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Anderson v. Farmers Insurance Co.

October 4, 1996

HELEN T. ANDERSON, INDIVIDUALLY, RESPONDENT,
v.
FARMERS INSURANCE COMPANY OF WASHINGTON, APPELLANT.



Superior Court of Pierce County. Superior Court Docket No. 94-2-07323-6. Date Filed In Superior Court: October 14, 1994. Superior Court Judge Signing: Thomas Sauriol.

Order Denying Motion for Reconsideration and Amending Opinion November 22, 1996,

Written By: David H. Armstrong, J. Concurred IN By: Carroll C. Bridgewater, J., John E. Turner, J.

The opinion of the court was delivered by: Armstrong

ARMSTRONG, J. -- Farmers provided underinsured motorists coverage (UIM) to Helen Anderson with limits of $25,000. Anderson was injured in an auto accident and demanded arbitration under policy language providing arbitration "as to the amount of payment under this Part ."

The arbitrators awarded Anderson $56,000, and the trial court confirmed the full amount of the award, together with costs, including some incurred in the third-party action against the other driver. The trial court also entered findings that detailed the settlement negotiations between Farmers and Anderson and a Conclusion that Farmers acted in bad faith. The issues are: (1) Does Farmers' policy limit the arbitrators' authority to the amount of the UIM limits; (2) Did the trial court err by entering findings and Conclusions on bad faith; and (3) Did the trial court err in its award of costs? We reverse and remand, holding that the policy language limited the arbitrators' authority to the amount of the UIM limits, that the trial court lacked authority to make findings and Conclusions on bad faith, and that the costs were improperly assessed.

FACTS

Helen Anderson was injured when her automobile was negligently struck by an automobile driven by Musa Idares. Both drivers were insured by Farmers. Idares had a third party liability limit of $25,000. Anderson had a $25,000 bodily injury limit on her UIM coverage.

Anderson sued Idares and also demanded arbitration of her UIM claim with Farmers. Later, Anderson dismissed the action against Idares. The UIM arbitration panel awarded Anderson $56,000 in damages, including $8,600 in medical expenses and $47,400 in general damages.

PROCEDURAL HISTORY

Anderson moved to confirm the full amount of the award with costs, including certain costs incurred in the third party action against Idares. Anderson also sought reasonable attorney fees. Farmers countered that it was entitled to a $25,000 credit for Idares's liability limit, that the court lacked authority to award attorney fees, and that Anderson was not entitled to costs under RCW 4.84.010 because the statute only applies to superior court proceedings, not UIM arbitrations.

The trial Judge confirmed the entire arbitration award and awarded attorney fees and costs under Olympic S.S. Co., Inc. v. Centennial Ins. Co., 117 Wash. 2d 37, 811 P.2d 673 (1991). The trial court also entered Anderson's proposed findings of fact and Conclusions of law establishing bad faith.

On the same day that the arbitration award was confirmed, the Supreme Court issued Dayton v. Farmers Ins. Group, 124 Wash. 2d 277, 280-82, 876 P.2d 896 (1994), holding that an insured is not entitled to attorney fees incurred in a UIM arbitration proceeding to determine damages. Farmers moved for reconsideration in this case, arguing that: (1) Anderson was not entitled to attorney fees under Dayton; (2) the court erred in entering the bad faith findings and Conclusions because RCW 7.04.150 limits the trial court to confirming, vacating, modifying, or correcting an arbitration award; (3) it was entitled to a $25,000 credit for Idares's liability limit; and (4) the court erred in assessing costs.

Later, Farmers filed a supplemental memorandum in support of its reconsideration motion, arguing its previous objections and also arguing that the arbitration award exceeded the arbitrators' authority under Farmers policy. Anderson moved to strike Farmers' supplemental memorandum, contending that Farmers was rearguing issues already ruled on. The trial court granted the motion to strike and ...


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