Allstate Ins. Co. v. Carrillo

Decision Date21 March 1972
Citation329 N.Y.S.2d 985,69 Misc.2d 350
PartiesApplication of ALLSTATE INSURANCE COMPANY, Petitioner, for Judgment Staying the Arbitration Commenced by Adelaide CARRILLO and Carmen Perez, Respondents.
CourtNew York Supreme Court

Gerald E. McCloskey, White Plains, for petitioner.

Philip Myer, New York City, for respondents.

Friedlander, Gaines, Ruttenberg & Goetz, New York City, for MVAIC.


This is an application by petitioner, Allstate Insurance Company, for an order staying arbitration demanded by the respondents, Adelaide Carrillo and Carmen Perez, arising from an alleged motor vehicle collision.

On March 11, 1971, the respondents were passengers in a motor vehicle owned by Two Brothers Taxi Service Corporation and operated by Hector Rodriguez when said vehicle allegedly collided with a motor vehicle owned by Corine Givens and operated by John Givens. The vehicle owned by Two Brothers Taxi was insured by the petitioner, Allstate Insurance Company, and Corine Givens' vehicle was allegedly non-insured, the Aetna Life and Casualty Company having stated by letter to Corine Givens that the Corine Givens' liability policy issued by Aetna had been canceled on July 2, 1970, prior to the date of the alleged collision.

Respondents previously have commenced an action for damages allegedly resulting from said collision against the owners and operators of both vehicles in the Supreme Court, Bronx County. An answer on behalf of John Givens and Corine Givens, as their interest may appear pursuant to Section 17--A of the Insurance Law interposed by Motor Vehicle Accident Indemnification Corporation, alleges, Inter alia, an affirmative defense that MVAIC is not liable to plaintiffs because they were passengers in an insured vehicle, Two Brothers Taxi, at the time and place of the collision referred to in the complaint. Said vehicle was allegedly insured by Allstate Insurance Company under a provision in its policy issued to Two Brothers Taxi insuring against damages caused by non-insured motorists.

Pursuant to CPLR 7503 (subd. (c)), respondents served the petitioner by certified mail, return receipt requested, with a notice of intention to arbitrate their alleged claim against the Givens' vehicle, which notice was received on September 9, 1971. The notice contained all the necessary requirements of the statute which validate such a notice, and the service thereof was made in accordance with the direction embodied in CPLR 7503 (subd. (c)), providing: 'Such notice shall be served in the same manner as a summons or by registered or certified mail, return receipt requested'.

Subsequently, petitioner, after respondents had stipulated to extend their time to apply for a stay of arbitration beyond the ten-day statutory limit to February 2, 1972, by order to show cause dated January 14, 1972, providing for service upon the attorney for the respondents on or before January 17, 1972, returnable January 28, 1972, made the instant application to stay arbitration. The service of said order to show cause pursuant to the authorization contained therein was made by regular mail. CPLR 7503 (subd. (c)), contains an identical requirement for the service of an application to stay arbitration as it prescribes for the service of a notice of intention to arbitrate, to wit, that it 'shall be served in the same manner as a summons or by registered or certified mail, return receipt requested.'

Thus, the threshold issues in this proceeding are: whether, in apparent contravention of the statute (CPLR 7503, subd. (c)), service (1) upon the attorney for the respondents instead of the respondents personally, and (2) by regular mail instead of by registered or certified mail, return receipt requested, is sufficient to obtain jurisdiction over the respondents when such manner of service has been directed by the order to show cause instituting the proceeding, and (3) whether service after the ten-day statutory period is a jurisdictional defect when the parties have stipulated to such an extension of time.

The Court of Appeals, in Mtr. Knickerbocker Ins. Co. (Gilbert), 28 N.Y.2d 57, 320 N.Y.S.2d 12, 268 N.E.2d 758, held that the application for a stay of arbitration commences and is a special proceeding. The Court of Appeals also stated in the Gilbert case, at page 65, 320 N.Y.S.2d at page 17, 268 N.E.2d at page 762, that service of a notice to stay arbitration upon an attorney who has served a notice to arbitrate on behalf of claimants was a proper means of commencing the proceeding to stay arbitration. In the case at bar, the respondents' attorney, with considerable ingenuity, attempted to circumvent the decision of the Court of Appeals in the Gilbert case, by deleting from his demand for arbitration, submitted on the form of the American Arbitration Association, that claimant would be bound by the rules of procedure of the American Arbitration Association, and by affirmatively asserting that claimant should be bound only by the provisions of CPLR 7503 and other statutes relating thereto initiating arbitration proceedings. In the opinion of this Court, by doing so, he circumvented some of the legal arguments contained in the Gilbert decision, but not all of them. Moreover, the record reveals that the attorney for the respondents and the attorneys for the petitioner had been in telephone conversation in an effort to ascertain whether, as a matter of fact, the Givens automobile was or was not insured by Aetna Insurance Company at the time of the accident. In the commendable effort to save both parties as well as the Court the time and trouble of formally resolving this question, it appeared that both attorneys were trying to ascertain the facts informally, if it were possible to do so. In any event, it appears from the record that on September 17, 1971, the attorney for the petitioner wrote the attorney for the respondents stating, among other things:

'Therefore, pursuant to your suggestion, my time to apply for a syay of arbitration is extended 45 days from September 9th, which is the date of service of your demand upon the Allstate Insurance Company. This additional period of time will allow you to fully investigate all facts of the within action and determine what the proper forum for this matter should be.'

Thereafter, it appears that on October 28, 1971, Robert...

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