Arbitration and Mediation_-arbitration--uninsured motorist coverage--waiver of issues
The trial court did not err in an action arising out of an automobile accident by
confirming an arbitration award of $80,000 in favor of plaintiff and against unnamed defendant
insurance company based on its uninsured motorist coverage endorsement, because: (1)
unnamed defendant waived any right to object to the arbitration award based on a lack of
coverage since the policy provided that arbitration will only occur if there was an uninsured
motor vehicle and the parties consented to arbitration; (2) by not objecting to arbitration of the
coverage issue prior to the arbitration hearing, unnamed defendant failed to assert its objection in
a timely manner and, through its consent to and active participation in the arbitration
proceedings, has engaged in conduct inconsistent with a purpose of insisting upon determination
of coverage by the trial court; (3) unnamed defendant failed to demonstrate that any grounds
existed under N.C.G.S. § 1-567.13 warranting vacation of the award; (4) unnamed defendant
waived the issue of the trial court confirming the award prior to the expiration of the 90-day
period in which unnamed defendant was allowed to move to vacate or modify the award by
failing to include an assignment of error addressing this issue, and in any event this argument has
already been expressly rejected by the Court of Appeals; and (5) unnamed defendant failed to
preserve the issue of plaintiff's receipt of workers' compensation benefits.
Charles G. Monnett, III & Associates, by Craig O. Asbill, for
plaintiff-appellee.
Garlitz & Williamson, P.L.L.C., by Thomas D. Garlitz, for
defendant-appellant Insura Property & Casualty Insurance
Company.
GEER, Judge.
The unnamed defendant uninsured motorist carrier, Insura
Property & Casualty Insurance Company ("Insura") appeals from an
order confirming an arbitration award in favor of plaintiff Johnny
Thurmond Miller, II. Because Insura has failed to demonstrate thatany grounds exist under N.C. Gen. Stat. § 1-567.13 (2001)
warranting vacation of the award, we affirm.
On 13 January 1997, plaintiff Miller collided with a truck
that had been abandoned on the side of the interstate. Plaintiff
was driving a truck owned by his employer, Anderson Heating and
Cooling, Inc., and insured by Insura. Insura's policy included an
endorsement providing for uninsured motorist benefits.
On 30 December 1999, plaintiff filed suit against Roca & Son,
Inc., and Morejon Nicandro, the alleged owners of the abandoned
truck. Plaintiff also alleged that he had been unable to locate
any insurance policy providing coverage for that truck and asserted
a cause of action against Insura based on its uninsured motorist
coverage endorsement.
On 15 May 2001, after Insura answered, plaintiff moved to
compel arbitration pursuant to the endorsement's arbitration
clause:
If we and an insured disagree whether the
insured is legally entitled to recover damages
from the owner or driver of an uninsured motor
vehicle or do not agree as to the amount of
damages that are recoverable by that insured,
then the matter may be arbitrated. However,
disputes concerning coverage under this
endorsement may not be arbitrated. The
insured may make a written demand for
arbitration.
The parties subsequently entered into a consent order on 2 July
2001 that stated: "[T]he parties have agreed that the case should
be arbitrated and that an order staying this matter be entered
until the completion of the arbitration . . . ." The arbitration occurred on 27 January 2002 before a three-
member panel. On 5 February 2003, the panel made an arbitration
award in plaintiff's favor in the amount of $80,000.00. Plaintiff
filed a motion to confirm the arbitration award on 17 March 2003.
The superior court entered an order confirming the award on 30
April 2003. Insura has appealed from the order of confirmation.
On appeal, Insura first argues that the trial court erred in
confirming the arbitration award because neither the trial court
nor the arbitrators had determined that the truck owned by Roca &
Son or Nicandro was uninsured, a prerequisite to uninsured motorist
coverage. We hold that Insura has waived any right to object to
the arbitration award based on a lack of coverage.
Insura's policy provides that "disputes concerning coverage
under this endorsement may not be arbitrated." If, however, Insura
"and an insured disagree whether the insured is legally entitled to
recover damages from the owner or driver of an uninsured motor
vehicle or do not agree as to the amount of damages that are
recoverable by that insured, then the matter may be arbitrated."
Under this language, arbitration will only occur if there is "an
uninsured motor vehicle."
As the consent order staying the action pending arbitration
reflects, Insura agreed with plaintiff "that the case should be
arbitrated." The record does not indicate any attempt by Insura to
have the court determine, prior to compelling arbitration, the
preliminary question of coverage. Insura never filed a declaratory
judgment action or asserted a counterclaim on the issue. Nor doesthe record reveal any effort by Insura, prior to the arbitration
hearing, to limit the scope of the arbitration to exclude questions
of coverage. There is no objection at all to the scope of the
arbitration until the hearing on the motion to confirm the
arbitration award.
Given the language of the arbitration agreement, Insura, by
consenting to arbitration, either was (1) admitting that there was
an uninsured motor vehicle involved in the accident; or (2)
consenting to have the issue of coverage decided by the arbitrator.
The record contains no reservation of a right to proceed later on
the coverage issue in superior court. Insura waited until after
the arbitrator ruled adversely to it to attempt to litigate the
question whether defendants' vehicle was uninsured.
Under these circumstances, Insura waived any right to object
to the award on the grounds of non-coverage. In McNeal v. Black,
61 N.C. App. 305, 300 S.E.2d 575 (1983), the defendant similarly
waited until after an adverse arbitration decision and the
plaintiff's filing of a motion to compel arbitration to argue that
the arbitration agreement was unenforceable as to him. This Court
observed that the defendant could have sought to stay the
arbitration in order to have the preliminary issues decided or,
theoretically, could have moved to vacate the award once it was
entered. Id. at 307, 300 S.E.2d at 577.
