GREAT AMERICAN INS. COMPANIES, v. LeMIEUX

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Docket Number

No. CX-88-2503.

Attorney(S)

Kenneth P. Gleason, Mahoney, Dougherty Mahoney, P.A., Minneapolis, for respondent. Peter W. Riley, DeParcq, Hunegs, Stone, Koenig Reid, P.A., Minneapolis, for appellant.

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Smart Summary

Factual and Procedural Background

Carol LeMieux died from injuries sustained in a collision with a semi-trailer truck driven by Oliver Busch. Busch's liability insurer, State Farm Insurance Company, offered its $100,000 policy limits to the LeMieux heirs, subject to indemnity rights of Great American Insurance Company, the no-fault carrier. Arthur LeMieux, as trustee and husband, demanded underinsured motorist (UIM) coverage from Great American, which denied coverage. LeMieux compelled arbitration under the policy's arbitration clause. Great American sought a stay of arbitration via declaratory judgment, which was denied. Arbitration proceeded in December 1987, resulting in an award of $50,000 UIM benefits to LeMieux.

LeMieux moved to confirm the arbitration award in May 1988. Great American opposed and moved to vacate the award, initially unsuccessfully. Subsequently, Great American renewed its motion to vacate citing procedural rules and a recent Minnesota Supreme Court decision. The trial court ultimately vacated the judgment confirming the award and dismissed LeMieux's claim. LeMieux appeals from this order.

Legal Issues Presented

Whether a motion to vacate a judgment confirming an arbitration award can be brought under Minn.R.Civ.P. Rule 60.02 after the 90-day limit prescribed in the Minnesota Arbitration Act has expired.
Whether the trial court erred in vacating the judgment confirming LeMieux's arbitration award and dismissing his claim for underinsured motorist benefits.

Arguments of the Parties

Appellant's Arguments (Arthur LeMieux)

LeMieux argues that the arbitration award was valid and the trial court erred in vacating the judgment confirming it.
He maintains that Great American failed to timely move to vacate the arbitration award within the 90-day statutory limit.

Respondent's Arguments (Great American Insurance Company)

Great American contends that arbitration was inappropriate for interpreting no-fault coverage issues, relying on Johnson v. American Family Mutual Insurance Co..
They argue that their motion to vacate was properly brought under Minn.R.Civ.P. Rules 41 and 60.02, despite the expiration of the 90-day limit under the Arbitration Act.
Great American asserts that an earlier adverse ruling on the validity of the arbitration agreement prevented a timely motion to vacate.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Cournoyer v. American Television Radio Co., 249 Minn. 577, 83 N.W.2d 409 (1957)	Emphasizes the finality of arbitration awards to prevent delay in resolving disputes.	The court cited this precedent to underscore the importance of limiting the grounds and time for vacating arbitration awards.
Component Systems, Inc. v. Murray Enterprises of Minnesota, Inc., 300 Minn. 21, 217 N.W.2d 514 (1974)	Trial court's obligation to confirm arbitration awards if no timely motion to vacate is made within 90 days.	Used to support that the 90-day statutory limit is mandatory and cannot be circumvented by other procedural rules.
Wacker v. Allstate Insurance Co., 312 Minn. 242, 251 N.W.2d 346 (1977)	Expiration of the 90-day period bars appellate review of arbitration awards.	The court relied on this case to explain that failure to timely move to vacate leaves no grounds for appeal.
Broton v. Western National Mutual Insurance Co., 428 N.W.2d 85 (Minn. 1988)	Referenced regarding procedural grounds for vacating arbitration awards.	Great American cited this case in its renewed motion to vacate; the trial court considered it in vacating the judgment.
Johnson v. American Family Mutual Insurance Co., 426 N.W.2d 419 (Minn. 1988)	Limits arbitrability in automobile reparation cases to factual issues, emphasizing consistency in statutory interpretation.	The court acknowledged Great American's argument based on this case but rejected it as a basis to avoid the 90-day limit for vacating arbitration awards.

Court's Reasoning and Analysis

The court analyzed the statutory framework governing arbitration in Minnesota, specifically Minn.Stat. ch. 572. Arbitration awards can only be vacated within 90 days of receipt unless based on corruption, fraud, or other undue means, which Great American did not allege. The court emphasized the policy favoring finality in arbitration to avoid delays in dispute resolution, citing Cournoyer. Great American’s motion to vacate was filed nearly five months after receipt of the award, well beyond the statutory deadline.

The court rejected Great American’s attempt to circumvent the statutory time limit by relying on Minn.R.Civ.P. Rules 41 and 60.02, holding that these procedural rules cannot override the Arbitration Act’s explicit 90-day limit. The court further noted that once the trial court denied the motion to stay arbitration—a non-appealable decision—Great American was bound to proceed with arbitration and timely seek vacatur if warranted.

The argument that arbitration was inappropriate due to the nature of the dispute was found unpersuasive for purposes of extending the time to seek relief. The court concluded that the statutory framework and prior rulings required confirmation of the arbitration award absent a timely motion to vacate.

Holding and Implications

REVERSED.

The court reversed the trial court’s order vacating the judgment confirming the arbitration award and dismissing LeMieux’s claim. The direct effect is that the arbitration award stands confirmed and LeMieux’s claim for underinsured motorist benefits remains valid. The decision reinforces the strict enforcement of the 90-day statutory limit for motions to vacate arbitration awards under Minnesota law and confirms that procedural rules cannot be used to evade this limit. No new precedent beyond the application of existing arbitration statutes and case law was established.

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GREAT AMERICAN INSURANCE COMPANIES, Respondent, v. Arthur F. LeMIEUX, Appellant.

