Tornai v. CSAA Insurance Exchange CA1/2

Filed 12/18/23 Tornai v. CSAA Insurance Exchange CA1/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or
ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION TWO

KATHRYN TORNAI,
Plaintiff and Respondent,
A167666
v.
CSAA INSURANCE EXCHANGE, (Sonoma County
Super. Ct. No. SCV271737)
Defendant and Appellant.

After plaintiff Kathryn Tornai filed a lawsuit against her insurance
company for breach of contract and bad faith, defendant insurance company
filed a motion to compel arbitration of her underinsured motorist claim. The
motion was made pursuant to a provision in plaintiff’s automobile policy,
which, as mandated by Insurance Code1 section 11580.2, subdivision (f),
requires the parties to arbitrate any dispute over entitlement to recover
damages caused by an uninsured or underinsured motorist2 or the amount of

1 Undesignated statutory references are to the Insurance Code unless

otherwise specified.
2 Section 11580.2 governs both uninsured motorist (UM) and

underinsured motorist (UIM) coverage, and the policy here defines
“ ‘Uninsured motor vehicle’ ” to include “underinsured motor vehicle[s].” For
purposes of this opinion, the terms are used interchangeably.

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damages. The trial court denied the motion, and defendant appeals. We
conclude that the denial was error, and we reverse.
BACKGROUND
The Parties and the General Setting
In August 2021, plaintiff Kathryn Tornai (plaintiff) entered into a
contract with defendant CSAA Insurance Exchange (defendant) to provide
automobile insurance for her vehicle (policy). The policy had a clause in the
UM/UIM coverage endorsement, which read: “We will pay damages, other
than punitive or exemplary damages, for bodily injury to an insured
person, which an insured person is legally entitled to recover from the
owner or operator of an uninsured motor vehicle. The bodily injury
must be caused by accident and arise out of the ownership, maintenance or
use of the uninsured motor vehicle. [¶] Determination whether an
insured person is legally entitled to recover damages or the amount of
damages shall be made by agreement between the insured person and us.
If no agreement is reached, the decision will be made by arbitration.”
Several paragraphs later, the policy reads: “ARBITRATION [¶] If an
insured person makes a claim under this Part and we do not agree that
such person is legally entitled to recover damages from the owner or operator
of an uninsured motor vehicle because of bodily injury to such insured
person, or, if so entitled, do not agree as to the amount, then either party, on
written demand of the other, shall institute arbitration proceedings as
provided in Section 11580.2 and the following sections of the Insurance
Code . . . .”
According to the complaint that plaintiff would come to file, on
February 2, 2022, she was injured in a traffic accident with another driver.
In September, plaintiff settled with the driver’s insurance carrier for $25,000,

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his policy limits.
Plaintiff’s policy provided UM/UIM coverage of up to $300,000 per
accident. Plaintiff made a written demand to defendant under the policy for
$275,000—the policy limits of $300,000, less the $25,000 she had already
received from the settlement with the UIM. Defendant refused to tender the
$275,000 demanded.
The Proceedings Below
On October 3, 2022, plaintiff filed her complaint against defendant
alleging breach of written contract and breach of the implied covenant of good
faith and fair dealing. The allegations in support of both causes of action
were the same and included the following: defendant failed to settle or make
any offer “when Plaintiff’s damages clearly exceed the policy limit with
numerous surgeries having been undergone”; defendant failed to “promptly
respond to Plaintiff’s communications with respect to the claim” and
“ignor[ed] time limited settlement demands”; defendant “[w]ithh[eld] benefits
due to Plaintiff when [defendant] knew, or should have known, Plaintiff was
entitled to”; and defendant failed to adequately investigate plaintiff’s injuries
and damages.
On November 18, defendant filed a motion to compel arbitration. It
was accompanied by a memorandum of points and authorities and the
declaration of defense counsel. The declaration in turn attached a copy of
plaintiff’s policy; defense counsel’s letter to plaintiff’s counsel demanding the
parties arbitrate their dispute over the UIM claim pursuant to the
arbitration provision in the policy; and plaintiff’s counsel’s subsequent email
again pressing for tender of policy limits of $275,000, but otherwise not
responding to the arbitration demand. In its motion, defendant asserted that
it “has disputed the amount that Plaintiff claimed under the policy and

