Halversen v. Allstate Property and Casualty

2021 UT App 59THE UTAH COURT OF APPEALS
LANE HALVERSEN,
Appellee,
v.
ALLSTATE PROPERTY AND
CASUALTY INSURANCE COMPANY,
Appellant.
Opinion
No. 20200085-CA
Filed June 4, 2021
Third District Court, Salt Lake Department
The Honorable Todd M. Shaughnessy
No. 170906110
Lynn S. Davies, Rafael A. Seminario, and Samantha
E. Wilcox, Attorneys for Appellant
Justin M. Hosman and Joshua S. Baron, Attorneys
for Appellee
JUDGE DIANA HAGEN authored this Opinion, in which JUDGES
GREGORY K. ORME and MICHELE M. CHRISTIANSEN FORSTER
concurred.
HAGEN, Judge:
¶1 Allstate Property and Casualty Insurance Company
appeals the district court’s denial of its motion to dismiss Lane
Halversen’s complaint. Halversen sought a trial de novo in the
district court after arbitration because he was dissatisfied with
the arbitration award he received on his underinsured motorist
(UIM) claim. Allstate moved to dismiss, arguing that Utah’s UIM
statute allows for a trial de novo only where the arbitration
award “was procured by corruption, fraud or other undue
means.” See Utah Code Ann. § 31A-22-305.3(8)(o)(i) (LexisNexis
2017)). We disagree with Allstate’s interpretation of the UIM
Halversen v. Allstate
statute and hold that either party, within twenty days of service
of the arbitration award, may request a trial de novo for any
reason. Accordingly, we affirm the court’s denial of Allstate’s
motion to dismiss and the resulting judgment.
BACKGROUND
¶2 Halversen was injured when an underinsured driver rear-
ended his vehicle. Because the policy limits of the at-fault
driver’s insurance did not fully cover his damages, Halversen
submitted a claim to Allstate, his own motor vehicle insurance
carrier, under his policy’s UIM coverage provision. 1 When
Allstate declined to pay Halversen the limits of his UIM
coverage, Halversen elected to resolve his claim in binding
arbitration as authorized by the UIM statute. See Utah Code
Ann. § 31A-22-305.3(8)(a)(i) (LexisNexis 2017).
¶3 Halversen received an arbitration award, but within
twenty days of receiving that award, he filed a complaint in
district court requesting a trial de novo. At the time the
complaint was filed, the relevant portion of the UIM statute
provided as follows:
(o) An arbitration award issued under this section
shall be the final resolution of all claims not
excluded by Subsection (8)(l) between the parties
unless:
1. Underinsured motorist coverage is insurance provided by the
insured’s own auto insurance provider. See generally Utah Code
Ann. § 31A-22-305.3(1)(b)(i), (2)(a) (LexisNexis Supp. 2020)).
“The purpose of UIM coverage is to provide a source of
indemnification for accident victims when the tortfeasor does
not have adequate coverage.” See State Farm Mutual Auto. Ins. Co.
v. Green, 2003 UT 48, ¶ 31, 89 P.3d 97.
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(i) the award is procured by corruption,
fraud, or other undue means;
(ii) either party, within 20 days after service
of the arbitration award:
(A) Files a complaint requesting a trial
de novo in the district court; and
(B) Serves the nonmoving party with
a copy of the complaint
requesting a trial de novo under
Subsection (8)(o)(ii)(A).
Id. § 31A-22-305.3(8)(o). 2 In a prior version of the statute,
subparts (i) and (ii) were separated by the word “or.” See id.
§ 31A-22-305.3(7)(o) (LexisNexis 2010). In 2011, the legislature
deleted the word “or,” leaving the two subparts connected only
by a semicolon without a conjunction. See id. (LexisNexis Supp.
2011).
¶4 On the eve of trial, Allstate moved to dismiss the
complaint for lack of subject matter jurisdiction, arguing that a
trial de novo was authorized only when the arbitration award
was both “procured by corruption, fraud, or other undue
means” and a complaint seeking a trial de novo was filed within
twenty days. See id. § 31A-22-305.3(8)(o)(i) (LexisNexis 2017).
Allstate asserted that by removing the word “or,” the legislature
effectively replaced “or” with “and,” creating both a substantive
and a procedural requirement for a party to request a trial de
novo in district court.
2. The relevant provisions are currently codified in subsection
(8)(p). See Utah Code Ann. § 31A-22-305.3(8)(p) (LexisNexis
Supp. 2020).
