Wednesday, January 19, 2011

Appeals Court holds arbitrator exceeded authority in ruling underinsurance claim premature until third-party claim resolved

In 2001 Dorcas Weiner was involved in two separate car accidents. She sought underinsured motorist coverage from Commerce for both accidents. Those claims were consolidated and went to arbitration as required by the standard Massachusetts automobile insurance policy.

The arbitrator held that the compensation Weiner received from the other driver in the first accident was sufficient to cover her losses from that accident. He held that arbitration was premature as to the second accident because the claim against the other driver in that accident had not been resolved.

Weiner and her husband won a motion in Superior Court to vacate the arbitration award, on the ground that the arbitrator had exceeded his authority in deciding that arbitration for the second accident was premature.

The case was arbitrated again with a new arbitrator. The second arbitrator awarded damages for both accidents, and that award was confirmed by the Superior Court. Commerce appealed, arguing that the first arbitration award should not have been vacated and that the matter should have been submitted for reconsideration to the first arbitrator.

In Weiner v. Commerce Ins. Co., 78 Mass. App. Ct. 563 (2011), the Appeals Court affirmed.

The court held that the first arbitrator plainly erred when he concluded that the claim for the second accident was premature, because it is well settled that an insurer must arbitrate an underinsurance claim regardless of the pendency of a third-party claim. The arbitrator made clear an intention to rely on the damages award in the third-party claim, but the policy required damages to be determined by the arbitrator. He thereby exceeded his authority.

The Appeals Court also held that the Superior Court judge was allowed by statute to appoint the second arbitrator to determine the claim.


Eminia said...

Such a nice case..I have also faced the same problem as third party claim and RA Law group helps me a lot.

Mark Marq said...

Dorcas Weiner (my mother) passed away on December31, 2012. Her husband (my father) is bound for assisted living with steadily accelerating age-related dementia.

As of this writing, Commerce Insurance has yet to pay out the award ordered.

Nina Kallen said...

I am sorry for your loss.