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therefore the dispute falls squarely within the arbitration provision of [t]he
Auto Policy.”
Plaintiff filed her opposition, which was accompanied by her counsel’s
declaration. The declaration attached plaintiff’s written demands to
defendant for tender of the available policy limits in the amount of $275,000.
It also attached copies of medical bills and expenses purportedly totaling
$30,451.98 as of August 2022, which plaintiff had incurred as a result of the
accident and she had produced in response to defendant’s discovery requests.
In her opposition, plaintiff argued that “[t]his case falls outside the
narrow scope of . . . section 11580.2 and, simply, does not present an
arbitrable UM dispute.” She maintained that “arbitration cannot be
compelled as to funds that are undisputedly owed.” (Capitalization omitted.)
According to plaintiff, defendant “cannot dispute that [she] is entitled to at
least $30,451.98 for medical expenses on her UM claim.” She further
asserted defendant “engaged in delay tactics to avoid payment.” Defendant’s
failure to pay her $30,451.98, plaintiff argued, “is a violation of [defendant’s]
duty to Plaintiff” and “is unacceptable and should not be condoned by
allowing [defendant] to hide behind arbitration.”
Next, relying mainly on Hightower v. Farmers Insurance
Exchange (1995) 38 Cal.App.4th 853 (Hightower), plaintiff argued she “should
not be required to complete arbitration proceedings prior to filing [her
lawsuit].” She claimed that “[i]f an insurer breaches the insurance contract
and/or engages in tortious conduct, as [defendant] has done here by delaying
payment of undisputed funds, it should not be allowed a safe-harbor while
the arbitration is being conducted.”
Finally, plaintiff raised a waiver defense. She argued that the trial
court “can, and should, hold that [defendant’s] bad faith in refusing to pay its

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insured $30,451.98 undisputedly owed . . . has resulted in the waiver of
[defendant’s] right to compel arbitration of Plaintiff’s claim for payment of
the $244,548.02 remaining in dispute under the $300,000.00 UM policy.”
(Italics omitted.)
Defendant filed a reply, asserting that plaintiff’s opposition made “two
key factual misstatements.” First, defendant argued that contrary to
plaintiff’s assertion, it had in fact offered to pay plaintiff $2,920 for medical
expenses. Second, defendant refuted plaintiff’s claim that $30,451.98 is “
‘undisputedly owed’ ” to her. Defendant explained: “This case presents the
complication of there being Medi-Cal insurance payments made for medical
services related to the claim. Defendant has asked Plaintiff to provide the
Medi-Cal documentation, as Defendant acknowledges that the reduced
amount of Medi-Cal’s actual payments is legally owed. However, Plaintiff
has—and continues—to refuse to provide the Medi-Cal payment
documentation, which would assist in quantifying the amount legally owed.”
Defendant further denied any allegation that it had acted in bad faith. It
argued that “it is in fact Plaintiff who is ‘stonewall[ing]’ on providing [it] the
Medi-Cal payment documentation.” Defendant also contended that
“[p]laintiff’s medical billing is nowhere near ‘plainly exceed[ing]’ policy
limits . . . .”
On April 4, after holding a hearing, the trial court issued its order
denying the motion. After setting forth the procedural background, it cited to
a number of legal authorities, including section 11580.2 and several cases.
One of those cases was Hightower, supra, 38 Cal.App.4th 853, which was
cited in plaintiff’s opposition and “held, among other things, that an insurer
is not entitled to immunity from claims for bad faith simply by requesting
arbitration instead of settling the claim, and therefore cannot shield itself

5
from such a claim simply by seeking arbitration.” After citing to Hightower,
though, the court acknowledged that Hightower “was not, however, faced
with a question of whether to order arbitration of an action involving a claim
of bad faith, or how to determine such a question.”
Interestingly, another case the trial court cited to was McIsaac v.
Foremost Ins. Co. Grand Rapids, Michigan (2021) 64 Cal.App.5th 418
(McIsaac), which “held that an insurer was entitled to arbitration under . . .
section 11580.2(f)” where there was a dispute over the amount of damages
owed to the plaintiff, even though the plaintiff had brought a bad faith claim
against the insurer.
The court then stated its reasons for denying the motion as follows:
“Plaintiff’s claims involve different alleged wrongdoing and disputes.
She alleges [in her opposition] . . . , and provides evidence demonstrating,
that after she made a demand under the Policy, Defendant unreasonably
failed to investigate the claim or settle the claim, Defendant has failed to
make any effort to address Plaintiff’s request for payment, resolve the matter
in any way, or pay any funds whatsoever, even though Plaintiff demonstrated
that her medical bills and expenses amount to $30,451.98, so that she is
unequivocally entitled to at least that amount.”
“Defendant for its part makes no effort in its moving papers to
demonstrate that the dispute is over simple coverage or the amount to which
Plaintiff is entitled. In short, is [sic] has done nothing to show that this is
within the ambit of Ins. Code section 11580.2(f)’s arbitration coverage or that
this is not, as Plaintiff alleges, at its root a dispute over alleged bad-faith
handing of Plaintiff’s claims. Defendant in its moving papers completely
ignores the fact that Plaintiff had alleged bad faith refusal to treat [sic] with
her or pay anything at all, in the face of a clear right to some payment, and

