This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.
Facts
The Plaintiff and her son were injured in a car accident involving an uninsured motorist. The Plaintiff filed a claim with the Defendant insurance company for uninsured motorist benefits. The parties submitted the claim to arbitration, where the Plaintiff was awarded $90,000 plus costs, and her son was awarded $9,216.50. The Defendant paid the son's award and costs but contested the Plaintiff's award, invoking a clause in the insurance policy that allowed for a trial de novo if the arbitration award exceeded the statutory minimum for bodily injury liability ($25,000 in New Mexico).
Procedural History
- District Court, November 27, 1991: Denied the Plaintiff's motion to confirm the arbitration award and granted the Defendant's request for a trial de novo, based on the insurance policy's clause.
Parties' Submissions
- Plaintiff-Appellant: Argued that the trial court erred in vacating the arbitration award and granting a trial de novo. She contended that the clause allowing for a trial de novo violated public policy and that the trial court exceeded its authority under the Uniform Arbitration Act.
- Defendant-Appellee: Asserted that the arbitration award exceeded the statutory minimum for bodily injury liability, entitling it to a trial de novo under the insurance policy. It also argued that the trial court properly vacated the award under Section 44-7-12(A)(5) of the Uniform Arbitration Act, as there was no binding arbitration agreement for awards exceeding the statutory minimum.
Legal Issues
- Does the clause in the insurance policy allowing for a trial de novo when arbitration awards exceed the statutory minimum for bodily injury liability violate public policy?
- Did the trial court exceed its authority under the Uniform Arbitration Act by vacating the arbitration award and granting a trial de novo?
Disposition
- The Supreme Court of New Mexico affirmed the trial court's decision to vacate the arbitration award and grant a trial de novo.
Reasons
Per Ransom J. (Montgomery C.J. and Frost J. concurring):
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The Court held that the clause in the insurance policy allowing for a trial de novo when arbitration awards exceed the statutory minimum for bodily injury liability does not violate public policy. The Court distinguished this case from Dairyland Insurance Co. v. Rose, noting that the legislature had not mandated finality for arbitration awards in cases where the parties contract otherwise. The Court emphasized that parties are free to contract for arbitration terms unless they contradict public policy, which was not the case here.
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The Court found that the trial court did not exceed its authority under the Uniform Arbitration Act. Section 44-7-12(A)(5) permits vacating an arbitration award if there was no agreement to arbitrate. The insurance policy explicitly limited binding arbitration to awards below the statutory minimum, and the Defendant had preserved its objection to binding arbitration for awards exceeding that limit. The Defendant's participation in arbitration with this objection did not waive its rights under the policy.
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The Court concluded that the trial court properly vacated the arbitration award and granted a trial de novo, as the Defendant met its burden of proving the absence of a binding arbitration agreement for awards exceeding the statutory minimum.