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Rahe v. Nationwide Mutual Ins., Co.

California Court of Appeals, Fifth District
Jul 17, 2008
No. F053266 (Cal. Ct. App. Jul. 17, 2008)

Opinion

NOT TO BE PUBLISHED

APPEAL from a judgment of the Superior Court of Kern County No. CV-260542, James M. Stewart, Judge.

Pollak, Vida & Fisher, Scott J. Vida and Daniel P. Barer for Defendant and Appellant.

William M. McPhillips for Plaintiffs and Respondents.


OPINION

VARTABEDIAN, Acting P. J.

This is an appeal from final judgment after the trial court modified and confirmed the award of an arbitrator in an underinsured motorist case. We reverse the judgment to the extent it modified the arbitrator’s award and remand the matter with directions to confirm the original and unmodified arbitration award.

Facts and Procedural History

Plaintiff and respondent Ronald J. Rahe was driving a tractor-trailer on Interstate 5 in the rain on May 14, 2003. An automobile driver struck respondent in the rear, causing respondent to lose control of his rig. The tractor ended up on its side in the center median. Respondent climbed out of the tractor cab. He told an investigating officer he was not injured, and he declined to be transported for medical treatment.

Plaintiff and respondent Laura Rahe filed a claim for loss of consortium. No issues arising directly from her claim are before us in this appeal. “Respondent” will refer to Ronald J. Rahe, except as may be otherwise noted.

Although respondent received medical treatment for other conditions over the next year, he did not complain to his doctor or seek treatment for any injury that might have arisen from the traffic accident. He continued to work long days for his family’s hay company; he rebuilt his tractor.

During this time, according to respondent, he suffered pain in his shoulder but was too busy with work to seek medical care for that condition. After about a year, respondent sought treatment of his shoulder and, in January of 2005, his shoulder was surgically repaired. Shortly after the surgery, respondent injured the shoulder again lifting hay bales.

Respondent claimed back and shoulder injuries as a result of the 2003 accident. Respondent entered into a policy-limits settlement with the driver who had caused the accident. The $100,000 settlement was allocated 80 percent to respondent and 20 percent on Laura Rahe’s consortium claim. Respondent also settled a worker’s compensation claim.

Respondent then filed a claim under the uninsured/underinsured motorist coverage of his own policy, which had a $300,000 policy limit. Defendant and appellant Nationwide Mutual Insurance Company, doing business as Allied Insurance, had issued that policy. Pursuant to the policy requirements, the matter was set for binding arbitration. In correspondence from respondent’s attorney, it was asserted that appellant denied respondent’s injuries were caused by the accident and that, if they were, the injuries resulted from respondent’s failure to wear a seat belt.

In addition to asserting the seat belt claim, appellant’s arbitration brief stated the following: “It is the position of the [defendant] that Mr. Rahe was not seriously injured in the subject accident and that his shoulder injury happened at a later date. All of the doctors admit that it would have been a very painful injury and most of the plaintiff’s doctors dismissed the theory that the pain could have been masked by [plaintiff’s] diabetic neuropathy. The back injury could have been present from the degenerative wear and tear caused by his truck driving profession as Rahe admitted having arthritis many years before the subject accident. The back injury is the same type you would find from wear and tear and not necessarily attributable to a traumatic event.”

After an unreported arbitration hearing at which the arbitrator received oral and documentary evidence, the arbitrator issued a written award. After an extensive recitation and evaluation of the evidence, the award stated, under the heading “Causation”: “Claimant’s job is clearly physical and he had been doing it for a long time. I felt it was reasonable to conclude that he had degenerative joint and disc disease that was aysymptomatic [sic] before the accident. [¶] I concluded that claimant was holding onto the steering wheel when the truck hit the barrier and that the force of the impact was enough to injure his shoulder and his low back. I also concluded that claimant could have injured his shoulder and low back when he fell [across the cab as the truck overturned].”

Next, under the heading “Damages, Medical Treatment, Mitigation,” the arbitrator found that respondent “ignored his injuries, and clearly aggravated them by continuing to work. Even after he began receiving medical care, he did not modify his work. In fact [h]e reinjured his shoulder shortly after surgery when he was lifting hay. Additionally, claimant failed to mitigate his damages by failing to timely seek medical care.” The arbitrator then set out quotations from case law to the general effect that a plaintiff will not be compensated for damages he reasonably could have avoided. Under the heading “Discussion” the arbitrator concluded: “Claimant clearly failed to mitigate his damages by delaying his medical treatment by almost a year. This delay clearly aggravated his conditions because he did not modify his work before and after his doctors diagnosed his conditions. To claimant’s credit, he thought that his injuries were transient and would eventually go away. This notwithstanding, claimant is not entitled to recover damages he could have avoided with reasonable diligence. To determine claimant’s recoverable damages, I first determined what claimant is reasonably entitled to recover. I then reduced this sum based on claimant’s failure to mitigate.”

Ultimately, the arbitrator concluded respondent’s total damages, including Laura Rahe’s consortium claim, was $426,229.76. That award, the arbitrator concluded, “must [be] reduced because of claimant’s failure to mitigate his damages and because claimant aggravated his condition by continuing to work.” The arbitrator reduced the damages by 50 percent on this basis, and then by $100,000 based on the settlement with the negligent driver, leaving a net award of $113,114.88.

