State Farm Ins. Co. v. Credle

• Decision Date: 06 June 1996
• Citation: 643 N.Y.S.2d 97,228 A.D.2d 191
• Parties: In re Application of STATE FARM INSURANCE COMPANY, Petitioner-Appellant, v. Lois CREDLE, Respondent-Respondent.
• Court: New York Supreme Court — Appellate Division

Page 97

643 N.Y.S.2d 97

228 A.D.2d 191

In re Application of STATE FARM INSURANCE COMPANY,

Petitioner-Appellant, v. Lois CREDLE, Respondent-Respondent.

Supreme Court, Appellate Division,

First Department.

June 6, 1996.

Cheryl F. Korman, Uniondale, for petitioner-appellant.

Dawn C. Wheeler, for respondent-respondent.

Before ROSENBERGER, J.P., and WALLACH, KUPFERMAN, NARDELLI and WILLIAMS, JJ.

MEMORANDUM DECISION.

Order, Supreme Court, Kings County (Richard A. Goldberg, J.), entered on or about January 20, 1995, which, in a proceeding pursuant to CPLR article 75 to confirm an arbitration award, denied petitioner's motion to vacate the award, reversed, insofar as appealed from, as limited by petitioner's briefs, without costs, and the motion to vacate the arbitrator's award is granted.

CPLR 7511 provides that an arbitration award should be vacated where an arbitrator exceeds the limits of his powers and the rights of a party are prejudiced. An award made in excess of the contractual limits of an insurance policy is an action in excess of authority (see, Sagona v. State Farm Insurance Co., 218 A.D.2d 660, 661, 630 N.Y.S.2d 352, 353; Mele v. General Accident Insurance Co., 198 A.D.2d 731, 732, 604 N.Y.S.2d 619). In this case, an award of $10,000 was made to each of three claimants, occupants of an automobile with uninsured motorist coverage, while the express terms of the contract limited the liability of the petitioner to $10,000 per person/$20,000 per occurrence (see, State Farm Mutual Automobile Insurance Co. v. Basile, 48 A.D.2d 868, 368 N.Y.S.2d 584). Payments were made on a chronological basis, and while it was arguably negligent for the petitioner to have paid out proceeds to the first two applicants, exhausting the policy limits after respondent had filed her claim, such action did not rise to the level of "gross disregard" so as to constitute bad faith (see, Pavia v. State Farm Mutual Automobile Insurance Co, 82 N.Y.2d 445, 454, 605 N.Y.S.2d 208, 626 N.E.2d 24). The award is vacated.

All concur except KUPFERMAN, J., who dissents in a memorandum as follows:

KUPFERMAN, Justice, dissenting.

I would modify the determination and reduce the award to $6,666.67.

Respondent was one of two passengers in a vehicle operated by a third person which collided with an uninsured automobile. The uninsured motorist benefits were $10,000 per person and $20,000 per occurrence. Respondent filed a notice of intention to make a claim. Several months later, the...