are not in dispute. State Farm issued an automobile liability policy to the Victors which was in force on September 24, 1986. On that date, Martin Victor was involved in a motor vehicle accident with two other vehicles. All three vehicles were proceeding in the same direction along a road. The first vehicle, driven by Ronald G. Smith, was pulling a

795 F. Supp. 302
trailer. The trailer apparently disconnected and lost a wheel, which came to rest in the path of Victor's vehicle. Victor slammed on his brakes to avoid collision with the detached wheel and was struck in the rear by a third vehicle driven by Norman Lichter. The Victors' vehicle did not collide with the Smith vehicle, its trailer or the trailer's detached wheel. Victor suffered severe personal injuries as a result of being struck by the Lichter vehicle. It appears that Lichter was insured but Smith was not. Victor notified State Farm of the accident and apparently made a claim under the medical payments coverage. He did not at the time claim uninsured motorist coverage

On September 20, 1988, just before the statute of limitations for personal injuries expired, Victor sued both Lichter and Smith in state court. Lichter defended, but Victor was unable to locate Smith and eventually served him by publication. There is no evidence in the record that Smith ever had actual rather than constructive notice of the suit. With State Farm's approval, Victor settled with Lichter for $50,000. State Farm did not approve of Victor's suing Smith and informed Victor that it would not be bound by any default judgment Victor might obtain against Smith. Nevertheless, Victor mailed State Farm a number of demand letters. Eventually, a default judgment hearing was held in state court, at which Smith did not appear. A state magistrate recommended and a state superior court judge entered judgment in Victor's favor and against Smith for $321,507.53. Victor never demanded arbitration of the coverage dispute. It appears that State Farm did demand arbitration after this suit was filed, and may have suggested it in negotiations with the Victors' attorney prior to their filing suit against it.

DISCUSSION

The policy issued to Victor provides for uninsured and underinsured coverage and has the following provision for disagreements between the carrier and the insured:

If there is no agreement regarding the insured's entitlement to damages from the uninsured motorist and the amount of that entitlement, these questions shall be decided by arbitration upon written request of the insured or us. Each party shall select a competent and impartial arbitrator. These two shall select a third one. If unable to agree on the third one within 30 days either party may request a judge of a court of record in the county in which the arbitration is pending to select a third one. The written decision of any two arbitrators shall be binding on each party.
....
We are not bound by any judgment against any person or organization obtained without our written consent.

See Policy, Section III ("Coverage U") (emphasis in original).

The Alaska courts recognize a strong public policy in favor of arbitration.2 See Arctic Contractors, Inc. v. State, 564 P.2d 30 (Alaska 1977), appeal after remand, 573 P.2d 1385 (Alaska 1978); Modern Constr., Inc. v. Barce, Inc., 556 P.2d 528, 529 & n. 1 (Alaska 1976). Alaska has adopted the Uniform Arbitration Act. See A.S. § 09.43.010 et seq. Given this strong public policy in favor of arbitration, it would appear that State Farm's demand for arbitration would deprive this Court of subject matter jurisdiction and require both parties to arbitrate their dispute. The Victors effectively concede the general rule, but argue that State Farm has waived arbitration.

Under some circumstances, Alaska recognizes that conduct can waive a contract right to require submission of disputes to arbitration. See International Bhd. of Teamsters v. King, 572 P.2d 1168, 1173-74 (Alaska 1977). The term "waive" is ambiguous and can mean a number of different things. See Milne v. Anderson,

795 F. Supp. 303
576 P.2d 109, 112 (Alaska 1978) ("a flexible word, with no definite and rigid meaning in the law") (quoting United States v. Chichester, 312 F.2d 275, 281-82 (9th Cir. 1963)); cf. Andrew v. State, 694 P.2d 168, 172-175 (Alaska App.1985) (Singleton, J., concurring).3

The Alaska Supreme Court generally requires a waiver before a party will be found to have given up the right to rely on a contract provision. Milne, 576 P.2d at 112. This general principle applies to insurance contracts, with the Alaska Supreme Court requiring a true waiver before...

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5 cases
  • Peterman v. State Farm Mut. Auto. Ins. Co., 97SC587
    • United States
    • Colorado Supreme Court of Colorado
    • June 29, 1998
    ...Wales v. State Farm Mut. Auto. Ins. Co., 38 Colo.App. 360, 364, 559 P.2d 255, 258 (1976); see also Victor v. State Farm Fire & Cas. Co., 795 F.Supp. 300, 302 (D.Alaska 1992) (requiring arbitration even though the insured obtained a default judgment against an uninsured motorist because of t......
  • O'Hanesian, v. State Farm Mut. Auto. Ins., E038114.
    • United States
    • California Court of Appeals
    • December 19, 2006
    ...clause was enforceable. (Id. at p. 364, 559 P.2d at p. 258.) Similarly, in Victor v. State Farm Fire & Cos. Co. (D.Alaska 1992) 795 F.Supp. 300, an insured obtained a default judgment against an uninsured motorist and demanded that the insurer pay uninsured motorist benefits. The insurer re......
  • Cullen v. Flanders
    • United States
    • Court of Appeals of Wisconsin
    • March 8, 1994
    ...the company.6 This appears consistent with the results in other jurisdictions that favor arbitration. See Victor v. State Farm Fire & Casualty Co., 795 F.Supp. 300(D. Alaska 1992) (trial court7 Cullen appears to argue that Badger has waived its right to invoke the arbitration and consent-to......
  • Peterman v. State Farm Mut. Auto. Ins. Co., 96CA0600
    • United States
    • Colorado Court of Appeals of Colorado
    • May 8, 1997
    ...The same conclusion has been reached by courts in other jurisdictions. For example, in Victor v. State Farm Fire & Casualty Co., 795 F.Supp. 300 (D.Alaska 1992), the insured obtained a default judgment against an uninsured motorist and demanded payment of uninsured motorist benefits. The in......
  • Request a trial to view additional results

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