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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Allstate Insurance Company v. Nathan Harbour, Allstate Insurance Company v. Kenneth N. Mattison (7/23/2021) sp-7545

Allstate Insurance Company v. Nathan Harbour, Allstate Insurance Company v. Kenneth N. Mattison (7/23/2021) sp-7545

          Notice:  This opinion is subject to correction before publication in the PACIFIC  REPORTER.  

          Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,  

          303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email  

          corrections@akcourts.gov.  



                    THE  SUPREME  COURT  OF  THE  STATE  OF  ALASKA  



ALLSTATE  INSURANCE  COMPANY,   )  

                                                               )   Supreme  Court  Nos.  S-17307/17610  

                             Appellant,                        )   (Consolidated)  

                                                               )  

                                                                                                                       

          v.                                                   )   Superior Court No. 4FA-16-02769 CI  

                                                               )  

                 

NATHAN HARBOUR,                                                )                      

                                                                   O P I N I O N  

                                                               )  

                                                               )                                  

                             Appellee.                             No. 7545 - July 23, 2021  

                                                               )  

                                                               )  

                                                              )  

ALLSTATE INSURANCE COMPANY,  

                                                              )  

                             Appellant,                       )  

                                                              )  

                                                                                                                       

          v.                                                  )    Superior Court No. 4FA-17-01656 CI  

                                                              )  

                                                              )  

KENNETH N. MATTISON,  

                                                              )  

                             Appellee.                        )  

                                                               )  



                                                                                                      

                   Appeal in File No. S-17307 from the Superior Court of the  

                                                                                               

                   State of Alaska, Fourth Judicial District, Fairbanks, Douglas  

                                                                                                      

                   Blankenship, Judge.  Appeal in File No. S-17610 from the  

                                                                                              

                   Superior  Court  of  the  State  of  Alaska,  Fourth  Judicial  

                                                                                                      

                   District,   Fairbanks,   Douglas   Blankenship   and   Earl   A.  

                                   

                   Peterson, Judges.  



                                                                                                      

                   Appearances:           Elizabeth  Slattery  and  Alfred  Clayton,  Jr.,  

                                                                                                  

                   Clayton & Diemer, LLC, Anchorage, for Appellant.  Ward  

                                                                                           

                   Merdes, Merdes Law Office, P.C., Fairbanks, for Appellees.  


----------------------- Page 2-----------------------

                                                                                                                       

                       Before:           Bolger,  Chief  Justice,  Winfree,  Maassen,  and  

                                                                                                 

                       Borghesan, Justices.  [Carney, Justice, not participating.]  



                                             

                       WINFREE, Justice.  



I.          INTRODUCTION  



                       The   primary   issue   in   these   consolidated   appeals   is   the   scope   of   an  



automobileinsurancepolicy'sarbitrationprovision. Two                                             insuredswith           identical Allstate  



Insurance   Company   medical   payments   and   uninsured/underinsured   motorist   (UIM)  



insurance coverage settled with their respective at-fault drivers for applicable liability                                              



insurance policy limits and then made medical payments and UIM benefits claims to  

                                                                                                                                                  



Allstate.  Allstate and the insureds were unable to resolve the UIM claims and went to                                                            



arbitration as the policy required.   The arbitration panels initially answered specific  

                                                                                                                                       



questions submitted about the insureds' accident-related damages.   At the insureds'  

                                                                                                                                     



requests  but  over  Allstate's  objections,  the  panels  later  calculated  what  the  panels  

                                                                                                                                          



believed Allstate ultimately owed the insureds under their medical payments and UIM  

                                                                                                                                             



coverages and issued final awards.   Allstate filed superior court suits to confirm the  

                                                                                                                                                



initial damages calculations, reject the final awards as outside the arbitration panels'  

                                                                                                                                         



authority, and have the court determine the total amounts payable to the insureds under  

                                                                                                                                            



their policies.  The judge assigned to both suits affirmed the final arbitration awards;  

                                                                                                                                        



Allstate appealed both decisions, which we consolidated for consideration and decision.  

                                                                                                                                      



                       Because the arbitration panels had no authority to determine  anything  

                                                                                                                                     



beyond the insureds' damages arising fromtheir accidents and because Allstate withheld  

                                                                                                                                       



its consent for the panels to determine anything else, we reverse the superior court's  

                                                                                                                                         



decisions and judgments.  We also reverse some aspects of the court's separate analysis  

                                                                                                                                       



and rulings on legal issues that the panels improperly decided. Given (1) the arbitration  

                                                                                                                                    



panels' damages calculations and (2) our clarification of legal issues presented, we  

                                                                                                                                                



                                                                        -2-                                                                 7545
  


----------------------- Page 3-----------------------

remand for the superior court to determine the amount, if any, Allstate must pay each                                                                                                                                                              



insured under their medical payments and UIM coverages.                                                                                        



II.                 BASIC UIM CONCEPTS                        



                                        Automobile liability insurers issuing bodily injury and death policies in                                                                                                                                         



                                                                                                                           1  

Alaska must offer optional UIMcoverage.                                                                                                                                                                                            

                                                                                                                                An underinsured motor vehicle is statutorily  



                                                                                                                                                                                                                                                       

defined as having insurance policy liability limits that are less than the damages for  



                                                                                                                                                                                                                                                       

bodily injury or death that an accident victim is legally entitled to recover from the  



                                                                                   2  

                                                                                                                                                                                                                                                      

vehicle's owner or operator.                                                            In other words, UIM coverage insures against the risk that  



                                                                                                                                                                                                                                                       

a liable motorist with no or insufficient liability insurance coverage may be unable to pay  



                                                                                          

the insured's accident-related damages.  



                                                                                                                                             3  

                                                                                                                                                                                                                                          

                                                                                                                                                   An insurer's maximum UIM liability  

                                        UIM coverage is excess coverage. 



                    1                   AS 21.96.020(c) (requiring, in Title21's regulation of insurance in Alaska,                                                                                                                        



that automobile liability insurer for bodily injury and death offer                                                                                                                                         UIM coverage at                               

various policy                             limit options); AS 28.20.440(a)-(b) (setting out, in AlaskaMotor Vehicles                                                                                                                   

 Safety Responsibility Act (AMVSRA), required provisions of motor vehicle liability                                                                                                                                                      

policy,   including   that   accompanying   UIM coverage                                                                                                          must   not   be   below   mandatory  

minimumfor liability insurance); AS 28.20.445 (setting out, in AMVSRA, requirements                                                                                                                                       

for UIM coverage); AS 28.22.201-.231 (setting out, in Alaska Mandatory Automobile                                                                                                                                            

Insurance    Act    (AMAIA),    additional    UIM    coverage    provisions);    see    generally  

Progressive Ins. Co. v. Simmons                                                                      , 953 P.2d 510, 520-22 (Alaska 1998) (discussing                                                                        

interplay   between   Title   21,   AMVSRA,   and   AMAIA).     Insureds   may   waive   UIM  

coverage in writing.                                          AS 21.96.020(e); AS 28.22.201(a)(3); AS 28.20.445(e)(3).                                                                        



                    2                   AS 28.90.990(30).  The statute does not define "uninsured motor vehicle"  

                                                                                                                                                                                                                                        

but the term's meaning is clear from the context; it is a motor vehicle not covered by  

                                                                                                                                                                                                                                                         

liability insurance to pay the damages that an accident victimis legally entitled to recover  

                                                                                                                                                                                                                                           

from the at-fault vehicle's owner or operator.  

                                                                                                            



                    3                   AS28.20.445(b) (providing UIMcoverage is "excess to" amounts payable  

                                                                                                                                                                                                                                          

under automobileliability,medical payments,andworkers'compensation coverages and  

                                                                                                                                                                                                                                                       

"may not duplicate amounts paid or payable" under those coverages); see generally  

                                                                                                                                                                                                                                    

                                                                                                                                                                                                                         (continued...)  



                                                                                                                            -3-                                                                                                                   7545
  


----------------------- Page 4-----------------------

is   "the   lesser   of"   (1)   the   difference   between   the   insured's   damages   caused   by   an  



underinsured motorist and the amounts paid to the insured "by or for a person who is or                                                                       



                                                                                                                                             4  

may be held legally liable for the damages" or (2) the UIM coverage limits.                                                                     



                                                                                                                                               

                         Thelegislaturehas not barred insurers fromincluding arbitrationprovisions  



                                                                                                                                              

in  UIM  coverage  policies.                            But  the  legislature  has  mandated  that  UIM  arbitration  



                                                                                                                                                   

provisions provide that "all expenses and fees, not including counsel fees or adjuster  



                                                                                                                                                            

fees, incurred because of arbitration or mediation shall be paid as determined by the  

arbitrator."5  



III.         FACTS AND PROCEEDINGS  

                                         



            A.           The Insureds' Allstate Coverage  

                                                                                           



                         Allstate issued separate automobile insurance policies to Nathan Harbour  

                                                                                                                                                  

and Kenneth Mattison. The policies haveidentical provisions for medical payments6 and  

                                                                                                                                                           



            3            (...continued)  



                                                                                                                                                         

Simmons, 953 P.2d at 514-15 (discussing 1990 statutory change of UIM coverage from  

                                                                                                                                                  

"reduction" framework, starting with UIM policy limits and reducing for all amounts  

                                                                                                                                        

paid or payable to insured from other sources, to an "excess" framework, compensating  

                                                                                                                                              

an  insured  when  other  recovery  sources  are  exhausted  but  insured  has  remaining  

                                                                                                                                                         

uncompensated damages);  Victor v. State Farm Fire & Cas. Co., 908 P.2d 1043, 1044  

                                                                                                                                                     

(Alaska1996)(subtractingsettlementwith at-fault driver frominsured's damages instead  

                                                                                                             

of reducing UIM policy limit to determine insurer's UIM liability).  



