Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-4_10-cv-00405/USCOURTS-azd-4_10-cv-00405-0/pdf.json

Nature of Suit Code: 350
Nature of Suit: Motor Vehicle Personal Injury
Cause of Action: 28:1332 Diversity-Auto Negligence

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Cynthia Elmore, 

Claimant, 

vs.

National Indemnity Company, 

Respondent. 

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No. CV-10-0405-TUC-CKJ-DTF

REPORT AND RECOMMENDATION

Pending before the Court is Claimant’s Application for Judgment Confirming

Arbitration Award and Respondent’s Opposition to Arbitration Award and Application to

Vacate or Modify Arbitration Award, which are fully briefed. (Doc. 1-1 at 1; Docs. 30, 38-

40.) Pursuant to the Rules of Practice in this Court, the matter was assigned to Magistrate

Judge Ferraro for a report and recommendation. The Magistrate recommends the District

Court, after its independent review of the record, deny entry of judgment.

FACTUAL AND PROCEDURAL HISTORY

Claimant Cynthia Elmore was injured in a car accident involving one or two uninsured

motorists on November 14, 2004, at which time Respondent provided insurance coverage to

Claimant’s employer for whom she was driving at the time. Claimant made a damages claim

under the uninsured motorists endorsement of the policy, the limit of which was $300,000.

Because the parties disagreed on fault for the accident, they agreed to engage in arbitration.

Under the insurance policy, the arbitrators were empowered to decide the amount of

damages suffered by the insured and whether those damages were recoverable from an

uninsured motorist. (Doc. 38, Ex. 4.) Any dispute regarding coverage under the policy was

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not subject to arbitration. (Id.) On May 20, 2010, the Majority Arbitration Award found that

Claimant (the insured) was damaged in the amount of $3 million and an uninsured vehicle(s)

was 90% at fault for causing those damages. (Doc. 38, Ex. 3.) After the arbitration,

Respondent (the insurer) paid out the $300,000 uninsured motorist policy limit to Claimant.

(Doc. 1-1 at 1; Doc. 30, Ex. D.)

On June 18, 2010, Claimant filed an Application for Judgment Confirming Arbitration

Award against Respondent in the Pima County Superior Court. (Doc. 1-1.) The Application

requested that the court enter a judgment of $2.7 million against Respondent, in confirmation

of the arbitration award. On June 22, 2010, the superior court entered the requested

judgment. (Doc. 9, Ex. 4.) On July 2, 2010, Respondent removed the action to this Court.

(Doc. 1.) Respondent concurrently filed a motion to set aside the judgment, because the court

entered it prior to the running of Respondent’s statutory 20-day period to object. The motion

to set aside judgment was granted with Claimant’s consent. (Docs. 28, 29.)

The parties fully briefed the application and opposition. (Docs. 30, 38, 39.) More than

two months later, on February 28, 2011, Respondent filed a supplemental brief. (Doc. 40.)

Although Respondent did not have permission for a supplement, on March 15, 2011, the

Court ordered the parties to file supplemental briefs on the issues therein. (Doc. 42.)

Both parties filed the requested supplemental briefs. (Docs. 44, 48.) Claimant then

requested leave to respond to Respondent’s supplemental brief, to address the insurance

company’s request for costs and attorneys’ fees. (Doc. 50.) The Court granted the request

(Doc. 53), and the parties filed the allowed additional briefs (Docs. 55, 57).

DISCUSSION

Under the governing Arizona statutes, a party seeking to confirm an arbitration award

files an application in court, serving it upon the party against whom the award was made.

A.R.S. § 12-1511. The court shall enter the judgment if there is no opposition. Id. Upon

opposition, the court shall decline the award if there was corruption or fraud; an arbitrator

was partial or corrupt, or there was misconduct; the arbitrators acted beyond their powers;

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the arbitrators prejudiced the rights of a party in the conduct of the hearing; or there was not

an adversarial arbitration proceeding pursuant to an arbitration agreement. A.R.S. § 12-1512.

