2005 UT 51
This opinion is subject to revision before final
publication in the Pacific Reporter.
IN THE SUPREME COURT OF THE STATE OF UTAH
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Allstate Insurance Company,
No. 20040670
Plaintiff and Appellee,
v.
F I L E D
Dixon Wong,
Defendant and Appellant.
August 19, 2005
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Third District, Salt Lake
The Honorable William B. Bohling
No. 020905129
Attorneys: Lynn S. Davies, Zachary E. Peterson, Salt Lake City,
for plaintiff
Daniel F. Bertch, Kevin R. Robson, Salt Lake City,
Preston L. Handy, Murray, for defendant

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On Certiorari to the Utah Court of Appeals
DURRANT, Justice:
¶1
In this case, we must determine whether the court of
appeals properly modified an arbitration award to reflect the
policy limits of an insurance contract that was not provided to
the arbitrator. The court of appeals initially determined that
the arbitrator based his award on a matter not submitted to
arbitration, but went on to conclude that the arbitrator's
resolution of the matter actually submitted to arbitration could
be salvaged by modifying the award. As a result, the court of
appeals modified the award to reflect the insurance policy's
liability limit. We granted certiorari to review the court of
appeals' decision and now affirm.
BACKGROUND
¶2
Dixon Wong sustained serious injuries as the result of
an automobile accident in which the other driver was at fault.

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Wong ultimately recovered $50,000 from the other driver's
insurance policy as well as $10,690 from his own personal injury
protection ("PIP") insurance. Both amounts represented the
policy limits of the respective insurance coverage. Wong then
filed a claim with his insurer, Allstate Insurance Company
("Allstate"), seeking recovery pursuant to the underinsured
motorist ("UIM") coverage provided by his policy. Wong's UIM
coverage limited any potential recovery for his injuries to
$100,000.
¶3
Allstate and Wong were unable to reach an agreement as
to the amount of money Wong was entitled to recover pursuant to
his insurance contract. Having reached an impasse, both parties
agreed to submit their dispute to binding arbitration. The
parties memorialized their agreement in a document entitled
"Arbitration Agreement," which expressed their intention to
submit their dispute to arbitration and outlined the procedures
that would be followed during the arbitration. The Arbitration
Agreement was drafted by counsel for Allstate and initially
contained a "high/low agreement," whereby the parties agreed to
be bound by a damages ceiling of $100,000 and a floor of $0. The
clause in question also stipulated that the parties would not
disclose the high/low agreement to the arbitrator.
¶4
Before signing the Arbitration Agreement, counsel for
Wong struck the reference to the high/low agreement, making the
relevant clause provide only that "[t]he terms of this agreement
shall not be disclosed to the arbitrator." Counsel for Wong then
initialed the strike out and signed the agreement. Counsel for
Allstate received and signed the modified Arbitration Agreement.
¶5
After executing the Arbitration Agreement, the parties
entered into another agreement, styled "Binding Arbitration
Agreement," at the request of the selected arbitrator, Warren W.
Driggs. The Binding Arbitration Agreement is a notably sparse
document prepared by Driggs that merely states the parties'
intention to submit their dispute to binding arbitration. The
agreement identifies the nature of the parties' dispute as
"Underinsured Motorist Claim-­Damages."
¶6
Shortly before arbitration began, counsel for both Wong
and Allstate exchanged correspondence addressing the scope of the
upcoming arbitration and their perception of the original
Arbitration Agreement. Counsel for Wong opined that "[w]e have

1 During the arbitration proceedings, Leonard McGee
represented Allstate while Preston L. Handy represented Wong.
Lynn S. Davies, Zachary E. Peterson, Daniel F. Bertch, and Kevin
R. Robson participated in this matter as appellate counsel only.
No. 20040670
2

