Pee Xiong, Respondent, vs. Western National Mutual Insurance Company, Appellant.

Pee Xiong, Respondent, vs. Western National Mutual Insurance Company, Appellant. A05-569, Court of Appeals Unpublished, December 13, 2005.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2004).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A05-569

 

Pee Xiong,

Respondent,

 

vs.

 

Western National Mutual Insurance Company,

Appellant.

 

Filed December 13, 2005

Affirmed

Halbrooks, Judge

 

 

Hennepin County District Court

File No. MC 03-16260

 

Timothy J. Johnson, Paul E. Overson, Johnson, Uhl & Associates, 7300 Hudson Boulevard, Suite 290, Oakdale, MN 55128 (for respondent)

 

Burke J. Ellingson, Brendel and Zinn, Ltd., 8519 Eagle Point Boulevard, Suite 110, Lake Elmo, MN 55042 (for appellant)

 

 

            Considered and decided by Peterson, Presiding Judge; Halbrooks, Judge; and Dietzen, Judge.

U N P U B L I S H E D   O P I N I O N

HALBROOKS, Judge

            On appeal from a district court order confirming an arbitrator's award, appellant argues that the district court erred in confirming the award because (1) the arbitrator erroneously interpreted Rindahl v. Nat'l Farmers Union Ins. Cos., 373 N.W.2d 294 (Minn. 1985),and the Minnesota No-Fault Act; (2) respondent submitted fraudulent evidence in support of her no-fault claim; and (3) the arbitrator improperly ruled on a question of law.  Because the district court did not err in confirming the arbitration award, we affirm.

FACTS

Respondent Pee Xiong was injured in a motor vehicle accident in April 2002.  She applied for and received no-fault benefits until late September 2002, when benefits were terminated based on the results of an independent medical examination.  Respondent then filed a petition for no-fault arbitration, seeking recovery of a number of expenses.  At issue here is respondent's claim for homemaker replacement services pursuant to Minn. Stat. § 65B.44, subd. 5 (2004). 

Respondent sought $12,000 in homemaker-replacement-services benefits at the June 2003 arbitration hearing.  Although respondent's own children range from six to sixteen years old, respondent's claim included 7.45 hours per week spent dressing, bathing, and diapering children.  Respondent is Hmong and does not speak or read English.  Appellant contends that the claim for these services is fraudulent, while respondent maintains that these services were performed for other children in respondent's household.

            The arbitrator awarded respondent the full $12,000 that she sought for homemaker replacement services.  Appellant moved the district court to vacate the award because respondent "clearly submitted fraudulent evidence in support of her claim for homemaker replacement services" and because the arbitrator erroneously interpreted Rindahl v. Nat'l Farmers Union Ins. Cos., 373 N.W.2d 294 (Minn. 1985), and the Minnesota No-Fault Act.  The district court concluded that Minnesota law limits homemaker-replacement recovery to the "reasonable value of such care and maintenance."  Minn. Stat. § 65B.44, subd. 5.  Because respondent did not have infant or toddler-aged children who required some of the claimed services, the district court determined that the arbitrator erred in applying the law because the award was not limited to the reasonable value of her claim.  The district court therefore vacated the award and remanded the matter for further proceedings to determine the reasonable value of respondent's homemaker-replacement-services benefits. 

            A second arbitration took place before the same arbitrator in June 2004.  Both parties submitted additional briefs, but no new testimony was taken.  The arbitrator awarded respondent $10,178 for homemaker replacement services. 

            Appellant again sought an order vacating the arbitrator's award.  After a hearing in September 2004, the district court concluded that there were no findings of fraud by either the district court or the arbitrator, that the parties had agreed that the arbitrator had enough evidence to award $12,000, exclusive of child services, and that no new evidence was introduced at the second arbitration.  Stating that appellant failed to meet its burden of proof, the district court denied the motion to vacate.  This appeal follows. 