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does not address the issue in any manner or provide any evidence at all
regarding the issue. Moreover, unlike the insurer in McIsaac, defendant here
expressly seeks to submit the entire dispute to arbitration, simply stating in
its motion, at 1:24-26, that it moves ‘the Court for an order compelling
arbitration of the present dispute between Defendant and Plaintiff . . . .’
Nowhere in its moving papers does it specify that there is a dispute over the
amount, much less that is seeks to compel only that dispute to arbitration,
while staying the litigation as to the claim of bad faith.”
The court went on, “Defendant’s reply papers do at least purport to
address the issue, but this is utterly insufficient.” After stating defendant
had “the burden here of showing the arbitration applies to the claims,” it
found that it failed to do so in its moving papers and “cannot now cure this
defect by addressing it in its reply.” The court, however, concluded that in
any event “the arguments and information set forth in the reply papers fail to
resolve the issue in Defendant’s favor.” In particular, the court addressed
defendant’s claim that it had offered to pay plaintiff $2,920 for medical
expenses, finding that “if plaintiff, as a result of the accident, in fact clearly
had medical bills which exceeded the amount offered and was accordingly
entitled to something greater, Defendant cannot simply offer less and claim
that this is a mere dispute over the amount owed.”
Finally, the court stated, “Although there may ultimately be a dispute
about the amount owed, at the present the claim is based on a simple refusal
to pay anything, despite clear and unequivocally [sic] evidence showing that
Plaintiff is entitled to some payment, or to settle or engage with Plaintiff in
any way.”

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 On April 7, defendant appealed.3 Plaintiff did not file a respondent’s
brief, and so we will “decide the appeal on the record, the opening brief, and
any oral argument by [defendant].” (Cal. Rules of Court, rule 8.220(a)(2).)
DISCUSSION
Defendant contends the trial court erred in denying its motion to
compel arbitration because it was entitled to arbitrate the amount of
plaintiff’s UIM claim under section 11580.2, subdivision (f) and the terms of
the policy. Defendant also argues that it did not waive the right to compel
arbitration, an issue that plaintiff raised in her opposition, but the trial court
did not reach.
General Legal Principles and Standard of Review
Petitions or motions to compel arbitration are governed by Code of Civil
Procedure section 1281.2, which states: “On petition of a party to an
arbitration agreement alleging the existence of a written agreement to
arbitrate a controversy and that a party to the agreement refuses to arbitrate
that controversy, the court shall order the petitioner and the respondent to
arbitrate the controversy if it determines that an agreement to arbitrate the
controversy exists, unless it determines that: [¶] (a) [t]he right to compel
arbitration has been waived by the petitioner; or [¶] (b) [g]rounds exist for the
recission of the agreement.” (Italics added.)
“The petitioner bears the burden of proving the existence of a valid
arbitration agreement by the preponderance of the evidence, and a party
opposing the petition bears the burden of proving by a preponderance of the

3 Although the notice of appeal incorrectly describes the date of the

order appealed from, we construe the notice as appealing from the order filed
on April 4, 2023 and thus deem it valid. (See Yolo County Dept. of Child
Support Services v. Lowery (2009) 176 Cal.App.4th 1243, 1246; see also
Dang v. Smith (2010) 190 Cal.App.4th 646, 656–657.)

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evidence any fact necessary to its defense.” (Engalla v. Permanente Medical
Group, Inc. (1997) 15 Cal.4th 951, 972 (Engalla).)
“[I]n ruling on a petition to compel, the court must determine whether
the parties entered into an enforceable agreement to arbitrate that reaches
the dispute in question, construing the agreement to the limited extent
necessary to make this determination.” (California Correctional Peace
Officers Assn. v. State of California (2006) 142 Cal.App.4th 198, 204–205
(California Correctional Peace Officers).) If such an agreement exists, the
court must ordinarily order the parties to arbitration. (Wagner Construction
Co. v. Pacific Mechanical Corp. (2007) 41 Cal.4th 19, 26, fn. omitted, citing
Code Civ. Proc., § 1281.2.)
A relevant principle governing the threshold issue of arbitrability is
that “ ‘in deciding whether the parties have agreed to submit a particular
grievance to arbitration, a court is not to rule on the potential merits of the
underlying claims.’ ” (California Teamsters Public, Professional and Medical
Employees Union, Local 911A v. County of Solano (1991) 233 Cal.App.3d 800,
803 (California Teamsters Public), quoting AT&T Technologies v.
Communications Workers (1986) 475 U.S. 643, 649; see California
Correctional Peace Officers, supra, 142 Cal.App.4th at p. 205 [“Section 1281.2
[of the Code of Civil Procedure] expressly forbids the court from reaching the
merits of the parties’ dispute, instructing that ‘[i]f the court determines that a
written agreement to arbitrate a controversy exists, an order to arbitrate
such controversy may not be refused on the ground that the petitioner’s
contentions lack substantive merit’ ”].) Another principle is that “where the
agreement contains an arbitration clause, a presumption of arbitrability
exists, and doubts should be resolved in favor of arbitration.” (California
Teamsters Public, supra, 233 Cal.App.3d at pp. 803–804; accord, Engalla,

