Court Opinion

ID: 9885705
Source: CourtListenerOpinion
Date Created: 2023-10-06 13:12:33.750435+00
Date Added: 2024-06-11T07:48:55.814717
License: Public Domain

Judge WEBB
concurring in part and dissenting in part.
The parties' stipulation, which the majority describes as "not to discuss policy limits at the hearing," is absent from the record. The trial court made no findings concerning either the seope of the stipulation or the parties' underlying intent. Hence, without more information, I cannot accept the majority's conclusion that defendant, Financial Indemnity Corporation (FIC), adequately preserved its position that any arbitration award in favor of plaintiff, Xymina G. Rocha, would be subject to the $25,000 policy limit on UM/UIM coverage. Accordingly, I respectfully dissent from the majority's conclusion that "FIC is entitled to modification of the original award to reduce it to the policy limits, $25,000."
In Applehans v. Farmers Ins. Exchange, 68 P.3d 594 (Colo.App.2003), as here, although the insurer had presented no evidence of policy limits during the arbitration, it sought modification reducing the award in favor of the insured to reflect policy limits. The division noted, "Farmers argues plaintiff had stipulated that any award would be subject to the policy limits and a setoff before undertaking the arbitration and also had agreed that information concerning policy limits and setoffs would not be disclosed to the arbitrator." Applehans, supra, 68 P.3d at 600 (emphasis added). Assuming the existence of such a stipulation, the division concluded that despite Farmers Ins. Exchange v. Taylor, 45 P.3d 759 (Colo.App.2001), Farmers' failure to present evidence of policy limits would not preclude it from seeking to modify the award.
But because Applehans asserted that there had been no such stipulation, the division remanded for the parties to present "evidence to the trial court concerning the existence of a stipulation regarding policy limits, setoffs, and disclosure to the arbitrator." Applehans, supra, 68 P.3d at 601. The division directed the trial court to vacate the initial arbitration award, to the extent it exceeded policy limits, only "if the court finds that the parties had stipulated to be bound by policy limits, to apply a setoff, and not to submit those issues to the arbitrator." Applehans, supra, 68 P.3d at 601 (emphasis added).
*609Based on this description of the stipulation as asserted by Farmers, and the discussion of its effect if similarly determined by the trial court, I conclude that an insurer can seek modification of an arbitration award to reflect policy limits, despite having failed to present such evidence during the arbitration, only if it obtains a two-part stipulation: (1) information concerning policy limits will not be disclosed during the arbitration; and (2) the award would be reduced to policy limits by setoff.
I am unpersuaded by the majority's conclusion that "[sluch a stipulation was unnee-essary to relieve FIC of its obligation to present evidence of policy limits at the arbitration hearing given the seope of the stipulation agreed to by plaintiff because, in my view, excusing this failure to present evidence of policy limits is not equivalent to reserving the right to do so later, by arguing setoff to either the arbitrator or the trial court. FIC's post-arbitration filings acknowledge that it perceived a tactical benefit in having the arbitrator determine the extent of Rocha's damages without knowing the policy limits. I discern no correlative benefit to Rocha. Hence, when FIC proposed the stipulation, Rocha may have acquiesced with the expectation of later asserting that FIC had failed to preserve its policy limits defense.
Here, the record presents no basis for concluding either that the parties agreed that the award would be subject to policy limits or that FIC had reserved the right to raise policy limits by arguing setoff after entry of the arbitration award. While requiring an insurer to prove one or the other, or lose its policy limits defense, "may be perceived as producing an inequitable result," nevertheless "excusing procedural defaults during or following arbitration would undermine the use of arbitration as a method of resolving disputes efficiently, conclusively, and comprehensively." Farmers Ins. Exch v. Taylor, supra, 45 P.3d at 763.
In sum, I agree with the majority that the trial court erred in confirming the amended arbitration award. However, I would remand for an evidentiary hearing to determine the seope of the parties' stipulation and, if the stipulation is found ambiguous, then to ascertain the parties' underlying intent from extrinsic evidence. Further, unless the trial court determined that the parties either agreed the award would be subject to policy limits or understood that FIC reserved the right to present evidence of policy limits after the award entered, I would direct the court to confirm the initial award, on the basis that FIC did not adequately preserve its policy limits defense.