Allstate Ins. Co. (Stolarz), Matter of

• Decision Date: 31 December 1991
• Citation: 577 N.Y.S.2d 936,178 A.D.2d 899
• Parties: In the Matter of the Arbitration between ALLSTATE INSURANCE COMPANY, Appellant, and Kathleen STOLARZ et al., Respondents; New Jersey Manufacturers Insurance Company, Appellant.
• Court: New York Supreme Court — Appellate Division

Page 936

577 N.Y.S.2d 936

178 A.D.2d 899

In the Matter of the Arbitration between ALLSTATE INSURANCE COMPANY, Appellant and Kathleen STOLARZ et al., Respondents New Jersey Manufacturers Insurance Company, Appellant.

Supreme Court, Appellate Division Third Department.

Dec. 31, 1991.

Kornfeld, Rew, Newman & Ellsworth, Suffern (Robert J. Ellsworth, of counsel), for appellant Allstate Ins. Co.

Downing & Mehrtens, P.C., New York City (Thomas E. Mehrtens, of counsel), for appellant New Jersey Mfrs. Ins. Co.

Michael R. Scolnick, P.C., Pomona (Valerie Crown Goldstein, of counsel), for respondents.

Before WEISS, J.P., and MIKOLL, YESAWICH, LEVINE and MERCURE, JJ.

WEISS, Justice Presiding.

Appeal (transferred to this court by order of the Appellate Division, Second Department) from an order of the Supreme Court (Stolarik, J.), entered September 12, 1990 in Rockland County, which, inter alia, denied petitioner's application pursuant to CPLR 7503 to stay arbitration between the parties.

On February 18, 1989 respondents Kathleen Stolarz and John Stolarz (hereinafter collectively referred to as respondents) were seriously injured while driving a vehicle registered and insured in New Jersey to Kathleen Stolarz's employer, a New Jersey firm, and assigned to her to be principally garaged at her home in New York. The accident occurred in New York and involved a vehicle registered in New York which was owned and operated by Alan James. Respondents settled their personal injury claims against James for the full limits provided in the liability insurance policy covering his auto. Petitioner, the insurer of vehicles personally owned by respondents, and respondent New Jersey Manufacturers Insurance Company (hereinafter N J Manufacturers), the insurer of the vehicle occupied and operated by respondents, both consented to the settlement. Thereafter, respondents simultaneously demanded arbitration against petitioner and N J Manufacturers to resolve their underinsured coverage claims against those insurance companies.

Petitioner commenced this proceeding to stay the arbitration and, upon a cross motion by respondents, N J Manufacturers was subsequently made a party. Supreme Court declared that the full underinsurance coverage limits provided by both policies was available and that both policies should contribute ratably. Petitioner and N J Manufacturers have appealed.

N J Manufacturers contends that its liability pursuant to the underinsured coverage should be reduced by the amount that respondents received from the liability policy covering the James vehicle pursuant to a policy provision mandated by New Jersey law (NJ Rev Stat § 17:28-1.1) which requires the reduction-in-coverage. N J Manufacturers argues that the rights and obligations under its insurance policy are governed solely by the law of New Jersey, the place where the contract of insurance was made. Supreme Court found that New York was the state most concerned with the matter and resolved the choice of law question in favor of New York, holding that the reduction-in-coverage clause was void because it was ambiguous and misleading.

New York has accepted a grouping of contacts approach which gives to the place having the most interest in the problems paramount control over the legal issues arising out of contracts. Thus, New York courts apply the policy of the jurisdiction most intimately concerned with the outcome of the case at issue (Auten v. Auten, 308 N.Y. 155, 161, 124 N.E.2d 99; Regional Import & Export...