Matarasso v. Continental Cas. Co.
| Decision Date | 10 June 1982 |
| Citation | 451 N.Y.S.2d 703,436 N.E.2d 1305,56 N.Y.2d 264 |
| Parties | , 436 N.E.2d 1305 In the Matter of the Arbitration between Daniel MATARASSO et al., Appellants, and CONTINENTAL CASUALTY COMPANY, Respondent. |
| Court | New York Court of Appeals Court of Appeals |
The question presented on this appeal is whether a motion to stay arbitration may ever properly be entertained outside the 20-day period specified in CPLR 7503 (subd ). We hold today that such a motion may be entertained when, as here, its basis is that the parties never agreed to arbitrate, as distinct from situations in which there is an arbitration agreement which is nevertheless claimed to be invalid or unenforceable because its conditions have not been complied with.
Claimants were injured in an automobile accident involving an uninsured motor vehicle. They recovered the maximum benefits allowable under the uninsured motorist indorsement contained in their primary automobile liability insurance policy. Claimants then sought to recover their excess damages under a "Commercial Umbrella Liability Policy" issued by respondent. This policy provides coverage to Daniel Matarasso (one of the claimants) and A. Matarasso & Co., Inc., for general liability, automobile liability and employer liability over and above the limits of similar coverage contained in several underlying policies issued by other insurers. One such underlying policy is the automobile liability policy under which claimants had already recovered uninsured motorist benefits.
A demand for arbitration was served upon the respondent insurer on August 21, 1980, asserting a claim for uninsured motorist damages under the umbrella policy. Approximately two months later, respondent moved to stay arbitration on the ground that it was not a party to any agreement providing uninsured motorist protection or requiring arbitration of such claims. Claimants asserted, in opposition to the motion, the bar of CPLR 7503 (subd. ), contending that respondent's failure to move for a stay of arbitration within the 20-day period set forth in the statute precluded the granting of a stay.
Special Term granted respondent's motion to stay arbitration. The Appellate Division unanimously affirmed (82 A.D.2d 861, 440 N.Y.S.2d 40). We granted claimants' application for leave to appeal to this court, and we now affirm.
CPLR 7503 (subd. ) provides that a party upon whom a proper notice of intention to arbitrate has been served must apply to stay arbitration within 20 days of service of the notice. If a party fails to make a timely application, "he shall thereafter be precluded from objecting that a valid agreement was not made or has not been complied with". It is undisputed that, in the present case, respondent was served with a proper notice of intention to arbitrate, but failed to move to stay arbitration until approximately 60 days had passed. Claimants argue that the failure to make the motion within the statutory 20-day period absolutely bars respondent from obtaining a stay. We disagree and hold that where the application for a stay is made on the ground that no agreement to arbitrate exists, it may be entertained notwithstanding the fact that the stay was sought after the 20-day period had elapsed.
Generally, where the parties have entered into an agreement to arbitrate their disputes, and the party desiring arbitration has served a proper notice of intention to arbitrate, the party seeking to avoid arbitration on the ground that the agreement is invalid or has not been complied with, must, under the statute's clear language,...
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