WINNING AT ARBITRATION
J. DAVID STRADLEY,
WHITE & STRADLEY, LLP
RALEIGH, NORTH CAROLINA
A. To arbitrate or not to arbitrate?
Plaintiff’s attorneys across the nation are engaged today in a battle against arbitration.
Many believe that recent efforts to promote arbitration, especially efforts by courts, endanger the
right to trial by jury. That may be true. However, in my opinion, arbitration is an excellent way
to resolve many cases, especially auto cases. Most auto cases are relatively simple and involve
modest to moderate sums of money. Few car wreck cases have great social consequences.
Most, if not all, car wreck plaintiffs want their cases resolved with a minimum of delay. For
such cases, arbitration is a boon. As an added bonus, the trier of fact will have a general
understanding of the law, most notably proximate cause. Thus, an arbitration panel may be
more likely to return a plaintiff’s verdict in an “aggravation of a pre-existing injury” cases.
That said, the point of this paper is how to get your case into arbitration, keep your case
in arbitration, and get a favorable award.
II. The Law
Both the North Carolina legislature and the United States Congress have enacted laws
intended to promote arbitration. The Federal Arbitration Act is codified at 9 USC § 1 et esq.
while North Carolina’s version of the Uniform Arbitration Act can be found at N.C. Gen. Stat. §
1-567.1 et seq. Since most auto cases are litigated in state court, I will focus on the state statute.
The purpose of the Uniform Arbitration Act is “to provide and encourage an expedited,
efficient, relatively uncomplicated, alternative means of dispute resolution, with limited judicial
intervention or participation.” Nucor Corp. v. General Bearing Corp., 333 N.C. 148, 154, 423
S.E.2d 747, 750 (1992). Accordingly, agreements to submit a claim to arbitration are construed
broadly. Robertson & Creed v. Marshall, 155 N.C. 167, 71 S.E. 67 (1911); see also Moses H.
Cone Mem’l Hosp. v. Mercury Const. Corp., 460 U.S. 1 (1983) (federal law compels liberal
construction of arbitration agreements).
A. Binding Nature of Proceedings
The provisions of the agreement govern the way in which the arbitration will be
conducted, including selection or arbitrators, the applicable rules of evidence and the extent to
which discovery is permitted. However, where the agreement is silent, the statute contains some
default rules for arbitration. For example, the court may appoint arbitrators, N.C. Gen. Stat. § 1-
567.4 and enforce subpoenas, § 1-567.8. Unless the agreement provides otherwise or the parties
otherwise agree (during the arbitration), no traditional discovery is permitted. Depositions are
permitted only if the witness cannot be subpoenaed or is unable to attend the hearing. Id.
Absent an agreement to the contrary, a decision may be rendered by a simply majority of the
arbitrators. Id. at § 1-567.6.
In general, an arbitration award is a final determination on the merits of a dispute and no
right of appeal lies. Calvine Cotton Mills, Inc. v. Textile Workers Union of America, 79 S.E.2d
181, 238 N.C. 719 (1953). An award may be overturned on limited grounds set out in N.C. Gen.
Stat. § 1-567.13. These grounds are:
(1) The award was procured by corruption, fraud or other undue
(2) There was evident partiality by an arbitrator appointed as a neutral
or corruption in any of the arbitrators or misconduct prejudicing
the rights of any party;
(3) The arbitrators exceeded their powers;
(4) The arbitrators refused to postpone the hearing upon sufficient
cause being shown therefor or refused to hear evidence material to
the controversy or otherwise so conducted the hearing, contrary to
the provisions of G.S. 1-567.6, as to prejudice substantially the
rights of a party; or
(5) There was no arbitration agreement and the issue was not
adversely determined in proceedings under G.S. 1-567.3 and the
party did not participate in the arbitration hearing without raising
the objection; but the fact that the relief was such that it could not
or would not be granted by a court of law or equity is not ground
for vacating or refusing to confirm the award.
The party seeking to overturn the award has the burden of establishing a basis for doing
so. However, “an award may not be vacated merely because the arbitrator erred as to law or
fact.” Sholar Business Associates, Inc. v. Davis, 138 N.C. App. 298, 301, 531 S.E.2d 236,
Since the right to arbitration is contractual, it may, at least in theory, be waived. A party
“impliedly waives its contractual right to arbitration if by its delay or by actions it takes which
are inconsistent with arbitration, another party to the contract is prejudiced by the order
compelling arbitration.” Cyclone Roofing Co. v. LaFave Co., Inc., 312 N.C. 224, 299, 321
S.E.2d 872, 876 (1984). A party is prejudiced if, for example, it is forced to bear the expenses of
a lengthy trial ...; evidence helpful to a party is lost because of delay in the seeking of
arbitration...; a party's opponent takes advantage of judicial discovery procedures not available in
arbitration...; or, by reason of delay, a party has taken steps in litigation to its detriment or
expended significant amounts of money thereupon. Id.
However, in McCrary ex rel. McCrary v. Byrd, 559 S.E.2d 821, 827 (N.C. Ct. App.
2002), the court of appeals made it clear that the party asserting waiver has the burden of proof
and that there must be a clear factual showing of prejudice to support a finding of waiver. Thus,
the court rejected Nationwide’s claim of waiver based on its expenditure of $60,000 in attorneys’
fees because Nationwide failed to show that these fees were incurred as a result of the delay in
demanding arbitration. Further, even where records had been destroyed, where the plaintiff’s
delay in pursuing discovery came after the destruction of the records, there was no prejudice and
thus no waiver.
In Sullivan v. Bright, 129 N.C. App. 84, 87, 497 S.E.2d 118, 120 (1998), the court of
appeals overturned a finding of waiver in a case in which arbitration was demanded after the
liability carrier tendered its limits during litigation. Six months after the tender by the liability
carrier, the plaintiff demanded arbitration with his UIM carrier. In the meantime, plaintiff had
conducted two depositions. The court set a high bar for the UIM carrier to clear in establishing a
waiver. Despite the six-month delay, the court held that, since the UIM carrier had not shown
that the two deponents would have been available at the arbitration hearing, it was not prejudiced
by having to attend their depositions. The court further faulted the trial court’s finding of waiver,
noting that the record contained no evidence of the amount of expense allegedly incurred by the
UIM carrier in connection with the depositions.
Practitioners should be aware or prior cases outside North Carolina in which courts have
held that arbitration has been waived.
C. Compelling Arbitration
Where a party refuses to arbitrate, the opposing party may file suit asking the court to
compel arbitration. N.C. Gen. Stat. § 1-567.3. In such a proceeding the court must summarily
determine whether there is an agreement to arbitrate. If there is an agreement to arbitrate, the
court must order the parties to arbitrate.
An order compelling arbitration is interlocutory, and is not immediately appealable. LSB Fin.
Servs. v. Harrison, 144. N.C. App. 542, 548 S.E.2d 574 (2001). However, an order denying
arbitration may be appealed immediately because it implicates a substantial right. N.C. Gen.
Stat. § 1-567.18.
(The summary nature of the proceeding to determine the existence of an arbitration agreement
brings to mind an interesting idea. In a dispute over whether UIM coverage is available, where
the amount of damages is not admitted, a proceeding to compel arbitration could be an
alternative to a declaratory judgment action. The action to compel arbitration would almost
certainly be quicker as there appears to be no right to jury trial, motions, etc. I have not seen this
attempted, but I see no reason that this would not work.)
The arbitration agreement dictates the procedure to be used in the arbitration. Parties
may agree to select the arbitrators in any way they choose and may elect to engage in as much or
as discovery as they choose. They may, and frequently do, adopt entire sets of rules to govern
the proceedings, e.g. the American Arbitration Association (AAA) rules. If the parties fail to
agree to rules, the statute provides some rudimentary rules, but great discretion is left to the
1. Common policy provision
The arbitration provision found in many North Carolina UM/UIM policies reads
substantially as follows:
If we and an insured do not agree:
1. Whether that insured is legally entitled to recover compensatory
damage from the owner or driver of an uninsured motor vehicle; or
2. As to the amount of such damages;
the insured may demand to settle the dispute by arbitration.
The following procedures will be used:
1. Each party will select a competent arbitrator. The two so selected
will select a third.
2. If the third arbitrator is not selected within 30 days, the insured or
we may request a judge of a court of record to name one. the court
must be in the count and state in which arbitration is pending.
3. Each party will pay its chosen arbitrator. Each will pay half of all
other expenses of arbitration. Fees to lawyers and expert witnesses
are not considered arbitration expenses and are to be paid by the
party hiring these persons.
4. Unless the insured and we agree otherwise, arbitration will take
place in the county and state in which the insured lives.
Arbitration will be subject to the usual rules of procedure and
evidence in such county and state. The arbitrators will resolve the
issues. A write decision on which two arbitrators agree will be
binding on the insured and us.
5. Any arbitration action against the company must begin within the
time limit allowed for bodily injury or death actions in the state
where the accident occurred.
6. Judgment upon award may be entered in any proper court.
7. As an alternative, the insured and we may agree to arbitrate by
rules other than stated above.
2. Arbitration under N.C.’s Statutory Scheme
The General Statutes provide very little guidance in how an arbitration will be conducted.
