Am. Indep. Ins. Co. v. Art of Healing Med., P.C.

• Decision Date: 13 March 2013
• Citation: 2013 N.Y. Slip Op. 01546,961 N.Y.S.2d 240,104 A.D.3d 761
• Parties: In the Matter of AMERICAN INDEPENDENT INSURANCE COMPANY, respondent, v. ART OF HEALING MEDICINE, P.C., et al., appellants.
• Court: New York Supreme Court — Appellate Division

104 A.D.3d 761

961 N.Y.S.2d 240

2013 N.Y. Slip Op. 01546

In the Matter of AMERICAN INDEPENDENT INSURANCE COMPANY, respondent,

v.ART OF HEALING MEDICINE, P.C., et al., appellants.

Supreme Court, Appellate Division, Second Department, New York.

March 13, 2013.

Amos Weinberg, Great Neck, N.Y., for appellants.

Freiberg, Peck & Kang, LLP, Armonk, N.Y. (Yilo J. Kang and Craig Freiberg of counsel), for respondent.

MARK C. DILLON, J.P., CHERYL E. CHAMBERS, SANDRA L. SGROI, and ROBERT J. MILLER, JJ.

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of claims for no-fault insurance benefits, the appeal is from an order of the Supreme Court, Queens County (Strauss, J.), entered October 4, 2011, which granted the petition to permanently stay arbitration, and dismissed the appellants' counterclaims.

ORDERED that the order is modified, on the law, by deleting the provision thereof granting the petition to permanently stay arbitration, and substituting therefor a provision denying the petition; as so modified, the order is affirmed, with costs to the appellants.

American Independent Insurance Company (hereinafter AIIC) commenced this proceeding to permanently stay arbitration of the appellants' claims for no-fault benefits on the ground that AIIC is not subject to personal jurisdiction in New York. Pursuant to CPLR 7503(b), a petition to stay arbitration may be granted on the limited grounds that a valid agreement to arbitrate was not made or has not been complied with, or that the claim sought to be arbitrated is barred by the statute of limitations. In addition, case law recognizes limited instances where arbitration is prohibited on public policy grounds ( see Matter of City of New York v. Uniformed Fire Officers Assn., Local 854, IAFF, AFL–CIO, 95 N.Y.2d 273, 280, 716 N.Y.S.2d 353, 739 N.E.2d 719). Lack of personal jurisdiction is not a basis for granting a stay of arbitration.

In Matter of Government Empls. Ins. Co. v. Basedow, 28 A.D.3d 766, 816 N.Y.S.2d 106 and Matter of Eagle Ins. Co. v. Gutierrez–Guzman, 21 A.D.3d 489, 801 N.Y.S.2d 328, upon which AIIC relies, this Court dismissed, on the ground of lack of personal jurisdiction, so much of the petitions as sought to stay arbitration and to add AIIC as an additional respondent for the resolution of threshold issues. While these cases reinforce the rule that personal jurisdiction must first be obtained over a party before judgment may be entered upon an arbitration award ( see Sargant v. Monroe, 268 App.Div. 123, 126, 49 N.Y.S.2d 546), the petitioner's reliance upon them is misplaced. There is a strong public policy favoring arbitration, and courts interfere as little as possible with the freedom of parties to submit their disputes to arbitration ( see Matter of Smith Barney Shearson v. Sacharow, 91 N.Y.2d 39, 49, 666 N.Y.S.2d 990, 689 N.E.2d 884;Shah v. Monpat Constn., Inc., 65 A.D.3d 541, 543, 884 N.Y.S.2d 116). Pursuant to CPLR 7503, courts decide threshold issues before compelling or staying arbitration ( see Merrill Lynch, Pierce, Fenner & Smith v. Benjamin, 1 A.D.3d 39, 43–44, 766 N.Y.S.2d 1). Here, AIIC has failed to allege, pursuant to CPLR 7503(b), that a valid arbitration agreement was not made or complied with, that the claim sought to be arbitrated was barred by the statute of limitations, or that public policy precluded arbitration of this matter. Indeed, AIIC failed to provide in the record a copy of the relevant policy of insurance by which the terms and circumstances of arbitration may be reviewed. Contrary to AIIC's contentions, Matter of Government Empls. Ins. Co. v. Basedow and Matter of Eagle Ins. Co. v. Gutierrez–Guzman are not controlling, since the issue of personal jurisdiction in those cases arose in the context of an ongoing legal proceeding, where the petitioners sought to add AIIC as a party. Here, in contrast, AIIC seeks to...