Judge: Helen Zukin, Case: 22SMCP00254, Date: 2022-08-01 Tentative Ruling
Case Number: 22SMCP00254 Hearing Date: August 1, 2022 Dept: 207
Background
On June 8, 2022, Petitioner Richard Kim (“Petitioner”) filed
the instant petition to confirm an arbitration award against Respondent State
Farm Mutual Automobile Insurance Company (“Respondent”). The underlying action
between Petitioner and Respondent arises out of an automobile accident
Petitioner suffered with an uninsured motorist. Petitioner sought payment of
benefits for the injuries he suffered from his own insurer, Respondent,
pursuant to Insurance Code § 11580.2. On May 7, 2022, the arbitrator, Robert
Thomas, issued an award in favor of Petition in the amount of $1,000,000, the
policy limit.
Petitioner brings this petition to confirm the arbitration
award and collect prejudgment interest and costs pursuant to Code Civ. Proc. §
998. Respondent opposes the petition, arguing it has already satisfied the
$1,000,000 arbitration award and claimed costs, and Petitioner is not entitled
to prejudgment interest.
Standard for Confirmation of Arbitration Award
A petition to confirm an arbitration award must include the
substance of the agreement to arbitrate, the names of the arbitrators, and the
opinion of the arbitrator. (C.C.P. § 1285.4.) “Regardless of the particular relief
granted, any arbitrator’s award is enforceable only when confirmed as a judgment
of the superior court.” (O’Hare v. Municipal Resource Consultants¿(2003)
107 Cal.App.4th 267, 278.) “Once a petition to confirm an award is filed, the superior
court must select one of only four courses of action: it may confirm the award,
correct and confirm it, vacate it, or dismiss the petition.” (EHM Productions,
Inc. v. Starline Tours of Hollywood, Inc.¿(2018) 21 Cal.App.5th 1058, 1063.)
“It is well settled that the scope of judicial review of arbitration awards is extremely
narrow.” (California Faculty Assn. v. Superior Court¿(1998) 63 Cal.App.4th
935, 943.) The general rule is that a court will not review “the merits of the
controversy, the validity of the arbitrator’s reasoning, or the sufficiency of
the evidence.” (Jordan v. California Dept. of Motor Vehicles (2002) 100
Cal.App.4th 431.)
Code
Civ. Proc. § 1290.4 sets forth the requirements for proper service of a petition
to confirm an arbitration award. It states, in pertinent part:
(a)
A copy of the petition and a written notice of the time and place of the hearing
thereof and any other papers upon which the petition is based shall be served in
the manner provided in the arbitration agreement for the service of such petition
and notice.
(b)
If the arbitration agreement does not provide the manner in which such service shall
be made and the person upon whom service is to be made has not previously appeared
in the proceeding and has not previously been served in accordance with this subdivision:
¶ (1) Service within this State shall be made in the manner provided by law for
the service of summons in an action.
Code
Civ. Proc. § 1283.6 provides: “The neutral arbitrator shall serve
a signed copy of the award on each party to the arbitration personally or by registered
or certified mail or as provided in the agreement.”¿(Emphasis added.) In addition,
a party may seek a court judgment confirming an arbitration award by filing and
serving a petition no more than four years, but not less than 10 days, after the
award is served. (C.C.P. §§ 1288, 1288.4.)
Analysis
Respondent has submitted evidence
showing it has already remitted payment to Petitioner for the $1,000,000
arbitration award and $17,848.50 Petitioner claims in costs. (Levine Decl. at
¶3, Exs. 2, 3, 4.) This evidence is uncontroverted and Petitioner does not
dispute Respondent’s claims. This leaves Petitioner’s claim for prejudgment
interest. Petitioner claims it is entitled to an award of prejudgment interest because
he made an offer to compromise to Respondent pursuant to Code Civ. Proc. § 998,
which Respondent rejected. Petitioner argues his arbitration award exceeded his
section 998 offer, entitling him to prejudgment interest under Civil Code §
3291. Section 3291 provides in pertinent part: “If the plaintiff makes an offer
pursuant to Section 998 of the Code of Civil Procedure which the defendant does
not accept prior to trial or within 30 days, whichever occurs first, and the
plaintiff obtains a more favorable judgment, the judgment shall bear interest
at the legal rate of 10 percent per annum….”
Respondent argues the California
Supreme Court’s ruling in Pilimai v. Farmers Ins. Exchange Co. (2006) 39
Cal.4th 133 bars Petitioner’s recovery of prejudgment interest here. The Court
agrees. Pilimai arose under analogous facts to those present here.
Plaintiff in Pilimai was insured in an automobile accident with an
uninsured motorist and brought an action against his own insurer under
Insurance Code § 11580.2. Plaintiff served the defendant insurer with an offer
to compromise under Code Civ. Proc. § 998, which defendant refused. The matter
then proceeded to arbitration and plaintiff received an arbitration award in
excess of his section 998 offer. Plaintiff then sought to collect prejudgment
interest pursuant to Civil Code § 3291. The California Supreme Court held he
was not entitled to an award of prejudgment interest, concluding “prejudgment
interest is not available in the present action because it is not an action for
‘personal injury’ within the meaning of Civil Code section 3291.” (Id.
at 137.)
