Alaska Supreme Court Affirms Broad Power and Discretion of Arbitrators in UIM Claim. (Recent Court Decisions).

Wing v. GEICO Insurance Co., 17 P.3d 783 (Alaska 2001)

Ursula Wing's car was hit in the rear by another driver's car in August 1994 and incurred economic loss, medical damages, and noneconomic loss. GEICO, her insurer, made preliminary payments of more than $13,000 ($7,527.36 for medical

expenses; $6,000 for economic loss). In 1997, GEICO offered $21,000 to settle the remainder of her claim. Wing rejected the offer and "instead filed an uninsured motorist (UTM) arbitration claim seeking a greater award." GEICO in 1998 then made "what it called an 'offer of judgment' of $33,557 to resolve the arbitration. Wing rejected the settlement offer, in part because GEICO sought to reserve a right to set off benefits previously paid to Wing. See 17 P.3d at 785-86.

The arbitration proceeded and the panel made a preliminary award of $33,078.00 but did not award costs or counsel fees because it found that the governing policy provided that each side would bear its own counsel fees and that this contract provision did not violate public policy. Alaska Rule of Civil Procedure 82 is something of an "English rule" that ordinarily provides that the losing party must pay the prevailing side's reasonable counsel fees. The arbitration panel then reduced the award to $14,987.70, presumably by allowing GEICO a setoff for benefits previously paid (the arbitration award was silent on this point) as well as deducting allowable expert witness fees. The three-member arbitration panel then required Wing to pay in full for the arbitrator she selected (pursuant to the state arbitration act) and for one-half the cost of the neutral arbitrator selected by the two party-appointed arbitrators.

Wing filed a petition to modify or vacate the arbitration award. The trial court denied her request for relief, and the Supreme Court affirmed. The court found that the applicable law provided only narrow grounds for setting aside an arbitration award. Furthermore, according to the court, none of those grounds--calculation of figures; exceeding the scope of the arbitration agreement; fraud; evident partiality; or refusal to permit a necessary continuance--plied to Wing's case. See 17 P.3d at 786. Although the arbitration award was not detailed, this was not required under the state's arbitration act. The supreme court did find that the trial court had erred by considering an affidavit submitted by the neutral arbitrator (on behalf of the panel) explaining the award in more detail but ruled that this error was harmless in that it did not affect the result or prejudice a substantial right of Wing. See 17 P.3d at 788-89.

On the question of counsel fees, the supreme court held that Alaska Civil Rule 82 applies only to civil judicial cases and not to arbitration proceedings. The court also suggested that, even if Rule 82 were applicable, it would uphold the insurance policy provision requiring the parties to bear their own costs in a dispute and that such a contract provision would be a valid agreement to avoid the ordinary impact of Rule 82. See 17 P.3d at 787.