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agreed that the arbitrator will not be made aware of either the
terms of the Arbitration Agreement or the policy limits under the
subject policy. In short, the arbitrator will be afforded the
opportunity to award what he believes Mr. Wong's claim is worth,
whatever that figure may be." Counsel for Allstate responded
that he "agree[d] with [Wong's counsel] that there is not a
high/low agreement in place . . . . [H]owever, it is [Allstate's]
position . . . that Mr. Wong is still bound by the $100,000.00
contractual limit of his insurance policy, notwithstanding
whatever amount the arbitrator may award." Consistent with the
parties' understanding, as evidenced by their correspondence,
neither Allstate nor Wong disclosed the existence of the parties'
initial Arbitration Agreement or the extent of UIM policy limits
to the arbitrator.
¶7
At the conclusion of the arbitration proceedings, the
arbitrator "awarded" Wong net damages in the amount of
$260,926.84. This amount represented the arbitrator's assessment
of Wong's gross damages, offset by the $60,690 Wong had already
recovered. After the award was issued, Wong demanded that
Allstate tender the full amount of damages awarded by the
arbitrator.
¶8
Maintaining that the insurance policy limits capped its
exposure to liability in the matter, Allstate filed a motion with
the district court requesting that the court either vacate the
arbitration award or modify the award to reflect policy limits.
The district court concluded that the arbitrator exceeded his
authority by purporting to fix Allstate's actual liability at an
amount in excess of the UIM policy limit. The district court
then modified the arbitration award to reflect the existence of
the policy limitation, requiring Allstate to pay Wong $100,000.
Wong appealed, and the court of appeals issued its decision on
the matter in Allstate Insurance Co. v. Wong, 2004 UT App 193, 93
P.3d 849.
¶9
In its decision, the court of appeals first highlighted
a distinction between situations in which an arbitrator, in
issuing an award, exceeds granted authority and those situations
in which an arbitrator bases an award on a matter not submitted
to arbitration. According to the court of appeals, a court
reviewing an arbitration award must vacate that award if the
arbitrator exceeded granted authority and should only modify the
award if it was based on a matter not submitted to arbitration
and the award can be modified to salvage the arbitrator's
determination of the matter actually submitted to arbitration.
Id. at ¶¶ 10-11.
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No. 20040670

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¶10
Beginning with that premise, the court of appeals
concluded that the district court improperly modified the
arbitration award after finding that the arbitrator had exceeded
his authority. See id. at ¶ 9. Because the district court
modified the arbitration award rather than vacating it, the court
of appeals went on to analyze whether there were in fact grounds
upon which the district court's modification could be upheld.
See id. at ¶ 12. The court of appeals ultimately concluded that
the arbitrator based his award on a matter not submitted to him
(Allstate's contractual liability), and that the award was
capable of modification without affecting the merits of the
arbitrator's decision with respect to the issue actually
submitted to arbitration (the total amount of Wong's damages).
See id. at ¶ 13-14. According to the court of appeals, "the
matter submitted to the arbitrator was the total amount of
damages incurred by Wong without regard to policy limits or other
set-off amounts." Id. at ¶ 13. However, in the court of
appeals' view, "the total amount of damages incurred by Wong has
no bearing on the maximum amount Allstate could pay Wong pursuant
to his underinsured motorist policy." Id. at ¶ 15. Because the
court of appeals concluded that the arbitrator based his award on
a matter not submitted to arbitration and that the award could be
modified to salvage the arbitrator's resolution of the matter
actually submitted to arbitration, the court of appeals modified
the award to reflect the liability limitation contained in the
insurance policy.
¶11
We granted certiorari to review the decision of the
court of appeals. We have jurisdiction pursuant to Utah Code
section 78-2-2(3)(a) (2002).
STANDARD OF REVIEW
¶12
On certiorari, we review the decision of the court of
appeals and not that of the district court. State v. Cram, 2002
UT 37, ¶ 6, 46 P.3d 230. Our review extends no further than to
determine whether the court of appeals "accurately reviewed the
trial court's decision under the appropriate standard of review."
Id. (internal quotation omitted). In this case, no party has
claimed that the standard of review utilized by the court of
appeals was improper. Indeed, it is clear that the court of
appeals appropriately confined its review to determining whether
the district court's legal conclusions were correct. See
Allstate Ins. Co. v. Wong, 2004 UT App 193, ¶ 8, 93 P.3d 849
(citing Intermountain Power Agency v. Union Pac. R.R. Co., 961
P.2d 320, 323 (Utah 1998)). As a result, our review in this
matter is confined to determining whether the court of appeals'
conclusions of law were correct.
No. 20040670
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ANALYSIS
¶13
The central issue in this case is whether the court of
appeals properly modified the arbitration award to reflect the
existence of insurance policy limits. In undertaking our
analysis, we will first examine the appropriateness of the court
of appeals' conclusion that the district court failed to conduct
the proper analysis before it modified the award. We will then
determine whether the court of appeals correctly concluded that
the arbitration award was based on a matter not submitted to
arbitration and that modification of the award could salvage the
arbitrator's resolution of the issue actually submitted.
I. VACATION OF AN ARBITRATION AWARD IS THE PROPER REMEDY WHEN AN
ARBITRATOR EXCEEDS GRANTED AUTHORITY
¶14
Although the court of appeals ultimately concluded that
modifying the arbitration award was appropriate, it initially
held that the district court failed to conduct the required
analysis to determine whether modification of the award was the
appropriate remedy. Allstate Ins. Co. v. Wong, 2004 UT App 193,
¶ 10, 93 P.3d 849. As noted, according to the court of appeals,
if a district court determines that an arbitrator exceeded the
authority granted by an arbitration agreement, the proper remedy,
absent further analysis, is vacation, rather than modification,
of the award. Id. In the present case, the district court
modified the arbitration award after concluding that the
arbitrator exceeded his authority when he purported to fix
Allstate's liability. The court of appeals held that the
district court, by confining its analysis to a determination of
whether the arbitrator exceeded his authority, failed to fully
analyze whether modification of the award was appropriate under
the circumstances. We agree.
¶15
The Utah Code allows parties aggrieved by the issuance
of an improper arbitration award to seek either vacation or
modification of the award. Utah Code Ann. §§ 78-31a-14 to -15
(2002).2 Specifically, section 78-31a-14 outlines situations in

