Cedillo v. Farmers Insurance Co. – Motorcycle Accident Arbitration

Increasingly, auto insurance policies are containing provisions that require insureds to handle any disputes through arbitration, rather than in a courtroom. motorcycle5

Understand that when you file a claim, your insurer more than likely isn’t going to grant that request automatically. Insurers will conduct their own investigation of the circumstances, the damages and your injuries and make a determination on how much they should offer a settlement amount. Almost always, this amount is lower than what you should receive, and that’s why so many cases wind up in court.

However, when insurance policies have an arbitration clause, it means the dispute has to be handled by a designated third party – not a judge.

Just because these disputes aren’t resolved in a court room doesn’t mean you won’t need an experienced accident lawyer. You will still need assistance in gathering and presenting evidence that will bolster your claim. A recent motorcycle accident victim had her claim initially handled by an arbitrator, though the case still ended up before the Idaho Supreme Court for a final ruling on disputed issues.

In Cedillo v. Farmers Insurance Co. of Idaho, plaintiff was a rider on the back of a motorcycle when the operator lost control of the vehicle and crashed into a concrete barrier. She suffered extensive injuries as a result.

Plaintiff had an auto insurance policy with defendant, and it obligated the company to compensate her for underinsured motorist damages of $100,000 per person or $500,000 per accident.

Motorcycle operator had his own insurance policy for $100,000 in bodily injury coverage and $5,000 for medical payment coverage.

In July 2009, plaintiff sent insurer a letter indicating she’d settled her claim with the operator for his policy limits, and sought to recover her own policy limit of $500,000.

The insurer instead sent plaintiff a check for $25,000, which it indicated was the value of her UIM claim.

Because plaintiff disputed this and the policy contained a binding arbitration agreement, the matter was sent to an arbitrator.

(The motorcycle operator, a lawyer who later married plaintiff, represented her at the arbitration hearing.)

Arbitrator issued an interim award determining she’d suffered $257,000 in economic damages and $150,000 in non-economic damages, and awarded a total of $407,000, without adjustments. The award was later reduced by $105,000 (which was paid by operator’s insurer), $22,000 for a pre-existing condition and $25,000 for insurer’s previous payment and some other adjustments. After all this, the award was $100,300. However, interest was applied in the amount of $103,000.

Defendant sought to modify that interest amount, but arbitrator denied this motion. Plaintiff then filed a petition to confirm the arbitration award in district court, and included an amended motion for attorneys fees. Defendant sought to modify/correct the arbitration award and disallow costs and attorney fees.

District court affirmed the amended final award, and held it lacked authority to modify arbitrator’s prejudgment interest award. Further, the request for $121,000 in attorney’s fees was not based on an illegal contract, and plaintiff was entitled to those fees.

Defendant appealed, and Idaho Supreme Court affirmed. Defendant had argued the arbitrator miscalculated prejudgment interest and attorney’s fees should not have been granted. The court ruled the arbitrator made a legal decision on how to apply the payment, but did not commit any math error. The award was affirmed.

If you have been injured in an accident, contact the Hollander Law Firm at 888-751-7777 for a free and confidential consultation. There is no fee unless we win.

Additional Resources:

Cedillo v. Farmers Insurance Co. of Idaho,March 3, 2015, Idaho Supreme Court

More Blog Entries:

Florida v. Dorsett – Hit-Run Legal Standard Toughens, March 10, 2015, Motorcycle Accident Lawyer Blog