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Wing v. Geico Insurance Company (2/23/01) sp-5366
Wing v. Geico Insurance Company (2/23/01) sp-5366
Notice: This opinion is subject to correction before publication in
the Pacific Reporter. Readers are requested to bring errors to the attention of
the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska 99501, phone
(907) 264-0608, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
URSULA WING, )
) Supreme Court No. S-9154
Appellant, )
) Superior Court No.
v. ) 3AN-98-11464 CI
)
GEICO INSURANCE COMPANY, ) O P I N I O N
)
Appellee. ) [No. 5366 - February 23, 2001]
______________________________)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
Sen K. Tan, Judge.
Appearances: Michaela Kelley Canterbury,
Kelley & Kelley, Anchorage, for Appellant. Mark E. Wilkerson,
Wilkerson & Associates, Anchorage, for Appellee.
Before: Matthews, Chief Justice, Eastaugh,
Fabe, Bryner, and Carpeneti, Justices.
CARPENETI, Justice.
I. INTRODUCTION
Ursula Wing appeals an arbitration award she received
against her insurer for damages she suffered from an accident
caused by an uninsured motorist. She contends that the arbitration
panel exceeded its authority in reducing its preliminary award, in
failing to award attorney's fees to her, and in awarding expert
fees against her. Because the arbitration panel did not exceed its
authority, we affirm the panel's decision. [Fn. 1]
II. FACTS AND PROCEEDINGS
Ursula Wing was injured by an uninsured motorist who
rear-ended her car in August 1994. She suffered both economic
loss, including medical damages, and non-economic loss. GEICO, her
automobile insurance carrier, made preliminary payments of
$7,527.36 for medical expenses and $6,000 for economic loss. GEICO
offered Wing $21,000 to settle her claim in May 1997. Wing
rejected GEICO's offer, and instead filed an uninsured motorist
arbitration claim seeking a greater award.
In July 1998 GEICO made what it called an "offer of
judgment" for $33,557 in the arbitration [Fn. 2] that included
payment for attorney's fees, costs, and interest. The offer also
reserved GEICO's right to offset the benefits previously paid to
Wing. Wing did not accept the offer, and instead pursued
arbitration provided for under the insurance agreement.
The arbitration panel made its preliminary arbitration
award on August 13, 1998. The arbitration panel awarded Wing a
total of $33,078.90 in past non-economic and economic losses, plus
interest. The panel did not award costs or attorney's fees because
the panel found that the governing insurance policy provided that
each side would bear its own attorney's fees. The panel also held
that the language of the insurance policy was not prohibited under
our ruling in State Farm Mutual Automobile Insurance Company v.
Harrington. [Fn. 3] The panel then invited the parties to submit
briefing on the division of the arbitrator fees, expert fees, and
other arbitration costs. Finally, the panel noted that it had not
determined offsets and, if disputed, invited submissions on that
issue as well.
After reviewing the parties' briefs on the issues of
offsets and arbitration fees, the panel issued its final
arbitration award on September 18. The panel reduced the payable
arbitration award to $14,987.70 by deducting allowable expert fees,
and presumably, although not explicitly, by deducting the offsets
claimed by GEICO. [Fn. 4] The panel also addressed the issue of
allocating the financial burden of the arbitrators' fees for the
three-person arbitration panel. The panel ordered Wing to pay in
full for her appointed arbitrator and for one-half the cost of the
neutral arbitrator. Likewise, the panel ordered GEICO to pay in
full for its appointed arbitrator and for the other half of the
neutral arbitrator.
Wing filed a petition in the superior court seeking to
have the arbitration award modified or vacated. Wing argued that
the arbitration panel exceeded its authority based on the reduction
of the preliminary award, the failure to award attorney's fees, and
the assessment of expert fees. Superior Court Judge Sen K. Tan
denied Wing's requested relief in May 1999.
Wing now appeals the superior court's decision affirming
the arbitration award.
