California Court of Appeals Upholds Arbitrator’s Monetary Award in Motorcycle Accident Case

In a recent case, Lanois v. Employers Fire Ins. Co., Cal. Ct. App. (2015), the California Court of Appeals had before it the issue of what an arbitrator may properly award to victims of car accidents subject to car insurance policy limitations.

The case arose out of a car accident, which occurred when a motorist driving an SUV entered an intersection at the start of a left turn, causing a motorcyclist and his passenger to swerve in an attempt to not collide. The motorcycle struck a metal telephone box, which resulted in both the driver and passenger of the motorcycle being forcefully thrown off the motorcycle some distance before landing on the ground, resulting in serious injuries.

The limits of the SUV driver’s insurance policy, $50,000, was paid out to the two motorcyclists, in the amount of $25,000 each.

The driver of the motorcycle and his passenger, hereinafter referred to as the plaintiffs, then sought payment from the motorcycle driver’s underinsured motorist coverage, which had a policy limit of $1 million. The plaintiffs filed a petition to compel arbitration, after which the insurer, hereinafter referred to as the defendant, agreed to proceed with arbitration.

Prior to the arbitration, the parties agreed that the defendant’s maximum liability under the policy was $950,000—$50,000 less than the $1 million policy limit—because the plaintiffs already had received $50,000 from the SUV driver’s insurer.

Following the arbitration hearing and proceedings, the arbitrator issued an interim arbitration award, finding that based upon the evidence and witness testimony, the plaintiffs’ total damages exceeded the policy’s limits, and awarded the driver of the motorcycle $687,000 in damages and awarded the passenger $313,000 in damages, for a total of $1,000,000. However, as explained above, the defendant’s maximum liability under the policy was $950,000.

After the defendant challenged the award, since it was in excess of its agreed-upon liability, the arbitrator issued a final award, this time awarding the driver of the motorcycle $662,000 in damages and the passenger $288,000 in damages, for a total of $950,000. The arbitrator also stated that the defendant must pay each plaintiff interest on his or her damages award “at the legal rate accruing from [the initial award date].” The arbitrator further required the defendant to pay sanctions in the amount of $2,362.50.

The defendants challenged the final award on various grounds, and the plaintiffs filed a motion in superior court to affirm the award. The trial court affirmed the award, including the interest that had accrued, and in turn rejected the employer’s argument that interest only began to accrue after the final judgment affirming the award had been entered.

On appeal, the defendant argued that the arbitrator could not make changes to the agreement, since more than 30 days had passed. However, the section that the defendant cited dealt only with final judgments, and here the arbitrator had first made an interim award, which was then changed.

Regarding the defendant’s challenge to the award of prejudgment interest, which it claimed could not create a sum award larger than the total $950,000, the court stated that the defendant could not point to any particular authority to support its position.

Prior to arbitration, the parties stipulated that the defendant’s maximum potential liability was set at $950,000, which was the equivalent of $1,000,000 (the policy’s limits) minus the $50,000 recovered from the other driver in the accident. However, the California Supreme Court has held that the relevant California insurance code provision regarding maximum liability does not “preclude recovery of costs under Code of Civil Procedure section 998 that, added to the arbitration award, exceed the coverage limits.”

Thus, the court of appeals held that the trial court did not err in refusing the defendant’s motion to vacate the arbitration award, nor in failing to relieve the defendant from liability for the additional penalties. Therefore, the judgment was affirmed, and the plaintiffs were awarded their costs from the appeal.

One of the most serious types of automobile accidents is those which involve a motorcycle.  The size and speed of motorcycles often makes them very difficult to see, and their structure makes injury often more severe than a car accident.  If you or a loved one has been injured in a motorcycle accident, contact Sharifi Firm, APC  for a free consultation with a California motorcycle accident lawyer.  There is never any obligation associated with your initial consultation, so do not hesitate in contacting us.  We will determine your eligibility for compensation and will get you started toward recouping the damages that you have suffered.

More Blog Posts:

Southern California Court Fails to Hold Employer Liable in Car Accident Case, Southern California Injury Lawyer Blog, published March 27, 2015

California Court of Appeals Rules on Insurance Issue in Tractor Trailer Wrongful Death Case, Southern California Injury Lawyer Blog, published March 24, 2015

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