Essentially, the parties can agree to any procedure they choose. However, the statute provides
some basic rules which apply absent agreement to the contrary. Great deference is given to the
parties agreement, which can sometimes fall short of perfect clarity.
For example, the arbitration provision commonly found in many North Carolina auto
policies states that “arbitration will be subject to the usual rules of procedure and evidence in
[the] city and state [in which the insured lives].” What does this mean? On the one hand, it
could mean the Rules of Civil Procedure and the Rules of Evidence. On the other hand, it could
me the “usual rules of procedure and evidence” for arbitration, i.e., those dictated by the Uniform
Arbitration Act. It is certainly true that the insurer could have been clearer if it intended to adopt
the Rules of Civil Procedure and Evidence by reference. If ambiguities are construed against the
insurer, perhaps the Rules of Civil Procedure and Evidence do not apply.
This dispute arises around the issue of whether the parties may conduct discovery. In
UM/UIM cases, the plaintiff is generally under a contractual obligation to cooperate with the
carrier and to submit to an examination under oath; thus, the carrier will usually have the
opportunity to depose the plaintiff. 1 However, if other depositions are needed, resort must be
had to the Rules of Civil Procedure, as arbitration rules generally do not allow discovery.
A common UM/UIM policy provides that each side will appoint an arbitrator and those
appointees will pick the third arbitrator. While this is clear enough, this method can lead to
delays and arbitrator shopping.
Under the Statute, a decision can be rendered by simple majority of the arbitrators.
Cost are generally split among the parties, either 50/50 or by each side paying its
arbitrator and splitting bill for the third arbitrator 50/50.
But see McCrary ex rel McCrary v. Byrd, 559 S.E.2d 821 (N.C. Ct. App. 2002). There, the court of
appeals held that the plaintiff had not breached her contract with the insurer where she refused to submit to a
deposition after demanding arbitration. The court noted (1) that the insurer had taken an adversarial stance as
opposed to stance indicating settlement possibilities and (2) that the plaintiff had a good faith belief that engaging in
discovery could waive the right to arbitrate. This case could be used as a basis for arguing that the duty to submit to
an examination under oath ends when arbitration is demanded. However, it should be noted that the plaintiff in
McCrary did eventually give a deposition.
3. Arbitration under AAA Rules
The AAA has developed arbitration rules of many different types of disputes. Its
Accident Claims Arbitration Rules apply to UM/UIM disputes. A copy of those rules are
attached to this manuscript; they are also available at the AAA’s website, www.adr.org.
The AAA rules comprehensively address the arbitration procedure from the demand to
the award. If a claim is submitted to the AAA, that organization will administer the entire
proceeding, from appointing the arbitrator to scheduling the arbitration hearing to ensuring that
the award is entered properly.
The most significant difference between the AAA rules and the non-AAA rules
commonly found in UM/UIM policies is the means of selecting the arbitrators. Recall that,
commonly, policies provide for a three arbitrators with one chosen by the claimant, one by the
insurer, and the third chosen by the two arbitrators. In contrast, AAA provides for a single
arbitrator; however, if the policy is greater than minimum limits, any party can require a three-
person panel. The AAA provides a list of nine names for a single-arbitrator case or 13 names for
a three-person panel. Each side can strike two names from the nine name list or three names
from the 13-name list. The AAA selects the arbitrator(s) from the remaining names.
The AAA rules provide an excellent framework for the arbitration. They set for general
rules for reception evidence, closing of the hearing record, and a time table for delivery of the
award. They also provide for default, if a party fails to participate in the arbitration. Under the
AAA rules, costs are generally split equally unless the arbitrators tax costs on some legal
A UM/UIM plaintiff and her attorney can benefit substantially from having using the
AAA to administer the proceedings. Notably, scheduling delays and stalling tactics are
minimized. Additionally, since the rules are clearly spelled out, the process should be smoother.
The cost of a AAA arbitration will be a few to several hundred dollars more, because of
administrative fees. However, I would generally think that the AAA’s services are worth the
III. Practice Tips
A. What types of disputes can be arbitrated?
Any type of dispute may be arbitrated, provided there is an agreement to do so.
However, the arbitration provisions in UM/UIM policies generally apply only to “tort-type”
disputes, i.e., whether the claimant was injured by the negligence of an un/underinsured motorist
and the extent of the claimant’s damages. Notably, coverage issues, e.g., whether the claimant
was a resident relative of the named insured, are not subject to arbitration under the terms of the
policy. There is, of course, nothing that prevents the carrier and the claimant from agreeing to
submit such dispute to arbitration, but the claimant cannot unilaterally force arbitration of the
B. Establishing the Right to Arbitrate
All personal auto policies issued in North Carolina apparently contain arbitration clauses
which generally apply to collision, UM, UIM and, in some cases, med-pay. In UM and UIM
cases, the plaintiff has the unilateral right to demand arbitration. Thus, the plaintiff has a choice
of forum: arbitration or court. The right to arbitrate can be invoked merely by sending a letter to
the carrier demanding it.
While a delay in demanding arbitration may not work a waiver, the better practice is to
demand the right to arbitrate as soon as the right arises. In a UM case, the demand should be
made at the same time you would ordinarily file suit. In a UIM claim where the carrier tenders
prior to suit, the plaintiff should demand arbitration in the letter giving notice of the tender. If
suit has been filed against the tortfeasor, I recommend making a conditional demand for
arbitration when notice of the suit is given to the UIM carrer. The demand should state that, in
the event of a tender of the liability limits, the plaintiff wishes to resolve the claims against the
UIM carrier by arbitration. Alternatively, the demand can be made immediately after the tender,
preferably in the notice to the liability carrier.
The bottom line in demanding arbitration is “DO NOT DELAY.” The Sullivan case,
supra, at least impliedly stands for the proposition that the plaintiff does not waive the right to
arbitrate by suing the tortfeasor where there has been no liability tender. However, once the
liability funds are tendered, the clock is ticking and arbitration should be demanded forthwith.
C. Selecting the Arbitrator
After demanding arbitration, the next step is the selection of arbitrators. If you have an
agreement that invokes the AAA rules, you simply notify the AAA of your demand and let them
do the rest.
However, many UM/UIM policies provide that the plaintiff picks an arbitrator, the
insurer does the same and those two arbitrators pick a third arbitrator. Since this requires action
on the part of the carrier, the process can stall here. I recommend naming your arbitrator in your
letter demanding arbitration and asking the carrier to name its arbitrator within 14 days. If they
fail to select within the time period, file an action or make a motion to compel arbitration and ask
the court to appoint the carrier’s arbitrator under N.C. Gen. Stat. § 1-567.4.
In a number of cases, in an attempt to save money, I have attempted to forego a 3-
member panel and attempt to agree on a single arbitrator. This has routinely proved fruitless and
has consumed substantial time. Don’t bother. Name your arbitrator and move on.
2. Who may serve
Several years ago, both plaintiffs and defendants in UM/UIM arbitrations attempted to
choose arbitrators who appeared impartial. Back then, both sides picked retired judges or full-
time mediators. In recent years, both sides have come to choose arbitrators that identify with
their respective sides. Plaintiffs choose plaintiff’s lawyers, and insurers choose defense lawyers.
According to the Canons of Ethics for Arbitrators as well as the Revised Uniform Arbitration
Act (RUAA), this is perfectly permissible. See Canon VII and N.C. Gen. Stat. §§ 1-569.11 – 1-
However, certain facts that impact an arbitrator’s impartiality must be disclosed. For
example, Section 1-569.12 of the RUAA provides:
(a) Before accepting appointment, an individual who is requested
to serve as an arbitrator, after making a reasonable inquiry, shall
disclose to all parties to the agreement to arbitrate and to the
arbitration proceeding and to any other arbitrators any known facts
that a reasonable person would consider likely to affect the
impartiality of the arbitrator in the arbitration proceeding,
(1) A financial or personal interest in the outcome of the
arbitration proceeding; and
(2) An existing or past relationship with any of the parties to
the agreement to arbitrate or to the arbitration proceeding, their
counsel or representatives, a witness, or other arbitrators.
(b) An arbitrator has a continuing obligation to disclose to all
parties to the agreement to arbitrate and to the arbitration
proceeding and to any other arbitrators any facts that the arbitrator
learns after accepting appointment which a reasonable person
would consider likely to affect the impartiality of the arbitrator.
(c) If an arbitrator discloses a fact required by subsection (a) or (b)
of this section to be disclosed and a party timely objects to the
appointment or continued service of the arbitrator based upon the
fact disclosed, the objection may be a ground under G.S. 1-
569.23(a)(2) for vacating an award made by the arbitrator.
(d) If the arbitrator did not disclose a fact as required by subsection
(a) or (b) of this section, upon timely objection by a party, the
court under G.S. 1-569.23(a)(2) may vacate an award.
(e) An arbitrator appointed as a neutral arbitrator who does not
disclose a known, direct, and material interest in the outcome of
the arbitration proceeding or a known, existing, and substantial
relationship with a party is presumed to act with evident partiality
under G.S. 1-569.23(a)(2).
