Fernow v. Gould

OPINION

ANDERSON, Justice.

On April 26, 2008, respondent Michael Gould, a snowplow driver for the City of Alexandria, crossed the center line in his snow plow and collided with the vehicle of Donald Fernow, causing Fernow’s vehicle to roll over. Witnesses indicated that it was a sunny day, and although there was slush present on the road, driving condi*10tions were good. Gould agreed that road conditions were fair, and that the driving lanes were clear.

Fernow brought a personal injury action against both the City and Gould. At around the same time, Fernow’s insurance company, appellant Country Mutual Insurance Company, sought arbitration against the City under Minn.Stat. § 65B.53, subd. 4 (2012),1 seeking repayment of $23,326 in basic economic loss benefits paid to Fer-now. In the personal injury action in district court, the City moved for summary judgment, arguing that Fernow’s claim was barred by statutory discretionary immunity, common law official immunity, and statutory “snow and ice immunity” under Minn-Stat. § 466.03, subd. 4(a) (2012).2 The district court denied the City’s summary judgment motion, concluding that the involvement (or lack thereof) of snow and ice in the collision was a question of material fact making summary judgment inappropriate. Country Mutual intervened in the action in January 2010, and the court of appeals affirmed the district court’s denial of summary judgment. Fernow v. Gould, No. A10-223, 2010 WL 3463694 (Minn.App. Sept. 7, 2010).

At Country Mutual’s urging, the arbitrator, who had granted the City a delay in proceedings pending the district court’s determination of the immunity claims, then awarded the insurance company $23,326 in basic economic loss benefits. The City argued that the arbitrator lacked authority to decide the issue of statutory immunity; the arbitrator addressed this claim in a brief paragraph:

The [City] asserts that [the arbitrator] does not have authority nor jurisdiction to hear this matter. Further stating their defense that there [sic] snowplow driver is exempt from any and all liability asserting statutory immunity. The [City] filed a motion for summary judgment in District Court to request this matter be dismissed by governmental statutory immunity. The District Court denied the motion. The Court of Appeals affirmed the District Court decision. Therefore, the defense of governmental statutory immunity does not apply to this matter.

The City filed a motion in the district court to vacate the arbitration award, arguing that the legal issue of immunity was not within the arbitrator’s authority. The district court denied the motion and confirmed the award. The City appealed, and the court of appeals reversed. Fernow v. Gould, 816 N.W.2d 647, 651 (Minn.App.2012). The court of appeals held that “[b]ecause the application of immunity is a question of law and, because, in the area of automobile reparation, arbitrators are limited to deciding issues of fact, the arbitrator exceeded her authority when she determined that the defense of governmental statutory immunity does not apply to this matter.” Id. at 650-51.

Country Mutual petitioned for review, arguing that the arbitrator acted within her authority when she decided that statu*11tory snow-and-ice immunity did not apply. We granted review, and now hold that claims of immunity, including necessary questions of fact, should be determined by the district court prior to arbitration on the merits under the Minnesota No-Fault Automobile Insurance Act, Minn.Stat. §§ 65B.41-71 (2012) (“No-Fault Act”). We therefore affirm the decision of the court of appeals, although on different grounds, and remand to the district court with instructions to vacate the arbitrator’s award.

I.

“Generally, arbitration law states that arbitrators are the final judges of both law and fact.” Johnson v. Am. Family Mut. Ins. Co., 426 N.W.2d 419, 421 (Minn.1988). “Absent a clear showing that the arbitrators were unfaithful to their obligations, the courts assume that the arbitrators did not exceed their authority.” Hilltop Constr., Inc. v. Lon Park Apartments, 324 N.W.2d 236, 239 (Minn.1982). “Indeed, a court will not even set aside an arbitration award because it thinks the arbitrators erred as to the law or facts, as long as the reasoning and judgment are consistent.” Johnson, 426 N.W.2d at 421.

But “no-fault arbitrators are limited to deciding questions of fact, leaving the interpretation of law to the courts.” Weaver v. State Farm Ins. Cos., 609 N.W.2d 878, 882 (Minn.2000). “Arbitration regarding automobile reparations therefore departs from the generally accepted principle that ‘arbitrators are the final judges of both law and fact.’ ” Id. (quoting Johnson, 426 N.W.2d at 421). “The limitation on the final authority of arbitrators is based on the perceived need for consistency in interpretation of the No-Fault Act.” Id. We have recognized, however, that “[t]o grant relief, arbitrators must apply the law to the facts they have found.” Id. Therefore, to achieve consistent interpretation of the No-Fault Act, we review the arbitrator’s legal determinations de novo. Id. An arbitrator’s factual findings are final. Id. at 884-85.

