Opinion
No. 29984-4-II.
Filed: February 24, 2004. UNPUBLISHED OPINION
Appeal from Superior Court of Pierce County. Docket No: 00-2-12864-4. Judgment or order under review. Date filed: 01/17/2003. Judge signing: Hon. Sergio Armijo.
Counsel for Appellant(s), Geoffrey C Bedell, Burgess Fitzer PS, 1501 Market St. Ste 300, Tacoma, WA 98402-3333.
Timothy R. Gosselin, Attorney at Law, 1501 Market St. Ste 300, Tacoma, WA 98402-3333.
Counsel for Respondent(s), Dan Matthew Albertson, Attorney at Law, 711 Court a Ste 200, Tacoma, WA 98402-5228.
James Robert Cushing, Attorney at Law, 535 E Dock St. Ste 108, Tacoma, WA 98402-4629.
Farmers Insurance appeals the grant of attorney fees after an arbitration. We hold that since coverage was not an issue that was arbitrated, Nelson could not recover attorney fees. We reverse.
On July 3, 1997, Casey Nelson was in a car accident. Nelson was waiting at a stoplight when another vehicle rear-ended her vehicle. She did not get the name of the driver who hit her before proceeding with her travel.
Approximately five minutes after the accident, Nelson began to feel neck pain. Because traffic was stop and go, the vehicle that rear-ended Nelson was still visible. As Nelson watched, the vehicle moved into the adjacent lane and passed her vehicle. As it passed, she wrote down the plate number. Mark Knell was the owner of the car, but he is not a party to this action.
Nelson filed an underinsured motorist claim (UIM) with Farmers Insurance (Farmers). She alleged that Mark Knell was the underinsured driver responsible for her injuries. Farmers initially believed Nelson had failed to meet the conditions of coverage, and it denied coverage of the claim. Farmers recorded its position in three letters to Nelson ranging from April 1999 to July 2000.
After receiving the first letter in April, Nelson demanded arbitration. Her insurance policy allowed for arbitration of UIM claims and established the scope of arbitration. Farmers refused to arbitrate because it asserted there was no coverage.
The arbitration agreement stated:
If an insured person and we [Farmers] 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 this Part, either that person or we may demand that the issue be determined by arbitration.
Clerk's Papers (CP) at 53.
In November 2000, Nelson filed a `Complaint to Compel Underinsured Motorist Arbitration.' Clerk's Papers at (CP) at 1-3. She requested two items: (1) an order compelling Farmers to arbitrate and (2) attorney fees and costs.
Farmers agreed to arbitration. In its answer, Farmers admitted that arbitration was appropriate. The action to compel arbitration went no further beyond the answer.
The parties began arbitration in July 2002. The arbitrators found for Nelson on both liability and damages. Nelson moved for the superior court to confirm the award under chapter 7.04 RCW. She also moved for attorney fees. The trial court heard oral argument on January 17, 2003. Over Farmers objection, the court awarded attorney fees and costs. Farmers appeals the trial court's award of attorney fees and costs.
I.
Farmers argues the award of attorney fees to Nelson went beyond the trial court's jurisdiction. We agree.
The statutes governing arbitration strictly limit the superior court's authority to review the award. Dayton v. Farmers Ins. Group, 124 Wn.2d 277, 279, 876 P.2d 896 (1994). Dayton directly limited the reviewing court's authority to specific actions: confirming, vacating, modifying, or correcting the arbitration award. Dayton, 124 Wn.2d at 279. The court cannot go behind the award and award attorney fees. Dayton, 124 Wn.2d at 280. Further, attorney fees are not recoverable unless the insured denies coverage. Dayton, 124 Wn.2d at 280. And the court specifically stated that: `the rule of Olympic Steamship does not extend to UIM arbitration proceedings.' Dayton, 124 Wn.2d at 282. Here, the attorney fees awarded were those incurred at the UIM arbitration hearing.
The Supreme Court stated the following rule in Olympic S.S. Co. v. Centennial Ins. Co., 117 Wn.2d 37, 53, 811 P.2d 673 (1991):
[W]e believe that an award of fees is required in any legal action where the insurer compels the insured to assume the burden of legal action, to obtain the full benefit of his insurance contract, regardless of whether the insurer's duty to defend is at issue.
