Hennepin County District Court File No. PI 01-8755.
Considered and decided by Minge, Presiding Judge; Willis, Judge; and Huspeni, Judge.*fn1
When a party agrees to settle through arbitration the damages arising from an accident with an underinsured motorist and provides a Schmidt-Clothier notice to his or her underinsured-motorist insurer, Minn. Stat. §§ 572.18 and 572.21 (2002) require judicial confirmation of the arbitration award before the insured party can seek underinsured-motorist benefits from his or her insurer.
The opinion of the court was delivered by: Willis, Judge
In these consolidated appeals, appellants challenge the district court's confirmation of an arbitration award and argue that (1) the district court lacked jurisdiction to hear the motion to confirm the award; (2) the district court erred by concluding that the arbitration agreement was ambiguous; and (3) the district court erred by finding that the arbitration agreement allowed respondent to pursue a claim for underinsured-motorist (UIM) benefits. Because we conclude that the district court had jurisdiction to hear the motion to confirm the arbitration award and that the district court did not err by concluding that the arbitration agreement was ambiguous and that the agreement allowed respondent to pursue a UIM-benefits claim, we affirm.
Appellants Kathleen Puls and Prudential Insurance Company appeal from an order and judgment confirming an arbitration award in favor of respondent Stephanie Murray for damages caused by an automobile accident involving Puls and Murray in 1995. Murray filed suit against Puls in 2001 and sent a Malmin*fn2 notice to Prudential, her underinsured-motorist insurer, informing it of the suit and of the possibility that she would seek UIM benefits. Prudential did not participate in the lawsuit.
Rather than proceed to trial, the parties agreed to participate in a binding high-low arbitration with a high of $100,000, Puls's liability limit under her automobile-insurance policy, and a low of $20,000. This agreement was not written, but both parties refer to a letter from Puls's attorney, Jill Doescher, confirming the agreement with Murray's attorney, as the arbitration agreement.
Before the arbitration, Doescher left the practice of law, and Timothy Sanda took over Puls's representation. Doescher did not discuss with Puls the possibility that Murray could seek UIM benefits after the arbitration. At the time that Puls and Murray agreed to arbitration, neither party mentioned whether UIM benefits would be sought in the future.
But as they prepared for the arbitration, Murray's attorney made it clear to attorney Sanda that Murray planned to seek UIM benefits. Sanda had asked Murray's attorney whether Murray would be willing to stipulate to her neurosurgeon's written report instead of using his deposition testimony at the arbitration. Murray's attorney replied that they planned to use the deposition testimony to increase Murray's chances of obtaining an arbitration award in excess of Puls's liability limits in order to seek UIM benefits.*fn3 The parties also agreed not to inform the arbitrator of the high-low agreement so that he would determine the total amount of Murray's damages resulting from the automobile accident.
The arbitrator found that Murray was entitled to an award of $217,746.28, in addition to no-fault benefits already paid. Murray's attorney then sent a Schmidt-Clothier*fn4 notice of the award to Prudential, inviting it to substitute its draft for Puls's $100,000 in order to preserve its future subrogation rights. Prudential informed Murray's attorney that it would not exercise its rights pursuant to Schmidt-Clothier. Puls's insurance carrier wrote Murray a check for $100,000, and Murray endorsed the check and signed a release relieving Puls from further liability connected with the accident.
Murray's attorney then wrote to Prudential and demanded the UIM policy limit of $100,000. Murray claims that Prudential refused to pay Murray any UIM benefits and argued that until the arbitration award was confirmed as a judgment, it had no obligation to pay.
Murray brought a motion to confirm the arbitration award in order to seek UIM benefits from Prudential. Murray and Puls stipulated (1) that the court could confirm the arbitrator's award against Puls in the amount of $100,000; and (2) that the court could confirm the amount of the arbitrator's award of $217,746.28 as Murray's total damages resulting from the accident. Puls now disavows the stipulation. Prudential intervened to oppose Murray's ...