Although we have recognized that arbitrators must make certain legal determinations in order to grant relief, we have said that coverage disputes present “a question of law for the courts, not the arbitrators, and should be determined by the district court prior to any arbitration on the merits of the claim.” W. Nat’l Ins. Co. v. Thompson, 797 N.W.2d 201, 206 (Minn.2011). “Where the coverage dispute arises on a motion to compel arbitration or to enjoin arbitration, the court ought to decide the issue in the first instance.” Costello v. Aetna Cas. & Sur. Co., 472 N.W.2d 324, 326 (Minn.1991). “The distinction between coverage disputes for the court and other types of disputes for the arbitrators is that questions that go ‘not to the merits of a claim but to whether a claim exists’ should be decided by the district court.” Thompson, 797 N.W.2d at 206 (quoting Myers v. State Farm Mut. Auto. Ins. Co., 336 N.W.2d 288, 290-91 (Minn.1983)).

The same considerations apply to immunity determinations. We have said that the denial of an immunity claim is “a final determination of a right separable from and collateral to rights asserted in the main action” and thus “is immediately ap-pealable notwithstanding the absence of a final judgment on the merits” because “it is [a] denial of a right not to stand trial at all — a right that is lost if the case is permitted to proceed.” Kastner v. Star Trails Ass’n, 646 N.W.2d 235, 239 (Minn.2002) (discussing Mitchell v. Forsyth, 472 U.S. 511, 105 S.Ct. 2806, 86 L.Ed.2d 411 (1985)). It is therefore likely that the courts will decide any disputed resolution of an immunity claim before any further *12proceeding, whether as an appeal from a successful assertion of immunity or as an interlocutory appeal from its denial. To have arbitrators make such determinations — but then subject their decisions to immediate de novo review by the courts— is both needlessly burdensome and contrary to the goals of the No-Fault Act, one of which is to speed the administration of justice. See Weaver, 609 N.W.2d at 884. We therefore conclude that questions of immunity, like questions of coverage, “should be determined by the district court prior to any arbitration on the merits of the claim.” Thompson, 797 N.W.2d at 206.

Because our decision in this case is limited to the question of an arbitrator’s authority to decide claims of immunity, we need not decide the scope of an arbitrator’s authority to decide other questions of law that may arise in arbitrations under the No-Fault Act. We note, however, that contrary to the court of appeals’ holding— arbitrators may not interpret statutes that “can affect the outcome of the arbitration,” Fernow, 816 N.W.2d at 650—our decision in Weaver clearly envisions a role for arbitrators in deciding questions of law necessary to resolve disputes and award relief. Weaver, 609 N.W.2d at 884 (“Rather, the arbitrator can determine the facts and apply the law to those facts subject to de novo review by the district court.”).

II.

We turn next to the issue of whether the district court or arbitration is the proper forum to determine issues of fact necessary to an immunity determination. Immunity claims are not merely matters of legal theory; those claims are grounded in real-life circumstances and the actions of individuals. For example, a claim of snow- and-ice immunity under Minn.Stat. § 466.03, subd. 4(a), as we face here, would require a finding regarding the presence, or lack thereof, of snow or ice at the scene of the collision.

Here again our decisions involving coverage disputes are a useful guide. In United States Fidelity & Guaranty Co. v. Fruchtman, 263 N.W.2d 66, 71 (Minn.1978), we stated that “(wjhere coverage is preconditioned on the establishment of facts ... such factual disputes must be tried and resolved by the trial court accompanied by findings of fact.” In Fruchtman, insurance coverage, and thus arbitrability, required a finding that the vehicle of a hit-and-run driver actually made contact with that of the insured. Id. at 72. We specified that although the arbitrator would be the final authority as to the factual question of whether contact was made for purposes of determining the unidentifiable driver’s fault, the same fact would first need to be established by the district court to determine whether the arbitrator had the authority to decide the merits of the underlying claim. Id. at 72 & n. 7.

We have also observed that the “severance of legal and factual issues between court and arbitrator would interfere with the goal of speeding the administration of justice” and that “it makes little sense to require [litigants] to shuttle back and forth between the arbitrator making factual determinations and the court deciding legal questions.” Weaver, 609 N.W.2d at 884. These observations apply with as much force to preliminary immunity determinations as they do to the initial resolution of coverage disputes. We therefore extend our reasoning in Fruchtman to pre-arbi-tration immunity issues, and hold that questions of fact necessary to decide immunity claims are to be decided by the district court rather than the arbitrator.

We hold that claims of immunity, including necessary questions of fact, should be determined by the district court prior to *13arbitration on the merits under the No-Fault Act. We therefore affirm the decision of the court of appeals, though on different grounds, and remand to the district court with instructions to vacate the arbitrator’s award.

Affirmed.

LILLEHAUG, J., not having been a member of this court at the time of submission, took no part in the consideration or decision of this case.

. Minnesota Statutes § 65B.53, subd. 4, states: "The right of indemnity provided in subdivision 1 shall be enforceable only through mandatory good faith and binding arbitration procedures established by rule of the commissioner of commerce. These procedures shall utilize determinations of comparative negligence. No evidence nor the decision in such an arbitration proceeding shall be admissible in any action by any party.”

. Minnesota Statutes § 466.03, subd. 4(a) provides that municipalities are immune from liability for "[a]ny claim based on snow or ice conditions on any highway or public sidewalk that does not abut a publicly owned building or publicly owned parking lot, except when the condition is affirmatively caused by the negligent acts of the municipality.”