III. STANDARDS OF REVIEW
Our review of an arbitrator's decision under AS 09.43.120
is limited primarily to issues of arbitrability. [Fn. 5] Whether
the arbitrator's decision on the merits is supported by record
evidence is generally not reviewable; [Fn. 6] "[t]he fact that the
relief is such that it could not or would not be granted by a court
of law or equity is not ground for vacating or refusing to confirm
the award." [Fn. 7]
When reviewing an arbitrator's decision for modification
or correction under AS 09.43.130, we may examine the award for: (1)
an "evident miscalculation of figures," (2) whether the
"arbitrators have awarded upon a matter not submitted to them," or
(3) whether "the award is imperfect in a matter of form not
affecting the merits." [Fn. 8]
IV. DISCUSSION
A. The Arbitration Panel Did Not Exceed Its Authority by
Reducing Its Preliminary Award.
The arbitration panel reduced its initial total award of
$33,078.90 to $14,987.70 after receiving the parties' invited
briefings on the issues of costs and fees, and offsets. Wing
argues that the arbitration panel's final award should be vacated
because the panel did not have the authority to make such a
reduction. In particular, Wing complains that the panel did not
provide any reason except for the explanation that the reduction
was "for allowable expert fees." [Fn. 9]
A court may vacate an arbitration award only upon a
finding that:
(1) the award was procured by fraud or
other undue means;
(2) there was evident partiality by an
arbitrator appointed as a neutral or corruption in any of the
arbitrators or misconduct prejudicing the rights of a party;
(3) the arbitrators exceeded their
powers;
(4) the arbitrators refused to postpone
the hearing upon sufficient cause being shown for postponement or
refused to hear evidence material to the controversy or otherwise
so conducted the hearing, contrary to the provisions of AS
09.43.050, as to prejudice substantially the rights of a party; or
(5) there was no arbitration agreement
and the issue was not adversely determined in proceedings under AS
09.43.020 and the party did not participate in the arbitration
hearing without raising the objection. [Fn. 10]
Wing argues that the panel exceeded its authority under subsection
.120(a)(3) by reducing its preliminary award without giving a
complete explanation for the reduction.
We reject Wing's argument because it is not consistent
with the natural meaning of subsection .120(a)(3), which allows
judicial review only to determine if an arbitration panel exceeded
its powers (and not for failure to give a complete explanation).
One of the primary powers explicitly granted to the arbitration
panel by the governing insurance policy in this case was the power
to determine "the amount payable" under the policy. Thus, the
panel's adjustment of the preliminary award was an appropriate
exercise of its power.
B. Wing Was Not Entitled to Civil Rule 82 Attorney's FeesComputed on the Arbitration Award.
Wing argues two theories to support her position that she
was entitled to Rule 82 attorney's fees calculated against the
initial arbitration award. Wing's first theory relies on the
"mirror rule" we announced in State Farm Mutual Automobile
Insurance Company v. Harrington. [Fn. 11] Wing's second theory
broadly interprets Civil Rule 82 and argues for an extension
requiring an award of attorney's fees to a successful claimant in
uninsured/underinsured motorist (UM) arbitration.
1. The "mirror rule" we announced in Harrington does
not apply to Wing.
Wing argues that the arbitration panel should have
awarded her Civil Rule 82 attorney's fees. [Fn. 12] Wing cites
Harrington [Fn. 13] for support, arguing that our interpretation of
AS 21.89.020(c) in Harrington requires all UM policies to include
attorney's fees and costs.
There are two problems with Wing's argument. First, the
insurance policy governing this arbitration explicitly provided
that each side would bear its own attorney's fees. Since there is
no legal infirmity with this contractual provision, the arbitration
panel rightly concluded that each side should pay its own
attorney's fees. Second, Wing seeks to extend Harrington, which
held that an award of attorney's fees was required under the policy
limits provision of a liability policy, [Fn. 14] to the arbitration
setting. We find no basis for doing so.
Accordingly, we do not extend the "mirror rule" of
Harrington to require an attorney's fees award to all claimants
that receive a monetary award in UM insurance arbitration
proceedings.