Two reasons prevent the superior court from granting attorney fees. First, is that the arbitrators did not award attorney fees or costs hence, Dayton prevents the superior court from adding to the arbitration award attorney fees or costs which the arbitrators did not award.
Second, coverage was not within the scope of the arbitration. The arbitration here involved a dispute over the identity of the driver and the value of Nelson's claim presented under the policy.
The general rules regarding the scope of an arbitration are as follows:
An agreement for the submission of a dispute to arbitration defines and limits the issues to be decided. The authority of the arbitrator is wholly dependent upon the terms of the agreement of submission. The arbitration award must concern only those matters included within the agreement for submission and must not exceed the powers established by the submission.
Sullivan v. Great Am. Ins. Co., 23 Wn. App. 242, 246, 594 P.2d 454 (1979).
Coverage issues are not claim disputes. See Heaphy v. State Farm Mut. Auto. Ins. Co., 117 Wn. App. 438, 442, 72 P.3d 220 (2003). Coverage issues concern the contractual duty to pay, who is the insured, the type of risk, and whether there is an insurance contract at all. Solnicka v. Safeco Ins. Co. of Illinois, 93 Wn. App. 531, 534, 969 P.2d 124 (1999). Claim disputes relate to factual issues, e.g., factual questions of liability, injuries, and damages; coverage questions are not appropriate for arbitration. Solnicka, 93 Wn. App. at 534. We affirmed these principles in Heaphy.
The insurance contract limited the issues that could be arbitrated: i.e., whether Nelson was legally entitled to recover damages from the owner or operator of the vehicle and the amount of the payment. This contract language would not include `coverage' as an arbitratable issue. But Nelson asserts, nonetheless, that coverage was an issue that was arbitrated, and that the arbitrators decided coverage. Several reasons reveal that coverage was not an arbitrated issue.
First, Nelson's complaint prayed for an order compelling Farmers to proceed with arbitration, after it denied coverage under the automobile insurance policy; but, Farmers' answer, after its letters denying coverage, admitted that arbitration was appropriate. This is an admission of coverage. Arbitration is only available to those who are covered under their policy. Thus, it cannot have been a matter for arbitration.
Second, Nelson argues that Farmers submitted the coverage issue in arbitration by asserting that there was `no UIM coverage' in its prehearing statement to the arbitrator. CP at 76. We disagree. The prehearing statement Farmers submitted set forth two issues:
(1) Can the claimant establish by a preponderance of the evidence that Mark Knell caused injury or damage to her, and, if so;
(2) What are the damages, if any, to be awarded.
CP at 75.
Nelson has not quoted the entire paragraph Farmers asserted wherein it asked for a determination in the arbitration of `no coverage.' CP at 76. The entire statement followed a factual recitation of the accident with questions related to the identity of the driver who struck her; the full request of Farmers in its prehearing statement is that:
Based on the above facts, Ms. Nelson cannot provide evidence of who the at-fault motorist is, and therefore, cannot show that the at-fault motorist was uninsured or underinsured. Therefore, there is no UIM coverage in this case. Damages should not be awarded.
CP at 76. It is plain that Farmers did not submit `coverage;' the issues submitted were the `identity' of the driver and the value of the damages i.e., factual issues.
It is clear that the parties addressed a claim dispute in the arbitration, not a coverage dispute. Farmers had admitted coverage before the arbitration.
Finally, the arbitrator's award does not refer to `coverage' as an issue that they arbitrated. The arbitrators ruled solely on the issues of negligence and damages.
In conclusion, the insurance contract did not permit arbitration of `coverage,' Farmers admitted `coverage' under the policy, the parties did not submit `coverage' as an issue to the arbitrators, and the arbitrators did not decide `coverage.' But the superior court awarded attorney fees and costs for a determination of `coverage' in the arbitration. The trial court erred.
Nelson also requests an award of attorney fees and costs on appeal but, since she is not the prevailing party on appeal, she is not entitled to attorney fees and costs. RAP 18.1; RCW 4.84.330.
Reversed.
A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record pursuant to RCW 2.06.040, it is so ordered.
HOUGHTON, J. and QUINN-BRINTNALL, A.C.J., concur.