2 The Utah Arbitration Act was repealed and a new chapter
31a, entitled Utah Uniform Arbitration Act, was enacted in its
place effective May 15, 2003. See Utah Code Ann. §§ 78-31a-101
to -131 (2002). Although the provisions of the new act
addressing vacation and modification of arbitration awards vary
somewhat from those contained in the old act, the language
relevant to the current dispute remains identical. Compare id.
§§ 78-31a-14(1)(c) & 78-31a-15(1)(b) with id. §§ 78-31a-124(1)(d)
(continued...)
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No. 20040670

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which vacation of an arbitration award is an appropriate remedy
and section 78-31a-15 outlines situations in which modification
of an arbitration award is an appropriate remedy. See id. In
relevant part, the Utah Arbitration Act provides that a reviewing
court shall vacate an arbitration award if "the arbitrators
exceeded their powers," id. § 78-31a-14(1)(c), but it also
provides that a reviewing court shall modify an arbitration award
if it "is based on a matter not submitted to [arbitration], [and]
the award can be corrected without affecting the merits of the
award upon the issues submitted," id. § 78-31a-15(1)(b).
¶16
In essence, the district court melded these two
provisions together, first concluding that the arbitrator
exceeded his authority and then modifying the award, a remedy not
applicable to situations where an arbitrator has only exceeded
granted authority. As noted by the court of appeals, the
district court was foreclosed from providing the remedy of
modification without first determining whether modification,
rather than vacation, was the appropriate remedy under the
circumstances. See Wong, 2004 UT App 193 at ¶ 10; see also
Softsolutions, Inc. v. Brigham Young Univ., 2000 UT 46, ¶¶ 17-39,
1 P.3d 1095 (analyzing each claim that an arbitration award
should be either vacated or modified by invoking the two relevant
statutory provisions and conducting separate analyses under each
statute).
¶17
Because the district court modified the arbitration
award without determining whether the award satisfied the
requirements contained in section 78-31a-15, which governs
modification of arbitration awards, the court of appeals
undertook that analysis to determine whether the district court's
modification could nevertheless be affirmed. Wong, 2004 UT App
193 at ¶¶ 13-15. We conclude that this was an appropriate course
of action. Having so concluded, we now turn our analysis to a
discussion of whether the court of appeals correctly determined
that modification of the arbitration award was the appropriate
remedy in this case.
II. ALTHOUGH THE ARBITRATION AWARD WAS BASED ON A MATTER NOT
SUBMITTED TO ARBITRATION, THE ARBITRATOR'S RESOLUTION OF THE
ISSUE ACTUALLY SUBMITTED CAN BE SALVAGED BY MODIFYING THE AWARD
¶18
After determining that the district court failed to
conduct the correct analysis before modifying the arbitration