OPINION

LANSING, Judge.

Arthur LeMieux, individually and as trustee for the heirs of Carol LeMieux, appeals from a trial court's order vacating a judgment confirming LeMieux's arbitration award and dismissing his claim for underinsured motorist benefits.

FACTS

This appeal presents the narrow issue of whether a motion to vacate a judgment based on an arbitration award can be brought under Minn.R.Civ.P. Rule 60.02 after the expiration of the 90-day limit in the Arbitration Act.

Carol LeMieux died from injuries sustained when her car was struck by a semi-trailer truck driven by Oliver Busch. Busch's liability insurer, State Farm Insurance Company, offered its $100,000 policy limits to LeMieux's heirs, subject to the indemnity rights of LeMieux's no-fault carrier, Great American Insurance Company.

Arthur LeMieux, Carol LeMieux's husband, made a demand against Great American for underinsured motorist (UIM) coverage included in the policy at $50,000 per automobile. Great American denied that UIM applied, but LeMieux successfully compelled arbitration under the arbitration clause in the policy. Before the arbitration hearing Great American brought a declaratory judgment action and moved the court to stay arbitration. After a hearing the court denied the motion and the matter was arbitrated on December 18, 1987. The parties stipulated to damages of $150,000 or more, and the arbitrators, in a split decision, found that LeMieux had not been paid by State Farm within the meaning of Minn.Stat. § 65B.49, subd. 4a (1986). The arbitrators awarded LeMieux $50,000 UIM benefits and served copies of the arbitration award on January 26, 1988.

More than three months later, in May 1988, LeMieux moved for confirmation of the arbitration award under Minn.Stat. § 572.18 (1986). In response Great American moved, in June 1988, to vacate the award through a reconsideration of the order denying the initial request for a stay. The trial court denied Great American's motion, confirmed the arbitration award, and ordered prompt entry of judgment for LeMieux.

Six weeks after this hearing, Great American renewed its motion to vacate the award, citing Minn.R.Civ.P. Rules 41 and 60.02 and the intervening decision in Broton v. Western National Mutual Insurance Co., 428 N.W.2d 85 (Minn. 1988). After a hearing the trial court vacated the judgment and dismissed LeMieux's claim for UIM benefits. LeMieux appeals.

ISSUE

Did the trial court err in vacating the judgment confirming LeMieux's arbitration award and dismissing his claim for UIM benefits?

ANALYSIS

Arbitration proceedings in Minnesota are governed by Minn.Stat. ch. 572 (1986). Arbitration awards may be set aside only in limited circumstances and then only if a motion to vacate is brought within 90 days of receipt of the award. Minn.Stat. § 572.19, subd. 2 (1986). Great American does not base its motion on corruption, fraud, or other undue means, the only exception to the 90-day requirement.

The rationale for severely restricting the vacation of arbitration awards is defined by the essential function of arbitration:

If the rule were otherwise, arbitration proceedings, instead of facilitating the settlement of controversies, would serve but to delay the final determination of the rights of the parties.

Cournoyer v. American Television Radio Co., 249 Minn. 577, 580, 83 N.W.2d 409, 411-12 (1957). So central is the concept of finality that

[T]he fact that the relief was such that it could not or would not be granted by a court of law or equity is not grounds for vacating or refusing to confirm the award.

Minn.Stat. § 572.19, subd. 1 (1988).

Great American was served with a copy of the arbitration award on January 26, 1988, but did not move to vacate until June 10, 1988, nearly five months later. Its motion to vacate was brought under Minn.R.Civ.P. Rule 41, pertaining to voluntary and involuntary dismissals, and Minn.R.Civ.P. Rule 60.02, pertaining to relief from final judgments. The application of § 572.19, subd. 2, cannot be circumvented by use of these rules. If no motion to vacate is brought within 90 days, the trial court is "obliged to confirm the award." Component Systems, Inc. v. Murray Enterprises of Minnesota, Inc., 300 Minn. 21, 25, 217 N.W.2d 514, 516 (1974). The expiration of the 90-day period necessarily "preclud[es] a challenge to the award * * * on appeal." Wacker v. Allstate Insurance Co., 312 Minn. 242, 251 N.W.2d 346, 349-50 (1977).

As the court stated in Wacker,

[A]ppellant's proper remedy would have been to move to vacate the award, once made, on the ground that the arbitrator exceeded his powers under Minn.Stat. § 572.19. Not having done so, there is now nothing to review on appeal and it must fail.

Id. 251 N.W.2d at 350.

Great American argues that because this case involves interpretation of no-fault coverage, arbitration was inappropriate. See Johnson v. American Family Mutual Insurance Co., 426 N.W.2d 419 (Minn. 1988). In Johnson the supreme court, recognizing a need for consistency in the interpretation of no-fault statutes, limited arbitrability in automobile reparation cases to issues of fact. Id. 426 N.W.2d at 421. Even assuming the issue was not properly before the arbitration panel, Great American's remedy does not change. Once the trial court denied the motion to stay arbitration, a non-appealable decision under Minn.Stat. § 572.26, subd. 1 (1986), Great American was bound by the arbitration process. The method to obtain review was to move to vacate within the 90-day limit, asserting the arbitrators exceeded their powers.

We are not persuaded by Great American's argument that it was prevented from bringing a motion to vacate because of an earlier adverse ruling on whether there was an agreement to arbitrate. See Minn.Stat. § 572.19, subd. 1(5) (1986). The motion to stay and the court's denial centered on whether LeMieux was eligible for UIM benefits provided in the policy. It has not been disputed that Great American's policy contained a valid and enforceable arbitration clause.

DECISION

Reversed.