Judge Jill Feeney, Case 22STCV21000 2022-08-11 Tentative Ruling

Pursuant to Code of Civil Procedure Section 1281.6 the Court nominates the following five persons to be arbitrator: (1) Richard Perterson, Esq.; (2) Honorable David Brickner; (3) Gary Chambers, Esq.; (4) Glenn Berger; and (5) David Schlueter.

The parties are ordered to appear (remotely or in person) on August 18th. At that time, the parties will inform the Court of their selection of an arbitrator if there is an agreement. If not, the Court will appoint the arbitrator from the list of nominees.

On June 28, 2022, Petitioner Urwah Almanaser filed his petition to compel Blue Hill Specialty Insurance Company to arbitration pursuant to Cal. Ins. Code section 11580.2 and for the appointment of an arbitrator. This matter arises from a vehicle collision which took place while Petitioner was a driver for Uber Technologies, Inc., who was insured with Responded Blue Hill Specialty Insurance Company at the time of the collision. Petitioner now seeks to recover under the underinsured motorist provision of the insurance policy with Respondent.

Respondent argues that Petitioner’s motion should be denied because he is attempting to initiate arbitration proceedings prematurely before the depletion of funds paid to or on behalf of Petitioner through his Occupational Accident Insurance (“OAI”) coverage. Respondent claims Petitioner’s insurance policy (“Policy”) with Respondent provides that the limits of liability under the Policy shall be reduced by the value of all sums paid to Petitioner under OAI for the same injury. Thus, it is impossible to ascertain the final value of any reduction necessitated under the terms of the Policy.

Petitioner argues that Respondent’s contention that arbitration cannot proceed prior to exhaustion of the OAI policy is false. Petitioner contends that claims against the OAI policy are not worker’s compensation claims, nor do such claims fall within worker’s compensation law. Additionally, the OAI policy is secondary to any other insurance that covers this claim.

Code Civ. Pro. section 1281.2 permits a party to file a petition to request that the Court order the parties to arbitrate a controversy. Section 1281.2 also states that the Court may grant the motion if the Court determines that an agreement to arbitrate the controversy exists.

When a motion to compel arbitration is filed and accompanied by prima facie evidence of a written agreement to arbitrate the controversy, the court itself must determine whether the agreement exists and, if any defense to its enforcement is raised, whether it is enforceable. (Rosenthal v. Great Western Financial Sec. Corp. (1996) 14 Cal.4th 394, 413.) The moving party bears the burden of proving its existence by a preponderance of the evidence because the existence of the agreement is a statutory prerequisite to granting the petition. (Ibid.)

Since binding arbitration is a matter of contract, the parties may freely delineate the area of its application, and a proceeding to compel arbitration is in essence a suit in equity to compel specific performance of a contract. (Freeman v. State Farm Mutual Auto Insurance Co. (1975) 14 Cal.3d 473, 479; Morris v. Zuckerman (1967) 257 Cal.App.2d 91, 96.) Arbitration, as a general rule, should be upheld by the court, unless it can be said with assurance that an arbitration clause is not susceptible to an interpretation covering the asserted dispute. (Bos Material Handling, Inc. v. Crown Controls Corp. (1982) 137 Cal.App.3d 99, 105; O’Malley v. Wilshire Oil Co. (1963) 59 Cal.2d 482, 490-491.) The court should, nonetheless, give effect to the parties’ intentions in light of the usual and ordinary meaning of the contractual language and the circumstances under which the agreement was made. (Victoria v. Superior Court (1985) 40 Cal.3d 734, 744.)

Under Insurance Code section 11580.2, subdivision (i)(2), any arbitration instituted pursuant to an uninsured motorist policy shall be concluded within five years from the institution of the arbitration proceeding. (Ins. Code, § 11580.2 subd. (i)(2)(A).) Further, the provisions of Insurance Code section 11580.2 are deemed to be a part of every uninsured motorist policy. (See Quintano v. Mercury Casualty Co. (1995) 11 Cal.4th 1049, 1053; Harford Fire Insurance Co. v. Macri (1992) 4 Cal.4th 318, 324; Travelers Indemnity Co. v. Kowalski (1965) 233 Cal.App.2d 607, 609.)

There are two “common themes” in case law interpreting the scope of arbitration under section 11580.2 subdivision (f): “(1) arbitration of issues other than liability and damages is appropriate if the parties have contractually agreed to arbitrate more than is required by section 11580.2, subdivision (f); and, (2) only issues of liability and damages may be decided in an arbitral forum if the parties did not agree to arbitrate more than is required by section 11580.2, subdivision (f).” (Bouton v. USAA Cas. Ins. Co. (2008) 43 Cal.4th 1190, 1197.)