2 (...continued)
& 78-31a-125(1)(b). Because the resolution of the present
dispute is governed by the provisions of the Utah Arbitration
Act, all citations are to that act.
No. 20040670
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award, the court of appeals undertook that analysis, concluding
that modification of the award was the appropriate remedy. The
court of appeals reached this result after determining that the
arbitrator based his award on a matter not submitted to
arbitration and that the arbitrator's resolution of the matter
actually submitted to arbitration could be salvaged by modifying
the award. We agree.
¶19
The Utah Arbitration Act requires a district court
reviewing an arbitration award to "modify or correct the award"
if the award "is based on a matter not submitted to
[arbitration], [and] the award can be corrected without affecting
the merits of the award upon the issues submitted." Utah Code
Ann. § 78-31a-15(1) (2002). Determining whether a modification
of an arbitration award is appropriate under this provision
requires a two-part inquiry. First, we must determine if the
arbitrator based his award on a matter not submitted to
arbitration. Second, we must determine whether the award can be
modified to salvage a merits determination of the matter actually
submitted to arbitration. We will address each of these issues
in turn.
A. The Arbitrator Based His Award on a Matter Not Submitted to
Arbitration
¶20
Both the district court and the court of appeals
concluded that the issue of Allstate's contractual liability
could not be fixed by the arbitrator. The court of appeals based
its conclusion on its determination that the parties only
authorized the arbitrator to fix the total amount of Wong's
damages, not to decide the extent of Allstate's liability.
Allstate Ins. Co. v. Wong, 2004 UT App 193, ¶ 13, 93 P.3d 849.
We agree.
¶21
As we stated in Softsolutions, Inc. v. Brigham Young
University, "[t]he scope of the parties' dispute as defined in
their written agreement to arbitrate establishes the scope of the
arbitrator's authority in resolving the conflict." 2000 UT 46,
¶ 15 n.2, 1 P.3d 1095. In this case, the only agreement
addressing the scope of the arbitration proceeding is the Binding
Arbitration Agreement entered into between Allstate and Wong at
the request of the arbitrator. That agreement defines the scope
of the parties dispute as "Underinsured Motorist Claim--Damages."
Wong requests that we interpret this language as empowering the
arbitrator to actually determine Allstate's liability, while
Allstate argues that the role of the arbitrator was confined to
fixing a dollar amount representing Wong's gross damages, which
the parties would then conform to policy limits.
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No. 20040670

