Opinion
No. CV 94 0316382S
November 7, 1994
MEMORANDUM OF DECISION
The issue in this proceeding for an order to compel arbitration is whether a claim that the plaintiff is collaterally estopped to litigate the issue of damages before the arbitration panel relates to the arbitrability of the plaintiff's claim for underinsured motorist benefits or to coverage. The court holds that the issue of collateral estoppel pertains to coverage and not to arbitrability. Therefore, the application to compel arbitration is granted[.]
The material facts are undisputed. On August 26, 1994, the plaintiff filed an application for an order to proceed with arbitration against the defendant, Westchester Fire Insurance Company (Westchester). See General Statutes § 52-410. In the application, the plaintiff claims that she sustained injuries on March 23, 1991, when the automobile in which she was a passenger was involved in an accident. The plaintiff brought a civil action against the tortfeasor. The amount of damages which she received as a result of the the judgment rendered in that action exceeded the tortfeasor's insurance coverage.
General Statutes " Sec. 52-410. Application for court order to proceed with arbitration. (a) A party to a written agreement for arbitration claiming the neglect or refusal of another to proceed with an arbitration thereunder may make application to the superior court for the judicial district in which one of the parties resides or, in a controversy concerning land, for the judicial district in which the land is situated or, when the court is not in session, to any judge thereof, for an order directing the parties to proceed with the arbitration in compliance with their agreement. The application shall be by writ of summons and complaint, served in the manner provided by law. "(b) The complaint may be in the following form: `1. On ____, 19__, the plaintiff and the defendant entered into a written agreement for arbitration, of which exhibit A, hereto attached, is a copy. 2. The defendant has neglected and refused to perform the agreement for arbitration, although the plaintiff is ready and willing to perform the agreement. The plaintiff claims an order directing the defendant to proceed with an arbitration in compliance therewith.' "(c) The parties shall be considered as at issue on the allegations of the complaint unless the defendant files answer thereto within five days from the return day, and the court or judge shall hear the matter either at a short calendar session, or as a privileged case, or otherwise, in order to dispose of the case with the least possible delay, and shall either grant the order or deny the application, according to the rights of the parties."
The plaintiff was an insured under an automobile liability insurance policy issued by Westchester. After exhausting the limits of the tortfeasor's insurance policy, the plaintiff sought additional compensation from Westchester under the underinsured motorist coverage of the insurance policy. The parties were unable to agree upon the amount of damages to which the plaintiff is entitled. Therefore, the plaintiff demanded that the issue be resolved by arbitration, pursuant to the applicable provisions of Westchester's insurance policy and General Statutes § 38a-336.
Westchester objects to the motion to compel arbitration. It seeks to limit the scope of the arbitration with respect to damages. In its objection, Westchester argues that the issue of damages was previously decided by the judgment rendered in the plaintiff's action against the tortfeasor and that the doctrines of res judicata and collateral estoppel militate that this court not permit the issue of damages to be relitigated in the arbitration.
The applicable doctrine is collateral estoppel, not res judicata. "Res judicata or claim preclusion prevents a litigant from reasserting a claim that has already been decided on the merits." (Internal quotation marks omitted.) Virgo v. Lyons, 209 Conn. 497, 501, 551 A.2d 1243 (1988). Res judicata clearly is inapplicable. The policy of insurance provides for underinsured motorist benefits "only after the limits of liability under any applicable `bodily injury' liability bonds or policies have been exhausted by payments of judgments or settlements." General Statutes § 38a-336(b) contains a similar requirement. Thus, both the insurance policy and the statute contemplate a prior claim before a claim for underinsured motorist benefits may be asserted. "Collateral estoppel, or issue preclusion, prevents a party from relitigating an issue that has been determined in a prior suit." Virgo v. Lyons, supra. The defendant seeks to prevent the plaintiff from relitigating the issue of damages in the arbitration proceeding.
General Statutes § 38a-336(c) requires that "[e]ach automobile liability insurance policy issued on or after October 1, 1971, which contains a provision for binding arbitration shall include a provision for final determination of insurance coverage in such arbitration proceeding." Our appellate courts have explained that "[t]he effect of § 38a-336(c) is . . . to remove from the court and to transfer to the arbitration panel the function of determining, in the first instance, all issues as to coverage . . . ." (Internal quotation marks omitted.) Wynn v. Metropolitan Property Casualty Insurance Co., 30 Conn. App. 803, 805-806, 623 A.2d 66 (1993), aff'd, 228 Conn. 436, 635 A.2d 814 (1994). Thus, all issues pertaining to coverage are determined by arbitration. Gaudet v. Safeco Insurance Co., 219 Conn. 391, 392, 593 A.2d 1362 (1991). "The arbitrability of a dispute, by contrast, is a legal question for the trial court to decide as a threshold matter." Wynn v. Metropolitan Property Casualty Insurance Co., supra, 806. "The function of the court . . . is to determine, in the first instance, whether the issue is arbitrable. If the court so decides, an order compelling arbitration is issued. If, on the other hand, the court decides that the issue is not arbitrable, it can proceed to decide the issue on the merits." Oliva v. Aetna Casualty Surety Co., 181 Conn. 37, 39-40, 434 A.2d 304 (1980).
