An injured automobile owner pursued claims against the driver who caused the accident, while her own carrier, whose policy could be implicated by the underinsurance of the driver at fault, waited on the sidelines. After reaching an end result with the at-fault driver (after a second trial), the injured owner sought underinsurance coverage from her carrier, and the carrier insisted on arbitration. The injured owner claimed that the carrier had waived arbitration, but the Massachusetts Appeals Court has ruled otherwise.
The accident was in 2007. The injured owner successfully sought a new trial after a poor outcome in the first trial. The second trial resulted in a judgment in her favor of $340,557, but the other driver had only $100,000 in coverage. While an appeal was pending, the parties settled the first case in 2014, and the injured owner filed suit against her carrier. The carrier demanded arbitration, but the trial court held that the carrier had waived its right to arbitration by waiting so long to invoke that right.
The Appeals Court noted there was no dispute that the carrier had never explicitly waived its right to arbitration. Thus, the question was whether the carrier had acted inconsistently with the arbitration right.
Both the injured owner and her insurance carrier could have demanded arbitration at any time, and there was no obligation to wait for the underlying case to be resolved. And the court noted that there is nothing in prior Massachusetts case law “to suggest that an insurer (or insured) acts untimely by waiting until the conclusion of an insured’s action against the alleged tortfeasors to demand arbitration on such a claim.”
The carrier was not a party to the prior lawsuit between the two drivers. Per the appellate court, the carrier “cannot fairly be charged with wasting judicial time and effort merely because it waited for [the underlying case] to conclude.” As soon as the injured owner finalized her settlement with the at-fault driver, and made a demand on her own carrier, the carrier sought arbitration. The carrier, per the court, “was within its contractual rights to follow the course that it did.” Further, the injured owner could have pursued arbitration herself at any time.
Finally, where the policy called for arbitration to resolve issues of liability and damages for underinsurance, the carrier was not collaterally estopped by the outcome between the two drivers. The case is Chamberland v. Arbella Mutual Insurance Company, Mass. App. Ct. No. 16-P-0861 (June 9, 2017).