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 Plaintiffs were involved in a car accident on July 24, 1994, when their vehicle was rear-ended by another driver (the tortfeasor). The tortfeasor's insurance policy provided $50,000 per person in liability coverage, while the Plaintiffs' insurance policy with the Defendant included underinsured motorist (UIM) coverage totaling $75,000 per person. The Plaintiffs alleged that the tortfeasor was underinsured and sought damages exceeding the tortfeasor's policy limits. They settled with the tortfeasor's insurer for $50,000 each and pursued arbitration with the Defendant to determine damages under the UIM coverage (paras 3-4).
Procedural History
- District Court of Taos County: Confirmed the arbitration award in favor of the Plaintiffs without modifying it to account for offsets from the tortfeasor's insurance settlement (paras 1, 6).
Parties' Submissions
- Defendant (Appellant): Argued that the arbitration award should be modified to include a $50,000 offset for each Plaintiff, reflecting the settlement amounts received from the tortfeasor's insurer. The Defendant contended that the arbitrators exceeded their authority by addressing offsets, that the award was ambiguous, and that the trial court erred in refusing to consider affidavits from arbitrators to clarify the award (paras 1, 6, 9).
- Plaintiffs (Appellees): Asserted that the arbitrators had the authority to determine all claims, including offsets, and that the arbitration award should be confirmed as written. They argued that the offsets were within the scope of arbitration and that the trial court correctly refused to consider extrinsic evidence, such as affidavits, to modify the award (paras 9, 13).
Legal Issues
- Whether the arbitrators exceeded their authority by addressing offsets for settlement amounts received by the Plaintiffs from the tortfeasor's insurer.
- Whether the trial court erred in confirming the arbitration award without clarifying whether the offsets were included in the arbitrators' calculations.
- Whether the trial court should have considered affidavits from arbitrators to clarify the award (paras 1, 9, 13).
Disposition
- The Court of Appeals reversed the trial court's confirmation of the arbitration award, vacated the amended judgment, and remanded the case for clarification from the arbitrators regarding whether the offsets were included in their calculations (paras 2, 17, 19).
Reasons
Per Rudy S. Apodaca J. (Pickard CJ and Donnelly J. concurring):
- The Court held that the scope of arbitration is determined by the parties' agreement, not by the trial court's order. The parties had agreed that the arbitrators would determine total damages without considering offsets, as the offsets were already settled and not arbitrable (paras 11-13).
- The trial court erred in confirming the award without clarifying whether the arbitrators included the $50,000 offsets in their calculations. The ambiguity in the award required clarification from the arbitrators under the New Mexico Arbitration Act (paras 9, 17).
- The Court rejected the Plaintiffs' argument that modifying the award to reflect the offsets would affect the merits of the arbitrators' decision. The offsets were a separate issue and did not alter the arbitrators' determination of total damages (para 15).
- The trial court's refusal to resubmit the matter to the arbitrators for clarification was incorrect. The New Mexico Arbitration Act allows for resubmission to address ambiguities or errors in the award (paras 16-17).
- The Court instructed the trial court to remand the case to the arbitrators for clarification. If the offsets were not included in the award, the trial court must deduct them from the judgment (para 19).