2. Civil Rule 82 does not apply to parties that
receive monetary awards in UM insurance arbitration
proceedings.
Wing also appears to make an independent argument that
Civil Rule 82 should be extended to all parties that receive
monetary awards in UM insurance arbitration. Wing cites no
authority for the proposition that Rule 82 should apply to
arbitration proceedings, except the extension of the statute-based
Harrington argument addressed above. Since Rule 82 applies by its
own terms only to "civil cases," we do not extend its application
to UM insurance arbitration proceedings.
C. The Arbitration Panel Properly Awarded Expert Witness
Fees to GEICO Under AS 21.89.020(f)(1).
Wing argues that the arbitration panel exceeded its
authority when it awarded $300 in expert witness fees to GEICO.
Wing asserts that this was a violation of AS 09.43.120(a)(3)
because the arbitration section of the insurance policy provided
that "[a]ttorney's fees and fees paid to medical or other expert
witnesses are to be paid by the party incurring them." The
arbitration panel addressed this issue in its decision, stating,
"The GEICO Insurance policy also provides that certain arbitration
costs, such as expert witness fees, shall also be borne by the
parties. That language is in direct conflict with AS
21.89.020(f)(1)." The arbitration panel proceeded to consider the
issue of expert fees.
Alaska Statute 21.89.020(f)(1) provides:
An automobile liability insurance policy must
provide that all expenses and fees, not including counsel fees or
adjuster fees, incurred because of arbitration or mediation shall
be paid as determined by the arbitrator.
The arbitration panel therefore correctly determined the
scope of its authority in conformity with a controlling statute.
[Fn. 15] Accordingly, we will not disturb its award of expert fees
to GEICO.
D. The Collateral Source Rule Does Not Apply Under the Facts
of This Case.
Finally, Wing argues that our holding in Falconer v.
Adams, [Fn. 16] that collateral source payments cannot be offset
against an award of damages, applies to this case because the two
cases are factually similar. Wing is wrong. GEICO made all the
relevant payments to Wing, or directly on her behalf, whereas in
Falconer the issue involved credit, in the form of offsets, claimed
by one defendant for payments made to the plaintiff by another
defendant.
Because all payments were made by GEICO for or to Wing,
there was no collateral source to be considered. No legal or
logical basis exists to allow Wing to double recover under both the
medical and UM portions of her insurance policy. Accordingly, we
reject Wing's collateral source argument.
E. Wing Was Not Prejudiced by the Superior Court's
Consideration of the Arbitrator's Affidavit.
Wing also argues that the superior court should not have
considered the affidavit submitted by one of the arbitrators at the
request of GEICO. GEICO submitted the affidavit in a filing of
"supplemental authority." The affidavit was submitted by the
third, neutral arbitrator after consultation with the other two
members of the panel. It was solicited by GEICO to support "how
the arbitration panel calculated the amount of the final award."
GEICO submitted the affidavit under Civil Rule 77(l).
1. The superior court erred by considering GEICO's
submission of the arbitrator's affidavit.
The superior court's acceptance and consideration of
GEICO's affidavit under Rule 77(l) was error because that rule only
provides for submission of citations to legal authorities that come
to the attention of a party after that party's memorandum has been
filed. [Fn. 17] The arbitrator's affidavit was not a legal
authority. It was a clarification of the arbitration panel's final
decision, and the rationale for it.
The proper procedure for this situation is provided by AS
09.43.090:
On application to the arbitrators by a party
or, if an application to the court by a party is pending under AS
09.43.110-09.43.130 on submission to the arbitrators by the court
under the conditions the court may order, the arbitrators may
modify or correct the award upon the grounds stated in AS
09.43.130(a)(1) and (3), or for the purpose of clarifying the
award. [Fn. 18]
Thus, the superior court could have sent the final award back to
the arbitration panel with an order to clarify, modify, or explain
the rationale behind it. However, consideration of GEICO's
submission of the individual arbitrator's affidavit was improper
under Rule 77(l).
