Empire Fire & Marine Ins. Co. v. GSA Ins. Co.

• Decision Date: 03 October 2002
• Citation: 808 A.2d 98,354 N.J. Super. 415
• Parties: EMPIRE FIRE & MARINE INSURANCE COMPANY, Defendant-Respondent, v. GSA INSURANCE COMPANY, Plaintiff-Appellant.
• Court: New Jersey Superior Court

808 A.2d 98

354 N.J. Super. 415

EMPIRE FIRE & MARINE INSURANCE COMPANY, Defendant-Respondent, v. GSA INSURANCE COMPANY, Plaintiff-Appellant.

Superior Court of New Jersey, Appellate Division.

Argued September 25, 2002.

Decided October 3, 2002.

Robert P. Clark, Sea Girt, argued the cause for appellant.

Frank P. Brennan, Cherry Hill, argued the cause for respondent. Spector Gadon & Rosen, attorneys for appellant (Mr. Brennan and Kevin J. DiMedio, Sr., on the brief).

Before Judges CONLEY, NEWMAN and CARCHMAN.

The opinion of the court was delivered by CONLEY, J.A.D.

This appeal arises from a private automobile insurance carrier's efforts to obtain reimbursement for Personal Injury Protection (PIP) benefits paid its injured insureds from the tortfeasors's commercial vehicle carrier. The private vehicle carrier, GSA Insurance Company (GSA), was successful in its arbitration proceedings brought pursuant to N.J.S.A. 39:6A-9.1. However, its subsequent complaint seeking confirmation of the arbitration award was dismissed and the commercial vehicle carrier, Empire Fire & Marine Insurance Company (Empire), obtained a summary judgment in its own separate complaint vacating the award. GSA appeals the April 30, 2001, summary judgment order and a June 8, 2001, order denying its motion for reconsideration. We reverse.

GSA's insureds, Christian and Anna Hernandez, were passengers in a private passenger automobile when it was struck by a commercial van registered to Metro Rental Services and operated by Eustorgio Castro. Empire provided liability insurance to Metro Rental Services at the time which included insurance for the van.

Commercial vehicles are not within the definition of "automobile" as used in N.J.S.A. 39:6A-4 and, therefore, are not statutorily required to maintain PIP coverage. See N.J.S.A. 39:6A-2a; Buoni v. Browning Ferres Indus., 219 N.J.Super. 96, 98, 529 A.2d 1044 (Law Div.1987). Thus, after paying PIP benefits to its insureds, GSA instituted arbitration proceedings against Empire for reimbursement of those benefits pursuant to N.J.S.A. 39:6A-9.1 That statute provides:

An insurer ... paying ... personal injury protection benefits ... shall, within two years of the filing of the claim, have the right to recover the amount of payments from any tortfeasor who was not, at the time of the accident, required to maintain personal injury protection or medical expense benefits coverage, ... or although required did not maintain personal injury protection... at the time of the accident. In the case of an accident ... involving an insured tortfeasor, the determination as to whether an insurer ... is legally entitled to recover the amount of payments and the amount of recovery ... shall be made against the insurer of the tortfeasor, and shall be by agreement of the involved parties or, upon failing to agree, by arbitration.

[N.J.S.A. 39:6A-9.1.]

We pause at this point to correct a misconstruction of this statute expressed in our unreported decision in First Trenton Indemnity v. South Jersey Gas Co., No. A-3534-99T2 (App.Div. March 22, 2001). We there said that under N.J.S.A. 39:6A-9.1:

if the alleged tortfeasor ... did not maintain PIP insurance protection (either because it was not required to do so, or, even if it were required to do so, it failed to comply with that obligation) then [a private automobile carrier], who had made such payments to its own insured, could proceed with a Superior Court action against [the tortfeasor] within two years of the time the original PIP claim was filed against it. On the other hand, if [the tortfeasor] did carry PIP insurance coverage, the determination of responsibility and the amount of any required reimbursement, would be determined either "by agreement of the involved parties" or, if the parties failed to reach such agreement, then "by arbitration."