20200085-CA 3 2021 UT App 59Halversen v. Allstate
¶5 The district court rejected that argument, explaining that
“if what the legislature had intended was to remove the ‘or’ and
replace it with ‘and,’ . . . that’s what the legislature would have
done.” Instead, the court reasoned that the legislature “created a
hopelessly ambiguous statute because [it] took what was
previously a complete sentence and [it] removed a necessary
connector.” The court concluded that removing the conjunction
“was a mistake; this was a drafting error by the legislature.” In
light of the resulting ambiguity, the court looked to “the
underlying legislative policy and legislative history” to interpret
the statute. The court observed that “underinsured motorist
statutes are designed to protect insureds” and should “be
liberally construed in favor of coverage.” In addition, it pointed
out that Allstate’s interpretation would “dramatically narrow[]”
the ability to review arbitration awards, yet nothing in the
legislative history suggested that “the legislature had intended
to make a policy shift [that] dramatic.” The court concluded that
the legislature had not intended to make subpart (i) a
substantive requirement for seeking a trial de novo and
accordingly denied the motion to dismiss.
¶6 The case proceeded to trial, and the jury returned a
verdict in favor of Halversen. Allstate moved for judgment
notwithstanding the verdict based on the same arguments raised
in its motion to dismiss. The district court denied the motion and
entered a final judgment. Allstate timely appealed, challenging
only the denial of its motion to dismiss and the resulting
judgment.
ISSUE AND STANDARD OF REVIEW
¶7 Allstate appeals the district court’s denial of its motion to
dismiss for lack of subject matter jurisdiction, based on the
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court’s interpretation of Utah Code section 31A-22-305.3(8)(o). 3
Whether the district court “has subject matter jurisdiction
presents a question of law, which [we] review under a correction
of error standard.” Amundsen v. University of Utah, 2019 UT 49,
¶ 19, 448 P.3d 1224 (cleaned up). Similarly, we “review questions
of statutory interpretation for correctness, affording no deference
to the district court’s legal conclusions.” State v. Gallegos, 2007
UT 81, ¶ 8, 171 P.3d 426.
ANALYSIS
¶8 Allstate argues that by removing the word “or” between
the two statutory circumstances in which an arbitration award is
not final, the legislature narrowed the UIM statute and allowed
litigants to seek a trial de novo in district court only if both: (1)
“the arbitration award was ‘procured by corruption, fraud, or
undue means,’” (quoting Utah Code Ann. § 31A-22-305.3(8)(o)
(LexisNexis 2017)), and (2) “the party seeking the trial de novo
complied with the procedural requirements for such a request.”
We disagree with Allstate’s interpretation and affirm the district
court’s ruling denying the motion to dismiss.
¶9 “Our courts use a ‘plain meaning’ approach to statutory
interpretation.” Oliver v. Utah Labor Comm’n, 2017 UT 39, ¶ 19,
424 P.3d 22. “Under this approach, we need not look beyond the
statute’s text to secondary considerations—such as legislative
history or the canon that we interpret statutes to avoid absurd
results—unless there is ambiguity in the statute.” Id. A statute is
ambiguous when “its terms remain susceptible to two or more
3. Our analysis pertains to the 2017 version of the UIM statute in
effect at the time Halversen filed the complaint. See State v. Clark,
2011 UT 23, ¶ 14, 251 P.3d 829 (explaining that the law
governing the parties’ procedural rights and responsibilities is
“the law in effect at the time of the procedural act”).
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reasonable interpretations after we have conducted a plain
language analysis.” Marion Energy, Inc. v. KFJ Ranch P'ship, 2011
UT 50, ¶ 15, 267 P.3d 863. Only then do we “resort to other
modes of statutory construction and seek guidance from
legislative history and other accepted sources.” Id. (cleaned up).
¶10 The district court ruled that when the legislature
“removed a necessary connector”—the word “or”—it
“render[ed] the statute ambiguous.” To resolve that ambiguity,
the district court relied on legislative policy and history to
interpret the statute. We afford no deference to the district
court’s conclusion that the statute is ambiguous. See State v.
Gallegos, 2007 UT 81, ¶ 8, 171 P.3d 426. Although we disagree
with that conclusion, the district court’s reading is the only
reasonable interpretation of the statute’s plain language, and we
affirm on that basis. See Olguin v. Anderton, 2019 UT 73, ¶ 20, 456
P.3d 760 (“It is within our discretion to affirm a judgment on an
alternative ground if it is apparent in the record.” (cleaned up)).
