Judge Layne H. Melzer, Case 2022-01258521 2022-12-22 Tentative Ruling

Judge: Layne H. Melzer, Case: 2022-01258521, Date: 2022-12-22 Tentative Ruling

Respondents Vladimir Sukhov

Motion to Compel Arbitration

Before the court is Petitioner Vladimir Sukhov’s Petition to compel his underinsured claim against his insurance company Respondent IDS Property Casualty Insurance Company to arbitration.

Legal Standard

Auto insurance policies must also provide coverage for insureds where the other driver has liability insurance but with limits lower than the insured's own UIMC limits. [Ins. C. § 11580.2(p)] This allows insureds to recover from their own insurer the difference between whatever is available from the negligent driver's liability insurance and the insureds' own UIMC limits. The negligent driver is considered “underinsured” only in relation to the particular insured's own UIMC: “In short, the fundamental purpose of section 11580.2 is to provide the insured with the same insurance protections he would have enjoyed had the tortfeasor carried liability limits equal to insured's underinsured motorist limits.” [Viking Ins. Co. v. State Farm Mut. Auto. Ins. Co. (1993) 17 CA4th 540, 548 (internal quotes omitted).] Insurers must include such coverages in auto liability policies. If they fail to do so, these coverages will be “read into” the policy: “[T]he provisions of the statute are a part of every policy of insurance to which it is applicable.” [Hartford Fire Ins. Co. v. Macri (1992) 4 C4th 318, 324 (internal quotes omitted)]

The basic provisions of the California Uninsured Motorist Act are embodied in Ins. C. §§ 11580.2-11580.5. California Insurance Code § 11580.2 requires insurers to provide coverage for bodily injury or wrongful death caused by uninsured or underinsured motorists. Subdivision (f) of § 11580.2 provides that if the insurer and the insured cannot agree whether the insured is legally entitled to recover damages from an uninsured motorist and the amount of such damages, those issues shall be determined by arbitration. (Freeman v. State Farm Mut. Auto. Ins. Co. (1975) 14 Cal. 3d 473, 485).

The purpose is to offer a means of resolving disputes that is more expeditious and less expensive than litigation. [Mercury Ins. Group v. Sup.Ct. (Wooster) (1998) 19 C4th 332, 342]

A demand for arbitration must first be made. Such demand must contain a declaration under penalty of perjury stating:

— whether the insured has a workers' compensation claim;

— if so, that the claim has proceeded to findings and award or settlement on all issues reasonably contemplated to be determined in that claim; and

— if not, what reasons amount to good cause are grounds for the arbitration to proceed immediately.

[Ins. C. § 11580.2(f)]

A letter from Insured's attorney to an attorney representing Insurance Co. simply stating “We would like to proceed with an uninsured motorist arbitration in this matter” was not sufficient to commence arbitration. It failed to contain the requisite declaration re workers' compensation, and no formal demand was sent to the arbitration service (AAA). [Allstate Ins. Co. v. Gonzalez (1995) 38 CA4th 783, 792, 45 CR2d 491, 497]

If no lawsuit has yet been filed, either party may file suit for a court order compelling the other to arbitrate disputes covered by the policy. [CCP § 1281.2]

If the insurer refuses to arbitrate or the parties cannot agree on the method of arbitration, the proper remedy is to file a petition for an order compelling arbitration (CCP § 1281.2) or appointing an arbitrator (CCP § 1281.6). [Ins. C. § 11580.2(f); see Gordon v. G.R.O.U.P., Inc. (1996) 49 CA4th 998, 1005 (citing text)] Absent agreement with the insurer, the insured has no authority to, instead, unilaterally initiate arbitration by selecting an arbitrator and scheduling a hearing. [American Home Assur. Co. v. Benowitz (1991) 234 CA3d 192, 201]

The statute “does not detail other procedures to be followed in such arbitrations (e.g., for commencing proceedings, for selection of arbitrator, for compelling attendance of witnesses, etc.)”; thus, “[u]nless the parties agree otherwise, those procedures are governed by the California Arbitration Act (CAA) (CCP § 1280 et seq.).” California Practice Guide: Insurance Litigation at ¶ 6:2398 (citing Pilimai v. Farmers Ins. Exch. Co. (2006) 39 Cal.4th 133, 141) (“[A]n uninsured motorist arbitration, although mandated by statute, nonetheless is a contractual arbitration subject to the provisions of the CAA …”).

Under CCP section 1281.2, “a party to an agreement to arbitrate may not bring an action to compel specific performance of the arbitration provision until he or she can allege not only the existence of the agreement, but also that the opposing party refuses to arbitrate the controversy.” Spear v. California State Auto. Assn. (1992) 2 Cal.4th 1035, 1041–1042 (emphasis added) (citation omitted); Code Civ. Proc., § 1281.2 (“On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party to the agreement refuses to arbitrate that controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, …”) compare Hyundai Amco Am., Inc. v S3H, Inc. (2014) 232 Cal.App.4th 572, 577 (when party's filing of lawsuit clearly demonstrates refusal to arbitrate under terms of arbitration agreement, opposing party may petition to compel arbitration without first proving existence of prior formal demand).

Merits

First, there is no proof of service filed showing that Respondent received proper notice of this Petition.

For a petition to compel arbitration, the petition and notice of hearing must be served at least 10 days before the hearing. (Code Civ. Proc. § 1290.2). Where the arbitration agreement does not provide the manner in which service shall be made and the person on whom service is to be made has not previously appeared in the proceeding and has not previously been served in accordance with section 1290.4(a) of the Code of Civil Procedure, for service in California the petition and notice of hearing must be served in a manner provided by law for the service of summons in an action, thus personally on Respondent for example. (Code Civ. Proc. § 1290.4(b).)

Proof of service should be filed with the court, showing the manner of service. If opposing parties are served in a manner other than personal service, the proof of service (or petition) should state the authority under CCP § 1290.4.

Second, it is not clear if the demand here was Code-compliant as it is not attached to the Petition or otherwise provided to the court.

The court therefore continues this matter to 2/2/22 at 2PM and orders Petitioner to serve Respondent with the Petition and this Order in the same matter as service of a summons and complaint. Petitioner is also ordered to file a declaration showing the demand is compliant.