[Id., slip op. at 4 (emphasis added).]

To the extent the emphasized language might be understood to reflect a construction of N.J.S.A. 39:6A-9.1 that extends reimbursement rights between two PIP carriers, that is incorrect. See State Farm Mutual Auto. Ins. Co. v. Licensed Bev. Ins. Ex., 146 N.J. 1, 15, 679 A.2d 620 (1996)

("The reimbursement right conferred by section 9.1 encompasses all tortfeasors that are not subject to the No-Fault Law."); Unsatisfied Claim & Judgment Fund Board v. N.J. Mfrs. Ins. Co., 138 N.J. 185, 191, 195, 649 A.2d 1243 (1994) ("the statute allows PIP carriers to recover not from other PIP carriers but from non-PIP carriers and uninsureds ... [t]he legislative history shows a conscious decision to eliminate any right of recovery between two PIP carriers.").

Here, as we have said, the tortfeasor vehicle was a commercial vehicle not requiring PIP coverage. GSA, then, sought reimbursement from Empire. Being unable to resolve its claim by agreement, it filed arbitration proceedings with the Arbitration Forums, Inc. The petitions (one for each of the insureds) were filed on March 23, 2000, and received by Empire on March 27, 2000. Evidently, on March 28, 2000, a representative of Empire contacted GSA and claimed that the van was a private passenger vehicle and had PIP coverage. In a certification filed by GSA in opposition to Empire's motion for summary judgment, a claims representative of GSA's loss adjustment entity asserted, without dispute, that "it was apparent to [the loss adjustment entity] from the police report [of the automobile accident] that the Empire Fire & Marine insured vehicle was a yellow GMC van with a commercial plate owned by a corporation and not a private passenger automobile...."

GSA continued to pursue the arbitration. Notice of a hearing date of June 28, 2000, was sent to both parties. All responses were to be filed by June 22, 2000. Empire's response, dated June 22, 2000, and apparently received by Arbitration Forums on June 26, 2000, but not considered as it was untimely, denied coverage or liability and requested a deferment. The only defense raised by Empire was that "coverage is void for fraud and misrepresentation by the parties involved staged accident loss ... the `accident' was staged by the drivers and occupants of both vehicles."

Empire did not attend the arbitration hearing or present any other written documentation or defenses prior to the award. When the award was received, Empire's attorney wrote to Arbitration Forums as follows:

Be advised, I was informed by Larry at the Customer Service Center at Arbitration Forums, Inc. at the Atlanta Data Center to forward this correspondence to your attention for immediate review and response.

Attached to this correspondence is a copy of respondent's allegations and contentions that were forwarded to Arbitration Forums in the above-entitled matter.

I received today a copy of an arbitration decision in this matter, despite the fact that a answer was filed, and a request for deferment forwarded in this case. The arbitration decision indicates that there was no appearance and no answer on behalf of the respondent.

The enclosed cover letter and response attached to this correspondence indicate quite to the opposite.

At the present time, we would ask that the matter be relisted for hearing, and the respondent's request for deferment in this matter be taken into consideration, as this is a matter on an ongoing SIU/fraud investigation, and investigation is not yet complete.

Please be advised that counsel for respondent was unaware of the upcoming date set for the hearing in this matter, and in fact, had prior to that date, forwarded a responsive/answer and request for deferment, which Arbitration Forums, Inc. currently indicates was never received to their knowledge.

Obviously, there has been some type of mistake made in regard to this situation, and the respondent requests a review of this matter and reopening of the hearing, and voidance of the arbitration decision that has now been rendered.

[Emphasis added.]

Empire, thus, continued to assert no defenses other than fraud and not only raised no objection to Arbitration Forums' jurisdiction over the dispute but sought a reopening of the hearing. By letter dated August 17, 2000, the Arbitration Forums rejected the request for a new hearing, and determined that the award "must remain final and binding."

Empire, then, apparently attempted to resolve the matter by again trying to convince GSA the vehicle did have PIP coverage, an issue it chose not to raise in the arbitration proceedings. When unsuccessful, Empire filed its complaint seeking either a new...