Respondent opposes confirmation of the arbitration award because it alleges the

neutral arbitrator had an undisclosed financial, business and personal relationship with

Claimant’s arbitrator; the award is beyond the insurance policy limit; and Respondent has

already paid out the policy limit. Additionally, Respondent requests that it be awarded

attorneys’ fees and costs for this proceeding. Claimant contends the arbitrator was not partial

and the arbitration was not limited to an award within the policy limits.

Request for Judgment

In its February 28 supplemental filing, Respondent argued that the Court should not

enter any judgment against it because the arbitration panel did not determine that Respondent

owed under the policy for any of the damages Claimant suffered. (Doc. 40.) The Court set

forth certain facts and ordered additional briefing on this argument:

Under the insurance policy, the arbitrators were empowered to decide the

amount of damages suffered by the insured and whether those damages were

recoverable from an uninsured motorist. (Doc. 38, Ex. 4.) Any dispute

regarding coverage under the policy was not subject to arbitration. (Id.) As

pointed out by Respondent, the arbitration panel resolved the two specific

issues it was authorized to decide under the policy, damages and fault. (Doc.

40 at 2.) The issue of whether the insurance company was responsible to pay

the insured any portion of those damages was not before the panel and was not

determined.

In light of the above discussion, Claimant should explain the grounds for the Court to enter a judgment against Respondent for $2.7 million ($300,000

of which has been satisfied) based on an arbitration award that did not

determine the insurer’s liability. Claimant also should provide legal and factual

support for its contention that the Court can enter a judgment against

Respondent in excess of the policy limits. Further, she should identify the basis

for the Court to enter a judgment when the policy limits have been tendered by

Respondent.

(Doc. 42 at 2.)

In response to the Court’s order, Claimant agreed that the arbitrators resolved only the

issue of fault and damages and did not address insurance coverage. (Doc. 44.) Claimant,

therefore, conceded that her proposed judgment was flawed because she was not entitled to

a “money judgment directly against National Indemnity Company.” (Id. at 1.) Further, she

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 1 The arbitration award does not delineate Claimant’s health care expenses arising from

the accident, nor does it award interest. (Doc. 38, Ex. 3.) Thus, there is no legal basis for

including paragraph 4 in the proposed judgment. See Creative Builders, Inc. v. Avenue Dev.,

Inc., 715 P.2d 308, 312-13, 148 Ariz. 452, 456-57 (Ct. App. 1986). Respondent raised this

argument in its opposition and a supplemental brief (Doc. 30 at 5 n.3; Doc. 48 at 3), to which

Claimant did not respond.

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stated that whether Respondent owed anything beyond the $300,000 limit was an issue to be

resolved in subsequent litigation. (Id. at 2.) Regardless, Claimant argued that she was entitled

to have the arbitration award confirmed in a judgment, pursuant to A.R.S. § 12-1511.

Claimant’s proposed judgment reads as follows:

Claimant, pursuant to A.R.S. § 12-1514, having filed an Application for

Judgment confirming an Arbitration Award dated May 20, 2010, and good

cause existing,

IT IS HEREBY ORDERED confirming the Arbitration Award and,

accordingly, JUDGMENT is hereby entered in favor of Claimant Cynthia

Elmore and against Respondent National Indemnity Insurance Company as

follows:

1. Claimant’s motor vehicle collision on November 15, 2004, was

proximately caused by one or more uninsured motorists.

2. Ninety percent of the fault for causing the collision is attributable

to the negligence of the uninsured motorist(s).

3. Claimant’s collision-related damages total three million dollars. The

amount of the damages attributable to the uninsured motorist(s) is

two million seven hundred thousand dollars.

4. Claimant would be entitled to a judgment against the uninsured

motorist(s) for 90% of the interest on her collision-related health

care expenses, which total $705,733.37, at the rate of 10% per year

from the dates incurred until paid.1

5. A copy of the Arbitration Award is attached to this Judgment and

incorporated by reference.

IT IS FURTHER ORDERED that judgment is entered in favor of

claimant and against Respondent in the amount of taxable costs incurred with

respect to this arbitration matter.

(Doc. 45.)

Claimant has failed to demonstrate entitlement to the new proposed judgment.