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supra, 15 Cal.4th at pp. 971–972; California Correctional Peace Officers,
supra, 142 Cal.App.4th at p. 205.)
“There is no uniform standard of review for evaluating an order
denying a motion to compel arbitration.” (Robertson v. Health Net of
California, Inc. (2005) 132 Cal.App.4th 1419, 1425.) When the court’s order
is based on a decision of law, we employ a de novo standard of review. (Ibid.)
In this case, “the court’s order denying a motion to compel arbitration is
based on the court’s finding that petitioner failed to carry its burden of proof.”
(Fabian v. Renovate America, Inc. (2019) 42 Cal.App.5th 1062, 1066.) “[T]he
question for the reviewing court is whether that finding [was] erroneous as a
matter of law.” (Ibid; accord, Trinity v. Life Ins. Co. of North America (2022)
78 Cal.App.5th 1111, 1121.) Also, while waiver is generally a question of fact,
when, as here, the relevant facts are undisputed, the issue of waiver may be
reviewed de novo. (Bower v. Inter-Con Security Systems, Inc. (2014)
232 Cal.App.4th 1035, 1043, citing Saint Agnes Medical Center v. PacifiCare
of California (2003) 31 Cal.4th 1187, 1196.)
Defendant Did Not Waive the Right to Compel Arbitration
Because the issue of waiver is potentially determinative, we address it
first. Initially, as noted, plaintiff opposed arbitration on waiver grounds, but
the trial court did not reach the issue. Defendant implicitly asks us to decide
the issue in the first instance. Given that the trial court’s ruling was limited
in scope, we could in theory remand to the trial court to consider the matter.
However, because the issue of waiver does not require us to resolve any
conflicting evidence and we would be reviewing it de novo, “nothing would be
gained by remanding for this purpose.” (Rayyis v. Superior Court (2005)
133 Cal.App.4th 138, 150, fn. 10; Higgins v. Superior Court (2006)
140 Cal.App.4th 1238, 1251.) We thus resolve the issue in the first instance.

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 In her opposition below, plaintiff argued the trial “[c]ourt can, and
should, hold that [defendant’s] bad faith in refusing to pay its insured
$30,451.98 undisputedly owed since August 29, 2022 has resulted in the
waiver of [its] right to compel arbitration of Plaintiff’s claim for payment of
the $244,548.02 remaining in dispute under the $300,000 UM policy.” In
support of this argument, plaintiff relied primarily on Davis v. Blue Cross of
Northern California (1979) 25 Cal.3d 418 (Davis).
In Davis, the Supreme Court concluded that a health insurance carrier
had waived its right to arbitrate a dispute by deliberately failing to advise its
insureds of the availability of and procedure for initiating arbitration at the
time it rejected the insureds’ claims. (See Davis, supra, 25 Cal.3d at pp. 426–
431.) It was significant that the arbitration clause “was ‘buried in an obscure
provision’ ” of a hospitalization agreement, such that the carrier knew the
insureds would not be aware of it, and that the insureds were proceeding
without legal representation. (Id. at p. 429.) Under these circumstances, the
high court held that “[i]n view of the importance of timely advice or
arbitrability to the basic fairness of the arbitration process, . . . the trial court
properly determined that by its action [the insurer] waived or forfeited any
right subsequently to compel its insureds to submit their disputes to
arbitration.” (Id. at p. 431.)
None of the concerns regarding “basic fairness of the arbitration
process” presented in Davis exists in this case. Plaintiff did not allege or
present any evidence that defendant concealed, much less deliberately, the
existence of the arbitration provision to plaintiff. It is undisputed that
defendant made plaintiff, who was represented by counsel at all relevant
times, aware of the arbitration provision. Thus, as defendant asserts, Davis