2. Consideration of the arbitrator's affidavit was not
prejudicial to Wing.
Although procedurally improper, the superior court's
consideration of the affidavit was not prejudicial to Wing. The
final award is adequately explained by simple subtraction and by
reviewing the memoranda of the parties submitted at the panel's
request to address the issues of costs and fees, and offsets.
Thus, Wing suffered no prejudice because the final award is
supported by logic and record materials. Moreover, an inadequate
record or explanation of the award is not a sufficient basis for
judicial review. [Fn. 19] We therefore do not disturb the
arbitration award.
V. CONCLUSION
Because the arbitration panel did not exceed its powers,
we AFFIRM the arbitration award.
FOOTNOTES
Footnote 1:
Wing also argues that the superior court erred in considering
an affidavit filed by the arbitration panel and in misapplying the
collateral source rule. We find no prejudicial error in the
superior court's treatment of these issues.
Footnote 2:
As of July 1998 no civil action had been filed concerning the
accident.
Footnote 3:
918 P.2d 1022 (Alaska 1996).
Footnote 4:
GEICO later submitted to the superior court an affidavit of
the neutral arbitrator, made after consulting with the other two
arbitrators, which explained that the panel calculated the final
award by subtracting GEICO's claimed offsets plus interest and $300
in expert witness fee costs (six hours at $50.00 per hour) from the
preliminary award.
Footnote 5:
See Ahtna, Inc. v. Ebasco Constructors, Inc., 894 P.2d 657,
661 (Alaska 1995) (quoting Masden v. University of Alaska, 633 P.2d
1374, 1376-77 (Alaska 1981)).
Footnote 6:
See Alaska State Housing Auth. v. Riley Pleas, Inc., [Fn. 20]
586 P.2d 1244, 1247-48 (Alaska 1978).
Footnote 7:
AS 09.43.120(b).
Footnote 8:
AS 09.43.130.
Footnote 9:
Wing's separate argument that the award of expert fees was
improper will be individually addressed below.
Footnote 10:
AS 09.43.120(a).
Footnote 11:
918 P.2d 1022 (Alaska 1996) (holding that as a "mirror" to
liability coverage, UM coverage provides for payment of prejudgment
interest, costs, and attorney's fees above the facial policy limit
when actual damages have exhausted the policy.)
Footnote 12:
Alaska R. Civ. P. 82(a) provides: "Except as otherwise
provided by law or agreed to by the parties, the prevailing party
in a civil case shall be awarded attorney's fees calculated under
this rule."
Footnote 13:
918 P.2d at 1025-26.
Footnote 14:
Id.
Footnote 15:
In Harrington we held that "[i]f a policy does not provide the
required coverage it will be reformed to conform with statutory
requirements." Harrington, 918 P.2d at 1025.
The arbitration panel thus had the authority to reform the
contract language -- "Attorney's fees and fees paid to medical or
other expert witnesses are to be paid by the party incurring them"
-- in a way that would conform to the statute. To conform to the
statute, this language should be reformed along the following
lines: "Attorney's or adjuster's fees are to be paid by the party
incurring them; all other expenses and fees shall be paid as
determined by the arbitrators."
Footnote 16:
974 P.2d 406, 411-13 (Alaska 1999).
Footnote 17:
Civil Rule 77(l) provides:
When pertinent authorities come to the
attention of a party after the party's memorandum has been filed,
or after oral argument but before decision, the party may promptly
advise the court, by letter, with a copy to adversary counsel,
setting forth the citations. There must be a reference either to
the page of the memorandum or to a point argued orally to which the
citations pertain, but the letter may not contain argument or
explanations. Any response must be made promptly and must be
similarly limited.
Footnote 18:
AS 09.43.090 (emphasis added).
Footnote 19:
See AS 09.43.120, AS 09.43.130; Riley Pleas, 586 P.2d at 1247-
48.
Footnote 20:
586 P.2d 1244, 1247 (Alaska 1978)