(See footnote 1)
The Court then noted
that "[a] party may waive a constitutional as well as a statutorybenefit by express consent, by failure to assert it in apt time, or
by conduct inconsistent with a purpose to insist upon it." Id.
Relying upon this principle, the Court affirmed the trial court's
confirmation of the arbitration award:
If [defendant] had prevailed at the
arbitration hearing, it is clear that he would
not be challenging the procedure at this time.
He cannot be allowed to participate in
arbitration, raising no objections, and then
refuse to be bound by an adverse award. This
type of conduct would serve to defeat the
purpose of arbitration.
. . . [Defendant] failed to assert his
objections in a timely manner and also, by his
active participation in the arbitration
hearing, indicated conduct inconsistent with a
purpose to insist upon a jury trial.
Id. at 308, 300 S.E.2d at 577-78.
McNeal applies with full force to this case. As with
constitutional and statutory rights, a party may waive contractual
rights. Brendle v. Shenandoah Life Ins. Co., 76 N.C. App. 271,
276, 332 S.E.2d 515, 518 (1985) ("An insurer may be found to have
waived a provision or condition in an insurance policy which is for
its own benefit."). By not objecting to arbitration of the
coverage issue prior to the arbitration hearing, Insura failed to
assert its objection in a timely manner and, through its consent to
and active participation in the arbitration proceedings, has
engaged in conduct inconsistent with a purpose of insisting upon
determination of coverage by the trial court.
Significantly, N.C. Gen. Stat. § 1-567.13(a)(5) (2001) only
requires a court to vacate an award for lack of an arbitration
agreement if "the party did not participate in the arbitrationhearing without raising the objection . . . ."
(See footnote 2)
Since Insura
participated in the arbitration hearing with no objection, it
cannot seek vacation of the award for lack of an arbitration
agreement on the coverage issue. See also In re Grover, 80 N.J.
221, 230, 403 A.2d 448, 452-53 (1979) (when defendant did not (1)
institute a declaratory judgment action and request a stay of
arbitration pending a determination of coverage, or (2) object to
arbitration on the ground of no coverage and participate in the
arbitration subject to its objection, defendant failed to preserve
the issue of coverage for the court).
To the extent Insura argues that the award must be vacated
because plaintiff offered insufficient evidence at the arbitration
hearing to prove defendants' lack of insurance and the arbitrator
failed to make an express ruling on the issue, these are not proper
bases for overturning an arbitration award. It has long been
established in North Carolina:
If an arbitrator makes a mistake, either as to
law or fact, it is the misfortune of the
party, and there is no help for it. There is
no right of appeal, and the Court has no power
to revise the decisions of "judges who are of
the parties' own choosing." An award is
intended to settle the matter in controversy
and thus save the expense of litigation. If a
mistake be a sufficient ground for setting
aside an award, it opens a door for coming
into court in almost every case; for in ninecases out of ten some mistake either of law or
fact may be suggested by the dissatisfied
party. Thus the object of references would be
defeated and arbitration instead of ending
would tend to increase litigation.
Patton v. Garrett, 116 N.C. 848, 858, 21 S.E. 679, 682-83 (1895).
See also Sholar Bus. Assocs., Inc. v. Davis, 138 N.C. App. 298,
303, 531 S.E.2d 236, 240 (2000) (award would not be vacated on the
ground that the arbitrator failed to rule on all the issues). An
award may be vacated only for the reasons specified in N.C. Gen.
Stat. § 1-567.13(a) and Insura has not demonstrated that any of
those reasons apply here.
Insura has also argued in its brief that the superior court
erred in confirming the award prior to the expiration of the 90-day
period in which Insura was allowed to move to vacate or modify the
award. Because Insura did not include any assignment of error
addressing this issue, it has not preserved it for appellate
review. N.C.R. App. P. 10(a) ("Except as otherwise provided
herein, the scope of review on appeal is confined to a
consideration of those assignments of error set out in the record
on appeal in accordance with this Rule 10."). We note also that
this argument was expressly rejected in Ruffin Woody & Assocs.,
Inc. v. Person County, 92 N.C. App. 129, 138, 374 S.E.2d 165, 170-
71 (1988), disc. review denied, 324 N.C. 337, 378 S.E.2d 799
(1989). In Ruffin, plaintiff filed a motion to vacate the award
after defendant filed a motion to confirm the award. The trial
court granted the motion to confirm prior to a ruling being made on
the motion to vacate: Plaintiff next contends that the trial
court erred in granting defendant's motion to
confirm the arbitration award prior to the
expiration of the ninety-day period prescribed
in G.S. 1-567.13(b). This contention is
without merit.
. . . Plaintiff would have us rule that
the statute requires the trial court to defer
its ruling for the entire ninety-day period
even though a motion to vacate has already
been filed. There is no support in statutory
or case law for plaintiff's position.
Id. Once plaintiff filed a motion to confirm the arbitration
award, Insura could have filed a motion to vacate. It chose not to
do so. If a trial court does not err in confirming an award while
a motion to vacate is pending, then it certainly does not err in
granting a motion to confirm when a party has not even filed a
motion to vacate.
Finally, Insura contends that the trial court should not have
confirmed the arbitration award when neither the trial court nor
the arbitrators had addressed plaintiff's receipt of workers'
compensation benefits. Plaintiff asserts that Insura never raised
this issue with the trial court. Since the record before this
Court contains no indication that Insura presented this issue to
the trial court, the issue is not properly preserved for review by
this Court. N.C.R. App. P. 10(b). We therefore overrule this
assignment of error.
Affirmed.
Judges BRYANT and ELMORE concur.
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