D E C I S I O N

Minnesota policy strongly favors the finality of arbitration awards.  Erickson v. Great Am. Ins. Cos., 466 N.W.2d 430, 432 (Minn. App. 1991).  Therefore, a judicial appeal from an arbitration award is subject to a particularly narrow standard of review.  State, Office of State Auditor v. Minn. Ass'n of Prof'l Employees, 504 N.W.2d 751, 754 (Minn. 1993).  In no-fault arbitration, "the arbitrator's findings of fact are conclusive," while questions of law are subject to de novo review.  Barneson v. W. Nat'l Mut. Ins. Co., 486 N.W.2d 176, 177 (Minn. App. 1992).  This rule reflects the desire for consistency in interpretation of the no-fault act and is an exception to the general rule that arbitrators are the final judges of both law and fact.  Weaver v. State Farm Ins. Cos., 609 N.W.2d 878, 882 (Minn. 2000).  This court is not bound by and need not give deference to the district court's decision on a question of law.  Frost-Benco Elec. Ass'n v. Minn. Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn. 1984).    

Judicial review of arbitration awards is "limited to those matters where jurisdiction is statutorily granted."  Abd Alla v. Mourssi, 680 N.W.2d 569, 572 (Minn. App. 2004).  An arbitration award may be vacated only upon proof of one or more of the grounds listed in Minn. Stat. § 572.19, subd. 1 (2004).  AFSCME Council 96 v. Arrowhead Reg'l Corrections Bd., 356 N.W.2d 295, 299 (Minn. 1984).  Upon application of a party, the court shall vacate an arbitration award when (1) the award is obtained by fraud, corruption, or other undue means; (2) there was evident partiality, prejudicial misconduct, or corruption of the arbitrator; (3) the arbitrator exceeded his or her powers; (4) improper conduct of the hearing resulted in substantial prejudice; or (5) there was no arbitration agreement.  Minn. Stat. § 572.19, subd. 1.

I.

 

            Appellant argues that the district court should not have confirmed the arbitrator's award for homemaker replacement services because the arbitrator erroneously interpreted both Rindahl v. Nat'l Farmers Union Ins. Cos., 373 N.W.2d 294 (Minn. 1985),and the Minnesota No-Fault Act.  First, appellant contends that the arbitrator erred in concluding that respondent was entitled to homemaker replacement services under Rindahl because of the alleged insufficiency of the evidence that respondent submitted.  But an arbitrator has authority to find facts and determine the sufficiency of proof in a no-fault claim.  Liberty Mut. Ins. Co. v. Sankey, 605 N.W.2d 411, 413 (Minn. App. 2000) (citing Neal v. State Farm Mut. Ins. Co., 529 N.W.2d 330, 331-32 (Minn. 1995)).  And an arbitrator's findings of fact are final.  Barneson, 486 N.W.2d at 177.  It is clear that this court may not review whether the record supports an arbitrator's findings.  Liberty Mut. Ins. Co., 605 N.W.2d at 413.  Because the arbitrator's findings of fact are conclusive, the district court did not err in refusing to vacate on the basis of insufficient evidence. 

            Next, appellant argues that the arbitrator's award of homemaker replacement services should have been vacated because it violates the statutory purpose of the no-fault actnamely, providing for special damages but not for general damages.  Appellant asserts that the arbitrator's award for homemaker replacement services is an award for general damages because it does not represent reimbursement for money actually paid to a third person for assistance with household tasks.  In support of this argument, appellant contends that the benefits awarded in Rindahl represented reimbursement for an actual financial loss and that, absent an actual out-of-pocket expenditure, the arbitrator's award here amounts to one of general damages.  Appellant contends that "Rindahl . . . seems to require a proven economic loss." 

            Appellant misconstrues Rindahl.  In Rindahl, a farm wife sought both homemaker-replacement-services benefits and income-loss benefits after her involvement in a disabling automobile accident.  Rindahl, 373 N.W.2d at 295.  The court analyzed the two claims independently and concluded that Minn. Stat. § 65B.44, subd. 5 (2004), does not require an out-of-pocket expense for recovery of homemaker-replacement-services benefits by someone who normally cares for the home as a full-time responsibility.  Id.at 296.  In fact, the supreme court specifically held that "if the injured person ‘normally, as a full time responsibility,' takes care of the home, that person is not required to incur actual expense for replacement help but can recover the reasonable value of her or his own household services."  Id.  Accordingly, appellant's contention that Rindahl requires a proven economic loss for recovery of homemaker-replacement-services benefits is incorrect.  The arbitrator correctly interpreted and applied the settled rule for recovery of homemaker-replacement-services benefits as articulated in Rindahl, and the district court did not err in failing to vacate on that ground.