            4            AS 28.20.445(a).  

                                 



             5           AS 21.96.020(f)(1); cf. AS 09.43.480(b) (authorizing arbitrator to award  

                                                                                                                                                      

attorney's fees and other arbitration expenses if otherwise allowed by law), .480(d)  

                                                                                                                                        

(authorizing arbitrator to order payment of arbitrator's fees and expenses, along with  

                                                                                                                                                         

other expenses, in award).  

                                                   



             6           See 11 STEVEN  PLITT  ET. A                       L.,  Couch on Insurance                     § 158:1 (3rd ed. 2020):         

                                       



                         Standard liability insurance policies . . . generally contain . . .                                            

                         provisions by which the insurer undertakes to pay up to a                                                     

                                                                                                                                        (continued...)  



                                                                              -4-                                                                       7545
  


----------------------- Page 5-----------------------

UIM coverages.                  The medical payments coverage limit for each insured is $100,000 per                                                        



person.   The coverage contains a subrogation provision that if Allstate makes medical                                                             



payments for an insured, the insured's "rights of recovery from anyone else become                                                                 



                                                                                            7  

 [Allstate's] up to the amount [Allstate has] paid."                                              



                         The UIM bodily injury coverage limit for each insured is $100,000 per  

                                                                                                                                                            



person. The policies clarify that Allstate's UIMcoverage is "excess" coverage, applying  

                                                                                                                                                  



 only "over and above" any amounts otherwise available to the insured, including from  

                                                                                                                                                         



 someone who is or may be legally liable for the insured's damages, liability insurance,  

                                                                                                                                               



workers' compensation insurance, and applicable medical payments insurance.   The  

                                                                                                                                                          



policies also clarify that "[i]n no event will an insured person be entitled to receive  

                                                                                                                                                    



 duplicate payments for the same elements of loss" and that Allstate has no obligation to  

                                                                                                                                                              



pay  any  UIM benefits  until  all  other  insurance  "ha[s]  been  used  up  by  payments,  

                                                                                                                                              



judgments or settlements."  

                                                     



             6	          (...continued)
  



                                                                                                                        

                         stated  maximum amount  for  medical  or  funeral  expenses
  

                                                                                                                                  

                         incurred  by  persons  injured  or  killed  as  a  result  of  the
  

                                                                                                                           

                         condition or use of [an] . . . automobile. . . . A typical medical
  

                                                                                                                                  

                         payments clause . . . states rather directly that the insurer will
  

                                                                                                                                   

                         pay "reasonable" expenses paid for "necessary" medical and
  

                                                                                                                            

                         funeral services required because of "bodily injury" caused
  

                                                                                                                               

                         by an "accident" and sustained by the insured and/or other
  

                                             

                         described persons.
  



                                                                                                                                                   

                         Allstate's medical payments coverage, in essence, provides that Allstate  

                                                                                             

will pay a defined insured's medical bills arising from an accident up to a stated limit,  

                                                                                                                                                     

 sets time limitations for payable medical bills, and limits duplicate payments.  



             7           See Ruggles ex rel. Estate of Mayer v. Grow, 984 P.2d 509, 512 (Alaska  

                                                                                                                                           

 1999) ("When an insurer pays expenses on behalf of an insured it is subrogated to the  

                                                                                                                                                            

 insured's claim.  The insurer effectively receives an assignment of its expenditure by  

                                                                                                                                                             

 operation of law and contract.").  

                                         



                                                                              -5-	                                                                      7545
  


----------------------- Page 6-----------------------

                                                                       The UIM "Insuring Agreement" states that, excluding punitive damages,                                                                                                                                                                                                                                                                        



Allstate "will pay all damages" for bodily injury and property damage "that an insured                                                                                                                                                                                                                                                                                                                                        



person is legally entitled to recover from the owner or operator of an . . . underinsured                                                                                                                                                                                                                                                                                                       



 auto."  It then states that the "right to benefits and the amount payable will be decided                                                                                                                                                                                                                                                                                           



by agreement between the insured person and                                                                                                                                                                                                       Allstate" (bold text in original).                                                                                                                                          A later   



 "Limits of Liability" section                                                                                                                               sets out the statutory limit on contractual liability                                                                                                                                                                                                                                  for  



 "damages," i.e., the lesser of (1) the damages incurred minus all amounts paid to the                                                                                                                                                                                                                                                                                                                                                               



insured on the at-fault driver's behalf or otherwise paid under medical payments and                                                                                                                                                                                                                                                                                                                                                              



workers' compensation insurance or (2) the policy face limits for the UIM coverage.                                                                                                                                                                                                                                                                                                                                                                                      



Particularly relevant                                                                                      to these appeals, the policy contains a provision requiring that, if the                                                                                                                                                                                                                                                             



parties cannot resolve the UIM claim, they will arbitrate two issues:                                                                                                                                                                                                                                                                                                      (1) the insured's                         



 "right to receive any damages" and (2) "the amount" of those damages.                                                                                                                                                                                                                                                                                                               The arbitration   



provision, as required by statute, also provides that expenses and fees incurred during                                                                                                                                                                                                                                                                                                                                            



 arbitration, except attorney's or adjuster's fees, shall be paid as the arbitrator determines.                                                                                                                                                                                                                                                                                                                                                                          



                                   B.                                  The Insureds' Accidents And Settlements With At-Fault Drivers                                                                                                                                                                                                                                                                                                               



                                                                       The insureds were injured in unrelated car accidents; the other drivers                                                                                                                                                                                                                                                                                 



undisputedly were at fault.                                                                                                                   Allstate paid medical expenses of $21,784 for Harbour and                                                                                                                                                                                                                                            



 $5,982.52 for Mattison under their medical payments coverages.                                                                                                                                                                                                                                                                                                  Allstate sent each                                                         



insured notice that it intended to negotiate its right of recovery with the responsible                                                                                                                                                                                                                                                                                                                 



 driver.   Allstate later instructed the insureds that they were not authorized to pursue its                                                                                                                                                                                                                                                                                                                                                            



                                                                                                   8  

 subrogated claims.                                                                                      



                                   8                                  See   id.   ("If   the   insurer   does   not   object,   the   insured   may   include   the  



 subrogated claim in its claim against a third-party tortfeasor.  Any proceeds recovered                                                                                                                                                                                                                                                                       

must be paid to the insurer, less pro rata costs and fees incurred                                                                                                                                                                                                                                                                                                       by the insured in                                                                

prosecuting and collecting the claim.  But the subrogated claim belongs to the insurer.                                                                                                                                                                                                                                                                                                                                                                                  

The insurer may pursue a direct action against the tortfeasor, discount and settle its claim,                                                                                                                                                                                                                                                                                                                                         

                                                                                                                                                                                                                                                                                                                                                                                                 (continued...)  



                                                                                                                                                                                                                             -6-                                                                                                                                                                                                             7545
  


----------------------- Page 7-----------------------

                                                    The insureds settled with the at-fault motorists for their respective liability                                                                                                                                                                                 



insurance policy limits.                                                                         Harbour received policy limits of $100,000 plus additional                                                                                                                                              



available amounts for prejudgment interest, attorney's fees, and costs, for a total of                                                                                                                                                                                                                                                  



 $121,407.96. Mattison received policy limits of $100,000, but prejudgment interest was                                                                                                                                                                                                                                            



unavailable under the at-fault driver's liability insurance policy; Mattison did not seek                                                                                                                                                                                                                                       



attorney's fees and costs available under the liability policy.                                                                                                                                                                              



                                                    The insureds, represented by the same attorney, then submitted claims to   



Allstate for medical payments and UIM benefits.                                                                                                                                                  



                          C.                        Arbitrations  



                                                      The   insureds'   claims   could   not   be   resolved   and  were   submitted   to  



arbitrations pursuant toAllstate's                                                                                              UIMarbitration                                                 provision. Thearbitration                                                                            panels,with   



two   members   in   common,   issued   similar   prehearing   orders   expressly   limiting   the  



arbitration's scope to:                                                                (1) whether the insured had a right to receive damages from the                                                                                                                                                                                



at-fault driver; (2) the amount of such damages; and (3) the allocation of arbitration fees                                                                                                                                                                                                                                        



and expenses.                                            



                                                     1.                       Harbour's arbitration   



                                                    Harbour's arbitration panel initially determined that he incurred $93,797                                                                                                                                                                                    



in damages as a result of his accident, including $16,743 in medical bills not already paid                                                                                                                                                                                                                                       



                                                                                                                                                                                                  9  

by Allstate under his medical payments coverage.                                                                                                                                                                                                                                                                               

                                                                                                                                                                                                         The panel expressly excluded from  



                                                                                                                                                                                                                                                                                                        

its damages calculation the $21,784 Allstate already had provided under Harbour's  



                          8                         (...continued)  



                                                                                                                                                                   

or determine that the claim should not be pursued.").  