(f) If the parties to an arbitration proceeding agree to the
procedures of an arbitration organization or any other procedures
for challenges to arbitrators before an award is made, substantial
compliance with those procedures is a condition precedent to a
motion to vacate an award on that ground under G.S. 1-
Essentially, the RUAA requires that facts which suggest bias or interest be disclosed.
When facts suggesting bias are disclosed, a party must timely object to the arbitrator’s service. If
that arbitrator does not withdraw, the award may be challenged on that basis. Where a neutral
arbitrator fails to disclose facts suggesting bias, the award is presumed to be invalid. Where a
non-neutral party fails to disclose such facts, the award may be challenged but is not presumed to
be invalid. The Canon strikes a similar balance.
Knowing what is coming from the other side, I always choose a plaintiffs’ lawyer. While
you should always be ethical, there is nothing wrong with arbitrator-shopping. After all, the
insurance industry chose the procedure for selecting arbitrators. If it wanted a more impartial
system, it could have written it into the standard policy.
I certainly don’t discuss the case with the people I choose, but I want someone who will
approach the case with some sympathy for my client. Try to find out if your prospective
arbitrator has arbitrated cases before, and talk to the attorneys involved in those cases. Better
still, talk to someone who has sat as an arbitrator with your candidate. I have been on panels
with people whom I would have expected to be more plaintiff-friendly than they turned out to be.
D. Scheduling the Arbitration
The sooner the arbitration is scheduled, the sooner your client gets paid, either by
settlement or by award. If you are not using the AAA to administer the arbitration, don’t be
afraid to take the lead and contact the arbitrators and the opposing parties to get dates. If the
opposing party will not respond after you have dates from the arbitrators, seek assistance from
the neutral arbitrator in getting the hearing scheduled. If that fails, seek the court’s assistance.
As discovery is limited under both the statute and AAA rules, you will not serve written
discovery or take depositions. This can, in fact, complicate hearing preparation. On the other
hand, if the arbitration agreement provides that the Rules of Civil Procedure will apply, you will
conduct normal discovery. In most cases, you will spend as much time trying to prevent
discovery as you will spend in conducting it or complying with it; so, I don’t think this battle is
worth fighting in most cases.
Additionally, the carrier generally has a right under the policy to both have your client
examined by its doctors and to examine your client under oath (i.e., depose your client). Query
whether this policy provision is still effective once arbitration is demanded? One could argue
that, since this provision is contained in a separate part of the policy from the arbitration
provisions, the arbitration rules, e.g., no discovery or discovery under the rules of civil
procedure, control after arbitration is demanded. Dicta in McCrary ex rel. McCrary v. Byrd, 559
S.E.2d 821, 826 (N.C. Ct. App. 2002) would seem to support this position. One should exercise
caution in taking such a position because the insured has a duty of good faith and cooperation in
the UM/UIM context. If an insured declines a request for a defense medical exam or a statement
under oath after arbitration is demanded, she should state in writing that she does not read the
policy to require her submission. If the carrier presses the point, a declaratory judgment action
should be filed to ensure that coverage is not forfeited.
Luckily, many if not most UM/UIM cases are “damages only” cases, so the evidence will
consist primarily of the client, some miscellaneous damages witnesses and medical evidence. If
the medical records are helpful, you can seek an agreement with defense counsel to stipulate to
the admission of the records or “causation letters” and forego medical testimony. If the defense
will not agree, some attorneys send a letter to the defense advising of their intent to introduce
records or correspondence from a particular doctor and inviting the defense to depose the doctor
if they desire the opportunity to cross-examine the doctor. I am not aware of any case in which a
panel has refused to consider a “causation letter” where the defense was advised ahead of time
and offered the opportunity to depose the doctor who wrote the letter. That said, the absolute
safest course, from an admissibility standpoint, is to secure the testimony of the doctor.
Ordinarily, the defense will agree to a deposition in lieu of live medical testimony. If
they contend that the Rules of Civil Procedure apply, you are certainly entitled to take a de bene
esse deposition. Alternatively, you can seek permission from the arbitrators for a deposition on
the ground that the doctor is unavailable to attend the hearing. Don’t waste the money on
videotaping the deposition; the arbitrators likely will not watch the video.
F. The Hearing
The arbitrators will generally appreciate a short opening statement which orients them to
the facts, the parties, and the issues. The evidence can be presented as it would be at trial.
However, the rules of evidence will generally be more relaxed. Letters from doctors, medical
records and depositions may simply be handed to the arbitrators for their review.
I believe that it is helpful to submit some sort of summary document to the arbitrators
which, at a minimum, summarizes the special damages and the medical testimony. In a more
complex case, additional information on the plaintiff’s intangible damages and the contentions of
the parties can be included.
However, at a bare minimum, the medical evidence should always be summarized
with citations to the records, correspondence and/or depositions. It is not unheard of for
arbitrators to merely skim medical depositions and voluminous medical records. If you can point
the panel to the chapter and verse in which the doctor uses the magic causation words, the
arbitrators may not care what the defense lawyer elicits in his cross-examination of that doctor.
As a general rule, most arbitration agreements will provide that the parties will bear their
own costs and will split the costs of the arbitration. While the Uniform Arbitration Act provides
for confirming the arbitration award as a judgment, ordinarily the court will not tax costs or
interest in connection with the arbitration itself. Absent a provision in the arbitration agreement
for a court to tax costs, I believe that it is error for the court to do so. See Palmer v. Duke Power,
129 N.C. App. 488, 499 S.E.2d 801 (1998). Section 567.12 of the Act further provides that, on
application of a party, the court “shall confirm an award,” and, under § 567.15, the court may tax
the “costs of the application and proceedings subsequent thereto.” Thus, by implication, the
court may not tax the costs of the underlying arbitration proceeding.
While the court will not, or at least probably should not, award costs, all is not lost. You
should certainly ask the arbitrators to award interest. After all, under the law, your client is
entitled not only to damages, but also to the lost use of those damages, i.e., interest. Under the
law, interest on tort awards runs from the date of the filing of the action. So, you should be
entitled to interest from the date you demand arbitration. However, to be safe on the interest
issue (as well as any statute of limitations issues, I always sue and serve the defendant and
unnamed UIM carrier and then demand arbitration in the complaint. This should certainly serve
to start the clock running an prejudgment interest.
Several cases have recently addressed interest on arbitration awards. The best and one of
the most recent is the court of appeals’ decision in Sprake v. Leche, ___ N.C. App. ___, 658
S.E.2d 490. There, the court held that arbitration interest is a matter of contract. However, the
clause allowing the arbitrators to decide the amount of damages owed was ambiguous and would
be construed to include prejudgment interest. The court cited Austin v. Midgett, 159 N.C. App.
416, 583 S.E.2d 405 (2003) for the proposition that “damages” in a UIM policy include
In Sprake, supra, as well as Lovin v. Byrd, 178 N.C.App. 381, 631 S.E.2d 58 (2006), the
plaintiff had requested prejudgment interest from the arbitration panel and the panel addressed
interest in its award. In Sprake, the panel awarded interest, but in Lovin, the arbitrator
specifically referred the issue of interest to the superior court, which later awarded interest. In
both cases, the court of appeals upheld the award of interest.
Contrast these cases with Palmer v. Duke Power, supra¸ and Eisinger v. Robinson, 164
N.C.App. 572, 596 S.E.2d 831 (2004). In Palmer, the arbitrator made no reference whatever to
interest. The court of appeals held that the trial court acted properly in declining to tack on
prejudgment interest because doing so would have been a modification of the arbitration award
not authorized by statute. The Eisinger court reached the same result as the Palmer court on
very similar facts.
Practice Tip: During the arbitration hearing, request and prove your entitlement to
interest. To do that, you should introduce a file-stamped copy of the summons and complaint to
show the date the action was filed. You will also need to introduce evidence of any money paid
by the liability carrier in a UIM case (or prior advance by the UIM carrier) as well as the date of
any such payments. If the defense objects to this, tell the panel that it is necessary to prove your
entitlement to interest. If they will not hear this evidence, ask them to either consider it or to
specifically refer the interest issue to a superior court judge. The cases appear to stand for the
proposition that the award must deal with interest in order for a court to award it. If the
arbitrators and the arbitration agreement are silent on interest, the court cannot award it after the
If the carrier argues that there is no provision for interest in the policy, you can use that to
your client’s advantage. Draw a contrast between costs, which are addressed in the policy, and
interest, which is not. The carrier provided in the policy that costs would not be shifted in
arbitration as they would be in court. However, since interest is not addressed in the policy, it
should be treated as it would be in court, i.e. taxed from the date of filing. If you will ask the
arbitrators to tax interest from the date of the arbitration demand, be prepared (with a copy of the
demand letter) to prove the date on which arbitration was demanded.
I. Confirming the Award
As noted above, N.C. Gen. Stat. § 1-567.12, provides for a court order confirming the
arbitration award as a judgment. In the UM/UIM context, the carrier should simply pay the
award without the necessity for confirmation. However, in a contentious case or if there may be
appellate issues, a confirmation hearing may be necessary.
If you proceed to a confirmation hearing, you should understand that it is not a mere
formality. If fact, this is the proceeding from which appeal properly lies to the appellate courts.