¶11 The absence of any conjunction between subparts (i) and
(ii) may well have been “a drafting error by the legislature,” but
we disagree that the omission renders the statute “hopelessly
ambiguous.” We read statutory text not in isolation but “in light
of the relevant context of the statute (including, particularly, the
structure and language of the statutory scheme).” Bright v.
Sorensen, 2020 UT 18, ¶ 59, 463 P.3d 626 (cleaned up). “Put
another way, the fact that the statutory language may be
susceptible of multiple meanings does not render it ambiguous;
all but one of the meanings is ordinarily eliminated by context.”
Oliver, 2017 UT 39, ¶ 20 (cleaned up). Here, that context
eliminates the potential ambiguity.
¶12 Under the “scope-of-subparts” canon of statutory
construction, “[m]aterial within an indented subpart relates only
to that subpart; material contained in unindented text relates to
all the following or preceding indented subparts.” Antonin
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Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal
Texts 156 (2012); see also Vanderwood v. Woodward, 2019 UT App
140, ¶ 27, 449 P.3d 983 (explaining that an unindented paragraph
“terminating in a colon, followed by a series of indented lettered
subparts . . . indicates that the subparts following the initial
paragraph are all related to the prefatory paragraph and its
objective”). This principle is illustrated by subsection (8)(o)(ii),
which provides that an arbitration award is not final when:
(ii) either party, within 20 days after service of the
arbitration award:
(A) files a complaint requesting a trial de
novo in the district court; and
(B) serves the nonmoving party with a copy
of the complaint requesting a trial de novo
under Subsection (8)(o)(ii)(A).
Utah Code Ann. § 31A-22-305.3(8)(o)(ii) (LexisNexis 2017). The
formatting indicates that the material in subpart (ii) relates to
indented subparts (A) and (B), but does not apply to subpart (i).
See Antonin Scalia & Bryan A. Garner, Reading Law: The
Interpretation of Legal Texts 156 (2012). Therefore, the twenty-day
time limit in subpart (ii) applies both to filing the complaint in
the district court and serving the nonmoving party with the
complaint. But it has no bearing on the separate exception to the
finality rule identified in subpart (i).
¶13 In contrast, subsection (8)(o) does not purport to delineate
two circumstances in which a party may request a trial de novo,
but rather two circumstances in which the arbitration award is
not final. The text in subsection (8)(o), which relates to all of the
indented subparts to follow, provides that the arbitration award
“shall be the final resolution of all claims” except in two
circumstances. The first exception—indented subpart (i)—
applies when “the award was procured by corruption, fraud or
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other undue means.” See Utah Code Ann. § 31A-22-305.3(8)(o)(i)
(LexisNexis 2017). The second exception—indented subpart
(ii)—applies when, within twenty days, either party “files a
complaint requesting a trial de novo” and serves it on the
nonmoving party. See id. § 31A-22-305.3(8)(o)(ii). Both exceptions
set forth circumstances under which the award is not final. But
only the second exception addresses the right to request a trial
de novo.
¶14 Thus, the legislature’s removal of the word “or” does not
render the statute ambiguous as to whether subpart (i) is a
substantive requirement for seeking a trial de novo. Applying
the scope-of-subparts canon of construction, only subpart (ii)
concerns the right to request a trial de novo. And that subpart
requires only that the complaint seeking a trial de novo be filed
in the district court and served on the nonmoving party “within
20 days after service of the arbitration award.” Id. No more is
required to invoke the district court’s subject matter jurisdiction.
¶15 This reading of subsection (8)(o) is consistent with the
UIM statute as a whole as well as related statutory provisions.
See Aaron & Morey Bonds & Bail v. Third Dist. Court, 2007 UT 24,
¶ 9, 156 P.3d 801 (“Pursuant to our rules of statutory
construction,” we interpret a statutory provision “in light of the
statute as a whole and in harmony with related statutory
provisions.”). Allstate contends that unless subsection (8)(o)(i) is
read as the “substantive basis” required for a trial de novo, a
party would be able to seek a trial de novo on any grounds or for
no reason at all, which would subvert the finality of arbitration
awards. But the UIM statute has a built-in disincentive to
seeking a trial de novo: if the moving party does not receive a
significantly better outcome following trial, that party is
responsible for the nonmoving party’s costs. See Utah Code Ann.
§ 31A-22-305.3(8)(q)(i) (LexisNexis 2017). By including this
provision, the legislature struck what it apparently deemed to be
the appropriate balance between promoting the finality of
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arbitration awards and allowing parties to seek a trial de novo
when confident of a more favorable verdict.