                          9                         The   arbitration   panel   also   concluded,   apparently   based   on   Allstate's  



medical  payments   coverage,   that   Harbour's   future   medical   bills   attributable   to   the  

accident "[s]hall be paid [by Allstate] to the extent they are incurred as recommended"  

                                                                                                                                                                                                                                                                                      

by Harbour's doctor, "limited to [five] years from the date of loss."                                                                                                                                                                                                     



                                                                                                                                                                    -7-                                                                                                                                                        7545
  


----------------------- Page 8-----------------------

                                                                                                                    

medical payments coverage. This presumably reflected either (1) thepanel's recognition  



                                                                                                                                

that UIM coverage is excess to medical payments coverage or (2) that Harbour was not  



                                                                                                                                

entitled to recover Allstate's subrogated claim from the at-fault driver. But the panel did  



                                                                                                                                  

not differentiate between Harbour's medical payments and UIM coverages when it  



                                                                                                                         

included as damages the $16,743 in medical bills not already paid by Allstate.  



                                                                                                                  

                    During the arbitration Harbour had asked the panel to award prejudgment  



                                                                                                                               

interest, attorney's fees, and costs based on the damages amount.  Allstate asserted that  



                                                                                                                                      

these matters were outside the arbitration's scope and did not consent to their arbitration.  



                                                                                                                                

The panel initially did not address Harbour's request but stated that either party could ask  



                                                                                                                      

the  panel  to  resolve  future  disputes  about  Allstate's  ultimate  liability  to  Harbour,  



                                                                                                                        

including how to address the offset for his prior recovery from the at-fault driver's  



                                                                                                                                 

liability insurance coverage.  The panel ordered Allstate to pay all arbitration costs.  



                                                                                                                                      

                    Allstate and Harbour disagreed on the amount Allstate owed Harbour.  



                                                                                                                     

Harbour contended he was owed nearly $25,000 in policy benefits.  Allstate contended  



                                                                                                                                 

that Harbour was not entitled to UIM benefits because the at-fault driver was not an  



                                                                                                                               

underinsured motorist; in the initial settlement the at-fault driver's liability insurer had  



                                                                                                                         

paid more in damages ($100,000 face amount before add-ons for prejudgment interest,  



                                                                                                                          

attorney's fees, and costs) than what the arbitration panel had determined was legally  



                                                                                                                     

recoverable from the at-fault driver ($93,797 before add-ons).  Allstate also contended  



                                                                                                                        

that it was entitled to payment from the "excess" settlement funds to at least partially  



                                                                                                                      

satisfy its subrogated claim for the $21,784 paid under Harbour's medical payments  



                                                                                                                             

coverage. Allstate agreed that its subrogated claim should be reduced by a pro rata share  



                                                                                                                      

of Harbour's attorney's fees incurred in recovering this portion of the medical payments  



                                      

from the at-fault driver.  



                                                                                                                                   

                    Harbour asked the arbitration panel to clarify the initial award and enter a  



                                                                                                                        

final award recalculating his damages by including:   Allstate's  subrogated medical  



                                                                -8-                                                         7545
  


----------------------- Page 9-----------------------

                                                                                                              

payment claim in his UIM damages; costs, prejudgment interest, and attorney's fees  



                                                                                                                       

based  on  the  damages  award;  and  a  pro  rata  share  of  his  attorney's  fees  incurred  



                                                                                                                         

obtaining the settlement with the at-fault driver's insurer.  Pro rata fees in this context  



                                                                                                                      

would be 100% under the theory that the settlement benefitted only Allstate by giving  



                                                                                                                            

it an offset against UIM damages.  Allstate repeatedly objected that revisiting the award  



                                                                                                                            

exceeded the panel's authority; it filed a superior court complaint to confirm the initial  



                                                                                                                         

award.  To avoid consenting to the panel's expanded authority, Allstate did not respond  



                                                                      

to the merits of Harbour's additional claims.  



                                                                                                                       

                    The  arbitration  panel  increased  the  award  almost  entirely  as  Harbour  



                                                                                                                    

requested. The panel determined that Allstate should reimburse Harbour the $41,243.61  



                                                                                                                         

in attorney's fees and costs he incurred obtaining the settlement from the at-fault driver's  



                                                                                                                                      

insurer and that it should pay interest and attorney's fees on the net damages amounts.  



                                                                                                                            

The panel's final judgment was that Allstate owed Harbour $39,206.13.   The panel  



                                                                                                                 

expressly rejected Allstate's contention that the panel had no authority to determine  



                                                                                                                       

Allstate'sultimatecontractualobligation to Harbour, stating thatthearbitrationprovision  



                                                                                                                       

submitted  "the  damages  issues  in  this  matter"  to  arbitration.                                One  panel  member  



                                                                                                                      

dissented, agreeing with Allstate that the panel had no authority to determine Allstate's  



                                                                    

ultimate contractual obligation to Harbour.  



                                                  

                    2.        Mattison's arbitration  



                                                                                                                                 

                    Mattison's  arbitration  panel  determined  that  he  incurred  $145,486  in  



                                                                                                                               

damages as a result of his accident.  The panel itemized $32,891 of the damages as past  



                                                                                                                         

medical bills. But the panel did not reference the $5,982.52 in medical payments Allstate  



                                                                                                                                

already had made on Mattison's behalf or Allstate's assertion that Mattison had no  



                                                                                   

authority to pursue recovery of its subrogated claim.  



                                                                                                                  

                    Mattison then asked thepanel to award additional amounts for prejudgment  



                                                                                                                               

interest, attorney's fees, and costs based on the damages amount.  Allstate asserted that  



                                                                -9-                                                         7545
  


----------------------- Page 10-----------------------

                                                                                                                              

these  matters  were  outside  the  arbitration's  scope,  and  it  did  not  consent  to  their  



                                                                                                                        

arbitration.        The  panel  initially  did  not  address  the  matter,  but,  as  in  the  Harbour  



                                                                                                                         

arbitration, the panel stated that either party could ask the panel to resolve future disputes  



                                                                                                                                 

about Allstate's ultimate liability to Mattison.   The panel ordered Allstate to pay all  



                            

arbitration costs.  



                                                                                                                                       

                    Allstate and Mattison disagreed on the amount Allstate owed Mattison.  



                                                                                                                         

Mattison asked the arbitration panel to adjudicate his unresolved claims for interest,  



                                                                                                                                 

attorney's fees, costs, and a pro rata share of attorney's fees incurred to secure his  



                                                                                                                      

settlement.  Because interest had undisputedly not been available under the uninsured  



                                                                                                                                 

motorist's liability coverage, Mattison also requested interest on his settlement with the  



                                                                                                                                  

underinsured  motorist.                Allstate  opposed  Mattison's  request,  arguing,  as  it  had  in  



                                                                                                                         

Harbour's matter, that the panel did not have authority to determine Allstate's ultimate  



                                                                                                                            

contractual liability.   Allstate filed a superior court complaint to confirm the initial  



            

award.  



                                                                                                                      

                     The arbitration panel issued a final decision, rejecting Allstate's contention  



                                                                                                                                 

that the panel had no authority to decide anything beyond the specific questions set out  



                                                                                                                    

in  the  pre-arbitration  order.                The  panel  ordered  Allstate  to  reimburse  Mattison's  



                                                                                                                      

attorney's feesand costs, totaling justunder $35,000, incurred inobtainingthesettlement  



                                                                                                                             

with the at-fault driver.  The panel rejected Mattison's request for attorney's fees based  



                                                                                                                                

on the damages determination because he had failed to obtain available attorney's fees  



                                                                                                                               

coverage  from  the  at-fault  driver's  liability  insurance.                            But  the  panel  decided  that  



                                                                                                                         

Mattison was entitled to interest on the damages, including the attorney's fees awarded  



                                                                                                                        

for his efforts to collect from the at-fault driver.  The final amount payable to Mattison  



                                                                                                                                 

was $90,123.62.  One panel member dissented, agreeing with Allstate that the panel did  



                                                                                                                                     

not have authority to determine Allstate's ultimate contractual obligation to Mattison.  