Appeal from a confirmation is the appropriate avenue by which to appeal an order compelling
arbitration. Thus, this proceeding should be taken seriously as it could be reviewed by an
appellate court. Close attention should be paid to the arguments made and objections should be
raised to any argument that the court should review the arbitrators’ award on the merits.
IV. Arbitration and Bad Faith
Can a carrier’s actions in an arbitration rise to the level of bad faith? While there are no
reported North Carolina cases, there is no reason to believe that a carriers good-faith obligations
vanish once arbitration is demanded. Since UM/UIM is first-party insurance, carriers still have
duties to promptly deal with claims and to make reasonable settlement offers at a minimum. As
plaintiffs’ attorneys, we tend to think that insurers never make reasonable offers and never move
quickly enough. While we do not get to judge the insurers, their conduct certainly can rise to the
level of bad faith.
One problem frequently encountered in arbitration is delay by the carrier or its attorney.
The plaintiffs’ lawyer primary goal should be first to prevent delays and only if that effort fails,
to hold the carrier accountable for delays. To that end, all communication should either be
conducted in writing in the first instance or should be confirmed in writing. In your letters,
request a response by a reasonable deadline and follow-up on those deadlines, again in writing.
It is important to move quickly in setting the arbitration panel, as there will inevitably be a three-
month delay in scheduling the hearing because at least five schedules must be coordinated.
If the carrier or its lawyer develops a pattern of failing to respond to your
communications, you can file suit for breach of contract, bad faith and unfair and deceptive trade
practices. A sample complaint is included at the end of the manuscript.
Carriers also undervalue claims in arbitration as in all cases. In the UM/UIM context,
however, the carrier has an obligation to make reasonable settlement offers. The arbitration
award is certainly an excellent measure of reasonableness. After all, it is the considered opinion
of three seasoned professionals about the value of the case. I would think that even most
insurance defense lawyers would agree that if there is a wide divergence between the carrier’s
offer and the arbitration award, this is some evidence of bad faith/unfair trade practices.
Subj: [ncatl_autotorts] Re: Arbitration agreement
Date: 3/9/2001 11:12:00 AM Eastern Standard Time
From: firstname.lastname@example.org (Robert Holmes)
Reply-to: email@example.com (NCATL Auto Torts Section)
To: firstname.lastname@example.org (NCATL Auto Torts Section)
From NCTLA Member: Robert Holmes <email@example.com>
E_mail will scramble the format, but here goes:
[arbitration agreement-Note for UIM situations, be cognizant of the issue of
whether the arbitrators will be informed of any liability or UIM coverages
and whether arbitrators will decide total damages or UIM only]
The parties to this Agreement to Arbitrate are ***
DISPUTE TO BE ARBITRATED
The parties submit the following to arbitration:
Damages shall be the issue decided by the Arbitrator.
The parties agree to a High-Low Agreement in this arbitration which shall operate as
follows: In the event that the amount of the arbitrator's award is below the low figure of the
parties' high-low agreement (including an award of zero), the parties stipulate that the award
shall be changed and/or a new award entered in the amount of the low figure. In the event that
the amount of the arbitrator's award is above the high figure of the parties' high-low agreement,
the parties stipulate that the award shall be changed and/or a new award entered in the amount of
the high figure. In the event the arbitrator's award is between the high and low figure, the award
shall stand as rendered.
We, the undersigned parties, agree to the following figures:
High: $*** Low: $***
The parties agree that the above figures shall not be disclosed to the Arbitrator prior to
an award; nor shall the existence of the high-low be disclosed.
Any fact or claim not specifically admitted by all parties is considered denied and is in
CONDUCT OF PROCEEDINGS & ARBITRATOR'S AUTHORITY
The parties agree to *** as arbitrator. The Arbitrator has authority to settle all points and
controversies in the above-described dispute and award appropriate relief. The Arbitrator shall
be the judge of the admissibility and weight of the evidence offered by the parties and
conformity to legal rules of evidence shall not be necessary.
In addition, the parties agree to the following specific conditions governing the
proceedings of this matter:
1) The decision of the Arbitrator shall be binding and final with no right of appeal;
2) The parties agree to exchange all documents ten (10) days prior to the arbitration;
3) The parties shall each bear their own costs and attorney fees. No pre-judgment
interest shall be owed; and,
4) Upon payment of the award, the Plaintiffs will sign a full Release releasing ***, all
Defendants and other persons from further liability; the Plaintiffs will also file a dismissal with
prejudice of Wake County civil action number ***
The parties contract and agree that they will be legally bound by the award and that
judgment may be entered on such an award. If any party fails to proceed with arbitration, fails to
comply with an award or unsuccessfully challenges an award, that party must pay all of the other
party's costs of suit including reasonable attorney's fees incurred to enforce or defend such an
award, and legal interest on the amount awarded.
Names of parties***
BY: _________________________ BY: _____________________________
Attorney for Plaintiffs Attorney for Defendants
Date: _______________________ Date: ___________________________
Subj: [ncatl_autotorts] RE: Arbitration agreement
All disputes arising under or by reason of alleged breach of this Agreement must be
resolved by binding arbitration conducted under the Uniform Arbitration Act as adopted by
North Carolina in G.S. § 567.1 et seq. Venue for the arbitration is exclusively in Johnston
County, North Carolina. Upon motion by a party requesting arbitration, each party shall submit
a list of three AOC certified mediators or arbitrators to the Senior Resident Superior Court Judge
for Judicial District 11-B who shall select one to serve as the arbitrator of the disputes submitted
by the parties. The arbitrator shall tax all costs of the arbitration, and all costs and attorney's fees
incurred by the prevailing party, against the losing party. The arbitrator shall determine which
party (if any) substantially prevailed in the positions it asserted in the arbitration. The arbitrator
is authorized to grant such equitable relief, including injunctive relief, as would be otherwise
available under North Carolina law.
STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
DURHAM COUNTY SUPERIOR COURT DIVISION
97 CVS 02778
GLENDA GEORGE and her )
husband, CARL GEORGE; )
v. ) CONSENT ORDER
MICHELLE ANNETTE )
NOW COMES THE Court and rules on the plaintiffs’ and Erie Insurance Exchange, the
unnamed party’s, motion to remove this case from the July 6, 1998 trial calendar and to order
arbitration pursuant to G.S.§1-567.3; and it appearing to the Court that on April 7, 1998, the
liability carrier, Atlantic Indemnity Company, notified the parties in writing that it was tendering
its policy limits to the plaintiffs in exchange for the execution of a COVENANT NOT TO
ENFORCE JUDGMENT AGAINST MICHELLE ANNETTE SATTERFIELD AND RELEASE
OF ATLANTIC INDEMNITY COMPANY WITH PLAINTIFFS’ RESERVATION OF
RIGHTS TO PURSUE UNDERINSURED CLAIMS; that on April 28, 1998 the plaintiffs
attempted to resolve their claims through court-ordered mediation; that on May 26, 1998, Susan
Burkhart, counsel for Erie Insurance Exchange, appearing as the unnamed party pursuant to
N.C.Gen.Stat.§20-279.21(b)(4), filed an Offer of Judgment; that on June 5, 1998, plaintiffs
notified Susan Burkhart, counsel for Erie Insurance Exchange, by certified mail, return receipt
requested, that Atlantic Indemnity had tendered its liability limits in exchange for the above-
referenced agreement and that plaintiffs were demanding to settle the dispute regarding the
amount of damages to be awarded on their underinsurance claims by arbitration, as provided
under the terms of their Erie automobile policy and their daughter, Tammi George’s automobile
policy; that on June 16, 1998, Susan Burkhart, counsel for Erie Insurance Exchange, notified
plaintiff’s counsel in writing that Erie Insurance Exchange does not plan to advance the liability
limits in this case and that Erie Insurance Exchange will not contest the plaintiffs’demand for
arbitration; that plaintiffs are ready and willing to accept Atlantic Indemnity’s tender of its policy
limits in exchange for the execution of a COVENANT NOT TO ENFORCE JUDGMENT
AGAINST MICHELLE ANNETTE SATTERFIELD AND RELEASE OF ATLANTIC
INDEMNITY COMPANY WITH PLAINTIFFS’ RESERVATION OF RIGHTS TO PURSUE
UNDERINSURED CLAIMS ; that the dispute regarding the amount of damages to be awarded
on the plaintiffs’ underinsurance claims should be resolved by binding arbitration; and that such
arbitration should be completed by December 31, 1998.
IT IS THEREFORE ORDERED that this case be removed from the July 6, 1998 trial
calendar and that the dispute regarding the amount of damages to be awarded on the plaintiffs’
underinsurance claims be resolved by binding arbitration to be completed by December 31,
This the _____ day of June, 1998.
Superior Court Judge Presiding
Heidi G. Chapman
100 Europa Drive, Suite 595
Chapel Hill, NC 27514
Attorney for Plaintiffs
Laura L. Singleton
Law Offices of Robert E. Ruegger
P.O. Box 20885
Raleigh, NC 27619-0885
Attorney for Defendant Michelle Satterfield
Susan K. Burkhart
Cranfill, Sumner & Hartzog, L.L.P.
