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Woodley v. Safeco Insurance Co.

January 21, 1997


Appeal from Superior Court of King County. Docket No: 95-2-05240-1. Date filed: 05/11/95. Judge signing: Hon. James W. Bates JR.

Petitioner's Motion for Extension of Time to File Petition for Review Granted June 3, 1997,

Authored by Ann L. Ellington. Concurring: C. Kenneth Grosse, Ronald E. Cox.

The opinion of the court was delivered by: Ellington

ELLINGTON, J. -- Denise Woodley and Safeco Insurance Company arbitrated UIM coverage for damages she incurred when she was struck by an underinsured motorist. The arbitration panel awarded Woodley $450,000 in "total damages." The court confirmed the award, offset by $300,000 Woodley received from the tortfeasor. Safeco argues that the court erred by not further offsetting the award by $56,435 paid under the medical payments and personal injury protection (PIP) provisions of the policy. Safeco contends that absent these deductions, Woodley will receive a double recovery. We reverse, finding that the arbitrators awarded total compensation and that Safeco is entitled to the deductions because they were authorized by the policy and because their allowance will not deprive Woodley of full compensation.


Denise Woodley was injured in a motor vehicle accident caused by a negligent driver whose liability insurance had a $300,000 limit. Safeco had paid Woodley $56,435 under medical and personal injury provisions of her policy. Woodley later claimed total damages exceeding $2 million, and demanded payment of her $1 million UIM coverage maximum, or arbitration under the policy. Her demand letter recited that her damages included "net economic losses" of $1.2 million and "non-economic losses" that "easily exceeded" $800,000. *fn1 Her letter did not purport to remove past medical expenses or wage loss from the arbitration. Nor did the policy's arbitration clause exclude medical expenses or past wage losses from the arbitration. Rather, the clause authorized the arbitration of disputed damages:

If we and a covered person disagree whether that person is legally entitled to recover damages from the owner or operator of an underinsured motor vehicle or do not agree as to the amount of damages, the dispute shall be resolved by arbitration.

Arbitration shall begin upon a written demand from either party. The parties agreed that Woodley was not at fault, but disagreed as to the amount of damages.

At the arbitration hearing, Woodley submitted evidence of past medical expenses totaling over $20,000, past wage loss in the range of $130,000 to $165,000, and claimed future lost income. The panel awarded Woodley $450,000 in "total damages." In full, the award recites:

We, the undersigned arbitrators, hereby find Denise Brackett Woodley is entitled to an award of damages as the result of the motor vehicle accident of July 17, 1991, and that Denise Brackett Woodley's total damages caused by the accident of July 17, 1991 are in the sum of Four Hundred Fifty Thousand Dollars ($450,000).

[Emphasis added]

The day after the arbitrators' decision, Safeco informed Woodley that it intended to offset the award with the $300,000 payment from the tortfeasor's insurance company and with the $56,435 that Safeco had paid under the medical and PIP provisions of Woodley's policy. These proposed deductions were expressly authorized by Woodley's policy. The UIM section authorized offsets for payments received from the tortfeasor, and the medical and PIP sections authorized offsets for payments made under these sections from any subsequent UIM award. *fn2 Safeco asked Woodley to respond if she disagreed with these offsets. More than one week later, having heard nothing from Woodley, Safeco tendered to Woodley a $93,000 check, representing the amount of the award less the offsets. The letter that accompanied this check noted her previous lack of response and again requested Woodley to respond if she disputed the offsets. She did not respond.

Woodley filed her motion to confirm the award nearly five months later. She did not dispute the $300,000 deduction for the tortfeasor's direct payment, but did dispute the $56,435 medical and PIP payment deductions, contending that the arbitrators had awarded her only general damages and future wage loss. In support of her motion, she declared that she did not ask the arbitrators to compensate her for the medical and PIP damages. Her attorney, who had not represented her at the arbitration, declared that "there was no request for these paid and resolved PIP amounts to be awarded[.]"

In response to Woodley's motion, Safeco's counsel filed a declaration attaching the evidence of medical expenses and lost wages that Woodley submitted to the arbitrators. Counsel also declared that the arbitrators were not provided any information concerning the ...

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