                                                               -10-                                                          7545
  


----------------------- Page 11-----------------------

             D.           Superior Court Proceedings        



                          Shortly after the arbitration panels issued their initial determinations, but  



beforetheobjected-to second roundsofarbitration proceedings, Allstatefiled complaints  

                                                                                                                                                   



 asking the superior court to confirm the initial damages determinations and then decide  

                                                                                                                                                           



Allstate's ultimate contractual obligation to the insureds.  After the panels issued their  



 final decisions, Allstate amended its complaints to seek relief vacating those decisions.  

                                                                                                                                                                         



 The same superior court judge was assigned the two cases, and the court consolidated  

                                                                                                                                    

themfor hearing but not for decision.10  The court ultimately confirmed both final awards  

                                                                                                                                                          

 on summary  judgment,11   deciding  Harbour's case first, then  citing  that decision  in  

                                                                                                                                                                   



Mattison's case.  

                                   



                          The superior court recognized that arbitrability is a matter for the court to  

                                                                                                                                                                    



 decide but held that the panels had authority to issue the expanded final awards.  The  

                                                                                                                                                                



 court suggested that thepanels' authority"likely expanded"when theinsureds submitted  

                                                                                                                                                     



the additional issues to the panels, and the court cited case law "suggest[ing]" that when  

                                                                                                                                                              



 an arbitration panel is asked to decide a party's "total damages from a tortfeasor" it also  

                                                                                                                                                                



may consider "amounts payable under the insurance policy."  The court concluded that  

                                                                                                                                                                 



the panels' consideration of payments related to, but beyond, the "damages" the at-fault  

                                                                                                                                                          



 drivers owed was "reasonable." The court then concluded that the panels' decisions did  

                                                                                                                                                                  



not otherwise violate law.  

                                                    



             10           Superior Court Judge Douglas Blankenship heard and decided Harbour's                                                      



 case.  Judge Blankenship also heard Mattison's case and wrote the decision at issue in                                                                             

this appeal; before all pending issues were resolved Judge Blankenship retired, and                                                                             

Mattison's case was reassigned to Judge Earl A. Peterson.                                                          



             11           See  Alaska  R.  Civ.  P.  56(c)  (providing  party  is  entitled  to  summary  

                                                                                                                                                     

judgment if there is no genuine issue of material fact and party is entitled to judgment as  

                                                                                                                                                                    

matter of law on undisputed facts).  

                                                         



                                                                                -11-                                                                          7545
  


----------------------- Page 12-----------------------

                             Allstate appealed both superior court decisions, and we consolidated the                                                                         



appeals for consideration and decision.                                            



IV.	          STANDARD OF REVIEW                      



                            We review grants of summary judgment de novo "and will affirm if there                                                                        



are no genuine issues of material fact and the winning party was entitled to judgment as                                                                                        

a matter of law."                  12  We review "a superior court's review of an arbitration decision de  



                                                                                                                                                     13  

                                                                                                                                                                                  

novo when it deals with questions of law and contract interpretation."                                                                                      "Whether a  



                                                                                                                                                              

dispute is arbitrable and whether a superior court's decision to affirm an arbitration  



                                                                                                                                        14  

                                                                                                                                                            

award is correct are both questions of law . . . review[ed] de novo."                                                                       But an "arbitrator's  



                                                                                                                                                                            15  

                                                                                                                                                 

legal conclusions are . . . unreviewable, except where they pertain to arbitrability." 



V.	           DISCUSSION  



                                                                                                                                                                        

               A.	          The Panels Exceeded Their Arbitration Authority By Deciding Issues  

                                                                                                    

                            That Allstate Did Not Agree To Arbitrate.  



                                                                                                                             16  

                                                                                                                                                                               

                            Arbitration  clauses  are  creatures  of  contract,                                                   and  "a  party  cannot  be  



                                                                                                                                                                                

required  to  submit  to  arbitration  any  dispute  which  [the  party]  had  not  agreed"  to  



                17  

                                                                                                                                                                                

submit.                Courts "decide whether . . . a controversy is subject to an agreement to  



              12            Sidney  v.  Allstate  Ins.  Co.,   187  P.3d  443,  447  (Alaska  2008).  



              13            Id.  (emphasis  omitted).  



              14            Id.  at  447-48  (emphasis  and  citations  omitted).  



              15            Kinn  v.  Alaska  Sales  &  Serv.,  Inc.,   144  P.3d  474,  487  (Alaska  2006).  



              16            Geotek  Alaska,  Inc.  v.  Jacobs  Eng'g  Grp.,  Inc.,  354  P.3d  368,  374  (Alaska  



2015).    



              17            Id.  (quoting   Classified  Emps.  Ass'n  v.  Matanuska-Susitna  Borough  Sch.  



Dist.,  204  P.3d  347,  353  (Alaska  2009)).  



                                                                                      -12-	                                                                               7545
  


----------------------- Page 13-----------------------

                 18  

arbitrate."           But if interpretation of other contract provisions is necessary to determine                                  



whether a claim fits within the contract's arbitration clause, the arbitrator's contract                                               



interpretation is given due weight if the parties did not seek a pre-arbitration ruling on   

                     19  For example, when a construction contract's arbitration clause authorized  

arbitrability.                                                                                                                     



arbitrators to decide "[a]ll claims, disputes and other matters arising out of or relating to"  

                                                                                                                                                



the contract, we said that this "necessarily gave the arbitrators power to interpret the  

                                                                                                                                                



contract[;] otherwise it would have been impossible for them to determine which claims  

                                                                                                                                          

or disputes they could properly arbitrate."20                               We said the later reviewing court then was  

                                                                                                                                               



limited to determining  

                   



                       . . . whether the construction of the contract made by the  

                                                                                                                         

                       arbitrator[s] is a reasonably possible one that can seriously be  

                                                                                                                           

                       made in the context in which the contract was made.  Stated  

                                                                                                                    

                       affirmatively, if all fair and reasonable minds would agree  

                                                                                                                     

                       that the construction of the contract made by the arbitrator[s]  

                                                                                                          

                       was not possible under a fair interpretation of the contract,  

                                                                                                               

                       then the court would be bound to vacate or refuse to confirm  

                                                                                                                 

                       the award. [21]  

                                           



            18         AS   09.43.330(c).     Contracting   parties   may   delegate   to   an   arbiter   the  



authority   to   resolve   questions   of   arbitrability,   but   they   must   do   so   "clearly   and  

unmistakably."   Lexington  Mktg.  Grp.  v.  Goldbelt  Eagle  LLC,  157  P.3d  470,  473  (Alaska  

2007).   Allstate's  policies  in  this  matter  do  not  address  the  forum  for  resolving  questions  

of  arbitrability  and  therefore  do  not  "clearly  and  unmistakably"  delegate  such  authority.   

See   id.   ("Because   the   arbitration   clause   .   .   .   is   silent   on   the   proper   forum   to   decide  

arbitrability,  it  does  not  'clearly  and  unmistakably'  rebut  the  presumption  that  the  courts  

decide  whether  a  dispute  is  arbitrable  under  the  terms  of  the  agreement.").  



            19         Univ. of Alaska v. Modern Constr., Inc., 522 P.2d 1132, 1136-39 (Alaska  

                                                                                                                                        

 1974).  



           20          Id. at 1137 (first alteration in original).  

                                                                           



           21          Id. (alterations in original) (quoting Pirsig, Some Comments on Arbitration  

                                                                                                                                  

                                                                                                                              (continued...)  



                                                                       -13-                                                                 7545
  


----------------------- Page 14-----------------------

We concluded that the arbitrators' decision, that the contractor could assert a claim for                                                                                                                                                  



" 'impact' damages" arising from the project owner's project delays despite no mention                                                                                                                                      



of impact damages in the contract, "was not based upon an unreasonable interpretation                                                                                                                        



                                                                                                                                                          22  

of the contract" and the claim therefore was arbitrable.                                                                                                        



                                      Harbour's  and  Mattison's  arbitration  panels  concluded  that  they  had  

                                                                                                                                                                                                                                       



authority to determine the total amounts payable under the insureds' coverages despite  

                                                                                                                                                                                                                               



their pre-arbitration orders expressly limiting the arbitrations' scope to: (1) whether the  

                                                                                                                                                                                                                                           



insured had a right to recover damages from the at-fault driver; (2) the amount of such  

                                                                                                                                                                                                                                      



damages; and (3) the allocation of arbitrable fees and expenses.   The superior court  

                                                                                                                                                                                                                                    



agreed, concluding that the panels' authority "likely expanded" to include total amounts  

                                                                                                                                                                                                                            



payable when the insureds asked the panels to determine Allstate's ultimate liability  

                                                                                                                                                                                                                             



under the coverages.  But Allstate did not consent to expanding arbitration authority; to  

                                                                                                                                                                                                                                              



the contrary, it repeatedly and affirmatively withheld consent. The panels therefore had  

                                                                                                                                                                                                                                         



no authority to determine the total benefit amounts payable under the policies unless that  

                                                                                                                                                                                                                                         



authority can be found or implied by law in the arbitration provision; we conclude that  

                                                                                                                                                                                                                                         



it cannot.  

