In re Phila. Ins. Co.

• Decision Date: 06 July 2012
• Citation: 97 A.D.3d 1153,948 N.Y.S.2d 501,2012 N.Y. Slip Op. 05470
• Parties: In The Matter of the Arbitration Between PHILADELPHIA INSURANCE COMPANY, Petitioner–Respondent, and Utica National Insurance Group, Doing Business as Utica Mutual Ins. Co., Respondent–Appellant.
• Court: New York Supreme Court — Appellate Division

97 A.D.3d 1153

948 N.Y.S.2d 501

2012 N.Y. Slip Op. 05470

In The Matter of the Arbitration Between PHILADELPHIA INSURANCE COMPANY, Petitioner–Respondent, and Utica National Insurance Group, Doing Business as Utica Mutual Ins. Co., Respondent–Appellant.

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

July 6, 2012.

Brown & Kelly, LLP, Buffalo (Joseph M. Schnitter of Counsel), for Respondent–Appellant.

Damon Morey LLP, Buffalo (Michael J. Willett of Counsel), for Petitioner–Respondent.

PRESENT: CENTRA, J.P., PERADOTTO, CARNI, LINDLEY, and SCONIERS, JJ.

MEMORANDUM:

Petitioner commenced this proceeding pursuant to CPLR 7511(b) seeking vacatur of the arbitration award on the ground that arbitration was not available because under Insurance Law § 5105(a) neither of the vehicles involved in the collision was “used principally for the transportation of persons or property for hire.” We conclude that Supreme Court erred in granting the petition to vacate the arbitration award and in denying the cross motion to confirm the award. Inasmuch as petitioner failed to apply for a stay of arbitration before arbitration, petitioner waived its contention that respondent's claim for reimbursement of first-party benefits is not arbitrable under Insurance Law § 5105 ( see Matter of Liberty Mut. Ins. Co. [Allstate Ins. Co.], 234 A.D.2d 901, 651 N.Y.S.2d 784). In view of that waiver, petitioner may not thereafter seek to vacate the arbitration award on the ground that the arbitration panel exceeded its power ( see id.;Matter of Utica Mut. Ins. Co. v. Incorporated Vil. of Floral Park, 262 A.D.2d 565, 566, 692 N.Y.S.2d 420;see also Rochester City School Dist. v. Rochester Teachers Assn., 41 N.Y.2d 578, 583, 394 N.Y.S.2d 179, 362 N.E.2d 977).

Were we to reach the issue whether respondent's vehicle was used principally for the transportation of persons or property for hire under Insurance Law § 5105, we would agree with our dissenting colleagues that the appropriate standard of review is whether the award was arbitrary and capricious ( see Matter of Motor Veh. Acc. Indem. Corp. v. Aetna Cas. & Sur. Co., 89 N.Y.2d 214, 223, 652 N.Y.S.2d 584, 674 N.E.2d 1349). However, despite acknowledging that we must apply a deferential standard of review, the dissent proceeds to conduct, with laser-like precision, a comprehensive legal analysis of the statutory phrase “vehicle used principally for the transportation of persons or property for hire” (§ 5105). In reaching a legal conclusion as to the appropriate definitionto be assigned to the subject phrase, the dissent relies upon eight different definitions of or references to the phrase “vehicle for hire,” which the dissent concedes arise in “other [statutory or legal] contexts.” Notably, none of those definitions or references relied upon by the dissent was raised during arbitration or on appeal.

As the court recognized, petitioner has “contended from the outset that there is no legal or factual basis here for loss transfer pursuant to [Insurance Law § ]5105,” and we disagree with the dissent's conclusion that “at no point during the course of the proceedings in this matter did petitioner take the position that the claim was not arbitrable.” Indeed, in addition to labeling its defense as one for “lack of jurisdiction,” petitioner twice asserted in the arbitration that it was “not subject to the loss transfer procedure.” Thus, we have no difficulty concluding that petitioner took the position that the claim was not arbitrable. In concluding that the phrase assigned to petitioner's defense (“lack of jurisdiction”) is not dispositive, our dissenting colleagues fail to offer any explanation of what was otherwise meant thereby. Moreover, the dissent's reliance on Matter of Progressive Cas. Ins. Co. v. New York State Ins. Fund, 47 A.D.3d 633, 850 N.Y.S.2d 478 is misplaced because, unlike here, the petitioner in Progressive “at no point during the course of the proceedings ... [took] the position that the arbitration panel lacked jurisdiction or that the ... claim was not arbitrable” ( id. at 634, 850 N.Y.S.2d 478 [emphasis added] ). Thus, that case does not support the dissent's position that petitioner, despite labeling its defense as one for “lack of jurisdiction,” did not assert that the claim was not arbitrable.

