New Jersey Mfrs. Ins. Co. v. Franklin

CourtNew Jersey Superior Court – Appellate Division
Writing for the CourtLARNER
Citation389 A.2d 980,160 N.J.Super. 292
Decision Date27 June 1978
PartiesNEW JERSEY MANUFACTURERS INSURANCE COMPANY, Plaintiff-Appellant, v. William H. FRANKLIN, Defendant-Respondent.

Page 292

160 N.J.Super. 292
389 A.2d 980
NEW JERSEY MANUFACTURERS INSURANCE COMPANY, Plaintiff-Appellant,
v.
William H. FRANKLIN, Defendant-Respondent.
Superior Court of New Jersey, Appellate Division.
Argued May 31, 1978.
Decided June 27, 1978.

[389 A.2d 981]

Page 294

R. Peter Connell, Newark, for plaintiff-appellant (McElroy, Connell, Foley & Geiser, Newark, attorneys).

Page 295

Laurence E. Appet, Fairfield, for defendant-respondent (Appet & Appet, Fairfield, attorneys).

Page 294

Before Judges HALPERN, LARNER and KING.

Page 295

The opinion of the court was delivered by

[389 A.2d 982] LARNER, J. A. D.

Defendant William H. Franklin sustained serious injuries as a result of an automobile accident with a vehicle owned by Carmine V. Capalbo. As a result of a settlement agreement Capalbo's liability insurance carrier paid Franklin the sum of $25,000 representing the total coverage of Capalbo's policy. Thereafter Franklin made a claim against his own carrier, New Jersey Manufacturers Insurance Co., for the additional sum of $15,000 based on the uninsured motorist endorsement on his policy. He claimed that his injuries and losses were not fully compensated by the payment from Capalbo's carrier, and that Capalbo was therefore "uninsured" to the extent that his policy was insufficient to pay for the injuries and losses.

Pursuant to the provision contained in the uninsured motorist endorsement, Franklin filed a demand for arbitration with the American Arbitration Association which sought $15,000 from New Jersey Manufacturers Insurance Co. for personal injuries based on the uninsured motorist provision of his policy. The demand contained no special request for arbitration of any particular issues and was simply a printed form demanding arbitration under the uninsured motorist provision of the policy. The record does not reflect an answer or statement by New Jersey Manufacturers. In any event, an arbitrator was selected. However, pursuant to an agreement that the matter would be submitted on written memoranda, neither party appeared before the arbitrator.

Accordingly, counsel for the insurance company submitted to the arbitrator a "Memorandum of Law in Support of Motion for Dismissal" and a supplemental memorandum as well. In these memoranda he argued that the matter was not appropriately the subject of arbitration, citing Selected Risks Ins. Co. v. Schulz, 136 N.J.Super. 185, 345 A.2d 349

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(App.Div.1975), as authority for his position that the question of coverage is not arbitrable. He noted that since the scope of arbitration is limited to "questions of fault and damage" which are not in dispute, nothing remains for the arbitrator to decide.

In addition to the foregoing jurisdictional contention relevant to the application to dismiss, the memoranda also ventured into a discussion of the merits of the coverage question involved in the uninsured motorist claim. On July 20, 1976 the arbitrator filed what is entitled "Interim Award of Arbitrator" with the following provisions:

1. NEW JERSEY MANUFACTURERS INSURANCE CO. is liable to WILLIAM FRANKLIN for injuries received from the accident which occurred on January 19, 1973, under Policy No. FA 548825-9.

2. Jurisdiction is retained until August 29, 1976 for a determination as to damages should the parties be unable to agree on a mutually acceptable amount.

On November 29, 1976 New Jersey Manufacturers filed a complaint in the Law Division for a declaratory judgment to determine that the arbitrator's interim ruling was beyond his jurisdiction, that the arbitration proceeding be dismissed, and that coverage does not exist for Franklin's claim under the New Jersey Manufacturers policy. Defendant took no steps to confirm the interim award and no final arbitrator's award was ever filed.

However, defendant moved to dismiss the complaint. The trial judge converted the motion into a summary judgment motion, which he granted on the ground that New Jersey Manufacturers had waived its right to a judicial determination of the coverage question by its participation in the arbitration proceeding. He also added his opinion that the arbitrator not only had jurisdiction to decide the issue of coverage but had decided that issue on its merits in accord with controlling law, citing Motor Club of America Ins. Co. v. Phillips, 66 N.J. 277, 330 A.2d 360 (1974).

Plaintiff's appeal from this determination presents the following questions for resolution: (1) Did the arbitrator

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have jurisdiction to decide the coverage question? (2) Did New Jersey Manufacturers waive its objection to the arbitrator's jurisdiction to determine that issue? (3) If the answer to [389 A.2d 983] both of these questions is in the negative, does the uninsured motorist provision of the policy afford coverage for Franklin's excess claim?

The standard uninsured motorist endorsement attached to the policy herein provides for arbitration only as to the liability of the uninsured motorist tortfeasor and the quantum of damages (Condition G). And since the scope of such arbitration is necessarily limited by the contract, the submission to the arbitrator by the demand for arbitration precluded consideration of any other issues. Goerke Kirch Co. v. Goerke Kirch Holding Co., 118 N.J.Eq. 1, 4, 176 A. 902 (E. & A.1935); Moreina Constr. Co., Inc. v. Wayne Tp., 98 N.J.Super. 570, 575-576, 238 A.2d 185 (App.Div.), certif. den. 51 N.J. 467, 242 A.2d 15 (1968); Polshek v. Bergen Cty. Iron Works, 142 N.J.Super. 516, 521, 362 A.2d 63 (Ch.Div.1976); Leslie v. Leslie, 50 N.J.Eq. 103, 107, 24 A. 319 (Ch.1892).