      



                                      Because the parties did not delegate to the arbitration panels the authority  

                                                                                                                                                                                                                          



to resolve questions of arbitrability, the arbitration panels were bound by applicable law  

                                                                                                                                                                                                                                         



                   21                 (...continued)  



                                                                                                             AND.L.REV. 685, 706 (1957)).                                  

Legislation and the Uniform Act, 10 V 



                   22                Id.  at 1138;                    accord Ahtna, Inc. v. Ebasco Constructors, Inc.                                                                                     , 894 P.2d 657,                             



 660-63 (Alaska 1995);                                           see also Classified Emps. Ass'n v. Matanuska-Susitna Borough                                                                                             

Sch. Dist., 204 P.3d 347, 352-59 (Alaska 2009) (applying same analysis to superior  

                                                                                                                                                                                                                           

court's pre-arbitration ruling on arbitrability of union grievance by determining whether                                                                                                                                    

asserted claims fell within contract definition of "grievance" subject to arbitration).  

                                                                                                                                                                                                         



                                                                                                                    -14-                                                                                                             7545
  


----------------------- Page 15-----------------------

                                                                                                            23  

in determining the scope of their authority.                                                                     This includes precedent stating that we                                                     



interpret insurance contracts by looking to: (1) the policy language; (2) other provisions                                                                                                 



                                                                                                                                                                                                                 24  

in the policy; (3) extrinsic evidence; and (4) "case law interpreting similar provisions."                                                                                                                             



                                                                                                                                                                                                                

The specific question before us is whether, given the arbitration clause's limitation to  



                                                                                                                                                                                          

"damages" determinations, the arbitration panels reasonably could interpret "damages"  



                                                                                                                                                                                                 

to include not only damages legally caused by the at-fault drivers, but also the benefits  



                                                                                                                          

ultimately payable under the insureds' insurance policies.  



                                                                                                                                                                                              

                                 Context always is key. The arbitration clause is not an expansive provision  



                                                                                                                                                                                                             

covering any and all claims arising out of or related to Allstate's insurance policy (or  



                                                                                                                                                                                                 

even  the UIM coverage).                                              The parties were following  a dispute  resolution  process  



                                                                                                                                                                                                 

unrelated to a breach of contract damages claim under Allstate's policy.  The primary  



                                                                                                                                                                                                   

factor of any UIMclaimis determining the damages the insured would be legally entitled  



                                                                                                                                                                                                              

to recover fromthe at-fault uninsured or underinsured motorist. Once those damages are  



                                                                                                                                                                                                               

determined  as  a  matter  of  fact,  Allstate  and  its  insured  should  be  in  a  position  to  



                                                                                                                                                                                                               

calculate, based on policy language and controlling law, what Allstate owes under its  



coverage.  



                                                                                                                                                                                                        

                                 Our  analysis thus begins with  the relevant portions of Allstate's UIM  



                        

coverage language:  



                 23              See   AS 09.43.330(c) ("The court shall decide whether an agreement to                                                                                                        



arbitrate exists or a controversy is subject to an agreement to arbitrate.");                                                                                                              Lexington  

Mktg.   Grp.,   157   P.3d   at   473   (requiring  "clear[]   and   unmistakabl[e]"   delegation   of  

authority to resolve questions of arbitrability);                                                                     cf. Modern Constr.                              , 522 P.2d at 1140                

("The general rule . . . is that arbitrators need not follow otherwise applicable law when                                                                                                             

deciding issues                        properly before them                                 ." (emphasis added)).                                 



                 24              Hahn v. GEICO Choice Ins. Co., 420 P.3d 1160, 1170 (Alaska 2018).  

                                                                                                                                                                                             



                                                                                                     -15-                                                                                               7545
  


----------------------- Page 16-----------------------

                

Insuring Agreement  



                                                                                         

[Allstate]  will  pay  all  damages,  other  than  punitive  or  

                                                                                  

exemplary damages, that an insured person is legally entitled  

                                                                                          

to recover from the owner or operator of an uninsured or  

                                           

underinsured auto because of:  



                                                                                        

1.	       bodily injury sustained by an insured person . . . .  



                                                                                        

          The bodily injury . . . must be caused by accident and  

                                                                                         

          arise out of the ownership, maintenance or use of an  

                                                                                 

          uninsured or underinsured auto.  The right to benefits  

                                                                             

          and the amount payable will be decided by agreement  

                                                                            

          between the insured person and Allstate.  



                 

           . . . .  



                 

Limits of Liability  



                                                                          

1.	       The coverage limit shown on the Policy Declarations  

          for:  



                                                                                        

          a)	         "each person" is the maximum that we will pay  

                                                                                          

                     for all damages arising out of bodily injury to  

                                                                                

                     one      person       in     any      one      motor        vehicle  

                                           

                     accident . . . .  



                 

           . . . .  



                                                                                 

3.	       Subject to this maximum, [Allstate's] limit of liability  

                                      

          will be the lesser of:  



                                                                                        

          a)	         The  difference  between  the  amount  of  an  

                                                                                             

                     insured person's damages for bodily injury . . .  

                     and the amount paid to that insured person for  

                                                                                       

                     such damages, by or for a person who is or may  

                                                                                          

                     be held legally liable for damages, including all  

                                                                               

                     sums       paid      under       [this      policy's        liability  

                                       

                     coverage]; and  



                                                                                      

          b)	        The   applicable   limit   of   liability   for   this  

                     coverage.  



                                                                                    

4.	       Any amounts otherwise payable for damages  under  



                                           -16-	                                                         7545
  


----------------------- Page 17-----------------------

                                                                                                     

                               this coverage shall apply over and above any amounts  

                                                                                                       

                               available to the insured person because of the bodily  

                               injury:  



                                                                                                          

                               a)	        By  or  for  a  person  who  is  or  may  be  held  

                                                                                                             

                                         legally liable for damages.   This includes all  

                                                                                                   

                                         sums       paid      under        [this     policy's        liability  

                                         coverage].  



                                                                     

                               b)	        Under any of the following:  



                                                                                                  

                                         i.        Workers' compensation law; or  



                                                                                                    

                                         ii.       Automobile medical payments coverage.  



                                      

                               . . . .  



                                                                                                             

                     5.	       [Allstate is] not obligated to make any payment for  

                                                                                                         

                               bodily injury . . . under this coverage until the limits  

                                                                                 

                               of liability of all bodily injury . . . liability bonds and  

                                                                                                 

                               policies that apply have been used up by payments,  

                                                                        

                              judgments or settlements.  



                                      

                               . . . .  



                                                         

                     If We Cannot Agree  



                                                                                                          

                     If  the  insured  person  or  [Allstate]  don't  agree  on  that  

                                                                                                               

                    person's right to receive any damages or the amount, then at  

                                                                                                       

                    the written request of either, the disagreement will be settled  

                                                                                            

                    by arbitration.  (Emphasis added; bold text in original.)  



                                                                                                                                  

                     The text of Allstate's UIM coverage establishes that damages caused by an  



                                                                                                                              

underinsured  motorist  are  distinct  from benefits  ultimately  payable  under  the  UIM  



                                                                                                                          

coverage.  The first paragraph of Allstate's UIM Insuring Agreement obligates Allstate  



                                                                                                                                 

to pay "all damages . . . that an insured person is legally entitled to recover from the  



                                                                                                                        

owner  or  operator  of  an  uninsured  or  underinsured  auto."                                 But  the  UIM  Insuring  



                                                                                                                         

Agreement  then  discusses  an  insured's  ultimate  "right  to  benefits  and  the  amount  



                                                                                                                           

payable" under the coverage.  The policy distinguishes between damages and benefit  



                                                                                                          

amounts payable because Allstate's UIM coverage, by law and by contract language  



                                                               -17-	                                                         7545
  


----------------------- Page 18-----------------------

                                                                                               25  

limiting Allstate's UIM liability, is excess coverage.                                             UIM coverage begins only after                     



an insured exhausts recovery from all other available sources, such as an at-fault driver's                                                     



liability coverage,               theinsured's           medicalpaymentscoverage,                           andany        applicableworkers'   

                                             26   The insurance policy refers to the amount an insured person  

compensation payments.                                                                                                                            



would have been legally entitled to recover froman at-fault driver as "damages"; it refers  

                                                                                                                                                    



to what the insured is entitled to recover from Allstate as "amount payable," a sum that  

                                                                                                                                                       



may differ from an insured's damages due to alternative recovery sources and add-ons  

                                                                                                                                                

allowed by the policy.27  

                             



                        In State Farm Mutual Automobile Insurance Co. v. Dowdy we discussed  

                                                                                                            



a similar UIM arbitration clause committing to arbitration two questions:  "(1) 'Is the  

                                                                                                                                                        



insured legally entitled to collect damages from the owner or driver of the uninsured  

                                                                                                                                            



            25          AS 28.20.445(b) (defining UIM coverage as "excess" coverage);  see Sidney  



v.  Allstate  Ins.   Co.,   187   P.3d   443,   448   (Alaska   2008)   ("In   1990   Alaska   adopted   an  

 'excess'  coverage approach to underinsured  motorist  insurance.");  State Farm Mut. Auto.  

