Tuesday, July 23, 2019

Binding Arbitration Award Less Than Tortfeasor's Limits Collaterally Estops UIM Claim


In the federal Post-Koken case of Shiffer v. Liberty Mutual Fire Ins. Co., No. 3:17-CV-978 (M.D. Pa. July 22, 2019 Mariani, J.), Judge Robert D. Mariani of the Federal Middle District Court of Pennsylvania applied the collateral estoppel doctrine to support the entry of summary judgment in favor of an automobile insurance carrier on a UIM claim where the Plaintiff had previously concluded the third party claim by way of a binding high/low arbitration at which an award was entered below the amount of the tortfeasor's liability limits.

According to the Opinion, during the course of the prior third party litigation, the parties in that matter agreed to proceed to a binding high/low arbitration at which the high parameter was set at the tortfeasor's liability limits. 

In the Binding Arbitration Agreement to relative to the third party claim, the Plaintiff expressly reserved the right to pursue a UIM claim.  The UIM carrier was not a party to that Arbitration Agreement.

As noted, the arbitrator in the third party claim entered an award in favor of the Plaintiff that was less than the tortfeasor's liability limits.

After the Arbitration, the Plaintiff signed a Release requested by the tortfeasor's carrier which confirmed a settlement of the third party liability case in the same amount as the Arbitration Award.

Thereafter, the Plaintiff commenced this UIM Post-Koken lawsuit.  After discovery, the UIM carrier filed a Motion for Summary Judgment asserting the collateral estoppel doctrine and asserted that the Plaintiff was collaterally estopped from pursuing the UIM claim as the matter had been previously fully litigated and the tortfeasor had essentially been determined not to have been underinsured.

The Plaintiff responded with the argument that the criteria for the application of the collateral estoppel doctrine had not been met by the defense.  The Plaintiff additionally asserted that the Court should honor the language in the Arbitration Agreement under which the Plaintiff preserved the right to pursue a UIM claim following the Arbitration.

Judge Robert D. Mariani
M.D. Pa.
After providing a thorough and detailed analysis of the collateral estoppel doctrine in general as well as in this particular context of the impact of a third party award less than the tortfeasor's limits on a UIM claim, the Court granted summary judgment in favor of the carrier on the UIM claim.

The Court found that the Plaintif had been provided with a full and fair opportunity to litigate the claim at the Arbitration and that a final determination had been made at the Arbitration relative to the amount of damages that the Plaintiff was entitled to as a result of the accident.  Given that the Arbitration Award was less than the tortfeasor's liability limits, the Plaintiff was found to be collaterally estopped from pursuing an underinsured motorist claim against the Plaintiff's own automobile insurance policy.

The Court additionally held that the language in the Binding Arbitration Agreement under which the Plaintiff had attempted to preserve the right to pursue a UIM claim did not serve to alter the result.

Anyone wishing to review Judge Mariani's Opinion in Shiffer may click this LINK

The Court's companion Order can be viewed HERE.


For other Tort Talk Blog posts on the effect of the collateral estoppel doctrine in UIM cases, click HERE (be sure to continue scrolling down to additional posts below the long Post-Koken Scorecard post in order to see more write-ups on cases in this context).

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