Opinion ID: 2585097
Heading Depth: 3
Heading Rank: 1

Heading: The Superior Court Correctly Reduced the Arbitration Award by the $50,000 Liability Settlement.

Text: We first turn to the question of whether the superior court correctly deducted the $50,000 liability settlement from Sidney's arbitration award in determining the amount of UIM benefits Allstate was required to pay. Sidney contends that because Allstate failed to present evidence of this offset or raise the issue of the $50,000 settlement at arbitration, Allstate is required to pay the full arbitration award. Allstate counters that the arbitration panel was asked to determine the amount of total damages Sidney incurred as a result of her accident, rather than what portion of her damages were payable under her UIM coverage, and thus the court properly reduced the full arbitration award by the amount of the settlement. Allstate further argues that the panel lacked the authority to determine the effect of the liability settlement or to consider offset claims, and that the reduction is required under statutory limits regarding UIM recovery. We need not address the precise question of whether the arbitration panel had the authority to consider the effect of the $50,000 settlement because we conclude that the arbitration panel determined a single issue  the amount of Sidney's total damages  that did not require nor implicate the panel's consideration of any offsets or reductions. Arbitrators are afforded broad discretion to fashion remedies, [23] and we recognize that courts considering the arbitrability of offsets and reductions have routinely upheld arbitrators' authority to determine these issues in similar contexts. [24] In Wing v. GEICO Insurance Co. [25] we held that where an insurance policy granted the arbitration panel the authority to determine the amount payable under the policy, the panel properly adjusted the preliminary award downward by providing for offsets of the insurer's previously awarded damages. But we have also expressed deference to arbitrators' determinations of the issue(s) before them and held that an arbitrator's interpretation of the question presented . . . should not be subjected to plenary review. [26] We therefore accord arbitrators' interpretations of the issues significant weight. [27] Generally, the terms of the endorsement are controlling in the determination of what matters or issues are to be submitted to arbitration between the insured claimant and the insurance carrier, except as mandated by statute or by regulation. [28] The UIM insurance provision of the Allstate policy provides: [T]he right to benefits and the amount payable will be decided by agreement between the insured person and Allstate. If an agreement can't be reached, the decision will be made by arbitration. The policy later provides that [i]f the insured person or we don't agree on that person's right to receive any damages or the amount . . . the disagreement will be settled by arbitration. (Emphasis added.) The language of the Allstate policy grants the arbitration panel authority to determine two different and distinct concepts: (1) the total amount of damages to which an insured is entitled (from the tortfeasor) and (2) amounts payable under the insurance policy (by the UIM insurer). While these policy terms are related, they are not mutually exclusive. [29] In her appeal, Sidney conceded (as she did in her arguments before the arbitration panel) that [t]he only issue to be determined at arbitration was Sidney's damages resulting from the January 13, 2000 car wreck. In her arbitration brief, Sidney asserted that the sole issue for the panel to determine is that of damages. How much. Neither party contends that the panel considered  or was asked to consider  the amount of benefits payable (or amounts payable) under the Allstate policy. Moreover, the panel's award plainly stated that Joanne Sidney has been damaged and is entitled to an award of damages . . . [totaling] $118,432. The scope of the panel's award was confined to a determination of damages that did not require consideration of any alleged offsets. [30] And unlike in Wing v. GEICO Insurance Co., [31] where we held an arbitration panel had acted within its authority in reducing a party's award following receipt of briefing on costs, fees, and offsets, here it appears the panel neither invited briefing on nor was asked to consider any such issue. While the panel may very well have had the authority to consider the effect of the $50,000 settlement on Sidney's damages awards, it did not do so in this case. As a result, we conclude that Allstate did not waive its right to assert this issue. [32] Moreover, the trial court's reduction was plainly proper in light of the UIM statutory framework, the purpose underlying UIM coverage, and the plain terms of the Allstate policy. Alaska Statute 28.20.445(e)(1) provides that underinsured coverage may not apply . . . until the limits of liability of all bodily injury and property damage liability bonds and policies that apply have been used up by payments, judgments or settlements. . . . And AS 28.20.445(a)(1) provides that the maximum liability of a UIM carrier is the lesser of (1) the difference between the amount of the covered person's damages . . . and the amount paid to the covered person by or for a person who is or may be held legally liable for the damages; and (2) the applicable limit of liability of the uninsured and underinsured motorist coverage. Allstate's policy mirrors this same language: [Allstate's] limit of liability will be the lesser of: 1. The difference between the amount of an insured person's damages . . . and the amount paid to that insured person for such damages, by or for a person who is or may be held legally liable for damages . . . and 2. The applicable limit of liability for this coverage. The Allstate policy further notes that amounts payable under the policy apply over and above any amounts available to the insured person . . . [b]y or for a person who is or may be held legally liable for damages. This language makes clear that Allstate's maximum liability in this case is the difference between Sidney's total damages  $118,432  and the amount previously satisfied by the Safeco settlement  $50,000. It would be unreasonable to conclude that Sidney incurred damages of $118,432, but that upon exhausting $50,000 policy limits she was entitled to a UIM award that failed to reflect her receipt of the underlying benefits. It would also run counter to Alaska's excess approach to UIM coverage. [33] We therefore affirm the superior court's decision to reduce Allstate's payment by the amount of the liability settlement.