Ins.   Co.  v.   Wilson, 199  P.3d   581,   584-85   (Alaska  2008)   ("The  new   statutory   system,  

referred   to   as   an   'excess'   approach,  still  sought   to   ensure   that   UIM   coverage   was  

secondary  to  other  sources  of  coverage  and  that  it  not  be  available  to  make  duplicative  

payments.");  Progressive  Ins.   Co.   v. Simmons,   953   P.2d   510,   514-15   (Alaska   1998)  

(discussing  UIM  coverage  "excess"  framework).  



            26          See AS 28.20.445(b); Coughlin v. GEICO, 69 P.3d 986, 992 (Alaska 2003)  

                                                                                                                                                    

("[P]olicy limits are exhausted when the face value of the policy is paid to the insured;  

                                                                                                                                               

any payment or non-payment of attorney's fees and prejudgment interest is independent  

                                                                                                                                        

of this determination.").  

              



            27          Although "[a]mbiguities in . . . insurance policies are . . . construed most  



favorably to an insured, . . . ambiguities . . . exist [only] when there are two or more  

                                                                                                                                                    

reasonable interpretations of  particular policy language."  State Farm Mut. Auto. Ins.  

                                                                                                                                                       

Co. v. Dowdy, 192 P.3d 994, 998 (Alaska 2008).  We conclude there is no ambiguity in  

                                                                                                                                                           

distinguishing between "damages" and "amount payable" in the contract provisions at  

                                                                                                                                       

issue.  



                                                                           -18-                                                                     7545
  


----------------------- Page 19-----------------------

                                                                                     28  

vehicle . . .'; and (2) 'if so, in what amount?' "                                        We concluded that "by focusing on the                              



insured's right to 'collect damages from the owner or driver[,]' . . . the arbitration clause                                                          



unambiguously exclude[d] questions relating solely                                                    to the right to collect from the                       

                29   Although Allstate's UIM arbitration provision does not use the phrase "from  

insurer."                                                                                                                                               



the owner or driver of the uninsured motor vehicle," Allstate's UIM Insuring Agreement  

                                                                                                                                              



and related provisions establish that damages are distinct fromamounts payable by using  

                                                                                                                                                         



the terms to refer to necessarily different sums.  Allstate's UIM arbitration provision -  

                                                                                                                                                               



discussing only damages - thus excludes from arbitration questions relating solely to  

                                                                                            



the insureds' rights to collect benefit amounts from Allstate, as in Dowdy.  

                                                                                                                             



                         The insureds argue that the arbitration panels' interpretations of Allstate's  

                                                                                                                                                 



UIM  arbitration  clause  (and  therefore  the  scope  of  the  panels'  authority)  were  

                                                                                                                                                        



reasonable, but they misinterpret our precedent involving broader arbitration clauses.  

                                                                                                                                                                     



For  example,  in  Johnson  v.  Aleut  Corp.  an  arbitrator's  capacious  interpretation  of  

                                                                                                                                                              



questions presented for arbitration was reasonable in light of a broad arbitration clause  

                                                                                                                                                       



committing to arbitration "[a]ny and all disputes . . . arising out of, relating in any way  

                                                                                                                                                           

to or in connection with" an employment agreement.30  And in Wing v. GEICO Insurance  

                                                                                                                                                



Co. we concluded that the UIM arbitration panel could consider issues of costs, fees, and  

                                                                                                                                                             



offsets (i.e. amounts payable under the UIM coverage) because the arbitration clause  

                                                                                                                                                       

granted the panel authority "to determine 'the amount payable' under the policy."31   But  

                                                                                                                                                             



Allstate's current UIM arbitration clause is narrower than those in Johnson and Wing,  

                                                                                                                                                        



explicitly committing only two discrete issues to arbitration: an insured's right to receive  

                                                                                                                                                      



             28           111 P.3d 337, 338 (Alaska 2005).                   



             29  

                                                                  

                         Id. at 341 (emphases omitted).  



             30  

                                                                             

                         307 P.3d 942, 944 (Alaska 2013).  



             31  

                                                                                 

                          17 P.3d 783, 786-87 (Alaska 2001).  



                                                                             -19-                                                                        7545
  


----------------------- Page 20-----------------------

damages from an at-fault driver and the amount of those damages.                                                            



                         The insureds, the arbitration panels, and the superior court all mistakenly                                        



relied on        Sidney v. Allstate Insurance Co.                             to support their conclusions that the panels'                 

                                                                                                            32  Allstate'spolicy in Sidney  

interpretations oftheir arbitrationauthority werereasonable.                                                                                        



included two separatearbitration clauses; onepermitted arbitration oftheinsured's"right  

                                                                                                                                                      



to receive any damages [from the at-fault driver] or the amount" and the other permitted  

                                                                                                                                               

arbitration of the insured's "right to [UIM] benefits and the amount payable."33                                                                         We  

                                                                                                                                                         



concluded that the two arbitration provisions granted the arbitration panel authority to  

                             



determine "two different and distinct concepts: (1) the total amount of damages to which  

                                                                                                                                                     



an insured is entitled (from the tortfeasor) and (2) amounts payable under the insurance  

                                                                                                                                               

policy (by the UIM insurer)."34                              The superior court affirmed the Mattison arbitration  

                                                                                                                          



panel's determinations of its authority, stating that "the policy language in Sidney is  

                                                                                                                                                             



identical to the policy language [in Mattison's policies]," but the policy language is not  

                                                                                                                                                          



identical.   The Allstate policies lack the language that granted the Sidney  arbitration  

                                                                                                                                            



panel  authority  to  arbitrate  the  insured's  "right  to  [UIM]  benefits  and  the  amount  

                                                                                                                                                 



payable."  In light of this difference, the panels' and the superior court's reliance on  

                                                                                                                                                           

Sidney was not reasonable.35  

                              



                         The insureds, the panels, and the superior court are correct that arbitration  

                                                                                                                                             



panels  have  the  implied  authority  to  determine  issues  not  explicitly  committed  to  

                                                                                                                                                            



            32           187  P.3d  443  (Alaska  2008).   



            33          Id.   at   449   &   n.29   (emphasis   omitted)   (construing   Zimmerman   v.   Ill.  



Farmers'  Ins.   Co.,   739   N.E.2d   990,   995   (2000   Ill.   App.)   as   "discussing   distinction  

between  damages  and  payment  and  noting  insured  entitled  to  'damages'  from  tortfeasor,  

but  'payment'  from  UIM  insurer").  



            34          Id. (emphasis in original).  

                                                        



            35           See id.  

                                 



                                                                            -20-                                                                      7545
  


----------------------- Page 21-----------------------

arbitration if the issues are "inextricably intertwined" with the issues committed to                                                   



                  36  

arbitration.                                                                                                                           

                       But a facially non-arbitrable issue is inextricably intertwined with an  



                                                                                                                                      

arbitrable issue only if resolution of the arbitrable issue will "necessarily resolve" the  

                                             37  Adetermination ofan insured's underlyingdamages does  

                                                                                                                                     

                                     

facially non-arbitrableissue. 



not, alone, necessarily resolve the benefit amounts payable under specific coverages.  

                                                                                                                                             



The  benefit  amounts  payable  under  UIM  coverage  depends  upon  the  underlying  

                                                                                                                         



damages, available alternative recovery sources that must be exhausted to trigger the  

                                                                                                                                       



UIM  coverage,  and  the  UIM  coverage's  specific  terms.                                       An  underlying  damages  

                                                                                                                             



determination             therefore        does       not      "necessarily          resolve"         an     amounts          payable  

                                                                                                                             

determination.38  



                     The arbitration panels exceeded their authority by purporting to determine  

                                                                                                                            



the total benefit amounts Allstateowed theinsureds under their coverages; the panels had  

                                                                                                                                      



authority to determine only each insured's damages arising from the at-fault driver's  

                                                                                                                               



conduct.  Only a court, not an arbitration panel, may determine whether the insureds are  

                                                                                                                                       

                                                                                                                   39  Alaska Civil  

entitled to:  prejudgment interest on Allstate's liability to the insureds,                                                        

                                                                                                     



           36        State  Farm  Mut. Auto Ins.   Co.  v.  Dowdy,   111  P.3d  337,  342-43  (Alaska  



2005).    



