Wow, it’s been a little while since I’ve posted anything here. I’ve been too busy being a lawyer to find time to write about being a lawyer. But don’t worry. I’m still a neophyte at all of this. I just need to get back into the habit of writing. Let’s start off with a review of a recent Utah Supreme Court ruling. And by recent, I mean, yesterday.
The case is Zeller v. Nixon, 2015 UT 57, – P.3d –. As far as I have been able to determine, this is the first appellate decision addressing U.C.A. § 31A-22-321, dealing with arbitration in third-party accident claims. These so-called “321 Arbitrations” have come up in cases we handle at the firm from time to time.
Facts of the Case
The Plaintiffs filed a complaint against the defendant as the result of an auto accident in Logan, Utah. The plaintiffs brought claims of negligence and loss of consortium. Pursuant to Section 321, they submitted their claims for arbitration. Under this Section, plaintiffs can choose to submit their claims for arbitration rather than going through a full trial. They can also rescind this choice, as long as a notice of rescission is filed within 90 days after the election to arbitrate and no less than 30 days before any scheduled arbitration.
After the 90-day period expired, the plaintiffs moved the district court to amend their complaint to add a claim for negligent entrustment against the business that owned the vehicle driven by the defendant at the time of the accident, and to undo the election of arbitration. In support of their motion, the plaintiffs identified new evidence that had been disclosed after the end of the 90-day rescission period. The defendant opposed the motion to amend the complaint, and filed her own motion to compel arbitration.
The district court granted the motion to amend the complaint, finding that the defendant would not be substantially prejudiced by the amendment. The district court also denied the motion to compel arbitration, finding that Utah Rule of Civil Procedure 15 governing amending complaints controlled the matter. The district court found that there were sufficient grounds for amending the complaint under Rule 15, thus circumventing the statutory provisions of Section 321. The defendant appealed.
Utah Supreme Court’s Holding
The Utah Supreme Court affirmed the district court’s opinion in part and reversed in part. The Supreme Court held that the plaintiffs’ claims against the defendant driver were “irretrievably subject” to arbitration under Section 321, as the plaintiffs failed to file their notice of rescission within the 90-day limit proscribed by Section 321. According to the Court, the express statement of the statute excluded any other path for rescission.
The Court also affirmed the district court’s decision regarding the plaintiffs’ claims against the business that owned the vehicle, but not for the reason identified by the district court. The Supreme Court held that the claims against the business were new claims against a new party. As such, they could have been asserted in a separate action. Although the Utah Rules of Civil Procedure allow the consolidation of separate but related claims into a single action, they do not require it. The Court held that the election of arbitration in Section 321 is “limited to the defendant(s) named in the complaint at the time the election is made.” Plaintiffs are free to assert separate claims against multiple defendants separately, if they so choose.
If you are interested in reading the full decision, you can find it here: http://www.utcourts.gov/opinions/supopin/Zeller%20v.%20Nixon20150721.pdf.
As I indicated above, This is the first (and so far only) appellate case that interprets any part of U.C.A. § 31A-22-321. I don’t know if other states have similar provisions allowing a plaintiff in an automobile accident case to opt for arbitration. The idea behind 321 arbitrations was that the arbitration process would be faster than litigation in the courts. In addition, by taking these auto accident cases out of the court system, it would help clear out the log jam at the courts.
This ruling seems to undo some of that. Under Zeller, in certain circumstances, a plaintiff can pursue separate claims based on the same accident. One (or more) claims can go through the 321 arbitration process, while one (or more) claims can go through litigation.
Weird. But not uncommon. I’ll keep you updated as the situation develops.