Docket No. 83221.
Decided May 6, 1986. Leave to appeal applied for.
G. Vernon Leopold, P.C. (by G. Vernon Leopold), for plaintiff.
Kohl, Secrest, Wardle, Lynch, Clark Hampton (by Michael L. Updike), for defendant.
This Court granted leave to appeal from a circuit court ruling which reversed an arbitration award in favor of defendant. We reverse.
Plaintiff, Mary Donegan, brought an action as personal representative of the estate of Paul Baker, deceased. Mary Donegan was insured under a policy issued by defendant. Paul Baker was plaintiff's son. On July 11, 1982, Paul Baker was killed when struck by an uninsured motorist while walking along a highway in Malibu, California. Following Paul Baker's decease, plaintiff made a claim for uninsured motorist benefits on behalf of Paul Baker's estate. Under plaintiff's insurance policy with defendant, coverage extended only to persons specifically named in the policy and to resident relatives within the named insured's household. Defendant maintained that, since Paul Baker was not a resident of the plaintiff household at the time of his death, the estate was not entitled to uninsured motorist benefits.
On August 16, 1982, plaintiff requested arbitration to determine uninsured motorist benefits due the estate of Paul Baker under the automobile insurance policy issued by defendant.
At the arbitration hearings, plaintiff maintained that, since Paul Baker was a resident relative in her home on a temporary visit to California, she was entitled to uninsured motorist coverage under the insurance policy written by defendant. Plaintiff and her daughters, Mary Jane Lawrence and Marlene Baker, testified. Plaintiff testified that Paul Baker had resided with her in Southfield, Michigan, until August 1, 1977, when he took up residence with his girlfriend in Hazel Park, Michigan. After he and his girlfriend broke up, Paul Baker vacated the flat where he resided on June 30, 1981, and resided with plaintiff. He had his own bedroom and kept miscellaneous furnishings such as a stereo, chess set, coin collection, personal clothing, and other belongings in the home. Some of Paul Baker's furniture was used in the home. After returning to the Southfield home, Paul Baker received mail there, and changed his Michigan driver's license to reflect the Southfield address. While in Southfield, Paul Baker took meals with plaintiff and his stepfather and attended social functions with them.
Sometime after June 30, 1981, Paul Baker confined himself at a center for drug and alcohol abuse in Royal Oak. During this stay, he regularly spent weekends at the Southfield home. Paul Baker was alleged to have had an alcohol problem for many years which was reactivated following the breakup with his girlfriend.
Approximately two weeks before Thanksgiving in 1981, Paul Baker left for California, allegedly to visit his sister there. He took some clothing but left most of his belongings in the Southfield home. He never requested that his belongings or mail be sent to California. He continued to receive mail at the Southfield home. The length of his stay in California at the time of his death was 7 1/2 months.
While in California, Paul Baker remained in contact with plaintiff and his sister Mary Jane Lawrence. Plaintiff sent money to him in California. Paul Baker stayed with Marlene Baker for two brief periods; the rest of the time, he resided in motels and rooming houses. It was alleged that he supported himself by doing odd jobs such as house painting and working as a short-order cook. About two weeks before his death, Paul Baker allegedly telephoned Mary Jane Lawrence and plaintiff and told them he intended to return to Southfield after visiting Los Angeles. At the July 11, 1982, accident scene, police located a sleeping bag and a pouch containing Paul Baker's Michigan driver's license, social security card, and other personal items.
On December 27, 1983, the majority of the Board of Arbitrators denied the plaintiff's claim against the defendant.
Plaintiff filed a motion to vacate the arbitration award in circuit court. On November 30, 1984, after a hearing was held, the circuit court judge indicated that the arbitration transcript would be read to determine whether the facts were so clear that as a matter of law there was only one way to look at them or whether there were facts to be weighed by the arbitrators.
On January 4, 1985, the circuit court judge granted the motion to vacate the arbitration award, ruling that the arbitrators made a clear error of law since the facts can support no other reasonable conclusion than that Paul Baker was domiciled at plaintiff's home. The circuit court erred by vacating the arbitration award on the basis that the arbitrators erred as a matter of law.
Under Michigan General Court Rule 1963, 769.9(1), now MCR 3.602(J), the court shall vacate an arbitration award upon application of a party, where:
(a) The award was procured by corruption, fraud or other undue means;
(b) There was evident partiality by an arbitrator appointed as a neutral or corruption in any of the arbitrators or misconduct prejudicing the rights of any party;
(c) The arbitrators exceeded their powers; or
(d) The arbitrators refused to postpone the hearing upon sufficient cause being shown therefor or refused to hear evidence material to the controversy or otherwise so conducted the hearing as to prejudice substantially the rights of a party. [Emphasis added.]
In DAIIE v Gavin, 416 Mich. 407; 331 N.W.2d 418 (1982), the Supreme Court concluded that, in some cases, arbitrators can be said to have exceeded their powers when they commit a legal error. The Court adopted this standard of review:
"[W]here it clearly appears on the face of the award or the reasons for the decision as stated, being substantially a part of the award, that the arbitrators through an error in law have been led to a wrong conclusion, and that, but for such error, a substantially different award must have been made, the award and decision will be set aside." [ Howe v Patrons' Mutual Fire Ins Co of Michigan, 216 Mich. 560, 570; 185 N.W. 864 (1921)]
We accept and adopt for application to automobile insurance policy statutory arbitration this formulation as reflecting the proper role of the courts in acting upon a motion to confirm or vacate arbitration awards. [ Gavin, supra, p 443.]
