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State Farm Mutual Automobile Insurance Co. v. Dowdy4/22/2005
ll confront hardship due to delays associated with adjudication. We address each of these contentions below.
D. Although Undue Delay Due to Bifurcation Is a Valid Concern, It May Be Addressed Through an Alternative Approach
The Dowdys argue that if the coverage matters involved in this case are not arbitrated they will have to endure excessive delay. The Dowdys point out that in Lawrence, which also involved NIED and loss of society coverage claims, the bifurcated case took almost seven years to finally resolve. The Dowdys maintain that if they are forced to wait for the superior court's resolution of their case and the likely Alaska Supreme Court appeal, they will not be able to put the terrible event of their daughter's death behind them for several more years. They argue that " ut of respect for [their] grief the court should allow them to promptly present to the arbitrators their testimony about the terrible ordeal of September 30, 2000."
The Dowdys are correct in their assessment of the delaying effects of court adjudication of coverage issues before arbitration of liability and damages. But commentators have recognized an alternative approach that addresses this problem of delay. For example, in his treatise, Uninsured and Underinsured Motorist Insurance, Professor Alan Widiss suggests that courts should have flexibility in determining the order of bifurcated proceedings:
There seems to be little, if any, reason why coverage issues - which insurers insist on resolving within the judicial system - must or should be decided first. To the extent that arbitration in fact provides an efficient and expeditious resolution process, it seems preferable to pursue that adjudication first.
We agree with Professor Widiss that in some cases it may be preferable to allow arbitration to precede adjudication of coverage issues. Application of such an approach could allow plaintiffs to be heard on the adjudicated factual issues on a more expedited basis. We leave discretion to trial courts to allow arbitration of liability and damages to proceed before or even concurrently with court adjudication of coverage in order to alleviate concerns regarding delay.
E. The Policy Coverage Issues Are Not Inextricably Intertwined with Issues of Fault and Liability in this Case
The Dowdys also contend that the policy coverage issues are inextricably intertwined with the issues of fault and liability committed by contract to arbitration. They argue that an arbitrator should therefore decide all these issues together.
Several courts have determined that arbitration is appropriate where underinsured motorist coverage questions are inseparable from issues of fault and damages included in the policy's arbitration clause. A number of other courts considering arbitration policies in the context of business contracts have determined that arbitration is necessary when nonarbitrable claims are inseparable from arbitrable matters. These cases help persuade us that coverage matters not committed to arbitration by the terms of the policy should nevertheless be arbitrated where they are inextricably intertwined with matters committed by contract to arbitration. Where the findings committed to the arbitrator would decide the coverage question, then the coverage question should be subject to arbitration.
The Dowdys' NIED and loss of society claims are not inextricably intertwined with the policy coverage issues. To prevail before the arbitrator on their NIED sensory observation claims, the Dowdys must show that (1) the defendant negligently caused injury to a close relative, (2) the plaintiffs experienced shock as the result of a sudden se
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