Claimant made a demand under the insurance policy, the parties arbitrated their dispute

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 2 To the extent the arbitrator’s fact findings are relevant to a future dispute, the

insurance policy provides that an arbitration decision is binding on the parties; that provision

does not rely upon the findings being reduced to a judgment. (Doc. 30-1 at 26.)

 3 Because the Court finds no basis for a judgment, it does not reach Respondent’s

argument that the neutral arbitrator Barry Schneider was biased based on his relationship

with Claimant’s arbitrator McGovern. However, the Court reviewed the essentially

undisputed factual basis for that argument: in three of McGovern’s cases in which he

represented a plaintiff, Schneider was suggested as a mediator by defense counsel and jointly

retained to mediate by McGovern and defense counsel; and, in the last decade, Schneider

attended, along with several hundred people, one or two parties hosted by a law firm at

McGovern’s home and exchanged a brief greeting. (Doc. 30, Ex. B; Doc. 38, Ex. 1.) These

facts, which do not evidence any relationship between Schneider and Claimant, do not

demonstrate evident partiality by Schneider pursuant to A.R.S. § 12-1512(A)(2). See Wages

v. Smith Barney Harris Upham & Co., 188 Ariz. 525, 531-32, 937 P.2d 715, 721-22 (Ct.

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regarding damages, and based on the findings of the arbitrators Respondent paid its policy

limits to Claimant. Because Claimant concedes that Respondent owes her nothing at this

time, there is no basis for a judgment. See Fed. R. Civ. P. 54(c) (“[F]inal judgment should

grant the relief to which each party is entitled.”). Once a judgment is entered pursuant to the

statute, it is enforceable like any judgment. A.R.S. § 12-1514. Here, however, there is

nothing from the award to enforce. Claimant’s application amounts to a request for the Court

to assist her in future litigation that was not the subject of the arbitration.2

 (See Docs. 38 at

4, 44 at 2.)

The basis for declining Claimant’s request does not fit squarely within the parameters

set forth in A.R.S. § 12-1512. However, even if there had been no opposition, there is no

§ 12-1511 “award” against Respondent to confirm. Admittedly, the insurance company lost

the factual dispute that was the subject of the arbitration but no relief was granted by the

arbitrators. Section 12-1511 does not provide for confirmation of factual findings.

Additionally, Respondent satisfied Claimant’s demand by paying the policy limits. Despite

the Court’s order for supplemental briefing, Claimant provided no legal basis for the Court

to enter a judgment after Respondent tendered the policy limits. The Court finds no grounds

for such a judgment and recommends that the District Court decline to enter it.3

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App. 1997) (assessing, for evident partiality, whether a reasonable person would conclude

an arbitrator was partial to one party or another) (citing Commonwealth Coatings Corp. v.

Cont’l Cas. Co., 393 U.S. 145 (1968)). 

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Attorney’s Fees

Respondent requests costs and fees from the confirmation process, based on A.R.S.

§ 12-1514, as well as §§ 12-341, 12-341.01(A), 12-342. Claimant opposes the award, arguing

that a fee sanction is not warranted.

The only issue that has been briefed at this time by Claimant is whether fees are

appropriate as a sanction. Respondents did not seek fees as a sanction, therefore, the issue

of fees has not yet been fully addressed by the parties. The appropriate time to address a fee

request is after judgment is entered. Fed. R. Civ. P. 54(d)(2). In accord with this rule,

Respondent indicated its intent to file a motion for fees if it is the prevailing party at the end

of this action. The Court recommends the issue of fees be addressed after the District Court

makes a final decision on the motion to confirm award.

RECOMMENDATION

Based on the foregoing, the Magistrate Judge recommends that the District Court

DENY Claimant’s Application for Judgment Confirming Arbitration Award.

Pursuant to Federal Rule of Civil Procedure 72(b)(2), any party may serve and file

written objections within fourteen days of being served with a copy of the Report and

Recommendation. If objections are not timely filed, they may be deemed waived. If

objections are filed, the parties should use the following case number: CV 10-0405-TUCCKJ.

DATED this 7th day of June, 2011.

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