II.

 

            Appellant argues that the district court's November 2003 order vacating the arbitrator's first award was based on a determination that evidence presented at the arbitration hearing was fraudulent and that it was therefore error to remand the matter to the same arbitrator.  But neither the arbitrator nor either of the two judges that reviewed the arbitrator's decisions made any findings or conclusions regarding any alleged fraud.  Instead, in the district court order of November 2003, the court very clearly set forth the arbitrator's manifest disregard for the law as the basis for vacating the award.  In fact, the court stated that "[t]o constitute ‘manifest disregard', the record must show that the arbitrator both knew the applicable law and expressly disregarded it.  This is precisely the case here." 

            A court need not confirm an arbitration award where it is clear that the arbitrator disregarded the law.  Hunter, Keith Indus., Inc. v. Piper Capital Mgmt., Inc., 575 N.W.2d 850, 855 (Minn. App. 1998).  This principle is especially salient in the context of reviewing a no-fault arbitrator's decision, given the stated desire for consistency in interpretation of the no-fault act.  Weaver, 609 N.W.2d at 882. 

            The district court correctly noted that under the no-fault act, homemaker-replacement-services benefits are limited to the reasonable value of certain care and maintenance.  Minn. Stat. § 65B.44, subd. 5.  The district court found that, because respondent did not have young children requiring some of the claimed services, the value of those services could not be reasonably awarded, and the arbitrator therefore disregarded his statutory obligation to award only the reasonable value of household replacement services.   

            To warrant vacating an arbitration award because of fraud, appellant has the burden of proving the fraud by clear allegations and proof.  Mork v. Eureka-Sec. Fire & Marine Ins. Co., 230 Minn. 382, 391, 42 N.W.2d 33, 38 (1950).  Appellant bases the allegations of fraud on the fact that respondent testified that she does not have children of her own who are young enough to require diapers or her assistance in bathing or dressing.  But appellant went no further in exploring this issue; in fact, appellant concedes that "further inquiry . . . was not pursued in the interest of brevity, and because the point had been made."  And respondent's counsel clarified that respondent actually performed those services for other children in her household and withdrew respondent's claim based upon those services because of the strength and breadth of the remainder of the homemaker-replacement-services claim.  Appellant simply did not demonstrate that respondent committed fraud.

            Fraud was not found by the district court in either review of the case. The district court clearly vacated the first arbitration order based on its determination that the arbitrator had exceeded his powers, not on a determination of fraud.  Because appellant failed to establish fraud by clear allegations and proof, the district court did not err in vacating the first order on an alternative basis, nor did the district court err in refusing to vacate the second arbitration award once the arbitrator acted within his statutory powers. 

            Further, the district court did not err in remanding the matter to the same arbitrator.  Minnesota law specifically empowers the district court to order a rehearing before the same arbitrator when an award is vacated because the arbitrator exceeded his or her powers.  Minn. Stat. § 572.19, subd. 3 (2004).  Therefore, because the district court based its order upon a determination that the arbitrator had exceeded his powers and not fraud, appellant's argument that the court erred in remanding the matter to the same arbitrator lacks merit. 

III.

 

            Finally, appellant contends that the district court erred in confirming the no-fault arbitrator's award because the arbitrator implicitly and impermissibly ruled on a question of law.  Appellant raises this issue but makes no argument concerning its merits.  An assignment of error that is based on a mere assertion and is unsupported by argument or authority is waived unless prejudicial error is obvious on mere inspection.  State v. Modern Recycling, Inc., 558 N.W.2d 770, 772 (Minn. App. 1997) (quoting Schoepke v. Alexander Smith & Sons Carpet Co., 290 Minn. 518, 519-20, 187 N.W.2d 133, 135 (1971)).  Because no such error is obvious here, we decline to reach this issue. 

            Affirmed.