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¶22
In support of his position, Wong argues that the
parties' first agreement, the Arbitration Agreement entered into
between Wong and Allstate, defines the scope of the arbitration
proceeding and that the subsequently executed Binding Arbitration
Agreement was nothing more than a memorandum memorializing the
parties' hiring of Driggs to serve as the arbitrator. We reject
Wong's contention, as there is simply no language in the
Arbitration Agreement that purports to delineate the scope of the
matter submitted to arbitration.
¶23
Nevertheless, we note that the series of events that
transpired after Allstate initially presented the Arbitration
Agreement for the signature of Wong's counsel does illuminate the
parties' perception of the nature of the arbitration proceeding.
Specifically, correspondence between counsel for both Wong and
Allstate evidences an understanding that neither party would
inform the arbitrator of the insurance policy limits. Such a
practice is commonplace in disputes of this nature, as parties to
arbitration realize that imposing predetermined boundaries as to
the range of a permissible award may adversely affect an
arbitrator's ability to make an objectively fair assessment of
damages. See, e.g., Applehans v. Farmers Ins. Exch., 68 P.3d
594, 596 (Colo. Ct. App. 2003) (discussing a situation in which
parties agreed not to disclose policy limits to arbitrator);
Tellkamp v. Wolverine Mut. Ins. Co., 556 N.W.2d 504, 509 (Mich.
Ct. App. 1996) (noting that whether an arbitrator will be
informed of policy limits "is generally left to the agreement of
the parties"). The policy of withholding insurance contract
limits from consideration at arbitration proceedings has even
been given statutory status by the Utah State Legislature, which
has imposed a requirement that, when arbitrating certain claims
under a motor vehicle insurance policy, the policy limits may not
be disclosed to the arbitrator. See Utah Code Ann. § 31A-22-
303(9)(h)-(i) (Supp. 2004).
¶24
However, on appeal, Wong's counsel now argues that
Allstate waived the right to rely on policy limitations when
seeking vacation or modification of the arbitration award.
According to Wong's counsel, Allstate was required to introduce
the policy limits during the arbitration proceeding if it wished
to enjoy the benefit of that cap on its liability. However,
given the parties' understanding prior to the commencement of
arbitration that policy limits would not be disclosed to the
arbitrator, it is disingenuous at best for Wong's counsel to now
argue that Allstate, by "failing" to disclose policy limits to
the arbitrator, has waived the right to now rely on those limits.
In correspondence exchanged shortly before arbitration commenced,
Wong's counsel stated that "[w]e have agreed that the arbitrator
will not be made aware of either the terms of the Arbitration
No. 20040670
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Agreement or the policy limits under the subject policy. In
short, the arbitrator will be afforded the opportunity to award
what he believes Mr. Wong's claim is worth, whatever that figure
may be." Counsel for Allstate immediately responded that, while
he agreed that the policy limits would not be disclosed to the
arbitrator, Wong would nevertheless be bound by those limits, and
any damages amount determined by the arbitrator would be
conformed to reflect policy limits. Wong's counsel chose to
remain silent in the face of Allstate's letter and failed to
contest Allstate's understanding of the parties' agreement.
However, Wong's counsel has now ended his silence and requests
that this court spring the trap set by his maneuvering and hold
that Allstate has waived the right to rely on the policy limits.
We decline to do so. See Applehans, 68 P.3d, at 599-600
(rejecting an argument that insurance policy limits were waived
as an affirmative defense because of the potential existence of
an agreement to not disclose those limits to the arbitrator).
¶25
Instead, we choose to give effect to the intent of the
parties as evidenced by the language of the Binding Arbitration
Agreement. By the terms of that agreement, the parties agreed to
submit the issue of Wong's damages to arbitration. The parties
did not submit to arbitration the issue of Allstate's liability
to Wong. Cf. id. at 600 (concluding that language confining the
scope of arbitration to "the amount of damages to which
[plaintiff] is entitled as a result of her injuries sustained, if
any, in the accident," limited arbitration to a determination of
"the damages plaintiff would be entitled to recover from the
underinsured tortfeasor" (internal quotation omitted)). In fact,
there is no language in the Arbitration Agreement or in the
Binding Arbitration Agreement that would operate to invalidate or
otherwise modify the mutual obligations contained in the parties'
insurance contract. In the absence of such language, as well as
the lack of any behavior that would evidence a contrary intent,
we conclude that the insurance contract, as well as the policy
limits contained in that contract, remain in full force.
¶26
As a result, the arbitrator, by purporting to fix
Allstate's liability, based his award on a matter not submitted
to arbitration. Having so concluded, we next analyze whether, by
modifying the arbitration award, we can salvage the arbitrator's
decision on the merits of the matter actually submitted to
arbitration.
B. The Arbitrator's Decision as to the Matter Actually Submitted
Can Be Salvaged Through Modification of the Award
¶27
Although the arbitrator based his award on a matter not
submitted by purporting to fix Allstate's liability rather than
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No. 20040670

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designating the extent of Wong's damages, vacation of that award
will not be necessary if the arbitrator's resolution of the issue
actually submitted to arbitration can be salvaged by modifying
the award. The court of appeals concluded that modification of
the award was appropriate in this case because a decision on the
matter actually submitted to arbitration was salvageable. We
agree.
¶28
It is a relatively simple matter to modify the
arbitrator's award in such a fashion as to confine its scope to a
resolution of the matter submitted to arbitration. Specifically,
modification of the arbitrator's award to accurately reflect a
determination of the matter actually submitted results in total
damages to Wong of $321,616.85.3 However, as noted above, the
parties to this dispute engaged in no conduct that would operate
to invalidate or otherwise change the policy limits contained in
the parties' insurance contract. We therefore affirm the court
of appeals' ruling that the arbitration award be conformed to the
policy limits and hereby order Allstate to pay Wong $100,000.
CONCLUSION
¶29
We conclude that the court of appeals correctly
modified the arbitration award. The award was based on a matter
not submitted to arbitration and the merits determination of the
matter actually submitted was salvageable by modifying the award
to reflect both Wong's gross damages and the existence of the
insurance policy limits. Affirmed.
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¶30
Chief Justice Durham, Associate Chief Justice Wilkins,
Justice Parrish, and Justice Nehring concur in Justice Durrant's
opinion.


3 We note that the arbitrator awarded Wong $260,926.84. In
reaching that number, the arbitrator subtracted as set-offs
Wong's recovery from the other driver's insurance company as well
as from Wong's own PIP policy. However, we agree with the court
of appeals that the arbitrator was charged with the task of
determining Wong's total damages without regard to policy limits
or set-off amounts. See Wong, 2004 UT App 193 at ¶ 14.
No. 20040670
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