The Court noted:
In many cases the arbitrator's alleged error will be as equally attributable to alleged "unwarranted" factfinding as to asserted "error of law". In such cases the award should be upheld since the alleged error of law cannot be shown with the requisite certainty to have been the essential basis for the challenged award and the arbitrator's findings of fact are unreviewable. [ Gavin, supra, p 429.]
Since the Supreme Court's decision in Gavin, this Court has applied that standard several times. In St Bernard v DAIIE, 134 Mich. App. 178, 186; 350 N.W.2d 847 (1984), the Court was faced with a question regarding the legal meaning of the term "uninsured" in a claimant's policy. It noted:
It is clear that nothing except the legal validity of defendant's definition of an uninsured automobile was at issue at the arbitration proceedings. The determination of that issue meets and surpasses the "but for" test of Gavin, supra. Deciding the legal issue was deciding the case. If the contract provision allowing payment only where the other vehicle carried no bodily injury liability insurance is a valid contract provision, the arbitrators exceeded their powers in ignoring that provision and awarding plaintiffs the full $20,000 available under the insurance policy's uninsured motorists coverage. [ St Bernard, supra, p 186.]
In Henderson v DAIIE, 142 Mich. App. 203, 206; 369 N.W.2d 210 (1985), a panel of this Court found there was no basis for assuming the arbitrators exceeded their power and ruled that the arbitrators' award should have been affirmed, concluding:
Plaintiff's argument that there could have been only one reason for the arbitrator's decision is simply unfounded. Defendant's theories in support of the decision are equally as tenable. See Hayman Co v Brady Mechanical Inc, 139 Mich. App. 185; 362 N.W.2d 243 (1984).
In Smith v Motorland Ins Co, 135 Mich. App. 33, 34; 352 N.W.2d 335 (1984), lv den 422 Mich. 854 (1985), this Court reversed the trial court's vacation of an arbitration award. In that case, plaintiff argued that the award was based on some of the arbitrators' belief that soft tissue injuries could never be considered serious impairments of body function, and defendant denied that that was so, Smith, supra, p 40. This Court noted:
The Supreme Court's decision in DAIIE v Gavin clearly limits judicial review of alleged errors of law in arbitration decisions to those which appear on the face of the award. 416 Mich. 443, citing Howe v Patrons' Mutual Fire Ins Co of Michigan, 216 Mich. 560, 570; 185 N.W. 864 (1921). The arbitration award in this case merely stated:
"The claim of Ernestine Smith against Motorland Insurance Company is hereby deemed denied."
The "remarks" sheet further indicated that:
"Petitioner failed to establish a serious physical impairment by a preponderance of the evidence related to the accident."
We believe that the decision in DAIIE v Gavin was intended to preclude judicial review in precisely the type of case presented here. We cannot tell on the face of the award whether the majority of the arbitrators relied upon erroneous principles of law in reaching their decision or whether they found that plaintiff's injuries were not causally related to the accident. Evidence submitted at the arbitration hearing would amply support the latter disposition. The arbitrators' remarks may be similarly construed. We thus cannot say that the decision in this case was based on erroneous principles of law and decline to affirm the trial court's decision on this basis. [ Smith, supra, pp 40-41.]
In this case, the issue disputed in the arbitration proceedings was whether plaintiff's decedent was domiciled at plaintiff's residence. In Workman v DAIIE, 404 Mich. 477; 274 N.W.2d 373 (1979), the Supreme Court noted:
Accordingly, both our courts and our sister state courts, in determining whether a person is a "resident" of an insured's "household" or, to the same analytical effect, "domiciled in the same household" as an insured, have articulated a number of factors relevant to this determination. In considering these factors, no one factor is, in itself, determinative; instead, each factor must be balanced and weighed with the others. Among the relevant factors are the following: (1) the subjective or declared intent of the person of remaining, either permanently or for an indefinite or unlimited length of time, in the place he contends is his "domicile" or "household"; (2) the formality or informality of the relationship between the person and the members of the household; (3) whether the place where the person lives is in the same house, within the same curtilage or upon the same premises; (4) the existence of another place of lodging by the person alleging "residence" or "domicile" in the household. [Citations and footnotes omitted. Workman, supra, pp 496-497.]
Plaintiff contends that all four of the criteria in Workman, supra, were satisfied and that, on the objectively established facts, the arbitrators could not have possibly found the way they did. Although plaintiff characterizes her claim as one involving an error in law, her real claim was that the award was against the great weight of the evidence. Neither the court rule nor case law provide for review on this basis. GCR 1963, 769.9(1), now MCR 3.602(J); Gavin, supra. The standard articulated in Gavin limits judicial review of alleged errors of law in arbitration decisions to those which appear on the face of the award. Gavin, supra, p 443; Smith, supra. This standard precludes review on the basis that the award was against the great weight of the evidence or that it was not supported by substantial evidence.
In the instant case, the arbitrators' award denying benefits was based on a factual determination of the decedent's domicile. While substantial evidence was presented to support plaintiff's claim, conflicting evidence was also present. Review of the award was not warranted merely because there was substantial evidence before the arbitrators to support a contrary conclusion. Warner v CTL Engineering, Inc, 9 Ohio App.3d 52; 458 N.E.2d 399 (1983) (discussing a court's role in reviewing common-law arbitration). There was no error apparent on the face of the award and we reverse the trial court's decision vacating the arbitrators' decision.