Court Opinion

ID: 4711557
Source: CourtListenerOpinion
Date Created: 2021-08-12 00:37:02.563754+00
Date Added: 2024-06-11T08:07:09.363559
License: Public Domain

Alexander, J.
(dissenting) — The majority, relying on its reading of Finney v. Farmers Ins. Co., 21 Wn. App. 601, 586 P.2d 519 (1978), aff’d, 92 Wn.2d 748, 600 P.2d 1272 (1979), concludes that the Allstate Insurance Company is bound by the results of an arbitration proceeding between its insured, Kelly Fisher, and an alleged tortfeasor. It reaches this conclusion, notwithstanding the fact that Allstate did not participate in the arbitration proceeding. I disagree with the majority’s holding for the reasons that Allstate (1) had insufficient notice that Fisher was engaged in arbitration with the tortfeasor, and (2) was unable to intervene in the arbitration proceeding. That being the case, it should not be bound by the arbitrator’s ruling.
In Finney, Division Three of the Court of Appeals concluded that a UIM insurer will be bound by “findings, conclusions and judgment” entered in a lawsuit maintained by the insured against the tortfeasor in any case where the insurer has notice or opportunity to intervene in the underlying action against the tortfeasor. Finney, 21 Wn. App. at 618. Although I have some reservations about the correctness of that decision, it is unnecessary for us to decide here if that case was correctly decided.7 I reach that conclusion because the requirements of Finney have not been met here. As noted above, the Finney court held only that an insurer is bound to the results of a lawsuit if it had notice of the proceeding or an opportunity to intervene. It reasoned that an insurer with knowledge of the lawsuit had to know that the lawsuit might affect its liability. Even *254assuming that this rule may, in certain instances, be extended to bind an insurer to the result of an arbitration proceeding, that should not be the result here because Allstate did not learn of the arbitration proceeding until just shortly before it was completed. The majority concludes that this makes no difference because Allstate knew of the underlying lawsuit and the “possibility of settlement or arbitration is implicit in the context of litigation.” Majority op. at 250-51. While I agree that the possibility of a settlement is always implicit in litigation, the same cannot be said about arbitration. The only authority the majority cites for the proposition that arbitration is implicit in litigation is a Delaware case, Sutch v. State Farm Mut. Auto. Ins. Co., 672 A.2d 17 (Del. Super. Ct. 1995). The Sutch case does not support the broad proposition advanced by the majority. In Sutch, the insured’s lawsuit against the tortfeasor was subject to compulsory arbitration pursuant to court rule. Under those circumstances, it follows that arbitration is an integral part of the lawsuit. Arbitration is not, however, always a feature of litigation in Washington. Indeed there is no evidence that arbitration of Fisher’s lawsuit was required by court rule or private agreement.8 Furthermore, I know of no authority that a third party can intervene in a private arbitration. Even in cases where arbitration is required by court rule, the civil rules relating to intervention do not apply. See MAR 1.3(b)(1). Consequently, an insurer such as Allstate would be unable to intervene in a court-ordered arbitration proceeding even if it had wanted to do so.
In the final analysis, though, it is simply inequitable to hold that Allstate is bound under principles of collateral estoppel to the results of a proceeding it knew nothing about until the eleventh hour and in which it was unable to intervene. While perhaps one can fault Allstate for not *255intervening in Fisher’s lawsuit so that it could attempt to protect itself by objecting to arbitration, that should not lead us to conclude that its failure to do so binds it to the results of the arbitration. To so conclude takes the Finney rule to an illogical extreme.9
In conclusion, it is my view that Allstate should not be bound to the result of the arbitration between Fisher and the tortfeasor. Because the majority concludes otherwise, I dissent.10
Madsen, J., concurs with Alexander, J.
Reconsideration denied November 5, 1998.

As the majority points out, in our review of Finney “we did not explicitly address [the issue of] whether an insurer was bound by a previous judgment” merely noting that the issue had been “ ‘thoroughly and adequately addressed by . . . the Court of Appeals or [had] been abandoned by petitioner for lack of citation to authority.’ ” Majority op. at 246 (quoting Finney, 92 Wn.2d at 750). In light of what can be described only as a qualified endorsement of Finney, it is difficult to understand how the majority concludes that Finney established a rule of law which binds this court.

Superior court civil actions are subject to mandatory arbitration if a money judgment of $35,000 or less is sought and the judges of the particular superior court jurisdiction have approved mandatory arbitration. RCW 7.06.020. The judgment sought by Fisher exceeded $35,000. Indeed, the arbitrator awarded her $236,000.

Allstate indicated that it had legitimate reasons for not intervening in the lawsuit. It points out, in that regard, that Fisher filed suit against it as well as against the tortfeasor, and that the lawsuit against it was originally scheduled to proceed to trial first. Allstate also points out that intervention in Fisher’s suit against the tortfeasor would have put it in an irreconcilable conflict with its insured in that its interest would have been to minimize recovery whereas its insured’s interest would be to maximize recovery.

Amicus, Washington State Trial Lawyers Association, suggests that the rule should be that an insurer will be bound by the arbitration in these circumstances if the insurer is invited by the parties to the arbitration to intervene in the proceeding and declines to do so. While I express no view on that proposal, I note that there is no evidence here that such an invitation was tendered to Allstate.