Superior Court Addresses Whether UIM Claim is Collaterally Estopped By Prior Third Party Binding Arbitration Award (Maybe)

In a "non-precedential" Memorandum decision in the case of Fernandez v. Erie  Insurance Group, No. 1002 EDA 2016 (Pa. Super. 2017 Moulton, Ransom, Fitzgerald, J.J.)(mem. op. by Fitzgerald, J.), the Pennsylvania Superior Court held that a UIM claim was not estopped by a previous arbitration award entered on the third party portion of the case.

According to the Opinion, the tortfeasor Defendant had a liability policy with a $50,000.00 limit.   The parties in the underlying third party matter proceeded to a binding arbitration at which the arbitrator found in favor of the Plaintiff for $87,000.00 and then molded the verdict down to the $50,000.00 liability limits.  

The Plaintiff later signed a Release and included a handwritten note indicating that she expressly reserved the right to pursue her UIM claims against the UIM carrier. 

Thereafter, the Plaintiff filed a breach of contract and bad faith claim against the UIM carrier.   The UIM carrier responded with a summary judgment motion asserting that the arbitration award in the third party matter collaterally estopped the Plaintiff from pursuing UIM benefits.   The UIM carrier also asked the court to grant the Plaintiff a total of $37,000.00 of UIM benefits, i.e., the difference between the arbitration finding and the molded award.  

After the trial court granted the UIM carrier’s Motion for Summary Judgment, the Plaintiff appealed.  

On appeal, the Superior Court agreed that, under collateral estoppel principles, the arbitration award was binding on the Plaintiff to the extent of the arbitrator’s jurisdiction.   However, the court stated that it could not tell whether the parties in the third party case had imposed any limit on the arbitrator’s jurisdiction.  Accordingly, the court found that the case should have been allowed to proceed to a jury to settle the jurisdictional ambiguity.  

As such, the Superior Court reversed the trial court’s ruling and remanded the case for further proceedings.  

Anyone wishing to review a copy of this case may click this LINK. 

Source: Article: “UIM Claim Not Estopped by Arbitration Award, Superior Court Rules,” By: Ben Seal of the Pennsylvania Law Weekly (May 2, 2017).  


To view other Tort Talk posts on the collateral estoppel issue, click HERE.