Post Office Box 27808
Raleigh, NC 27611-7808
Attorney for Unnamed Party,
Erie Insurance Exchange
NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
DURHAM COUNTY FILE NO. 00 CvS 00492
ADA BYRD JACKSON, )
vs. ) STIPULATION OF
BRIAN KEITH GEORGE, JR., )
PLAINTIFF AND NATIONWIDE INSURANCE COMPANY, an unnamed party, do
hereby stipulate and agree as follows:
1. Pursuant to the provisions of Nationwide's policy of insurance, Plaintiff has
demanded to arbitrate the claims that Plaintiff has raised in the above entitled action to the extent
that they involve and concern Nationwide's UIM coverage.
2. Pursuant to the applicable Nationwide policy, the parties will select one arbitrator
each, who in turn will jointly select a third arbitrator; and will schedule the arbitration of the
above entitled action before that panel. The parties shall select their respective arbitrator within
5 days of the date this agreement is signed; and the arbitration hearing shall commence within 60
days of the date this agreement is signed. No Arbitrator shall have prior personal knowledge of
the facts of the incident which is the subject of the arbitration proceeding; nor shall any of the
Arbitrators be personally acquainted with any party to the Arbitration proceeding.
3. The parties wish to enter into this stipulation setting forth the rules by which the
parties are to be bound and proceed in the arbitration of Plaintiff’s claims in the above entitled
Based upon the forgoing, the parties do hereby stipulate and agree that the parties hereto
shall be bound by, follow, abide by and adhere to the following rules in regard to the arbitration
of the above entitled action:
RULE 1. EXCHANGE OF INFORMATION
(a) Pre-Hearing Exchange of Information. At least 5 days before the date set for the
Arbitration hearing, the parties shall prepare a pre-hearing agreement in a form similar to a
pretrial order, which encompasses the following information and in addition to said agreement,
(1) Lists of witnesses they expect to testify in person, by sworn statement,
deposition, video or audio tape, or otherwise, indicating for each how the
witness shall be presented (i.e., by deposition, affidavit, live, videotape,
telephone testimony, etc.).
(2) Copies of documents or exhibits they expect to offer in evidence; and
(3) A brief statement of the issues and their contentions.
Either party may rely on stipulations and/or statements, sworn or unsworn, question and
answer statements, or depositions, rather than a formal presentation of witnesses and documents,
for all or part of the hearing, provided that the party planing to rely on such evidence shall notify
the other party not later than in the pre-hearing agreement of the nature and scope of the
evidence which will be presented in this manner.
(b) Exchanged Documents Considered Authenticated. Any document exchanged in
accordance with Rule 1(a) above may be received in the hearing as evidence without further
authentication; however, the party against whom it is offered may subpoena and examine as an
adverse witness anyone who is the author, custodian or witness through whom the document
might otherwise have been introduced. Documents not so exchanged may not be received if to
do so would, in the Arbitrators' opinion, constitute unfair, prejudicial surprise.
Prior to the hearing, the parties may present to the Arbitrators a compilation of exhibits to
which both have agreed in order that the Arbitrators may have these prior to the hearing. By
agreeing to include a particular exhibit in the compilation, neither party agrees that the exhibit is
relevant or material and the inclusion of a particular document in the compilation shall not
prevent either party from attacking the materiality or relevance of the document.
(c) Copies of Exhibits Admissible. Copies of exchanged documents or exhibits are
admissible in arbitration hearings.
(d) Ex Parte Contact. Ex parte discussion of the merits of the case with any of the
nominated Arbitrators during the selection process or with the Arbitrators subsequent to their
selection is prohibited. It is permissible to contact a potential Arbitrator to discuss the
Arbitrator’s availability and willingness to serve and to schedule the hearing of the matter.
RULE 2. ARBITRATION HEARING
(a) Witnesses. Witnesses who appear in person may be compelled to testify under
oath or affirmation and produce evidence by the same authority and to the same extent as if the
hearing were a trial. The Arbitrators are empowered and authorized to administer oaths and
affirmations in arbitration hearings.
(b) Subpoenas. Rule 45 of the North Carolina Rules of Civil Procedure shall apply to
subpoenas for attendance of witnesses and production of documentary evidence at an arbitration
hearing under these Rules.
(c) Authority of Arbitrator to Govern Hearings. Arbitrators shall have the authority
of a trial judge to govern the conduct of hearings, except for the power to punish for contempt.
(d) Conduct of Hearing. At the opening of the hearing, the Arbitrators shall make a
written record of the place, time and date of the hearing, and the presence of the parties and
counsel. The Arbitrators and the parties shall review the list of witnesses, exhibits and written
statements concerning issues previously exchanged by the parties pursuant to Rule 1 above.
Plaintiff may then present exhibits and witnesses, who, if giving live testimony, may be cross-
examined.. Defendant may then present exhibits and witnesses, who, if giving live testimony,
may be cross-examined. The Arbitrators may, in their discretion, vary the order of presentation
(e) Evidence. The North Carolina Rules of Evidence shall not apply in an arbitration
hearing, except as to privilege or protection, but shall be considered as a guide toward full and
fair development of the facts. The Arbitrators shall consider all evidence presented and give it
the weight and effect the Arbitrators determine appropriate.
(f) Conclusion of Hearing. When the parties state they have no further exhibits or
witnesses to offer, the Arbitrators shall declare the hearing closed. Counsel may make oral
argument, but the filing of post-hearing briefs will not be permitted unless requested by the
Arbitrators. If the Arbitrators request post-hearing briefs, such briefs must be submitted within
three (3) business days after the hearing has been concluded or otherwise agreed among the
parties and the Arbitrators.
RULE 3. THE AWARD
(a) Issuance of Award. The Arbitrators shall issue and mail to the parties an award
within seven (7) business days of the date of the closing of the hearing or the receipt of post-
hearing briefs, whichever is later.
(b) Findings and Conclusions. In rendering their decision, the Arbitrators shall
complete and sign an issue sheet, which shall constitute the award described in Rule 3(a), in the
form normally used in jury trials answering all issues presented at the hearing.
(c) Costs of the Arbitration. Each party will pay the fee of its chosen Arbitrator.
Each party will pay one-half of the fee charged by the third Arbitrator. Each party will pay one-
half of all other expenses of the arbitration. Fees to lawyers and expert witness are not
considered arbitration expenses and are to be paid by the party hiring these persons.
(d) Scope of Award. The award must resolve all issues raised by the pleadings.
RULE 4. AGREEMENT FOR BINDING ARBITRATION
(a) Agreement For Binding Arbitration. All parties agree that the Arbitrators' award
as agreed upon by two of the Arbitrators shall be binding on the parties, as provided in the policy
and subject to the provisions of Article 45A (Arbitration and Award) of the North Carolina
(b) Issuance of Award. At the conclusion of the Arbitration hearing, the Arbitrators
shall issue an award in accordance with the provisions of Rule 3.
(c) Termination of Binding Arbitration Action By Agreement Before Judge. The
parties may file a stipulation of dismissal or consent judgment at any time before entry of
judgment on the Arbitrators' award.
(d) Confirmation of the Arbitrator's Award. If the case is not terminated by
agreement of the parties pursuant to Rule 4(c) within ten (10) business days of the issuance of
the Arbitrators' award, either party may seek confirmation of the Arbitrator’s award pursuant to
Article 45 A of the North Carolina General Statutes.
RULE 5. MODIFICATION OF PROCEDURE
Subject to approval of the Arbitrators, the parties may agree to modify the procedures
required by these Rules for Arbitration.
This the ___ day of _______________, 2001.
PULLEY, WATSON, KING & LISCHER, P.A.
Attorneys for Plaintiff
Guy W. Crabtree
P.O. Drawer 3600
Durham, NC 27702
Telephone: (919) 682-9691
Facsimile: (919) 688-9107
Bryant, Patterson, Covington & Idol, P.A.
Attorneys for Nationwide
David O. Lewis
P.O. Box 341
Durham, NC 27702
NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
GUILFORD COUNTY SUPERIOR COURT DIVISION
00 CvS 8858
GARY WAYNE TUTTLE
Plaintiff, MOTION TO COMPEL
v. AND TO STAY ACTION
PENDING ARBITRATION AWARD
DARREN KEITH STEVENS,
Now comes the Plaintiff, by and through counsel, and moves the Court pursuant to N.C.
Gen. Stat. § 1-567.3(a) for an order compelling unnamed defendant North Carolina Farm Bureau
Mutual Insurance Company (hereinafter, “Farm Bureau”) to proceed with arbitration of the
plaintiff’s underinsured motorist (“UIM”) claim under the terms of the insurance policy issued by
Farm Bureau to the plaintiff, and to stay this action pending the arbitration award pursuant to
N.C. Gen. Stat. § 1-567.3(d).
In support of its motion, the plaintiff shows to the Court:
1. Farm Bureau and the plaintiff are parties to a contract of insurance providing UIM
coverage to the plaintiff with limits of $300,000.00, which policy was in full force and effect as of
December 13, 1997.
