In Lemerise v. The Commerce Insurance Company, Case No. 14-244-A (April 16, 2016), the Rhode Island Supreme Court found that a trial court erred in denying a plaintiff’s motion to confirm an arbitration award that was in excess of the limits of the uninsured motorist insurance policy where the policy was not entered into evidence at the arbitration, and that the trial justice had no grounds to modify/reduce the award to conform to the policy limits because error of law is not a grounds for modifying an arbitrator’s award.
The plaintiff was injured in a motor-vehicle accident by an uninsured motorist, and sought to recover under the applicable uninsured motorist policy, which had limits of $100,000. The matter was submitted to a single-panel arbitrator who decided the extent of the injury and the amount of compensation the plaintiff was entitled to due to the related injuries. The arbitrator determined that the plaintiff was entitled to damages in the amount of $150,000 plus interest. During the arbitration, the arbitrator was never presented with a copy of the applicable uninsured motorist insurance policy, and was not informed that the applicable insurance policy was governed by Massachusetts law. The plaintiff filed a motion to confirm the arbitration award and the defendant objected and then filed its own motion to reduce/modify the arbitration award on the basis that the award was in excess of the limits of the uninsured motorist policy. During the hearing, the trial court justice allowed the testimony from the arbitrator, who admitted that was never presented or shown the applicable uninsured motorist policy during the arbitration, and permitted the uninsured motorist policy to be introduced into evidence. The trial justice determined that the award should be modified and reduced to the applicable policy limits.
The Rhode Island Supreme Court reversed the trial court’s decision and confirmed the arbitrator’s award. The Court held that a reviewing trial justice had no basis to modify the arbitration award by expanding the record to allow testimony of the arbitrator or the introduction of the policy into evidence. The Court reasoned that a trial justice was not permitted to hear new evidence or consider documents that had not been submitted to the arbitrator, including the insurance policy. A trial justice reviewing an arbitration award is confined to the four corners of the arbitration award itself and the record of the arbitration proceeding. Therefore, the failure to submit an insurance policy to an arbitrator was not grounds for modification of an arbitration award that was in excess of the applicable uninsured motorist policy limits.
This case should serve as a reminder that the issue to be arbitrated should be set forth in a clear and unambiguous writing tracking the policy language, the policy should be entered into evidence at the arbitration and that all legal issues should be resolved before the arbitration is conducted.