¶16 The ability to seek a trial de novo for any reason within
twenty days is also consistent with the related statute governing
arbitration in third-party motor vehicle accident cases. Much like
the UIM statute, the third-party arbitration statute provides:
(11) An arbitration award issued under this section
shall be the final resolution of all bodily injury
claims between the parties and may be reduced to
judgment by the court upon motion and notice
unless:
(a) either party, within 20 days after service
of the arbitration award:
(i) files a notice requesting a trial de
novo in the district court; and
(ii) serves the nonmoving party with
a copy of the notice requesting a trial
de novo under Subsection (11)(a)(i);
or
(b) the arbitration award has been satisfied.
Id. § 31A-22-321(11). The language in subpart (a) is almost
identical to the language in subsection 31A-22-305.3(8)(o)(ii) and
requires no “substantive basis” for seeking a trial de novo. Like
the UIM statute, the third-party arbitration statute discourages
meritless trials de novo by requiring the moving party to pay
costs if it does not obtain a significantly better result. See id.
§ 31A-22-321(13)(a). We read both subsection 31A-22-
305.3(8)(o)(ii) and subsection 31A-22-321(11)(a) as allowing
either party to request a trial de novo within twenty days for any
20200085-CA 9 2021 UT App 59Halversen v. Allstate
reason, so long as it is willing to gamble on the possibility of
being responsible for costs.
¶17 Allstate asserts that this reading would provide an
“unlimited statute of limitations” for raising the “issue of
corruption, fraud, or other undue means in a UIM arbitration”
and yet would provide no remedy if the complaining party does
not have the right to seek a trial de novo. But both a time limit
and a remedy are provided by the Utah Uniform Arbitration Act
(UUAA), which governs UIM arbitration proceedings unless
otherwise provided. See id. § 31A-22-305.3(8)(g). The UUAA
provides that an arbitration award may be vacated in certain
circumstances, including where “the award was procured by
corruption, fraud, or other undue means,” which is identical to
the language used in subpart (8)(o)(ii). See id. § 78B-11-124(1)(a)
(LexisNexis 2018). In such circumstances, a party may file a
motion with the court to vacate the award. See id. § 78B-11-
124(1). Furthermore, such a motion must be filed within ninety
days of receiving notice of the award or within ninety days after
the basis for alleging corruption, fraud, or other undue means
was “known or by the exercise of reasonable care would have
been known by the movant.” See id. § 78B-11-124(2). It is not
necessary to read subparts (i) and (ii) together to provide either a
time limit or a remedy for challenging an arbitration award
procured by corruption, fraud, or undue means because the
UUAA supplies provisions that address those concerns. 4
4. Allstate argues that there would be no reason to include
subsection (8)(o)(i) in the UIM statute if section 78B-11-124 of the
UUAA applies whenever a party asserts that an arbitration
award was procured by corruption, fraud, or other undue
means. In an appropriate case, a court will need to grapple with
whether subsection (8)(o)(i) is superfluous or whether the
legislature intended to limit the circumstances under which a
(continued…)
20200085-CA 10 2021 UT App 59Halversen v. Allstate
¶18 In sum, by removing the word “or” between subparts (i)
and (ii) of subsection (8)(o), the legislature did not render the
UIM statute ambiguous. The statute provides two separate and
independent exceptions to the finality of a UIM arbitration
award. Within twenty days, either party may request a trial de
novo in district court for any reason, but the moving party risks
liability for costs if it does not obtain a significantly better result
at trial. Separately, either party may move to set aside an
arbitration award procured by corruption, fraud, or other undue
means. Such a motion is subject to the UUAA, which governs
arbitration procedures generally. Because an allegation of
corruption, fraud, or other undue means is not required to seek a
trial de novo, the district court correctly denied Allstate’s motion
to dismiss for lack of subject matter jurisdiction.
CONCLUSION
¶19 An allegation of fraud, corruption, or other undue means
is not a prerequisite to seeking a trial de novo within the time
limits set forth in Utah Code section 31A-22-305.3(8)(o).
Accordingly, we affirm the district court’s denial of Allstate’s
motion to dismiss.
(…continued)
party could seek to vacate a UIM arbitration award to instances
in which the award was procured by corruption, fraud, or other
undue means, while excluding the other circumstances listed in
section 78B-11-124. See Utah Code Ann. § 78B-11-124(1)(b)–(f)
(LexisNexis 2018). But we do not need to interpret subsection
(8)(o)(i) in this case because Halversen did not challenge the
finality of the award based on corruption, fraud, or other undue
means; instead he sought a trial de novo, which is governed
solely by subsection (8)(o)(ii). See id. § 31A-22-305.3(8)(o)(ii).
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