"The distinction between coverage issues and arbitrability issues have not always been readily apparent." Wynn v. Metropolitan Property Casualty Insurance Co., supra, 30 Conn. App. 806. "[A] coverage issue is one that is governed wholly by the policy language . . . or involves the interpretation of both statutory and policy language . . . or otherwise implicates the scope of coverage afforded by the terms of the policy." (citations omitted.) Ibid. "An issue of arbitrability, by comparison, is one that addresses the arbitrability of the claim and is capable of being decided by the court as a matter of law irrespective of the terms of the policy." Id., 807.
Our Supreme Court has held that the question of whether the statutory duty to arbitrate coverage issues applied to motorcycle insurance policies was a threshold legal issue for the court to decide. Beloff v. Progressive Casualty Ins. Co., 203 Conn. 45, 523 A.2d 477 (1987). Our Appellate Court has held that whether a claim for underinsured motorist benefits is barred by the statute of limitations is a question of arbitrability. Wynn v. Metropolitan Property Casualty Ins. Co., supra, 30 Conn. App. 807. On the other hand, our appellate courts have held that whether the failure to exhaust the liability coverage of an alleged tortfeasor's automobile liability insurance policy precluded a plaintiff from recovering underinsured motorist benefits was a coverage question; Lane v. Aetna Casualty Surety Co., 203 Conn. 258, 524 A.2d 616 (1987); that the issue of whether a policy's uninsured motorist coverage provision extended benefits to accidents involving underinsured vehicles was essentially a coverage question; Security Ins. Co. of Hartford v. DeLaurentis, 202 Conn. 178, 520 A.2d 202 (1987); that questions involving whether fleet policies could be stacked and whether uninsured motorist benefits should be set off by the amount of workers' compensation benefits collected were ones of coverage; Wilson v. Security Ins. Group, 199 Conn. 618, 509 A.2d 467 (1986); and whether the nonfulfillment of a policy provision concerning the timely presentation of claims bars recovery was essentially a coverage question. Oliva v. Aetna Casualty Surety Co., supra, 181 Conn. 37.
"Where an issue may fairly be characterized as either (1) an issue of arbitrability, i.e., a question for the courts to decided in the first instance, or (2) an issue of insurance coverage, i.e., a question for the arbitrator[s] to decide in the first instance, legislative policy requires the court to elect the latter characterization and submit the issue to the arbitrator[s] together with all other issues of insurance coverage." Gaudet v. Safeco Insurance Co., supra, 219 Conn. 399.
Here, however, the question is not a close one. The defendant Westchester does not claim that the plaintiff is not entitled to underinsured motorist benefits but, rather, that the amount of those benefits is fixed by a fact extraneous to the policy and to General Statutes § 38a-336, to wit, the amount by which the verdict in the plaintiff's action against the tortfeasor exceeded the tortfeasor's automobile insurance liability limits. However, the amount of damages is a matter which Westchester's policy of insurance commits to the arbitrators. That policy provides: "If we and an `insured' do not agree . . . [a]s to the amount of damages . . . either party may make a written demand for arbitration. . . . A decision agreed to by two of the arbitrators will be binding as to . . . [t]he amount of damages." For this reason the court holds that the issue of the collateral estoppel effect of the verdict against the tortfeasor falls within the ambit of coverage questions committed by the policy to the arbitrators. Cf. Gary Excavating, Inc. v. North Haven, 164 Conn. 119, 125, 318 A.2d 84 (1972) (where contract provided that the arbitrators were judges of all matters of law and fact relating to both the subject matters of and procedure during arbitration, held, the res judicata effect of an earlier arbitration decision was within the scope of authority delegated to the arbitrators.).
There follows a provision for a trial de novo if the award exceeds the minimum limit for bodily injury liability in the applicable state. This provision is substantially similar to that held to be unenforceable as against public policy in Mendes v. Automobile Ins. Co. of Hartford, 212 Conn. 652, 563 A.2d 695 (1989).
The plaintiff's application for an order to proceed with arbitration is granted.
BY THE COURT
Bruce L. Levin Judge of the Superior Court