“If the insured has or may have rights to benefits, other than nonoccupational disability benefits, under any workers’ compensation law, the arbitrator shall not proceed with the arbitration until the insured's physical condition is stationary and ratable. In those cases in which the insured claims a permanent disability, the claims shall, unless good cause be shown, be adjudicated by award or settled by compromise and release before the arbitration may proceed.” (Insurance Code section 11580.2, subd. (f).)

The parties dispute whether arbitration must be stayed due to Petitioner’s collection of benefits under an OAI policy. Respondent argues that arbitration must be stayed under Insurance Code section 11580.2, subd. (f), which allows insurers to delay arbitration until resolution of a worker’s compensation claim. (Opposition, p.4.)

Insurance Code section 11580.2, subd. (f) specifically states that arbitration may not proceed if the insured has rights to benefits under any worker’s compensation law until the insured’s condition is stationary and ratable. Additionally, in cases where the insured claims permanent disability, the claims must be adjudicated by award, settled by compromise, and released before arbitration may proceed. (Insurance Code section 11580.2, subd. (f).) Together with Insurance Code section11580.2, subd. (h), which allows uninsured motorist benefits (“UM benefits”) to be reduced by the amount paid under any worker’s compensation law, these provision were designed to prevent double recovery of UM benefits and worker’s compensation benefits. Automobile insurers are unable to impose liens on worker’s compensation benefits because the availability of such liens is strictly limited by statute and because the liens fall within the original jurisdiction of the Workers’ Compensation Appeals Board. (Rangel v. Interinsurance Exchange (1992) 4 Cal.4th 1, 9.) Thus, an insurer would be unable to recover against benefits paid through worker’s compensation. (Id.)

Here, Petitioner’s evidence shows that the OAI policy is not a worker’s compensation plan under any worker’s compensation law. Petitioner provides in support of its motion a letter from Respondent’s third-party administrator of OAI coverage, stating that OAI coverage is “not a Worker’s Compensation insurance policy, nor is it a Personal Auto or Commercial Automobile Liability policy.” (Goldsman Decl., Exhibit 11.) Rather, it is a policy that affords “limited coverage for Accident Medical Expense Benefits, Temporary Total Disability Benefits, and other scheduled and applicable benefits to independent contractors, subject to all policy coverage grants, terms and conditions.” (Id.) Moreover, it is “secondary to any other insurance that covers this claim.” (Id.) Because Petitioner’s OAI policy is not a worker’s compensation plan governed by workers’ compensation law and Petitioner is not claiming a permanent disability, Insurance Code sections 1150.2 subdivisions (h) and (f) do not apply in the present case.

Petitioner does note he has another lawsuit pending against the OAI carrier, Interact Insurance Group, Case No. 22STCV19448). To the extent that Respondent is concerned with Petitioner’s further recovery from Intact Insurance Group, Respondent is not precluded from imposing a lien against any settlement or judgment in that case.

The parties do not dispute that an arbitration agreement exists. California law provides that auto insurers must include the provisions of Ins. Code section 11580.2 in uninsured and underinsured motorist policies. (Ins. Code section 11580.2; Harford Fire Insurance Co. v. Macri (1992) 4 Cal.4th 318, 324.) The determination of whether the insured is legally entitled to recover damages and the amount of damages shall be made by agreement between the insured and the insurer or, in the event of disagreement, by arbitration. (Ins. Code section 11580.2, subd. (f)) Thus, an arbitration agreement exists. The parties will be limited to arbitrating issues of liability and damages unless the parties agreed otherwise. (Bouton v. USAA Cas. Ins. Co. (2008) 43 Cal.4th 1190, 1197.) Thus, the motion to arbitrate is granted.

Petitioner requests that the Court nominate a neutral arbitrator. Respondent previously proposed a list of arbitrators: Darryl Forgey, George Rosenberg, Glenn Berger, David Schlueter, and David Karen. Petitioner disagreed with this list and proposed other arbitrators: (1) Richard Peterson, Esq. (Independent); (2) Honorable David Brickner, Retired (JAMS); (3) Gary Chambers, Esq. (JAMS); (4) Honorable Joel Pressman, Retired (Judicate West); (5) Honorable Herbert Hoffman, Retired (Ivans). (Goldsman Decl., Exhibit 7.) The Court nominates five arbitrators as set forth above.