2. On December 13, 1997, the plaintiff was injured by the negligence of defendant
Darren Keith Stevens, and suffered damages in excess of the $25,000.00 limits of the liability
insurance policy issued to Mr. Stevens by Integon Insurance Company. On May 4, 1998, Integon
gave notice to Farm Bureau of its offer to pay its policy limits to the plaintiff in exchange for a full
and final release of all claims against its insured, Mr. Stevens.
3. After receiving notice of the tentative settlement between Integon and the plaintiff,
Farm Bureau preserved its subrogation rights against Mr. Stevens by advancing a payment to the
plaintiff in an amount equal to the tentative settlement, in accordance with the procedure set forth
in N.C. Gen. Stat. §20-279.21(b)(4).
4. The plaintiff and Farm Bureau engaged in settlement negotiations over the
plaintiff’s UIM claim but were unable to reach agreement on the amount of damages the plaintiff
is entitled to recover in excess of the $25,000.00 limits of the Integon policy.
5. The insurance policy issued by Farm Bureau to the plaintiff provides that any
dispute between the parties over whether the plaintiff is legally entitled to recover damages from
the owner or driver of an underinsured motor vehicle, or over the amount of damages recoverable
by the plaintiff, is subject to binding arbitration upon written demand by the plaintiff. As such,
the Farm Bureau policy is a contract containing “a provision for the settlement by arbitration of
any controversy thereafter arising between them relating to such contract” within the meaning of
N.C. Gen. Stat. § 1-567.2.
6. On July 17, 2000, the plaintiff commenced this action to suspend the running of
the statute of limitations pending arbitration, and on July 19, 2000, the plaintiff made written
demand for arbitration upon Farm Bureau before the American Arbitration Association (“AAA”),
in the belief that the Farm Bureau policy provided that arbitration should be conducted under
7. By letter to the AAA dated August 15, 2000, Farm Bureau contested the plaintiff’s
right to have the arbitration conducted before the AAA, stating that “our policy has its own rules
for arbitration which do not include any requirement that arbitration be conducted either by you
or in conjunction with your rules.” Farm Bureau attached to this letter a copy of the arbitration
provision which it contends was contained in the policy issued to the plaintiff. This letter,
together with its attached copy of the policy provision relating to arbitration, are attached hereto as
Exhibit A, and constitute an admission by Farm Bureau of the existence of an agreement to
arbitrate the plaintiff’s UIM claim.
8. On August 15, 2000, Farm Bureau, by telephone and through its counsel of record,
advised counsel of record for the plaintiff that it contended not only that it was not subject to
arbitration under AAA rules, as stated in the letter attached as Exhibit A, but also that it was not
required to arbitrate the plaintiff’s UIM claim in any venue, and that it did not intend voluntarily
to do so.
9. In an effort to resolve any misunderstanding regarding the issue of arbitration, and
to avoid the time and expense of bringing this matter before the Court, counsel for the plaintiff
wrote to counsel for Farm Bureau on August 21, 2000. The plaintiff, through counsel, requested
a copy of the certified policy in effect at the time of the collision, and also requested confirmation
of Farm Bureau’s willingness to proceed with arbitration. The letter also stated the plaintiff’s
intention to proceed to arbitration in whatever venue was prescribed under the terms of the Farm
Bureau policy. A copy of this letter is attached as Exhibit B. To date, counsel for plaintiff has
received no communications from counsel for Farm Bureau to indicate that Farm Bureau is
willing to proceed to arbitration of the plaintiff’s UIM claims.
Wherefore, the plaintiff prays:
1. That Farm Bureau be ordered to proceed to arbitration of the plaintiff’s UIM claim
in accordance with the terms set forth in the plaintiff’s insurance policy, pursuant to
N.C. Gen. Stat. § 1-567.3(a);
2. That the Court order that the arbitrators be selected in the manner specified in the
plaintiff’s Farm Bureau policy in effect on December 13, 1997;
3. That the arbitration be conducted under the procedures set forth in Chapter 1,
Article 45A of the North Carolina General Statutes, except insofar as the plaintiff
and Farm Bureau may otherwise agree in writing;
4. To avoid undue delay in the arbitration of the plaintiff’s claims, that the Court:
1. Designate in its Order reasonable times certain by which the selection of the
arbitrators shall be completed and the arbitration hearing shall be
conducted, pursuant to N.C. Gen. Stat. § 1-567.6(1);
2. Order that an award shall be made within five days after either the
completion of the hearing or the submission of any required post-hearing
briefs, pursuant to N.C. Gen. Stat. § 1-567.9(b);
5. That all proceedings in this civil action be stayed pending the outcome of the
arbitration of the plaintiff’s UIM claim in accordance with N.C. Gen. Stat.
§ 1-567.3(d) ; and
6. That the plaintiff have and recover of the unnamed defendant Farm Bureau the
costs, including attorney’s fees, required in bringing this matter before the Court.
This the ____ day of September, 2000.
William F. Patterson, Jr.
Attorney for Plaintiff
TURNER ENOCHS & LLOYD, P.A.
Post Office Box 160
Greensboro, North Carolina 27402
NORTH CAROLINA IN THE GENERAL COURT OF
GUILFORD COUNTY SUPERIOR COURT DIVISION
00 CvS 8858
GARY WAYNE TUTTLE
DARREN KEITH STEVENS,
This matter coming on to be heard before the Court on Plaintiff’s Motion to Compel
Arbitration and to Stay Action Pending Arbitration Award;
And the Court finding that:
(1) The insurance policy issued to Plaintiff by Unnamed Defendant North Carolina
Farm Bureau Mutual Insurance Company is a contract containing a provision for the settlement
by arbitration of any controversy thereafter arising between them relating to such contract per
N.C. Gen. Stat. § 1-567.2;
(2) A dispute has arisen between Plaintiff and the Unnamed Defendant over the
compensation due to Plaintiff under the underinsured motorist coverage of the aforementioned
(3) Plaintiff has made written demand for arbitration of his claims under the
aforementioned policy; and
(4) The Unnamed Defendant has refused to arbitrate in accordance with the terms of
the aforementioned policy;
It is hereby ORDERED, ADJUDGED AND DECREED that:
Plaintiff’s motion to compel arbitration is GRANTED, in accordance with N.C. Gen.
Stat. § 1-567.3(a);
Plaintiff and Unnamed Defendant are Ordered to proceed with binding arbitration of
Plaintiff’s claims arising out of injuries sustained in a collision involving an underinsured motor
vehicle on December 13, 1997;
Defendant shall not be a party to the arbitration between Plaintiff and Unnamed
Defendant and shall not be bound by any decision rendered in the arbitration;
Except as the parties may otherwise agree in writing, the arbitration shall be conducted in
accordance with the procedures set forth in Chapter 1, Article 45A of the North Carolina General
In accordance with N.C. Gen. Stat. § 1-567.6(1), it is Ordered that the arbitration shall be
conducted according to the following schedule, subject to modification by written agreement of
Within thirty (30) days of the entry of this order, Plaintiff and Unnamed Defendant shall
designate their respective arbitrators;
Within twenty (20) days after both parties have designated their respective arbitrators, the
two arbitrators designated by the parties shall designate a third arbitrator, completing the panel of
Within ninety (90) days after the third arbitrator has been designated, the arbitration
hearing shall be held.
In accordance with N.C. Gen. Stat. § 1-567.9(b), it is Ordered that an award shall be
made within ten (10) days after either the completion of the hearing or the submission of any
required post-hearing briefs;
In accordance with N.C. Gen. Stat. § 1-567.3(d), Plaintiff’s motion to stay this action
pending the filing of the arbitration award is GRANTED;
In accordance with N.C. Gen. Stat. § 1-567.17, the Court shall retain jurisdiction of this
matter pending the award of the arbitrators; and
Plaintiff’s motion for attorneys fees and costs is DENIED.
This the _____ day of October, 2000.
Jerry Cash Martin
Superior Court Judge Presiding
Accident Claims Arbitration Rules (Including Mediation) of the American Arbitration Association
As Amended and Effective on January 1, 1994
The American Arbitration Association (AAA) is a public-service, not-for-profit organization offering a broad range
of dispute resolution services to business executives, attorneys, individuals, trade associations, unions, management,
consumers, families, communities, and all levels of government. Services are available through AAA headquarters
in New York City and through offices located in major cities throughout the United States. Hearings may be held at
locations convenient for the parties and are not limited to cities with AAA offices. In addition, the AAA serves as a
center for education and training, issues specialized publications, and conducts research on all forms of out-of-court
Automobile insurance policies written in every state protect an insured against personal injury caused by uninsured
and hit-and-run motorists. The standard uninsured motorist endorsement is one in which the insurer promises
to pay all sums which the insured shall be legally entitled to recover as damages from the owner or
operator of an uninsured automobile because of bodily injury sustained by the insured, caused by
accident and arising out of the ownership, maintenance or use of such uninsured automobile,
provided determination as to whether the insured is legally entitled to recover such damages, and
if so, the amount thereof, shall be made by agreement between the insured and the company or, if
they fail to agree, by arbitration.
This endorsement contains a provision for arbitration, which typically reads as follows.