Hence it is well settled in this State that coverage questions are not arbitrable under the usual arbitration clause contained in an uninsured motorist endorsement. GEICO v. Bovit, 142 N.J.Super. 268, 361 A.2d 100 (App.Div.), certif. den. 71 N.J. 502, 366 A.2d 658 (1976); Selected Risks Ins. Co. v. Schulz, supra, 136 N.J.Super. at 187, 345 A.2d 349; Travelers Indem. Co. v. Mongiovi, 135 N.J.Super. 452, 343 A.2d 750 (App.Div.1975); Gov't Employees Ins. Co. v. Shara, 137 N.J.Super. 142, 145-146, 348 A.2d 212 (Ch.Div.1975). See also, Annotation, "What issues are arbitrable under arbitration provision of uninsured motorist insurance?," 29 A.L.R.3d 328 (1970); Widiss, A Guide to Uninsured Motorist Coverage, §§ 6.17-6.26 at 202-216 (1969). The issue of coverage is one for determination by a court, and in the absence of evidence of stipulation, waiver or estoppel, the arbitrator had no primary jurisdiction to determine that question.

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It follows therefore that the justification for the arbitrator's interim award holding New Jersey Manufacturers liable can only be...

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  • Ohio Cas. Ins. Co. v. Benson
    • United States
    • United States State Supreme Court (New Jersey)
    • July 23, 1981
    ...142 N.J.Super. 268, 273, 361 A.2d 100 (1976), certif. den. 71 N.J. 502, 366 A.2d 658 (1976). See New Jersey Mfrs. Ins. Co. v. Franklin, 160 N.J.Super. 292, 297, 389 A.2d 980 (App.Div.1978) (question whether other driver is uninsured is question of coverage to be determined by court); Satzin......
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    • May 15, 1979
    ...142 N.J.Super. 268, 361 A.2d 100 (App.Div.), certif. den. 71 N.J. 502, 366 A.2d 658 (1976); N. J. Manufacturers Ins. Co. v. Franklin, 160 N.J.Super. 292, 389 A.2d 980 (App.Div. 1978). Plaintiff's proofs at the first hearing before the arbitrator consisted only of his own testimony and the p......
  • Tornatore v. Selective Ins. Co. of America
    • United States
    • New Jersey Superior Court – Appellate Division
    • June 17, 1997
    ...by the court. Ohio Cas. Ins. Co. v. Benson, 87 N.J. 191, 194-99, 432 A.2d 905 (1981); New Jersey Manufacturers Ins. Co. v. Franklin, 160 N.J.Super. 292, 297, 389 A.2d 980 (App.Div.1978); 2 Alan I. Widiss, Uninsured and Underinsured Motorist Law §§ 24.6, 24.7 (2nd ed.1992); cf. In re Matter ......
  • Hot Springs County School Dist. No. 1 v. Strube Const. Co., Nos. 84-250
    • United States
    • United States State Supreme Court of Wyoming
    • March 11, 1986
    ...Motorists Insurance Company v. Llanes, 396 Mich. 113, 240 N.W.2d 203 (1976); New Jersey Manufacturers Insurance Company v. Franklin, 160 N.J.Super. 292, 389 A.2d 980 (1978); National Cash Register Company v. Wilson, 8 N.Y.2d 377, 208 N.Y.S.2d 951, 171 N.E.2d Page 546 302 (1960); Coventry Te......
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20 cases
  • Ohio Cas. Ins. Co. v. Benson
    • United States
    • United States State Supreme Court (New Jersey)
    • July 23, 1981
    ...142 N.J.Super. 268, 273, 361 A.2d 100 (1976), certif. den. 71 N.J. 502, 366 A.2d 658 (1976). See New Jersey Mfrs. Ins. Co. v. Franklin, 160 N.J.Super. 292, 297, 389 A.2d 980 (App.Div.1978) (question whether other driver is uninsured is question of coverage to be determined by court); Satzin......
  • Grover v. Universal Underwriters Ins. Co.
    • United States
    • United States State Supreme Court (New Jersey)
    • May 15, 1979
    ...142 N.J.Super. 268, 361 A.2d 100 (App.Div.), certif. den. 71 N.J. 502, 366 A.2d 658 (1976); N. J. Manufacturers Ins. Co. v. Franklin, 160 N.J.Super. 292, 389 A.2d 980 (App.Div. 1978). Plaintiff's proofs at the first hearing before the arbitrator consisted only of his own testimony and the p......
  • Tornatore v. Selective Ins. Co. of America
    • United States
    • New Jersey Superior Court – Appellate Division
    • June 17, 1997
    ...by the court. Ohio Cas. Ins. Co. v. Benson, 87 N.J. 191, 194-99, 432 A.2d 905 (1981); New Jersey Manufacturers Ins. Co. v. Franklin, 160 N.J.Super. 292, 297, 389 A.2d 980 (App.Div.1978); 2 Alan I. Widiss, Uninsured and Underinsured Motorist Law §§ 24.6, 24.7 (2nd ed.1992); cf. In re Matter ......
  • Hot Springs County School Dist. No. 1 v. Strube Const. Co., Nos. 84-250
    • United States
    • United States State Supreme Court of Wyoming
    • March 11, 1986
    ...Motorists Insurance Company v. Llanes, 396 Mich. 113, 240 N.W.2d 203 (1976); New Jersey Manufacturers Insurance Company v. Franklin, 160 N.J.Super. 292, 389 A.2d 980 (1978); National Cash Register Company v. Wilson, 8 N.Y.2d 377, 208 N.Y.S.2d 951, 171 N.E.2d Page 546 302 (1960); Coventry Te......
  • Request a trial to view additional results

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