This is the second in my series of UMP Case Summaries. In today’s case (LD v. ICBC) the arbitrator had to address whether legal fees can be taken into account when considering the deductibility of past tort payments.
In LD the Claimant was involved in as 2003 collision in California. The Claimant was insured with ICBC and had UMP coverage. The at fault motorist only had $25,000 in Third Party Liability coverage and ICBC agreed that the Claimant’s claim exceeded this amount.
The parties agreed to have the value of the claim determined via UMP Arbitration. Total damages of $86,608.31 were assessed. Prior to this the Claimant already settled with the Defendant’s insurer for the policy limits of $25,000. She had to hire counsel to achieve this result and after legal fees she received $16,054.
The Claimant argued that only the $16,054 should be deducted from the UMP damage assessment. The arbitrator (Donald Yule) disagreed and deducted the full $25,000. In doing so he provided the following reasons:
ICBC, however, submits that the correct deductible amount is what the M’s liability insurer was obliged to pay, namely $25,000. (This position) is supported by the decision of Arbitrator Paul Fraser, Q.C. in Cederberg v. ICBC (May 18, 1995)….As Mr. Fraser concluded, the obligation to pay attorney’s fees arose out of a separate and independent contract with the attorney which, in no way, reduce the amount paid by the tortfeasor or payable by the tortfeasor’s insurer. I agree with his analysis. The full amount of the settlemetn of the M’s liability insurer is therefore a deductible amount.
This decision is also worth reviewing for the non-pecuniary damage assessment. The Plaintiff suffered various soft tissue injuries. Non-pecuniary damages were assessed at $55,000. In doing so Arbitrator Yule made the following findings:
I find that in the accident Mrs. D suffered a Grade III whiplash associated disorder injury, bilateral thoracic outlet syndrome and right ulnar neuropathy, a Grade II lumbosacral spinal strain injury and myofascial pain in her shoulder ridge areas, and bruising to the knee. These injuries caused headaches, interference with sleep, fatigue, irritability and anxiety. The bruising resolved in short order. The low back symptoms resolved within 2 years. Headaches, and neck pain extending into the shoulders, while significantly inmproved by September, 2005, have nevertheless persisted to the date of hearing…
…I assess Mrs. D’s non-pecuniary damages at $55,000.
I should note that, adjusting for inflation, this assessment is closer to $58,000 in today’s dollars.