If any person making claim hereunder and the company do not agree that such person is legally
entitled to recover damages from the owner or operator of an uninsured automobile because of the
amount of payment which may be owing under this endorsement, then, upon written demand of
either, the matter or matters upon which such person and the company do not agree shall be settled
by arbitration in accordance with the rules of the American Arbitration Association, and judgment
upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof.
Such person and the company each agree to consider itself bound and to be bound by any award
made by the arbitrators pursuant to this endorsement.
In 1956, at the request of the insurance industry, the American Arbitration Association established these procedures
for arbitrating such matters.
Mediation procedures are also provided for those parties who wish to make use of them. The AAA encourages
parties to submit their accident claims disputes to mediation, which has proven to be a prompt, fair, and economical
method of resolving insurance claims. The mediation provisions of the AAA's Alternative Dispute Resolution
Procedures for Insurance Claims will be utilized where the parties agree to mediate their dispute.
In mediation, the mediator assists the parties in reaching their own settlement, but does not have the authority to
make a binding decision or award.
Mediators appointed under this program are experienced attorneys. They have specific training or experience in
mediation and are prepared to offer prompt service. The AAA makes every effort to appoint mediators who are
acceptable to both parties. Upon the objection of either party, the AAA will replace a mediator.
Using the Mediation Process
Because mediation is voluntary, all parties to the dispute must consent to participate. Upon request, a mediation
submission form will be provided by the AAA, or you may indicate your willingness to mediate by placing a check
mark in the appropriate box on the Demand for Arbitration form. The AAA will contact the other parties and
attempt to obtain their agreement to mediate.
If there is no agreement to mediate or if mediation proves unsuccessful, the parties can continue with the arbitration.
The initial administrative fee and insurance carrier surcharge are applied to the cost of administering the mediation.
In addition, there is suggested mediator compensation of $300 per case, to be paid equally by the parties. The exact
compensation rate for the mediator will be agreed to by the parties in each case, with the assistance of the AAA.
Accident Claims Arbitration Rules
1.Agreement of Parties
The parties make these rules a part of their arbitration agreement whenever a policy of insurance or applicable
insurance-department regulation provides; for arbitration by the American Arbitration Association (AAA) in
connection with a dispute involving a motor-vehicle liability claim. These rules and any amendment of them shall
apply in the form obtaining at the time the arbitration is initiated, except for any such provision that may be
inconsistent with the arbitration agreement or with applicable law.
2. Administration and Delegation of Duties
When parties agree to arbitrate under these or when they provide for arbitration by the AAA and an arbitration is
initiated under these rules, they thereby authorize the AAA to administer the arbitration. The duties of the AAA
under these rules may be carried out through such representatives as the AAA may direct.
3. Panel of Arbitrators
The AAA shall establish and maintain an Accident Claims Panel of arbitrators made up of attorneys with negligence
experience. Each of the AAA's regional offices will maintain an Advisory Committee, made up of equal numbers of
at least three members of the defense bar and/or the insurance industry and three members of the plaintiff's bar,
which will approve the qualifications of the members of that panel. Each committee shall meet at least once a year.
4. Initiation under an Arbitration Provision in a Policy
When the conditions precedent contained in the insurance policy or state insurance-department regulations have
been complied with, arbitration shall be initiated by filing a written Demand for Arbitration. The demand shall be
served by US certified mail-return receipt requested. When filed by an insured, it shall be directed to the claim,
office of the insurer under whose policy arbitration, is sought, at the office where the claim has been discussed, or at
the office of the insurer closest to the residence of the insured.
The demand shall set forth the following information:
(1) the name, address, and telephone number of the insured person(s) and the filing attorney;
(2) the name, address and policy number of the policyholder;
(3) the identity and location of the claims office of the insurer, if known; the claim's file number, if known; and the
name of the individual with whom the claim was discussed;
(4) the date and location of the accident;
(5) nature of dispute and injuries alleged;
(6) amount of uninsured-motorist policy limits and the amount claimed thereunder; and,
(7) address of the AAA regional office at which copies of the demand are being filed.
Three copies of the demand must be filed with an AAA regional office at the same time, with a copy of the parts of
the policy or regulations relating to the dispute, including the arbitration provisions together with the administrative
The AAA will acknowledge receipt of the demand to all parties. If, within thirty calendar days after
acknowledgment of the demand by the AAA, the insured moves in court to contest coverage, applicable policy
limits, or stacking of policy coverage, administration will be suspended until such issues are decided.
All issues covering compliance with conditions precedent may be decided by an arbitrator.
Issues as to applicable policy limits, or stacking of policy coverage may be referred to voluntary coverage arbitration
with the agreement of all parties before an arbitrator appointed by the AAA from a panel designated to hear such
issues. These issues will be submitted to the arbitrator on documents only, unless the parties agree otherwise or the
arbitrator determines that an oral hearing is necessary. In the absence of an agreement to submit such issues to
arbitration, accident claims arbitrators may only decide contested issues of coverage, applicable policy limits, or
stacking of policy coverage where ordered to do so by a court or where so authorized by law.
Unless there is, (1) an agreement to submit such issues to voluntary coverage arbitration, (2) a motion to contest
coverage, applicable policy limits, or the stacking of policy coverage made within thirty calendar days after
acknowledgment of the demand by the AAA, or (3) a court order staying arbitration, the AAA will proceed with the
administration of the case.
5. Change of Claim
If any party desires to make any new or different claim, same shall be made in writing and filed with the AAA and a
copy thereof shall be mailed to the other party. After the arbitrator is appointed, no new or different claim may be
submitted except with the arbitrator's consent.
6. Initiation under a Submission
Parties to any existing dispute may commence an arbitration under these rules by filing at any regional office of the
AAA three copies of a written submission to arbitrate under these rules, setting for the information specified in
7. Fixing of Locale
Either the county of residence of the insured or the county where the accident occurred may be designated by the
insured as the locale in which the hearing is to be held. Only if all parties agree shall the hearing be held in some
8. Designation of Arbitrator
Unless applicable law or the agreement of the parties provides otherwise, the dispute shall be determined by one
arbitrator, except as otherwise provided in this section. The AAA will submit a list of nine members of the Accident
Claims Panel from which each party shall have the right to strike up to two names on a peremptory basis, within
twenty days of the AAA's submission of the list. The AAA will appoint the arbitrator from among the remaining
Where the amount claimed and available coverage limits exceed minimum statutory financial-responsibility limits,
upon the request of a party made within thirty calendar days after acknowledgment of the demand by the AAA, the
dispute shall be determined by three arbitrators. The AAA will submit a list of thirteen names from the Accident
Claims Panel, allowing each party to strike up to three names on a peremptory basis, within twenty days of the
AAA's submission of the list. The AAA will appoint three arbitrators from among the remaining names.
If the parties fail to agree on any of the persons named on the list of arbitrators, if acceptable arbitrators are unable to
act, or if, for any other reason, the appointment cannot be made from the submitted lists, the AAA shall have the
power to make the appointment from among other members of the panel without submitting additional lists.
9. Qualifications of Arbitrator
No person shall serve as an arbitrator in any arbitration in which that person has any financial or personal interest.
An arbitrator shall disclose any circumstances likely to create a presumption of bias which might disqualify that
arbitrator as an impartial arbitrator. Any party shall have the right to challenge the appointment of an arbitrator for
reasonable cause. The AAA shall determine whether the arbitrator should be disqualified, and shall inform the
parties of its decision, which shall be conclusive.
If for any reason an appointed arbitrator should be unable to perform the duties of the office, the AAA shall appoint
a replacement from among those names remaining on the list(s) submitted to the parties. If an appointment cannot be
made from the list(s), the AAA shall appoint a replacement in accordance with the provisions of Section 8.
10. Time and Place
The arbitrator shall fix the time and place for each hearing. The AAA shall mail to each party notice thereof at least
twenty calendar days in advance, unless the parties by mutual agreement waive such notice or modify the terms
Any party may be represented by counsel or other authorized representative. A party intending to be so represented
shall notify the other party and the AAA of the name and address of such representative at least three days prior to
the date set for the hearing at which the representative is first to appear. When an arbitration is initiated by counsel
or when an attorney replies for the other party, such notice is deemed to have been given.
12. Stenographic Record
Any party wishing a stenographic record shall make arrangements directly with a stenographer and shall notify the
other party of such arrangements in advance of the hearing. The requesting party or parties shall pay the cost of the
record. If such transcript is agreed by the parties to be, or determined by the arbitrator to be, the official record of the
proceeding, it must be made available to the arbitrator and to the other party for inspection, at a time and place
determined by the arbitrator.
Any party wishing an interpreter shall make all arrangements directly with the interpreter and shall assume the costs
of such service.
14. Attendance at Hearings
The arbitrator shall maintain the privacy of the hearings unless the law provides to the contrary. Any person having
a direct interest in the arbitration is entitled to attend hearings. The arbitrator shall otherwise have the power to
require the exclusion of any witness, other than a party or other essential person, during the testimony of any other
witness. It shall be discretionary with the arbitrator to determine the propriety of the attendance of any other person.
The arbitrator may, for good cause, postpone the hearing upon the request of a party or upon the arbitrator's own
initiative, and shall grant such postponement when all of the parties agree thereto.