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simply does not support plaintiff’s waiver claim.4 We therefore conclude that
defendant has not waived its right to arbitration as a matter of law.
We turn now to defendant’s primary argument that the trial court
should have ordered arbitration of the amount of UIM damages claimed by
plaintiff, pursuant to the requirements of section 11580.2 and the terms of
the policy.
Defendant Is Entitled to Arbitrate the Amount of Plaintiff’s
UIM Claim
Section 11580.2 requires insurers to provide coverage for bodily injury
or wrongful death caused by uninsured or underinsured motorists.
(§ 11580.2; Bouton v. USAA Casualty Ins. Co. (2008) 43 Cal.4th 1190, 1193
(Bouton).) Subdivision (f) of section 11580.2 requires language in an
automobile policy that provides for arbitration of disputes: “The policy or an
endorsement added thereto shall provide that the determination as to
whether the insured shall be legally entitled to recover damages, and if so
entitled, the amount thereof, shall be made by agreement between the
insured and the insurer or, in the event of disagreement, by arbitration. . . .”
As our Supreme Court explained, “section 11580.2, subdivision (f)
requires the parties to arbitrate the narrow issues of whether the insured is
entitled to recover damages from the uninsured or underinsured motorist,
and if so, the amount of those damages.” (Bouton, supra, 43 Cal.4th at
p. 1199, citing Freeman v. State Farm Mut. Aut. Ins. Co. (1975) 14 Cal.3d
473, 480 (Freeman).) As such, “an insurer’s contractual right to arbitrate the

4 Plaintiff also relied on Meyer v. Carnow (1986) 185 Cal.App.3d 169,

which mentions Davis in a footnote. (Id. at p. 174, fn. 2.) As defendant aptly
notes, “Meyer is even less helpful to Plaintiff here” because it “actually
reversed the trial court’s ruling that a plaintiff had waived its right to
arbitration by delay in filing a medical malpractice claim against a
podiatrist.” (Id. at p. 175.) (Emphasis omitted.)

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value of a UIM claim does not prevent an insured from filing suit for bad
faith. [Citations.]” (McIsaac, supra, 64 Cal.App.5th at p. 423.) Put slightly
differently, “if the insured files a lawsuit for ‘bad faith’ before resolving the
UM/UIM claim, the UM/UIM claim is still subject to arbitration, even if the
‘bad faith’ action is not subject to arbitration.” (Haning, et al., Cal. Prac.
Guide: Personal Injury (The Rutter Group 2023) ¶ 7:293.5e, citing McIsaac.)
In this case, in accordance with section 11580.2, subdivision (f), the
policy provides, in relevant part: “Determination whether an insured person
is legally entitled to recover damages or the amount of damages shall be
made by agreement between the insured person and us. If no agreement is
reached, the decision will be made by arbitration.” (Boldface omitted.)
Plaintiff did not dispute the validity of this provision.
Nor was there a dispute over the interpretation of the arbitration
provision of the policy or section 11580.2, subdivision (f). Both the policy and
statutory language quoted above make clear that a disagreement over
entitlement to UIM damages, or the amount of damages, must exist between
an insurer and insured before arbitration becomes the required means of
resolution. (§ 11580.2, subd. (f).)
The parties, however, took different positions as to whether a
disagreement over the amount of UIM damages owed to plaintiff had arisen.
In its motion, defendant asserted that it “has disputed the amount that
Plaintiff claimed under the policy and therefore the dispute falls squarely
within the arbitration provision of [t]he Auto Policy.”
In her opposition, plaintiff claimed she was “undisputedly owed”
$30,451.98, the amount of medical bills and expenses which she had incurred
as of August 2022 and for which she presented documentation. According to
plaintiff, “arbitration cannot be compelled as to funds that are undisputedly

13
owed.” Plaintiff acknowledged, however, that $244,548.02 (the difference
between the remaining policy limits of $275,000 and the $30,451.98) was
“remaining in dispute.”
In its reply, defendant refuted plaintiff’s claim that she was
“ ‘undisputedly owed’ ” at least $30,451.98, explaining that it had requested
from plaintiff, but was not provided, documentation from Medi-Cal, of which
plaintiff was a beneficiary. As such, defendant asserted that plaintiff’s
refusal to provide documentation prevented it from assessing the nature and
extent of the damages claims.
The above indicates that the parties plainly failed to reach an
agreement as to the amount of damages owed, thereby triggering the
requirements of section 11580.2, subdivision (f) and the terms of the policy for
arbitration of that issue. This fact was not negated by plaintiff’s contention
that she was “ ‘undisputedly owed’ ” at least $30,451.98. By “ ‘undisputed,’ ”
plaintiff apparently meant not that the parties in fact failed to reach an
agreement over the amount of damages owed, but rather that defendant
could not have reasonably disagreed—i.e., its disagreement was in bad faith.
However, regardless of what caused their failure to reach an agreement over
the $30,451.98, defendant and plaintiff clearly did not reach an agreement as
to that amount. As asserted in its reply papers below, defendant was unable
to evaluate that amount because plaintiff failed to provide documentation
from Medi-Cal. But even assuming the parties did agree that plaintiff was at
least owed $30,451.98, she claimed she was also entitled to the remaining,
available policy limits in the amount of $244,548.02, which she expressly
acknowledged “remain[ed] in dispute.”
In short, the parties disagree over how much in UIM damages plaintiff
is owed, and that issue therefore must be sent to arbitration pursuant to the