Respondent filed an “Application for Correction and Confirmation of [Underinsured Motorist] Arbitrator’s Award.” He contended the arbitrator erred in granting the settlement offset and that the issue of mitigation of damages was beyond the scope of the submission to the arbitrator. After hearing, the court issued an oral statement of decision. The court denied the request to modify the offset but granted the request to strike the mitigation of damages reduction from the arbitrator’s award. The court’s basis for that determination was that appellant’s counsel had agreed on the issues to be decided by the arbitrator and, while mitigation was not specifically excluded, “I think the attorneys in this particular case certainly had a tacit agreement” that other issues would not be raised. After further proceedings, the court entered its order correcting and confirming the arbitration award in a net amount of $326,229.76, and a judgment in favor of respondents for $200,000 (in essence, a judgment for the policy limit less the prior offset).

Appellant filed a timely notice of appeal.

Discussion

As recently reiterated by the Supreme Court, “[a]bsent an express and unambiguous limitation in the contract [for arbitration] or the submission to arbitration, an arbitrator has the authority to find the facts, interpret the contract, and award any relief rationally related to his or her factual findings and contractual interpretation.” (Gueyffier v. Ann Summers, Ltd. (2008) 43 Cal.4th 1179, 1182 (Gueyffier).) “On petition of a party to an arbitration … the superior court is to vacate an arbitrator’s award if ‘[t]he arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted.’ ([Code Civ. Proc.,] § 1286.2, subd. (a)(4).) As we have explained in prior cases, however, this provision does not supply the court with a broad warrant to vacate awards the court disagrees with or believes are erroneous.” (Id. at p. 1184.)

An arbitrator does not exceed his or her powers by reaching an erroneous conclusion on a contested issue of law or fact. (Gueyffier, supra, 43 Cal.4th at p. 1184.) “An exception to the general rule assigning broad powers to the arbitrators arises when the parties have, in either the contract or an agreed submission to arbitration, explicitly and unambiguously limited those powers.” (Id. at p. 1185.)

In the present case, respondent does not point to any evidence the parties “explicitly and unambiguously” excluded mitigation of damages as an issue. Respondent contends, however, that such a limitation can arise when the parties have not affirmatively included an issue in the submission to arbitration. If there were any doubt about the “express and unambiguous” requirement before Gueyffier, that decision resolved any doubt. Accordingly, we reject respondent’s contention that the issues before the arbitrator were only those affirmatively submitted for decision. While the arbitrator could possibly have interpreted the parties’ submission to exclude a reduction of damages on the basis of failure to mitigate, “the arbitrator evidently did not adopt such an interpretation. As construction of the [submission] was for the arbitrator, not the courts, we cannot say he exceeded his powers … by failing to adopt a particular interpretation of the agreement.” (Gueyffier, supra, 43 Cal.4th at p. 1186.)

Respondent contends in general terms that the parties in this case, contrary to the trial court’s finding that such agreement was only implicit, had an express agreement limiting the issues. The record does not support this claim. There is no evidence the parties agreed to prohibit mitigation of damages as a defense or that any such limitation was presented to the arbitrator.

Finally, as necessary to this discussion, respondent contends he was denied due process of law because the arbitrator ruled on “an unsubmitted, non-briefed, non-argued defense.” We reject this contention for two reasons. First, arbitration proceedings are not judicial proceedings, and the due process standards applicable to judicial proceedings are not applicable to arbitrations. (See Rifkind & Sterling, Inc. v. Rifkind (1994) 28 Cal.App.4th 1282, 1291.)

Second, respondent gives far too much weight to the arbitrator’s use of the phrase “mitigation of damages,” as if it were an independent category of legal analysis unrelated to the issues as framed by the parties. Instead, it is merely a subset of causation analysis and the issue of causation of injury was explicitly raised by appellant at all stages of the arbitration. Thus, mitigation of damages, in this case, is merely shorthand for at least two aspects of appellant’s stated claim that respondent’s injuries were not caused by the accident: (1) The injuries were caused, in part, by respondent’s unreasonable delay in seeking treatment, not by the accident itself; and (2) the injuries were caused, in part, by respondent’s failure to moderate his work habits in response to pain, not by the accident itself. Regardless of the label the arbitrator put on his conclusions, the issues he decided clearly were within the scope of the issues submitted for arbitration.

Disposition

The judgment is reversed insofar as it purports to correct the arbitrator’s award. The matter is remanded for entry of a new judgment confirming the arbitrator’s award in its entirety. Respondent’s brief seeks to have us impose sanctions on appellant for a frivolous appeal. That request is denied since the appeal is not, for the foregoing reasons, frivolous. Appellant is awarded costs on appeal.

WE CONCUR: WISEMAN, J., HILL, J.


Summaries of

Rahe v. Nationwide Mutual Ins., Co.

California Court of Appeals, Fifth District
Jul 17, 2008
No. F053266 (Cal. Ct. App. Jul. 17, 2008)
Case details for

Rahe v. Nationwide Mutual Ins., Co.

Case Details

Full title:RONALD J. RAHE et al., Plaintiffs and Respondents, v. NATIONWIDE MUTUAL…

Court:California Court of Appeals, Fifth District

Date published: Jul 17, 2008

Citations

No. F053266 (Cal. Ct. App. Jul. 17, 2008)