|
An arbitration panel exceeded its authority when it reduced an arbitration award because the action was not taken to clarify the initial award or correct a mistake; however, the Colorado state court still confirmed the reduced award because the original award exceeding the insurance policy limits.
In Rocha v. Financial Indem. Corp., No. 05CA2156, 2006 WL 3803422 (Colo. Ct. App. Dec. 28, 2006), Rocha brought claims under her uninsured motorist policy with Financial following an accident with an uninsured motorist. The parties disputed as to the value of Rocha's claim, and the dispute was submitted to arbitration.
An arbitration panel issued a $40,000 award in Rocha's favor. However, when Financial requested that the arbitration panel reduce the award to the policy's limit of $25,000, the panel did so.
Rocha then filed a motion to confirm the original award of $40,000, and this Court held that the arbitration panel erred in reducing the amount of the award. Because the amended award did not clarify the initial award or correct a mistake, and because the modified award "significantly altered the amount to be received by [Rocha]," the arbitration panel exceeded its authority by modifying the award. See Applehans v. Farmers Ins. Exchange, 68 P.3d 594 (Colo. App. 2003).
However, the Court confirmed the award in the amount of $25,000, the policy limit. The Court noted that an arbitrator is not empowered to issue an award in excess of the policy limit unless the limit itself is an issue presented to the arbitrator. In this case, because the parties never disputed the amount of the policy limit in the arbitral forum, the arbitrator was without power to issue an award in excess of the policy limits.
The Court also rejected Rocha's argument that Financial's failure to present evidence of the policy limit at the arbitration hearing resulted in a waiver of the right to assert the limit. Financial was not required to present any evidence of the policy limit because the parties did not dispute the limit.
Subscribe to a free weekly update on ADR case law and
legislation
|