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policy and section 11580.2, subdivision (f).
McIsaac is instructive. There, a motorcyclist was involved in an
accident with a UIM and initiated a claim with his insurer under an
automobile policy with an arbitration provision similar to the one in this case.
(McIsaac, supra, 64 Cal.App.5th at p. 420.) After the parties were unable to
reach an agreement over the amount of damages, the insured served the
defendant with an arbitration demand. (Ibid.) The insurer responded to the
demand with a letter suggesting the parties engage in basic discovery to
determine if the case could be settled, and served discovery requests. (Ibid.)
The insured did not serve discovery responses and instead filed an action
against the insurer, alleging claims for breach of contract and breach of the
covenant of good faith and fair dealing, among others. (Id. at p. 421.) The
insurer filed a petition to compel arbitration and to stay the action. (Ibid.)
The insured opposed the petition, arguing that he should not be forced to
arbitrate his breach of contract and bad faith claims. (Ibid.) The trial court
denied the petition because it concluded that section 11580.2 does not apply
to bad faith claims. (Id. at pp. 421–422.)
Division One of this First District reversed. (McIsaac, supra,
64 Cal.App.5th at pp. 424–425.) The court noted that “if an agreement to
arbitrate a controversy exists, the trial court must order arbitration.” (Id. at
p. 423, citing Code. Civ. Proc., § 1281.2.) And because the insurer filed a
petition to compel arbitration showing that the parties had a written
agreement to arbitrate the amount of UIM damages and were unable to reach
an agreement, the court held that insurer “was entitled to an order granting
the petition to compel arbitration of that limited issue.” (McIsaac, at p. 423.)
In so concluding, the court rejected the insured’s and trial court’s position
that the insurer was not entitled to arbitrate the amount of damages because

15
the insured had alleged a nonarbitrable, bad faith cause of action. (Ibid.) It
explained, “[t]he fact that litigation involves some nonarbitrable issues is not
a basis to deny a petition to compel arbitration unless those issues involve a
third party who is not contractually obligated to arbitrate.” (Id. at p. 424,
citing Laswell v. AG Seal Beach, LLC (2010) 189 Cal.App.4th 1399, 1409;
Knight et al., Cal. Practice Guide: Alternative Dispute Resolution (The
Rutter Group 2020) ¶ 5:326.1.)
McIsaac is analogous to this case. Here, as explained above, defendant
similarly filed a motion to compel arbitration showing that the parties had a
written agreement to arbitrate the amount of UIM damages and were unable
to reach an agreement. In the absence of any exception (which plaintiff has
failed to establish, as concluded above), and regardless of whether plaintiff
filed an action asserting bad faith claims, the trial court was required under
Code of Civil Procedure, section 1281.2 to order arbitration of the issue of the
amount of damages. (See McIsaac, supra, 64 Cal.App.5th at pp. 423–424.)
In declining to order arbitration in this case, the trial court erred. It
cited a number of reasons for its ruling, but in our view, none of those reasons
justified the denial of defendant’s motion to compel arbitration.
It appears the court’s order was premised on its mistaken view that
“[n]owhere in [defendant’s] moving papers does it specify that there is a
dispute over the amount . . . .” Defendant did so specify. It expressly stated
in its motion that it “has disputed the amount that Plaintiff claimed under
the policy and therefore the dispute falls squarely within the arbitration
provision of [t]he Auto Policy.” Thus, to the extent the court found that
defendant’s motion failed to demonstrate the existence of a dispute over the
amount of UIM damages, as contemplated in section 11580.2 and the policy,

16
the court was mistaken.5
Another basis for denying the motion to compel arbitration was the
court’s determination that this case was distinguishable from McIsaac. It
found that unlike in McIsaac, defendant did not state in its moving papers
that it seeks to compel arbitration of only the amount of the UIM damages,
and did not request a stay of the litigation of the bad faith claim. It is true
that defendant’s motion was not as clear as the petition in McIsaac in that
regard. However, we agree with defendant that this distinction did not
support denying its motion. Like defendant, we do not read McIsaac to
suggest that the omissions in defendant’s motion require a denial of the
motion. As defendant asserts, “[w]hile McIsaac noted that the defendant
insurer had affirmatively indicated its understanding that arbitration
proceedings would not preclude the plaintiff from thereafter litigating bad
faith claims, there was no suggestion . . . that such a pronouncement is
necessary for an insurer to seek the statutorily mandate[ed] arbitration of the
contract dispute.” The McIsaac decision did not hinge on whether the
petition explicitly and/or correctly asserted that it was seeking arbitration of
only the UIM damages amount, but rather whether the petition showed a
valid agreement to arbitrate a controversy, as required under Code of Civil
Procedure section 1281.2. (See McIsaac, supra, 64 Cal.App.5th at pp. 422,
423.) Thus, we agree with defendant that the factual distinctions that the
court drew between this case and McIsaac were not dispositive on whether to
compel arbitration.
An additional basis for denying the motion to compel arbitration was

5 The court’s mistaken view that defendant did not specify in its motion

that there was a dispute over the UIM damages also apparently led the court
to find that any argument on that issue contained in defendant’s reply papers
was improperly raised there for the first time.

