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Evans v. Mercado

Court of Appeals of Washington, Division 1

November 17, 2014

Julia Evans et al., Petitioners,
v.
Kathia Mercado, Defendant, Metropolitan Casualty Insurance Company et al., Respondents

Oral Argument September 8, 2014.

Appeal from Snohomish Superior Court. Docket No: 09-2-11282-5. Judge signing: Honorable Joseph P Wilson. Judgment or order under review. Date filed: 12/04/2013.

David A. Kohles (of David A. Kohles Inc. ), for petitioners.

Dawna J. Campbell and Kimberly A. Reppart (of Fallon & McKinley ); Christopher L. Winstanley (of Lee Smart PS ); Marie E. Dolack (of Law Offices of Sweeney Heit & Dietzler ); and Amy S. Rosario (of Moore & Davis ), for respondents.

Authored by Linda Lau. Concurring: Ronald Cox, Michael J. Trickey.

OPINION

Page 286

Lau, J.

[184 Wn.App. 505] ¶ 1 Julia Evans sued her underinsured motor (UIM) vehicle insurers Metropolitan Casualty Insurance Company and Safeco Insurance Company of America.[1] She submitted the case to mandatory arbitration under chapter 7.06 RCW. Metropolitan opposed mandatory arbitration, essentially arguing that the arbitrator lacked authority to enter a gross award (the total collision damage inclusive of payments already received from the tortfeasor and personal injury protection (PIP) benefits) exceeding the statutory limit of $50,000. Evans responds that nothing prohibits the arbitrator from determining her total collision damages, reducing the amount by any setoffs, and entering a net award not to exceed $50,000. The trial court ruled the case " is not arbitrable" and " transferred" it to the civil trial calendar. Clerk's Papers (CP) at 16. Because nothing prohibits an arbitrator from determining a UIM claimant's [184 Wn.App. 506] total collision damages, reducing the amount by any setoffs, and entering a net award not to exceed the statutory limit, here $50,000, we reverse the trial court's order and remand for further proceedings consistent with this opinion.

FACTS

¶ 2 The main facts are not disputed.[2] In December 2006, Julia Evans sustained injuries in a rear-end collision with Charity Edwards. Evans settled with Edwards's liability insurer for the policy limits of $25,000. She then sued the UIM insurers,[3] Metropolitan Casualty Insurance Company and Safeco Insurance Company, alleging that her total damages exceeded $25,000. Metropolitan and Safeco also paid PIP benefits for Evans's medical treatment. The parties dispute causation and damages but not Edwards's liability.

¶ 3 Evans sought to resolve her case under chapter 7.06 RCW's mandatory arbitration provisions and the Mandatory Arbitration Rules (MAR) applicable to superior courts. She filed a note for trial setting and initial statement of arbitrability to transfer her case to mandatory arbitration in accordance with the MAR and Snohomish County Local Mandatory Arbitration Rules (SCLMAR). Evans's statement indicated her case was eligible for mandatory arbitration because she sought only a money judgment and no claim exceeded $50,000.[4]

¶ 4 The parties disagreed on whether Evans's case qualified under the $50,000 statutory damages cap for mandatory [184 Wn.App. 507] arbitration. Metropolitan filed a motion to contest arbitration of Evans's UIM claims and to reset

Page 287

the case for trial.[5] Metropolitan argued that Evans must adhere to the statutory damages cap in order to invoke the procedural benefits of mandatory arbitration. That requires the arbitrator to enter a gross award not to exceed $50,000.

¶ 5 Evans opposed the motion, arguing the award cannot exceed $50,000 but nothing prohibits the arbitrator from determining her total damages, reducing the amount by any offsets, and entering a net award not to exceed $50,000.

¶ 6 In a written October 3, 2012 order, the trial court granted Metropolitan's motion, ruled the case was not arbitrable, and transferred it to the civil trial calendar. The court also denied Evans's reconsideration motion. A commissioner of this court granted Evans's motion for discretionary review.

ANALYSIS

¶ 7 The parties agree that a mandatory arbitration award cannot exceed the $50,000 statutory damages cap. They disagree on how the arbitrator determines the amount of the award when offset and setoff amounts apply.

¶ 8 The parties agree that de novo review applies to a trial court's application of the mandatory arbitration rules. Twitchell v. Kerrigan, 175 Wn.App. 454, 461, 306 P.3d 1025 (2013).

¶ 9 " We interpret the mandatory arbitration rules as though they were drafted by the legislature, and we construe these rules consistently with their purpose." Malted Mousse, Inc. v. Steinmetz, 150 Wn.2d 518, 525, 79 P.3d 1154 (2003). " The primary goal of statutory construction is to carry out legislative intent." Cockle v. Dep't of Labor & Indus., 142 Wn.2d 801, 807, 16 P.3d 583 (2001).

¶ 10 [184 Wn.App. 508] " Mandatory arbitration, a statutory system, was designed to take relatively small and simple cases off the superior court's docket and resolve them quickly and inexpensively." Mercier v. GEICO Indem. Co., 139 Wn.App. 891, 899, 165 P.3d 375 (2007). The system was " intended to provide a relatively expedient procedure to resolve claims where the plaintiff is willing to limit the amount claimed." Williams v. Tilaye, 174 Wn.2d 57, 63, 272 P.3d 235 (2012); see also Twitchell, 175 Wn.App. at 465 (mandatory arbitration system helps " reduce the delay in hearing civil cases" ); Stanley v. Cole, 157 Wn.App. 873, 888, 239 P.3d 611 (2010) (system serves " judicial economy goals" by " providing a simplified and economical way to resolve disputes involving claims of $50,000 or less" ); Sorenson v. Dahlen, 136 Wn.App. 844, 858, 149 P.3d 394 (2006) (system's " foremost goal" is reduction of court congestion and delays in hearing civil cases). SCLMAR 1.1(a) provides:

Purpose. The purpose of mandatory arbitration of civil actions under RCW 7.06, as implemented by the Mandatory Arbitration Rules (MAR), is to provide a simplified and economical procedure for obtaining the prompt and equitable resolution of disputes involving claims of fifty thousand dollars ($50,000.00) or less, exclusive of attorney fees, interest and costs, and claims in which the sole relief sought is the establishment, modification, or termination of maintenance or child support payments regardless of the number or amount of such payments. Mandatory Arbitration Rules (MAR) as supplemented by these Local Mandatory Arbitration Rules (SCLMAR) are not designed to address every question that may arise during the arbitration process, and the rules give considerable discretion to the arbitrator. The arbitrator should not hesitate to exercise that discretion. Arbitration hearings should be informal and expeditious, consistent with the purpose of relevant statutes and rules.

¶ 11 In general, Washington has a strong public policy favoring arbitration. Canal Station N. Condo. Ass'n v. Ballard Leary Phase II, LP, 179 Wn.App. 289, 297, 322 P.3d 1229 (2013). Accordingly, we " indulge every presumption in [184 Wn.App. 509] favor of arbitration, whether the issue is ...


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