Before proceeding with the first hearing, each arbitrator may take an oath of office and, if required by law, shall do
so. The arbitrator may require witnesses to testify under oath administered by any duly qualified person and, if
required by law or requested by either party, shall do so.
17. Arbitration in the Absence of a Party or Counsel
Unless the law provides to the contrary, the arbitration may proceed in the absence of any party or counsel who,
after due notice, fails to be present or fails to obtain an adjournment. An award shall not be made solely on the
default of a party. The arbitrator shall require the party who is present to submit such evidence as is deemed
necessary for the making of an award.
18. Order of Proceedings
A hearing shall be opened by the filing of the oath of the arbitrator, where required; by the recording of the place,
time and date of the hearing and the presence of the arbitrator, the parties, and counsel, if any; and by the receipt by
the arbitrator of the statement of the claim and answer, if any.
The arbitrator may, at the beginning the hearing, ask for statements clarifying the issues involved. The claimant shall
then present its claims, proofs, and witnesses, who shall submit to questions or other examination. The respondent
shall then present its defenses, proofs, and witnesses, who shall submit to questions or other examination. The
arbitrator has discretion to vary this procedure but shall afford full and equal opportunity to the parties for the
presentation of any material or relevant proofs.
Exhibits, when offered by either party, may be received in evidence by the arbitrator.
The names and addresses of all witnesses and exhibits in the order received shall be made a part of the record.
The Parties may, by written agreement, provide for the waiver of oral hearings. If the parties are unable to agree as
to the procedure, the AAA shall specify a fair and equitable procedure.
The parties may offer such evidence as is relevant and material to the dispute and shall produce such additional
evidence as the arbitrator may deem necessary to an understanding and determination of the dispute. An arbitrator
authorized by law to subpoena witnesses or documents may do so upon request of any party or independently.
The arbitrator shall be the judge of the relevance and materiality of evidence offered, and conformity to legal rules
of evidence shall not be necessary. All evidence shall be taken in the presence of all the arbitrators and all of the
parties, except where any of the parties is absent in default or waives the right to be present.
Any party intending to offer any medical report or record at the hearing must provide the other party with a copy at
least twenty days in advance thereof.
20. Evidence by Affidavit and Posthearing Filing of Documents
The arbitrator may receive and consider the evidence of witnesses by affidavit, but shall give it only such weight as
the arbitrator deems it entitled to after consideration of any objection made to its admission.
If the parties agree or the arbitrator directs that documents are to be submitted to the arbitrator after the hearing, they
shall be filed with the AAA for transmission to the arbitrator. All parties shall be afforded an opportunity to examine
21. Majority Decision
Whenever there is more than one arbitrator, all decisions of the arbitrators must be by at least a majority. The award
must also be made by at least a majority unless the concurrence of all is expressly required by the arbitration
agreement or by law.
22. Closing of Hearing
The arbitrator shall specifically inquire of all parties whether they have any further proofs to offer or witnesses to be
heard. Upon receiving negative replies, or if satisfied that the record is complete, the arbitrator shall declare the
hearing closed and a minute thereof shall be recorded. If briefs are to be filed, the hearing shall be declared closed as
of the final date set by the arbitrator for the receipt of briefs. If documents are to be filed as provided for in Section
20 and the date set for their receipt is later than that set for the receipt of briefs, the later date shall be the date of
closing the hearing. The time limit within which the arbitrator is required to make the award shall commence to run,
in the absence of other agreements by the parties, upon the closing of the hearing.
23. Reopening of Hearing
The hearing may be reopened by the parties at will or upon application of a party at any time before the award is
made. If reopening the hearing would prevent the making of the award within the specific time agreed upon by the
parties in the contract out of which the controversy has arisen, the matter may not be reopened, unless the parties
agree upon an extension of time. When no specific date is fixed in the contract, the arbitrator may reopen the
hearing, and the arbitrator shall have thirty days from the closing of the reopened hearing within which to make an
24. Waiver of Rules
Any party who proceeds with the arbitration after knowledge that any provision or requirement of these rules has not
been complied with and who fails to state objection thereto in writing shall be deemed to have waived the right to
25. Extensions of Time
The parties may modify any period of time by mutual agreement. The AAA may for good cause extend any period
of time established by these rules except the time for making the award. The AAA shall notify the parties of any
such extension and its reason therefor.
26. Serving of Notice
(a)With the exception of the demand, which shall be served by US certified mail-return receipt requested, each party
shall be deemed to have consented that any papers, notices, or process necessary or proper for the initiation or
continuation of an arbitration under these rules; for any court action in connection therewith; or for the entry of
judgment on any award made under these rules may be served upon such party by mail addressed to such party or its
attorney at the last known address or by personal service, in or outside the state where the arbitration is to be held,
provided that reasonable opportunity to be heard with regard thereto has been granted to such party.
(b) To facilitate communication between the parties and the AAA, the parties agree that communications received
from each other or the AAA via facsimile machine, telex, telegram, or other written forms of electronic
communication are valid and proper notice under these rules.
27. Communication with Arbitrator
There shall be no direct communication between the parties and an arbitrator other than at oral hearings. Any other
oral or written communication from the parties to an arbitrator shall be directed to the AAA for transmission to the
28. Time of Award
The arbitrator shall render the award promptly and, unless otherwise agreed by the parties or specified by law, no
later than thirty days from the date of closing the hearing, or, if oral hearings have been waived, from the date of
transmitting the final statements and proofs to the arbitrator.
29. Form of Award
The award shall be in writing and shall be signed either by the sole arbitrator or by at least a majority if there is more
than one arbitrator. It shall be executed in the manner required by law.
30. Scope of Award
The arbitrator shall render a decision determining whether the insured person has a right to receive any damages
under the policy and the amount thereof, not in excess of the applicable policy limits. The award shall not contain a
determination as to issues of coverage except as provided in Section 4.
31. Award upon Settlement
If the parties settle their dispute during the course of the arbitration, the arbitrator may, upon their request, set forth
the terms of the agreed settlement in an award.
32. Delivery of Award to Parties
Parties shall accept as legal delivery of the award the placing of the award or a true copy thereof in the mail
addressed to such party or its attorney at the last known address, personal service of the award, or the filing of the
award in any other manner that may be permitted by law.
The expenses of witnesses for either side shall be paid by the party producing such witnesses. All other expenses of
the arbitration, including required traveling and other expenses of the arbitrator and of AAA representatives, and the
expenses of any witness and the cost of any proof produced at the direct request of the arbitrator, shall be borne
equally by the parties, unless they agree otherwise or unless the arbitrator in the award assesses such expenses or
any part thereof against any specified party or parties.
34. Applications to Court and Exclusion of Liability
(a) No judicial proceeding by a party relating to the subject matter of the arbitration or mediation shall be deemed a
waiver of the party's right to arbitrate.
(b) Neither the AAA nor any arbitrator or mediator in a proceeding under these rules is a necessary party in judicial
proceedings relating to the arbitration or mediation.
(c) Parties to these rules shall be deemed to have consented that judgment upon the arbitration award may be entered
in any federal or state court having jurisdiction thereof.
(d) Neither the AAA nor any arbitrator or mediator shall be liable to any party for any act or omission in connection
with any arbitration or mediation conducted under these rules.
35. Release of Documents for Judicial Proceedings
The AAA shall, upon the written request of a party, furnish to such party, at its expense, certified copies of any
papers in the AAA's possession that may be required in judicial proceedings relating to the arbitration.
36. Interpretation and Application of Rules
The arbitrator shall interpret and apply these rules insofar as they relate to the arbitrator's powers and duties. When
there is more than one arbitrator and a difference arises among them concerning the meaning or application of these
rules, it shall be decided by a majority vote. If that is unobtainable, either an arbitrator or a party may refer the
question to the AAA for final decision. All other rules shall be interpreted and applied by the AAA.
An initial administrative fee in the amount of $250 shall be paid to the AAA by the party initiating the mediation or
arbitration. No refund of the initial fee is made when a matter is withdrawn or settled after filing.
If the parties engage in voluntary coverage arbitration followed by arbitration of the remaining liability and damage
issues, there will be an additional administrative fee of $100 per party.
Where a case is heard by three arbitrators, the party requesting three arbitrators shall pay an additional
administrative fee of $300.
The balance of the administrative costs of the AAA is covered by a $250-per-case surcharge paid by the insurer or
self insurer involved.
Arbitrators from the AAA's Accident Claims Panel shall be compensated at a rate of $150 per case concluded. This
fee will be paid by the AAA from the administrative fees collected in the case.
A fee of $50 is payable by each party for each hearing held after the first hearing.
Hearing Room Rental
Hearing rooms for second and subsequent hearings are available on a rental basis at AAA offices. Check with your
local office for specific availability and rates.
A fee of $50 is payable by a party causing a postponement of any hearing scheduled before a single arbitrator. For
second or subsequent postponements before a single arbitrator, a fee of $100 will be paid by the party causing the
A fee of $75 is payable by a party causing a postponement of any hearing scheduled before a
multiarbitrator panel. For second or subsequent postponements before multiarbitrator panel, a fee of $150 will be
paid by the party causing the postponement.