November 2016 E-Bulletin for Arbitrators

This month's E-Bulletin topics include:

  1. Thank you Arbitrators!
  2. QwikTip: Hearing a Policy Limits Case
  3. Is the Absence of a Prior Settlement Attempt a Bar to Recovery?
  4. Passenger Statements
  5. Writing Readable Decisions

Thank you Arbitrators!

Thanksgiving Thank you Arbitrators

In this season of thanksgiving, we want to thank our member arbitrators for your continued support hearing cases and efforts in writing quality decisions.

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QwikTip: Hearing a Policy Limits Case

There are two points to remember when hearing a case involving policy limits:

1. Make a decision regarding liability and damages.

You must determine what the award is to determine if the policy limits are even at issue. For example, if an Applicant has a $7,000 claim and proves the Respondent is 50% liable, the award is $3,500, which is within the policy limit. In this scenario, the affirmative defense would be denied and the decision entered. Needless to say, other considerations must be given if there are additional exposures against the policy limits.

2. Confirm whether policy limits have been accepted by the Applicant.

If, in the above example, the Respondent was deemed to be 80% liable, the award would be $5,600, which would be in excess of the policy limit. But, before you grant the affirmative defense of policy limits, you must view the Applicant's information to see if it has accepted policy limits. Such acceptance will be noted on the Applicant's tab in the Hearing Document (graphic 1) or as an Affirmative Pleading on the initial Decision Entry Web page (graphic 2).

Do not grant an affirmative defense of policy limits simply because the Applicant's Total Company Claim Amount exceeds the Respondent's policy limit. Determine whether the actual award amount will be within or equal to the policy limit, whether the Applicant has agreed to accept the policy limit as final settlement if its claim, and, when applicable, whether there are any additional exposures seeking recovery from the Respondent's policy limits.

Applicant Tab/Hearing Document View

Affirmative Pleading View

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Is the Absence of a Prior Settlement Attempt a Bar to Recovery?

We have noticed an increase in responding companies disputing damages based on the absence of a settlement attempt prior to filing arbitration. These companies cite the preamble to the Rules (a/k/a the condition precedent) to support this argument.

"As a condition precedent to using these rules, the parties should attempt to settle the subject dispute prior to filing arbitration."

Unfortunately, some arbitrators have perceived the absence of a prior settlement attempt as a rule violation. Notice the word "should" is used, not must. "Should" is used to convey a recommendation or advice. In contrast, "must" is used to indicate an obligation or a requirement. The membership accepts that, in some instances, settlement may not be attempted before filing in arbitration. The absence of a settlement attempt prior to filing is not a bar to recovery. When hearing this type of case, simply verify that the Applicant's damages are valid and supported, and award accordingly.

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Passenger Statements

When you receive a new claim and notice there were passengers in one or more of the vehicles, what are your best practices? Do you talk to the passengers, take statements, or ask the driver about them? Do you dismiss their presence with the assumption that only biased information will be provided by them?

Arbitrators are required to consider all the evidence submitted. It is up to them to determine if the evidence supports the arguments or falls short. If a passenger statement corroborates the driver's story, that constitutes additional support. It is also up to the arbitrator to determine how much weight is placed on the evidence. A supporting passenger statement may receive less weight than an independent witness statement or it may be given more, depending on what questions were asked and how the passenger responded.

Image of a witness statementWe all know that there is limited time when investigating claims. For our members, a decision must be made between trying to contact everyone involved in an accident, just the drivers, or some common ground between. If your claim is word versus word, in which each driver claims to have had the right-of-way, the police report is inconclusive, and there are no independent witnesses, a passenger statement may be enough to tilt the arbitrator decision scales in your favor, again, depending on the questions asked and the answers provided.

The evidence will be considered in terms of relevance and credibility. In other terms, is it pertinent to the accident and believable? If the passenger was in one of the vehicles involved in the accident, the information should relate to the accident, hence relevance. Credibility is a higher hurdle to maneuver. Questions of bias naturally arise based on an expectation that the passenger knows the car's driver and may provide only information that will benefit the driver. This is where the arbitrator's experience comes into play, interpreting the answers given by the passenger to determine how and if the information fits with the other evidence submitted. The arbitrator will not dismiss the passenger's statement out-of-hand but will read, consider, and weigh it to determine what value it brings to that party's position.

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Writing Readable Decisions

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Email and social media etiquette informs us that the use of text in ALL CAPS means that you are yelling.

The message, "Dinner?" suggests you are being asked about dinner plans.

The message, "DINNER?" suggests you may have missed an earlier message or you are late for dinner.

I'm sure none of you would feel at ease receiving the all caps message.

The same can be said for entering your decisions. Hopefully, a party may not think you are yelling at them through your decision, but you don't know how the reader will interpret the use of all caps.

Perhaps more important, WHEN MESSAGES INVOLVE READING, SUCH AS DECISIONS, THE USE OF ALL CAPS RESULTS IN LOWER READABILITY. TEXT IN ALL CAPS SLOWS PEOPLE DOWN. Studies show that people read uppercase words up to 10 percent slower than other text.

Please refrain from using all caps when entering your arbitration decisions. Thank you.

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