Appeal from Superior Court of Spokane County. Docket No: 93-2-02098-2. Date filed: 02/14/95. Judge signing: Hon. Robert Austin.
Authored by Philip J. Thompson. Concurring: Dennis J. Sweeney, Frank L. Kurtz.
The opinion of the court was delivered by: Thompson
THOMPSON, J. Kelly Fisher was injured in an automobile accident. She filed suit against Susan Allman, the tortfeasor, and Allstate for coverage under an underinsured motorist policy. Ms. Fisher agreed to arbitrate her claim with Ms. Allman. She then sought to bind Allstate to the damages awarded at arbitration. Allstate argued it was not bound by the arbitration. The court awarded summary judgment in favor of Ms. Fisher finding Allstate was bound by the arbitration award. Allstate now appeals. We affirm.
In 1991, Ms. Fisher was a passenger on a motorcycle driven by Paul Mitchell. Ms. Fisher and Mr. Mitchell were injured when Ms. Allman struck their motorcycle head on. Ms. Allman was legally responsible for the accident.
Ms. Allman owned an insurance policy with United Services Automobile Association (USAA) which had a $25,000 limit. A second liability policy was owned by William Meyer, the owner of the vehicle driven by Ms. Allman. That policy was also held by USAA and had applicable policy limits of $100,000. Mr. Mitchell also had an insurance policy with Allstate which had an underinsured motorist (UIM) provision. The Allstate policy had a $25,000 limit.
Ms. Fisher sued Ms. Allman in Idaho. Allstate knew of the Idaho lawsuit involving coverage and liabilities under the USAA policies. Trial was set for September 1994. Ms. Fisher, believing her claimed injuries exceeded the policy limits, sued Allstate in Spokane for UIM coverage. The trial in Spokane was set for April 1994. Allstate, knowing its trial was first, had limited participation in the discovery process for the Idaho trial. The Allstate trial was continued to October 1994. Allstate then contacted Ms. Fisher one week before the Idaho trial was scheduled to start, and learned USAA and Ms. Fisher had entered into a binding arbitration agreement. Allstate had not received any notice of the arbitration.
The arbitrator awarded Ms. Fisher $236,000 in damages. Ms. Fisher demanded the $25,000 UIM policy limit from Allstate because the arbitration award exceeded USAA's limits. Allstate refused to pay. Ms. Fisher amended her complaint against Allstate to include a bad faith claim. She then moved for summary judgment. Allstate argued summary judgment was not proper because it should not be bound by the arbitration award. The court awarded partial summary judgment in favor of Ms. Fisher and found that Allstate was bound by the arbitration award. The court denied Allstate's motion for reconsideration.
Allstate, the UIM carrier, argues it is not bound by the arbitration award in the Idaho action, and therefore summary judgment was not proper. Summary judgment is appropriate only where no genuine issues of material fact exist. CR 56(c). In reviewing a summary judgment order, the appellate court engages in the same inquiry as the trial court. Neff v. Allstate Ins. Co., 70 Wash. App. 796, 799, 855 P.2d 1223 (1993), review denied, 123 Wash. 2d 1004, 868 P.2d 872 (1994). A motion for summary judgment should be granted when, after looking at all the evidence, reasonable minds could only reach one Conclusion. Nationwide Mut. Fire Ins. Co. v. Watson, 120 Wash. 2d 178, 186, 840 P.2d 851 (1992).
The first and most important inquiry is does the rule set forth in Finney v. Farmers Ins. Co., 21 Wash. App. 601, 586 P.2d 519 (1978), aff'd, 92 Wash. 2d 748, 600 P.2d 1272 (1979), apply to this case. Mr. Finney's daughter was killed in an automobile accident. Id. at 603. As representative of her estate, he sought recovery under the uninsured motorist provisions of his automobile insurance policies with Farmers. Id. He also brought an action against the insurance companies of the driver and owner of the vehicles involved. Id. at 604. Both companies denied coverage. Id.
Farmers wrote Mr. Finney explaining he should first sue for coverage under the driver and owner's policies, and then he could sustain a claim against Farmers. Id. Mr. Finney then filed a wrongful death action against both the driver and the owner of the vehicle. Id. Mr. Finney settled with the insurance company of the driver for $15,000. Id. The action against the car's owner went to trial and Mr. Finney was awarded $45,837.95. Id. at 605. The owner's insurance company denied coverage; thus, Mr. Finney sued Farmers to recover $30,000 under his uninsured motorist coverage. Id.
Among the issues on appeal was whether Farmers was bound by the $45,837.95 judgment since it was not a party to the action. The court held that when an insurance company has notice of an action and has the chance to participate, the insurance company is bound on the question of liability.
Id. at 617. The court found that Farmers was bound by the judgment because it knew of the action and should have known that the outcome would affect its liability. Id. at 618.
The facts of this case are very similar to Finney. Ms. Fisher was injured in an accident caused by Ms. Allman. At the time of the accident, she was a passenger on a motorcycle driven by Mr. Mitchell. Ms. Fisher sued Ms. Allman for damages in Idaho, where the accident occurred. She also brought suit in Washington against Allstate, Mr. Mitchell's insurer, for coverage under his underinsured motorist policy. Allstate was aware of the action against Ms. Allman. Allstate did not intervene in that action because its case was set for trial first. The Allstate trial was postponed and the Allman matter went to arbitration. The arbitrator found Ms. Fisher had damages of $236,000, which exceeded the $125,000 policy limits of Ms. Allman's coverage. Thus, the factual situation is similar enough to conclude that the rule in Finney should be applied to this case.
Allstate argues that Finney should not apply because it dealt with the issue of liability and not damages. Contrary to Allstate's position, Finney did deal with damages. Finney bound Farmers to the amount of judgment for damages determined at trial. Finney, 21 Wash. App. at 618. Since Mr. Finney was not able to collect the full amount from either the driver or the owner's insurer, the court held Farmers liable for their uninsured motorist policy limits. Id. Thus, Finney did rule that Farmers was bound ...