In reaching this conclusion, the Pilimai
Court noted Civil Code § 3291 by its express terms applies “In any action
brought to recover damages for personal injury sustained by any person
resulting from or occasioned by the tort of any other person.” (Id. at
145 [quoting Civ. Code § 3291].) The Court then determined “An action against
an insurance company to recover policy benefits is not an action to recover ‘damages
for personal injury’ but rather damages for breach of contract, even if that
contract is to provide compensation for personal injury.” (Id. at 146.) The
Court further noted this conclusion was supported by the legislative history of
section 3291 and prior caselaw on similar issues concerning the interpretation
of section 3291. (Id. at 146-147.) Under Pilimai, it is clear
Petitioner is not entitled to recover prejudgment interest here.
Petitioner attempts to distinguish
Pilimai by arguing the plaintiff there brought a motion to compel
arbitration, whereas here the parties proceeded in arbitration voluntarily.
(Reply at 4.) This is a distinction without a difference. The Court’s reasoning
in Pilimai was in no way premised on the case having proceeded to
arbitration by virtue of a motion to compel rather than through voluntary
arbitration proceedings. Petitioner does not cite or quote to any provisions of
Pilimai demonstrating otherwise. Petitioner further claim that his
action against Respondent was not contractual in nature because he did not have
to bring a motion to enforce the arbitration provisions of Insurance Code §
11580.2. This argument runs directly contrary to the plain language of Pilimai,
which expressly held an action brough against an insurer to recover policy
benefits is not an action to recover for personal injuries but rather “damages
for breach of contract, even if that contract is to provide compensation for
personal injury.” (Id. at 146.)
Petitioner here brought an action
against Respondent for policy benefits under his policy with Respondent.
Petitioner does not dispute this, and himself characterizes his action against
Respondent as an “Insurance Code Section 11580.2 statutory claim for uninsured
motorist benefits.” (Reply at 1-2.) Pilimai expressly held such a claim
is not an “action brought to recover damages for personal injury” under Civil
Code § 3291, and thus Plaintiff may not rely on section 3291 to recover
prejudgment interest from Respondent.
Petitioner argues such a
conclusion would render Code Civ. Proc. § 998 a nullity. The Court disagrees.
First, the Pilimai Court held section 998 did apply to actions brought
under Insurance Code § 11580.2 and plaintiff was entitled to recover costs from
defendant pursuant to section 998. Nothing in Pilimai renders section
998 a nullity, rather Pilimai simply renders Civil Code § 3291
inapplicable to certain cases. But in enacting section 3291, the legislature
itself determined its application would be limited to actions brought to
recover personal injuries rather than all civil actions generally.
Accordingly, the Court finds
Petitioner is not entitled to prejudgment interest.
Respondent asks the Court to deny
the petition as it has already satisfied its obligations to pay Petitioner’s
award and costs. Respondent provides the Court with no authority suggesting the
Court may dismiss a petition to confirm an arbitration award on such grounds. “Once a petition to confirm
an award is filed, the superior court must select one of only four courses of action:
it may confirm the award, correct and confirm it, vacate it, or dismiss the
petition.” (EHM Productions, Inc. v. Starline Tours of Hollywood, Inc.¿(2018)
21 Cal.App.5th 1058, 1063.) Under Code Civ. Proc. § 1286, “If a petition or
response under this chapter is duly served and filed, the court shall confirm
the award as made, whether rendered in this state or another state, unless in
accordance with this chapter it corrects the award and confirms it as
corrected, vacates the award or dismisses the proceedings.” The “chapter”
referenced in section 1286 contains Code Civ. Proc. §§1285-1288.8. None of
these provisions empower the Court to dismiss a petition based on mootness or
prior satisfaction. (See, e.g., C.C.P. § 1287.2 [“The court shall
dismiss the proceeding under this chapter as to any person named as a
respondent if the court determines that such person was not bound by the
arbitration award and was not a party to the arbitration].) Accordingly, the
Court declines Respondent’s request to deny the petition on this basis.
Respondent alternatively asks the Court to order the court
clerk to enter satisfaction of judgment pursuant to Code Civ. Proc. § 724.050.
Under section 724.050, a judgment debtor who has satisfied a money judgment may
make a written demand to the judgment creditor to either file an
acknowledgement of satisfaction of judgment with the court or deliver an
executed acknowledgement to the judgment debtor. If a creditor ignores this
request, the debtor “may apply to the court on noticed motion for an order
requiring the judgment creditor to comply with the demand.” (C.C.P. §
724.050(d).) If the Court finds the judgment has been satisfied, it must either
issue an order directing the creditor to comply with the demand or order the
clerk to enter satisfaction of the judgment. (Id.) A judgment creditor
who fails to comply with a demand becomes liable to debtor for “all damages
sustained by reason of such failure and shall also forfeit one hundred dollars
($100) to such person.” (C.C.P. § 724.050(e).)
While it appears Respondent has
fully satisfied the judgment to be entered against it, the Court finds an order
directing the clerk to enter satisfaction of the judgment under C.C.P. §
724.050(d) would be premature at this time. As set forth above, the issue of
whether the award has been fully satisfied was not properly before the Court on
the petition as such satisfaction is not a recognized grounds to dismiss a
petition to confirm an arbitration award. Section 724.050 expressly
contemplates the filing of a separate, noticed motion and the Court finds no
prejudice would be suffered by any party in complying with the statutory
procedure set out in section 724.050. If Petitioner improperly refuses
Respondent’s demand to file or execute an acknowledgment of satisfaction,
Respondent can bring a motion and seek to collect any damages it sustained by virtue
of such refusal.
Conclusion
The Petition to confirm the arbitration award is GRANTED and
Petitioner’s request for an award of prejudgment interest is DENIED.