Federal Mutual Insurance v. Schermerhorn

California Court of Appeal Dec 21, 1965 No. Civ. 22320Published

Before: Agee

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Holding. The court held that a preliminary injunction preventing an insured from proceeding with arbitration under an uninsured motorist policy pending a judicial determination of the other driver's insurance status constitutes an abuse of discretion.

Issues

Whether the issue of whether a motorist is 'uninsured' is properly triable in arbitration proceedings under the Uninsured Motorist Coverage Act.
Whether a preliminary injunction delaying arbitration pending a judicial determination of insurance coverage constitutes an abuse of discretion.

Disposition. reversed

Quotations verified verbatim against the opinion

“the uninsured motorist question is properly triable in the arbitration proceedings.”

“it would virtually deprive the insured of the value of arbitration as a speedy remedy under the Uninsured Motorist Coverage Act.”

“the continuance of the preliminary injunction in the instant ease until the appeal of Federal from the judgment in favor of Allstate is finally adjudicated would constitute an abuse of such discretion as a matter of law.”

AGEE, J.

On December 10, 1960, Patricia Schermerhorn was injured as the result of a collision between an automobile in which she was riding and a pickup truck owned and being driven by George Matsunaga.

Allstate Insurance Company had issued a public liability insurance policy on another vehicle owned by Matsunaga but there was no existing policy on the pickup truck. However, the Allstate policy contained a “temporary substitute” clause and Matsunaga claimed coverage of the pickup truck under its provisions. Allstate denied such coverage.

Federal Mutual Insurance Company had issued a public liability insurance policy on the automobile in which Schermerhorn was riding. It provided uninsured motorists’ coverage and contained a provision to settle by arbitration any controversy relating to liability or damages arising under such coverage.

On February 25, 1964, Schermerhorn requested arbitration under this provision and caused a hearing to be scheduled before the American Arbitration Association for May 28, 1964.

On April 15, 1964 Federal filed the within action against Allstate, Matsunaga and Schermerhorn, seeking a declaration of whether Allstate’s policy covered Matsunaga’s pickup truck.

Federal also asked for a preliminary injunction against Schermerhorn, restraining her from proceeding with the arbitration until the determination of its dispute with Allstate. Such an injunction was granted and Schermerhorn has appealed.

[902]

On February 11, 1965 the issue as between Federal, Allstate and Matsunaga was tried by the court sitting without a jury.

On April 23, 1965, the court filed a “Memorandum of Opinion,” holding that Allstate’s policy did not cover Matsunaga or his pickup truck.

After settlement of findings and conclusions of law, judgment in favor of Allstate was entered on December 10, 1965. Federal has stated that it intends to appeal therefrom. Meanwhile, the preliminary injunction continues to prevent Schermerhorn from pursuing the remedy provided by the Uninsured Motorist Coverage Act. (Stats. 1959, ch. 817; former Ins. Code, § 11580.2, as in effect during the period pertinent herein.)

Federal Mutual Insurance v. Schermerhorn

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AGEE, J.

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