17
defendant’s failure to refute plaintiff’s allegations of bad faith. As stated
previously, the court noted that “Plaintiff alleges [in her opposition] . . . , and
provides evidence demonstrating, that after she made a demand under the
Policy, Defendant unreasonably failed to investigate the claim or settle the
claim.” The court found that defendant made no effort in its motion to
address “Plaintiff’s request for payment, resolve the matter in any way, or
pay any funds whatsoever, even though Plaintiff demonstrated that her
medical bills and expenses amount to $30,451.98, so that she is unequivocally
entitled to at least that amount.” Although defendant attempted to address
in its reply some of plaintiff’s allegations, the court noted, those arguments
“fail[ed] to resolve the issue in Defendant’s favor.” Thus, the court found that
defendant failed to show “that this is within the ambit of . . .
section 11580.2(f)’s arbitration coverage or that this is not, as Plaintiff
alleges, at its root a dispute over alleged bad-faith handing of Plaintiff’s
claims.”
As we understand its comments, the court apparently credited
plaintiff’s allegations in her opposition that defendant had acted in bad faith
by not paying her at least $30,451.98 in UIM damages or attempting to
resolve the matter; required defendant to refute those allegations; and,
finding that defendant failed to do so, denied the motion to compel
arbitration.
In essentially accepting plaintiff’s allegations of bad faith and requiring
defendant to rebut those allegations, the court did not limit itself to
determining whether the controversy was subject to arbitration. Instead, it
appeared to rule on the potential merits of the underlying claims. This was
inappropriate on a motion to compel arbitration. As discussed above, “ ‘in
deciding whether the parties have agreed to submit a particular grievance to

18
arbitration, a court is not to rule on the potential merits of the underlying
claims.’ ” (California Teamsters Public, Professional, supra, 233 Cal.App.3d
at p. 803; accord, California Correctional Peace Officers, supra,
142 Cal.App.4th at p. 205, citing Code Civ. Proc., § 1281.2.) Thus, even if
there were questions of fact regarding defendant’s alleged dilatory tactics or a
failure to investigate or settle plaintiff’s claim, those questions went to the
merits of the underlying claims, are separate from the court’s analysis of
arbitrability, and therefore should not have been considered on the motion to
compel arbitration.6
To the extent plaintiff and the trial court relied on Hightower, supra,
38 Cal.App.4th 853, such reliance was misplaced. In Hightower, the insured
was involved in an uninsured motorist accident and demanded the policy
limits of $30,000. The insurer disputed the insured’s right to policy limits
and demanded arbitration. At arbitration, the insured prevailed and was
awarded the policy limits. (Id. at p. 857.) The insured then filed an action
against her insurer, alleging that the insurer’s liability for policy limits had
been clear before the arbitration and that the insurer had “acted in bad faith
by exercising its right to arbitrate rather than settling the claims.” (Id. at
p. 861.) The insurer moved for judgment on the pleadings, based in part on
the ground that it had immunity from insurer liability for exercising its right
to request arbitration pursuant to section 11580.26, subdivision (b), which
states: “No cause of action shall exist against either an insured or insurer
from exercising the right to request arbitration of a claim under this section
or Section 11580.2.” (Hightower, supra, 38 Cal.App.4th at p. 861.)
The issue on appeal was “whether a cause of action may be stated

6 We express no opinion on the merits of plaintiff’s underlying bad faith

claims.