Both the dissent and the court disregard controlling precedent of this Court in determining that petitioner's contention was not waived ( see Liberty Mut. Ins. Co., 234 A.D.2d 901, 651 N.Y.S.2d 784). The doctrine of stare decisis “recognizes that legal questions, once resolved, should not be reexamined every time they are presented” ( Dufel v. Green, 198 A.D.2d 640, 640, 603 N.Y.S.2d 624,affd.84 N.Y.2d 795, 622 N.Y.S.2d 900, 647 N.E.2d 105). “ ‘The doctrine ... rests upon the principle that a court is an institution, not merely a collection of individuals, and that governing rules of law do not change merely because the personnel of the court changes' ” ( People v. Taylor, 9 N.Y.3d 129, 148, 848 N.Y.S.2d 554, 878 N.E.2d 969, quoting People v. Bing, 76 N.Y.2d 331, 338, 559 N.Y.S.2d 474, 558 N.E.2d 1011,rearg. denied76 N.Y.2d 890, 561 N.Y.S.2d 551, 562 N.E.2d 876). Stare decisis “ ‘is the preferred course because it promotes the evenhanded, predictable, and consistent development of legal principles, fosters reliance on judicial decisions, and contributes to the actual and perceived integrity of the judicial process' ” ( id.;see People v. Damiano, 87 N.Y.2d 477, 488–489, 640 N.Y.S.2d 451, 663 N.E.2d 607 [Simons, J., concurring]; Baden v. Staples, 45 N.Y.2d 889, 892, 410 N.Y.S.2d 808, 383 N.E.2d 110).

Here, this Court has previously held that, by failing to apply for a stay before arbitration, an insurer waives the contention that the claim is not arbitrable under Insurance Law § 5105( Liberty Mut. Ins. Co., 234 A.D.2d 901, 651 N.Y.S.2d 784). In the instant matter, the court acknowledged our decision in Liberty Mut. Ins. Co., but concluded that it was overruled by Motor Veh. Acc. Indem. Corp., 89 N.Y.2d 214, 652 N.Y.S.2d 584, 674 N.E.2d 1349. That was error. Indeed, the Court of Appeals in Motor Veh. Acc. Indem. Corp. did not hold that insurers are precluded from obtaining judicial review of the threshold question of whether a claim was subject to loss-transferarbitration under section 5105. Rather, the courts of this State have long recognized that a court has the power to resolve the threshold question whether a loss-transfer arbitration should be stayed under CPLR article 75 ( see Matter of State Farm Mut. Auto. Ins. Co. v. Aetna Cas. & Sur. Co. 132 A.D.2d 930, 931, 518 N.Y.S.2d 263,affd.71 N.Y.2d 1013, 530 N.Y.S.2d 106, 525 N.E.2d 751;City of Syracuse v. Utica Mut. Ins. Co., 90 A.D.2d 979, 456 N.Y.S.2d 571,affd.61 N.Y.2d 691, 472 N.Y.S.2d 600, 460 N.E.2d 1085;Utica Mut. Ins. Co., 262 A.D.2d 565, 692 N.Y.S.2d 420;Liberty Mut. Ins. Co., 234 A.D.2d 901, 651 N.Y.S.2d 784).

Motor Veh. Acc. Indem. Corp., 89 N.Y.2d 214, 652 N.Y.S.2d 584, 674 N.E.2d 1349, also relied upon by the dissent as a basis for concluding that the award is arbitrary and capricious, involved an “erroneous application of the Statute of Limitations” by the arbitrator ( id. at 224, 652 N.Y.S.2d 584, 674 N.E.2d 1349). In concluding that such an error of law was not arbitrary and capricious as a matter of law, the Court in Motor Veh. Acc. Indem. Corp. noted the varying interpretations of the limitations rule by the courts. Here, there is a paucity of decisions interpreting the phrase “for hire” in the Insurance Law § 5105 context, and our own decision on this point noted that the statute is “inartfully drafted” and does not limit the universe of vehicles embraced thereby to “taxis and buses, and livery vehicles” ( State Farm Mut. Auto. Ins. Co., 132 A.D.2d at 931, 518 N.Y.S.2d 263). Therefore, even assuming, arguendo, that we could reach the issue, we would conclude that, under the circumstances presented, it cannot be said that the arbitration panel's award was arbitrary and capricious or was unsupported by any reasonable hypothesis ( see Motor Veh. Acc. Indem. Corp., 89 N.Y.2d at 224, 652 N.Y.S.2d 584, 674 N.E.2d 1349).

It is hereby ORDERED that the order so appealed from is reversed on the law without costs, the petition is denied, the cross motion is granted and the arbitration award is confirmed.

All concur except PERADOTTO and SCONIERS, JJ., who dissent and vote to affirm in the following Memorandum:

We respectfully dissent. Unlike the majority, we conclude that petitioner did not waive its contention that the vehicle owned by its insured and involved in the subject accident was not “used principally for the transportation of persons or property for hire” within the meaning of Insurance Law § 5105(a). We further conclude that there is no evidentiary support or rational basis for the arbitration panel's determination that the at-issue vehicle-a minivan owned by a nonprofit community residence for developmentally disabled individuals and used by its employees to transport the six residents of the group home-is a vehicle “for hire” under that section.

Petitioner's insured, Rivershore, Inc. (Rivershore), is a private, nonprofit organization that provides residential and community support services to individuals with developmental disabilities. Rivershore operates several state-funded community residences for people with disabilities, including a residence on 17th Street in Niagara Falls. On May 11, 2009, Rivershore employee Thomas Beckhorn, a night program manager at the 17th Street residence, was on his way to pick up one of the residents from her mother's home when he was involved in a motor vehicle accident with a vehicle owned by Mary D. Farmel and operated by Cheryl K. French. French sustained injuries in the accident. At the time of the accident, Beckhorn was operating a minivan owned by Rivershore and insured by petitioner. The Farmel vehicle was insured by respondent. After paying first-...