           37        Id.  



           38        See  id.  at  343.  



           39        See   Sidney,   187   P.3d   at   451-53   (concluding   UIM   insurer   not   liable   for  



prejudgment  interest  after arbitration  decision);  Farquhar v   .  Alaska  Nat'l  Ins.   Co.,  20  

P.3d    577,    579-81    (Alaska    2001)    (deciding    whether    insurance    policy    covered  

prejudgment  interest);  State  Farm  Mut.  Auto  Ins. Co. v. Harrington, 918  P.2d  1022,  1023  

(Alaska 1996)  (discussing  superior  court prejudgment interest award under  UIM policy).  



                                                                  -21-                                                             7545
  


----------------------- Page 22-----------------------

                                                                                       40                                                                                                                                                                                              41  

Rule 82 attorney's fees,                                                                      and pro rata attorney's fees for subrogated claims.                                                                                                                                              It was  



 legal error to affirm the panels' determinations of their arbitration authority.                                                                                                                                                                                                    



                         B.                      The Superior Court Decisions Must Be Vacated.                                                                                                          



                                                After affirming the arbitration panels' determinations of their arbitration                                                                                                                                                       



 authority, the superior court addressed the panels' legal justifications for determining                                                                                                                                                                                  



Allstate's total UIM liability.                                                                            One significant legal determination - that Allstate must                                                                                                                                    



pay the insureds' attorney's fees and costs incurred to obtain the underlying policy limits                                                                                                                                                                                                         



 settlements with the at-fault drivers - clearly was wrong.                                                                                                                                                                     And at least two other                                              



 significant legal determinations - regarding the interplay between Allstate's medical                                                                                                                                                                                                     



payments and UIM coverages and the availability of prejudgment interest on damages                                                                                                                                                              



underlying UIM benefit payments - appear to have been affirmed not by applying the                                                                                                                                                                                                                           



 court's   independent   judgment   but   with   deference   to   the   arbitration   panels'   legal  

 analyses.42  



                        40                      See Sidney                              , 187 P.3d at 456 (awarding Rule 82 attorney's fees on UIM                                                                                                                      



benefits after arbitration award);                                                                                     Progressive Corp. v. Peter                                                                           , 195 P.3d 1083, 1094-95                                      

 (Alaska 2008) (deciding whether UIMinsurer owed Rule82attorney's                                                                                                                                                                                          fees);  State Farm   

Mut. Auto. Ins. Co. v. Lestenkof                                                                                , 155 P.3d 313, 316-18 (Alaska 2007) (deciding whether                                                                                                                      

UIM insurer owed Rule 82 attorney's fees).                                                                                                                       



                        41                      See O'Donnell v. Johnson, 209 P.3d 128, 134-35 (Alaska 2009) (deciding  

                                                                                                                                                                                                                                                                                      

whether insured created common fund); Sidney, 187 P.3d at 454 (awarding pro rata fees  

                                                                                                                                                                                                                                                                                                          

 after arbitration for insured's recovery of UIM insurer's subrogated medical payments  

                                                                                                                                                                                                                                                                                      

 claim from at-fault driver).  

                                                                      



                        42                      An "arbitrator's legal conclusions are . . . unreviewable, except where they  

                                                                                                                                                                                                                                                                                                         

pertain to arbitrability."  Kinn v. Alaska Sales & Serv., Inc., 144 P.3d 474, 487 (Alaska  

                                                                                                                                                                                                                                                                                            

 2006).  But because we hold that the panels exceeded their authority in issuing the final  

                                                                                                                                                                                                                                                                                                        

 awards, the superior court should have applied its independent judgment to resolve the  

                                                                                                                                                                                                                                                                                                             

remaining legal issues.  

                                                           



                                                                                                                                                     -22-                                                                                                                                              7545
  


----------------------- Page 23-----------------------

                                                         1.	                        UIM   insurers   are   not   required   to   reimburse   insureds   for   

                                                                                    attorney's fees and costs incurredinexhausting at-fault drivers'                                                                                                                                                                                   

                                                                                    liability insurance coverage underlying UIM excess insurance                                                                                                                                                                             

                                                                                    coverage.  



                                                        It was error to independently adopt the arbitration panels' mistaken legal   



 conclusions that the insureds' settlements with the at-fault parties' insurers provided                                                                                                                                                                                                                                          



 common   fund   benefits   requiring   Allstate   to   pay   a   pro   rata   share   of   the   insureds'  



 attorney's fees and costs incurred in obtaining the settlements.                                                                                                                                                                                                      As noted above, in this                                                            



 context "pro rata" would mean 100% of the fees incurred to obtain the policy limits                                                                                                                                                                                                                                                            



 settlements.   But, with the possible exception of subrogated medical payments claims                                                                                                                                                                                                                                                        



 discussed in the next section, the insureds' policy limits settlements did not directly                                                                                                                                                                                                                                                



benefit Allstate and thus do not constitute common fund benefits.                                                                                                                                                                             



                                                        The common fund doctrine provides that "a litigant . . . who recovers a                                                                                                                                                                                                                                     



 common fund for the benefit of persons other than himself . . . is entitled to a reasonable                                                                                                                                                                                                                            

 attorney's fee from the fund as a whole."                                                                                                                              43  

                                                                                                                                                                                                                                                                                                                                                             

                                                                                                                                                                                  In Ruggles v. Grow we implicitly applied the  



                                                                                                                                                                                                                                                                                                                                      

 doctrine to conclude that when an insured recovers an insurer's subrogated medical  



                                                                                                                                                                                                                                                                                                                                                      

payments claim from a third-party in a tort suit, the "proceeds recovered must be paid  



                                                                                                                                                                                         44  

                                                                                                                                                                                                                                                                                                                                                                

to the insurer, less pro rata costs and fees."                                                                                                                                                       We extended the doctrine in Sidney to  



                                                                                                                                                                                                                                                                                                                                         

 conclude that an insured is entitled to pro rata fees upon recovering a subrogated medical  



                            43                          Edwards v. Alaska Pulp Corp.                                                                                                  , 920 P.2d 751, 754 (Alaska 1996) (quoting                                                                                                      



Boeing Co. v. Van Gemert                                                                                       , 444 U.S. 472, 478 (1980));                                                                                           see O'Donnell                                                   209 P.3d at 135                                    

 ("[T]he elements of a common fund recovery under Alaska law are (1) the efforts of one                                                                                                                                                                                                                                                                    

party (2) result in the creation of a fund benefitting a third party (3) who is benefitted in                                                                                                                                                                                                                                                                    

 a clear and well-defined manner, and (4) the third party is ready and willing to accept the                                                                                                                                                                                                                                                                 

benefits so obtained.").                       



                            44                          984 P.2d 509, 512 (Alaska 1999).  

                                                                                                                                                                          



                                                                                                                                                                             -23-	                                                                                                                                                                   7545
  


----------------------- Page 24-----------------------

                                                                                            45  

payments claim through settlement, not just litigation.                                          In both      Ruggles  and  Sidney  the  



insureds procured a "direct benefit" for the insurers by securing satisfaction of claims                                                   

their insurers held.            46  



                                                                                                                                         

                        Theinsureds mistakenly arguethatthey secured adirect benefit for Allstate  



                                                                                                                                         

by settling with the at-fault parties because "Allstate seeks to net 100% of that liability  



                                                                                                                              

recovery against its UIM obligation to [the insureds]." But that argument fundamentally  



                                                                                                                                           

mischaracterizes excess insurance coverage. Allstate's UIM liability necessarily cannot  



                                                                                                                                           

begin until an insured exhausts all other potential payment sources for damages arising  

                              47   Allstate was not liable to the insureds for amounts payable to them  

                                                                                                                                              

from an accident. 



by the at-fault drivers' liability insurance coverage, and Allstate did not have a claim  

                                                                                                                                            



against the at-fault drivers beyond its subrogated claim for medical payments to the  

                                                                                                                                                 



insureds.   Securing the settlements thus did not create a common fund or otherwise  

                                                                                                                                     



provide Allstate any direct benefit beyond the subrogated medical payment claims.  

                                                                                                                                                  



                       Sidney clarifies this point. In Sidney Allstate paid an insured's medical bills  

                                                                                                                                               

                                                                 48  Allstatethusbecamesubrogated to theinsured's  

under themedical payments coverage.                                                                                                    

                                                 



claims against third parties for the medical bills; Allstate, not the insured, was legally  

                                                                                                                                          



entitled to any payment from liable third parties for the insured's medical bills that  

                                                                                                                                               



            45          187  P.3d  at  455.  



            46         Id.  at  453-54;  Ruggles,  984  P.2d  at  512;  see  O'Donnell,  209  P.3d  at   134  



(requiring  "well-defined  benefits"  to  third  party  for  creation  of  common  fund).   