19
against an insurer for demanding arbitration of a claim for uninsured
motorist benefits even where the insurer’s liability is clear.” (Hightower,
supra, 38 Cal.App.4th at p. 856.) The Court of Appeal held that section
11580.26, subdivision (b) does not immunize the insurer from liability for
unreasonably demanding arbitration when its liability is clear: “Where there
is no issue reasonably to be resolved by arbitration, as in a case where the
insured’s damages plainly exceed policy limits and the liability of the
uninsured motorist is clear, the failure to attempt to effectuate a prompt and
fair settlement violates the insurer’s statutory duties [citation] and gives rise
to tort liability.” (Hightower, supra, 38 Cal.App.4th at p. 863.)
Hightower is not controlling. The insured there obtained an arbitration
award validating her pre-arbitration policy limits demand. (Hightower,
supra, 38 Cal.App.4th at p. 857.) Only then did she file a bad faith action
against her insurer. (Id. at p. 861.) The court had no occasion to consider the
situation here, which involves an insured seeking to proceed with a bad faith
action against a UIM insurer without first arbitrating the issue of the
amount of UIM damages. Indeed, the trial court here acknowledged that the
Hightower court “was not . . . faced with a question of whether to order
arbitration of an action involving a claim of bad faith, or how to determine
such a question.”
In addition, unlike the insurer in Hightower, defendant here does not
dispute plaintiff’s right to bring her action for breach of contract and bad
faith. In fact, defendant states in its opening brief that it “is not seeking
immunity under . . . section 11580.26, subdivision (b), from bad faith claims
by filing a motion to compel arbitration.”
Furthermore, it cannot be said here that “there is no issue reasonably
to be resolved by arbitration.” (Hightower, supra, 38 Cal.App.4th at p. 863.)

20
The foundation of plaintiff’s bad faith claim—the amount of UIM damages—
remained disputed and had not yet been sent to arbitration when plaintiff
filed this action. As discussed, assuming arguendo that a portion of the
claimed damages ($30,451.98) was “undisputedly owed” as plaintiff argued,
she conceded that the remaining amount of the available policy limits she
was still pursuing ($244,548.02) was still “in dispute.” Accordingly,
Hightower is inapposite and does not support plaintiff’s assertion that she
was entitled to simply bypass arbitration and proceed directly to litigation.
Nor do any of the remaining cases cited in the court’s order support the
denial of the motion to compel arbitration. In fact, the cited cases are the
same ones that the insured and the trial court in McIsaac relied upon as a
basis to deny the insurer’s petition to compel arbitration in that case, and
that the appellate court ultimately found distinguishable. (See McIsaac,
supra, 64 Cal.App.5th at p. 424.) We distinguish the cited cases for the same
reasons stated in McIsaac and therefore adopt its analysis here:
“Corral [v. State Farm Mutual Auto. Ins. Co. (1979) 92 Cal.App.3d 1004
(Corral)] for example, did not involve a petition to compel arbitration, but
addressed whether the plaintiff’s bad faith action was barred by a prior
arbitration award under principles of res judicata. (Corral, supra,
92 Cal.App.3d at pp. 1009–1010.) In Corral, unlike here, arbitration of the
plaintiff’s UIM claim had already concluded. (Id. at p. 1007.)
“Nor is State Farm Mutual Automobile Ins. Co. v. Superior Court (2004)
123 Cal.App.4th 1424, helpful to plaintiff. There, the court rejected an
insured’s demand for arbitration because the insurer had already paid the
policy limits under its policy with insured, and accordingly, there was no
controversy to arbitrate. (Id. at p. 1431.) While the appellate court also held
that the insured was not entitled to arbitration in order to evaluate a possible

21
bad faith suit (id. at pp. 1434–1435), that holding has no bearing on
defendant’s right to arbitrate the amount of UIM damages where, as here,
the parties dispute the amount of damages caused by the UIM.
“Finally, the trial court cited Freeman, supra, 14 Cal.3d at page 480
and Bouton, supra, 43 Cal.4th at page 1193, for the principle that ‘ “. . .
section 11580.2, subdivision (f) ‘read literally, requires arbitration of two
issues only: (1) whether the insured is entitled to recover against the
uninsured motorist and (2) if so, the amount of the damages.’ ” ’ The quoted
language plainly supports defendant’s right to compel arbitration of the
amount of UIM damages. (See Bouton, at p. 1203 [insured and insurer must
arbitrate all disputes concerning liability and damages arising out of an
accident between insured and UIM].)” (McIsaac, supra, 64 Cal.App.5th at
p. 424, fn. omitted.)
In sum, because the parties disagreed over the amount of UIM
damages owed to plaintiff, defendant was entitled under section 11580.2,
subdivision (f) and the terms of the policy to arbitrate the issue of UIM
damages. Accordingly, the trial court erred in denying defendant’s motion to
compel arbitration.
DISPOSITION
The order denying defendant’s motion to compel arbitration is reversed.
The case is remanded to the trial court with directions to grant defendant’s
motion to compel arbitration of the UIM damages. Defendant is awarded
costs on appeal.

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 _________________________
Richman, Acting P.J.

We concur:

_________________________
Miller, J.

_________________________
Markman, J. *

Tornai v. CSAA Insurance Exchange (A167666)

*Superior Court of Alameda County, Judge Michael Markman, sitting as
assigned by the Chief Justice pursuant to article VI, section 6 of the California
Constitution.

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