            47         See  AS  28.20.445(b);  Curran  v.  Progressive  Nw.  Ins.  Co.,  29  P.3d  829,  833  



(Alaska  2001)  (stating  that  "UIM  claimant   [must]   'exhaust'  or   'use  up'  all  underlying  

liability  coverage  before  recovering  under  [the]  UIM  policy").   



            48          187 P.3d at 446.  

                                             



                                                                       -24-                                                                  7545
  


----------------------- Page 25-----------------------

                                         49  

Allstate already had paid.                   As part of the insured's settlement with the at-fault driver's                     



insurance   company,   the   insurance   company   agreed   to   satisfy   Allstate's  subrogated  



          50  

                                                                                                                              

claim.         The Sidney  insured thus recovered a direct benefit for Allstate by securing  



satisfaction of its subrogated claim, to which the insured held no legal interest.  But in  



                                                                                                                            

the  cases  now  before  us,  except  as  contemplated  below  with  respect  to  Allstate's  



                                                                                                                                        

subrogated medical payments claims, all of the settlement money went directly to the  



                                                              

insureds.  This case thus differs from Sidney.  



                                                                                                                                      

                      The common fund doctrine was misapplied by the superior court.   The  



                                                                                                                                         

insureds  are  not  entitled  to  a  100% "pro  rata"  share  of  attorney's  fees  incurred  in  



                                                                                                                                              

obtaining their policy limits settlements with the at-fault drivers' insurance companies.  



                                                                                                                         

                       2.	      The  arbitration  panels'  treatment  of  Allstate's   subrogated  

                                                                                                                               

                                medical   payments   claims,   and  thus   the  superior   court's  

                                                             

                                affirmance, are unclear.  



                                                                                                                                         

                      Allstate had paid $21,784 of Harbour's medical bills and $5,982.52 of  



                                                                                                                               

Mattison's medical bills under their medical payments coverages.   Allstate claimed  



                                                                                                                               

ownership of its subrogated claims by providing notice to the insureds that it intended  



                                                                                                                               

to negotiate its right of recovery directly with the responsible parties.   The insureds  



                                                                                                                                      

disputed the validity of Allstate's directive not to recover the subrogated claims.  The  



                                                                                                                             

arbitration panels made no findings about Allstate's subrogated claims or its directives  



                                                                                                                              

to the insureds, instead awarding pro rata fees based on the entire settlement.  



                                                                                                                                         

                      Because we hold that it was improper to award pro rata attorney's fees on  



                                                                                                                               

the entire settlement, the superior court must determine on remand whether the insureds  



                                                                                                                                        

recovered any portion of Allstate's subrogated claims, in which case they would be  



                                                                                                                                         

entitled to recover  pro rata fees only  on  the portion  of  the settlement dedicated  to  



           49        Id.  at  451,  454.  



           50        Id.  at  451.  



                                                                   -25-                                                                 7545  


----------------------- Page 26-----------------------

                                                                                                                                                                                       51  

 satisfying Allstate's subrogated claims.                                                                                                                                                       Allstate apparently conceded that it may owe                                                                                                                                                   



 Harbour some pro rata fees, stating in a letter that "Harbour is entitled to a pro rata                                                                                                                                                                                                                                                                                                       



 reduction . . . for the costs and attorney's fees he incurred to recover on Allstate's                                                                                                                                                                                                                     



  subrogated medical payments claim."                                                                                                                                                Absent further development of the record and                                                                                                                                                               



 factual findings, it is unclear how to resolve this issue in Mattison's case.                                                                                                                                                                                                                                                



                                                               3.	                            The superior court must independently determine if Mattison is                                                                                                                                                                                                                                               

                                                                                              entitled to prejudgment interest on the damages award.                                                                                                                                                                                          



                                                               Mattison's settlement with the at-fault driver undisputedly did not include                                                                                                                                                                                                                                      



 prejudgment interest because it was not available as an add-on above the policy limit                                                                                                                                                                                                                                                                                                      



 under the at-fault driver's liability coverage.                                                                                                                                                               He therefore asked the arbitration panel to                                                                                                                                                



 hold Allstate liable for prejudgment interest on the underlying settlement under his UIM                                                                                                                                                                                                                                                                                                   



 coverage. But determining Allstate's liability for prejudgment interest on the underlying                                                                                                                                                                                                                                                                      



  settlement requires determining Allstate's contractual liability, and, as discussed above,                                                                                                                                                                                                                                                                                        



 that was not submitted to arbitration.                                                                                                                                              The panel exceeded its authority in awarding                                                                                                                                    



 Mattison prejudgment interest.                                                                                                                     The superior court apparently affirmed the award by                                                                                                                                                                                               



 deferring to the panel's legal analysis of the issue instead of applying its independent                                                                                                                                                                                                                                                                



judgment; this was error.                                                                  

                                                               Thearbitrationpanel                                                                            reliedon                                 Farquharv.                                               Alaska NationalInsuranceCo.                                                                                                                 52  



 and  Sidney53                                                     to  conclude  that  Allstate  was  liable  for  prejudgment  interest  on  the  

                                                                                                                                                                                                                                                                                                                                                                                                 



 settlement amount.  In Farquhar we discussed only two grounds for holding the UIM  

                                                                                                                                                                                                                                                                                                                                                                                           



                                51                             See id. at 453-54;  cf. O'Donnell, 209 P.3d at 135 ("If the insurer actively                                                                                                                                                                                                                                  



 requests that the plaintiff not pursue her subrogation claim, there is no common fund                                                                                                                                                                                                                                                                                                      

 because the insurer will not be collecting the lien from the plaintiff's recovery fund but                                                                                                                                                                                                                                                                                                        

 will seek its own recovery.").                                                  



                                52                             20 P.3d 577 (Alaska 2001).  

                                                                                                                                                                



                                53                              187 P.3d at 443.  

                                                                                                                      



                                                                                                                                                                                                 -26-	                                                                                                                                                                                      7545
  


----------------------- Page 27-----------------------

insurer liable for prejudgment interest: (1) "if the insurer contractually assumes liability                                                                               



by the terms of its policy" and (2) "if public policy requires liability despite the language                                                                           

                                  54   The insurance policy in Farquhar did not explicitly state whether the  

of the contract."                                                                                                                                                                    



insurer was liable for prejudgment interest beyond the policy limit, suggesting that it was  

                                                                                                                                                                                   

not.55         And we rejected the argument that an insurer is liable for any add-on fees not  

                                                                                                                                                                                    

expressly  excluded  by  a  coverage.56                                                  We  ultimately  held  that  an  insurer  is  not  

                                                                                                                                                                                   



automatically required to pay add-ons, such as prejudgment interest, above a facial  

                                                                                                                                                                               

policy limit that is greater than the statutory minimum.57  

                                                                                                 



                             In Sidney we held that when an insured is able to pursue an add-on from an  

                                                                                                                                                                                       



at-fault driver's insurance but does not, the insured waives the right to claim a similar  

                                                                                                                                                                           

add-on from the insured's UIM coverage provider.58  To award prejudgment interest, the  

                                                                                                                                                                                     



Mattison arbitration panel implicitly reasoned that theinversewas true: When an insured  

                                                                                                                                                                            



is unable to pursue an add-on from an at-fault driver's insurance, the insured may claim  

                                                                                                                                                                               



a similar add-on from the insured's UIM coverage provider.  

                                                                                                                                     



                             The superior court's basis for affirmance is unclear.  The court called the  

                                                                                                                                                                                     



Mattison arbitration panel's interpretation of Farquhar  "arguably questionable" but  

                                                                                                                                                                                    



found "no reason to modify or vacate the arbitration panel's decision under the law" and  

                                                                                                                                                                                    



noted that "Allstate fail[ed] to point to any contractual language . . . to suggest . . . that  

                                                                                                                                                                                 



Allstate was not obligated to pay any interest."  Because the arbitration panel exceeded  

                                                                                                                                                                       



               54            20 P.3d at 578.         



               55            Id.  at 579.   



               56            Id.  at 580.   



               57            Id.  at 583.   



               58            187 P.3d at 451-53.       



                                                                                         -27-                                                                                   7545
  


----------------------- Page 28-----------------------

                                                                                                                                                                                                     

the scope of its authority in awarding prejudgment interest, the court was required to  



                                                                                                                                                                                                 

apply  its  independent  judgment  to  the  issue.                                                                It  therefore  was  error  to  afford  any  



                                                                                                                                                                                                   

deference to the arbitration panel's "arguably questionable" analysis.  On remand the  



                                                                                                                                                                                         

court must independently determine whether  Allstate is contractually liable for  the  



                                                                                          

prejudgment interest Mattison claims.  



VI.             CONCLUSION  



                               The superior court's judgments are REVERSED.                                                                         We REMAND for the                              



superior court to determine what amounts, if any, Allstate owes the insureds under their                                                                                                        



policies in light of the arbitration determinations of the insureds' damages caused by the                                                                                                         



                   

at-fault drivers.  



                                                                                                -28-                                                                                          7545
  

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