Opinion
Index No. 650866/2020 Motion Seq. No. 001 NYSCEF Doc. No. 19
07-15-2024
COUNTRY-WIDE INSURANCE COMPANY Petitioner, v. QUICK DOCS MEDICAL PLLC, Respondent.
Unpublished Opinion
MOTION DATE 02/10/2020
DECISION + ORDER ON MOTION
ANAR RATHOD PATEL, A.J.S.C.
The following e-filed documents, listed by NYSCEF document number (Motion 001) 2,9, 10, 12, 13, 14, 15, 16, 18 were read on this motion to/for VACATE - DECISION / ORDER / JUDGMENT / AWARD.
Relevant Factual and Procedural History
Petitioner Country-Wide Insurance Company (hereinafter "Petitioner") insured a motor vehicle that was involved in a collision causing injury to at least one of the vehicle's occupants, Jean Bastien (hereinafter "Bastien"). NYSCEF Doc. No. 1 (Petition to Vacate Arb. Award). Subsequently, Bastien sought medical services from the Respondent, who provided Bastien with medical services and submitted the resulting bills to Petitioner. Id. On or about August 31, 2016, Petitioner "required" Bastien appear for an Examination Under Oath ("EUO") by mailing notices to Bastien. Id. Petitioner's first notice informed Bastien that an EUO was scheduled for September 23,2016. Id. Bastien did not appear for the September 23, 2016, EUO. Id. Petitioner then mailed Bastien a final notice informing Bastien of an EUO scheduled for October 20, 2016. Id. Again, Bastien failed to appear. Id.
On March 6, 2017, Petitioner commenced a suit against Bastien and Respondent-among others-by filing a Summons and Complaint with the New York County Supreme Court under index number 152125/2017. NYSCEF Doc. No. 3. All defendants, including Respondent here, failed to appear in that action. Id. As such, default judgment was issued in that case against Respondent on January 17, 2018. Id. The Notice of Entry was filed on January 31, 2018, with copies mailed to the Respondents. Id. To date, the Default Judgment Order has not been vacated by any party.
On March 7, 2018, Respondent filed a demand for arbitration. NYSCEF Doc. No. 1. Arbitration between the parties commenced on August 28, 2019, before Arbitrator Stacey Erdheim of the American Arbitration Association ("AAA"). NYSCEF Doc. No. 4. On September 4, 2019, Arbitrator Erdheim awarded Respondent $2,907.94. Id. Arbitrator Erdheim reasoned that there were questions of fact relating to the mailing of Petitioner's notices. Id. Petitioner appealed for a master arbitration before master arbitrator Jeffrey Grob. NYSCEF Doc. No. 1. Arbitrator Grob issued a decision in the matter on November 18, 2019. NYSCEF Doc. No. 7. Arbitrator Grob affirmed Arbitrator Erdheim's determination noting, "[Petitioner]'s focus on the proof proffered to establish the patient's default misses the thrust of the Lower Arbitrator's position to wit: the failure to identify the address to which the corresponding EUO notices were directed." Id.
Petitioner commenced the present action by filing a Notice of Petition and Petition on February 7, 2020. NYSCEF Doc. Nos. 1-2. Petitioner seeks to vacate the master arbitrator's award. Id. This matter was originally assigned to the Honorable Debra James and was reassigned subsequently to the present Court.
Discussion
To confirm or vacate an arbitration award, parties must bring a special proceeding pursuant to Article 75 of the CPLR. Parties seeking to vacate or modify the award, must bring their Article 75 proceeding within 90 days of the delivery. CPLR § 7511. Moreover, "[i]t is well settled that judicial review of arbitration awards is extremely limited. An arbitration award must be upheld when the arbitrator 'offer[s] even a barely colorable justification for the outcome reached.'" Wien & Malkin LLP v. Helmsley-Spear, Inc., 6 N.Y.3d 471, 479, (2006).
"[A] court may vacate an arbitration award only if it violates a strong public policy, is irrational, or clearly exceeds a specifically enumerated limitation on the arbitrator's power." Matter cf In re Falcone (New York Cent. Mut. Fire Ins. Co.), 15 N.Y.3d 530, 534 (2010). Per CPLR § 7511 (b), a party may seek to vacate the arbitrator's award on the grounds that "the rights of that party were prejudiced by: (i) corruption, fraud or misconduct in procuring the award; or (ii) partiality of an arbitrator appointed as a neutral, except where the award was by confession; or (iii) an arbitrator, or agency or person making the award exceeded his power or so imperfectly executed it that a final and definite award upon the subject matter was not made; or (iv) failure to follow the procedure of this article [Article 75], unless the party applying to vacate the award continued with the arbitration with notice of the defect and without objection." CPLR § 7511(b).
Per CPLR § 7511(c), "[t]he court shall modify the award if (1) there was a miscalculation of figures or a mistake in the description of any person, thing or property referred to in the award; or (2) the arbitrators have awarded upon a matter not submitted to them and the award may be corrected without affecting the merits of the decision upon the issues submitted; or (3) the award is imperfect in a matter of form, not affecting the merits of the controversy." CPLR § 7511(c). Otherwise, an award may be vacated or modified if: (1) "the award exceeds the policy limitations;" (2) "the award is 'incorrect as a matter of law';" (3) "the award of attorneys' fees is improper;" or (4) "the award is inconsistent or irreconcilable with an award rendered in Health Services Association arbitration." Smith v. Firemen's Ins. Co., 55 N.Y.2d 224, 231 (1982).
The standard of review in Article 75 proceedings depends on the amount awarded by the arbitrator. '"Judicial review' of a master arbitrator's award is limited to the grounds set forth in CPLR article 75 unless the award is $5,000 or more, in which case the entire dispute is subject to a 'plenary judicial adjudication', something very different from judicial review of some other entity's determination." Matter cf Greenberg, 70 N.Y.2d 573, 577 (1987). Accordingly, when an arbitration award, less the attorney's fees and interest, exceeds $5,000.00, the petitioner is entitled to de novo review by the judiciary.
Where the amount in contention does not exceed $5,000.00, courts grant deference to the findings of the arbitrators. "In cases of compulsory arbitration, this court has held that CPLR article 75 'includes review ... of whether the award is supported by evidence or other basis in reason.' This standard has been interpreted to import into article 75 review of compulsory arbitrations the arbitrary and capricious standard of article 78 review." Matter cf Petrcfsky (Allstate Ins. Co.), 54 N.Y.2d 207, 211 (1981) (quoting Mount St. Mary's Hosp, cf Niagara Falls v. Catherwood, 26 N.Y.2d 493, 508 (1970)). Thus, if the amount petitioner is seeking is less than the statutory amount, the judiciary is restricted by the findings of the arbitrators. Only when review has basis in an enumerated ground in CPLR § 7511 or the court finds that the arbitration award is a result of arbitrary or capricious determinations by the arbitrators may the court interject.
"Further, 'a court is bound by the arbitrator's factual findings and interpretations of the contract,' and it 'cannot examine the merits of an arbitration award and substitute its judgment for that of the arbitrator simply because it believes its interpretation would be the better one.' The 'arbitrator's award will not be vacated for errors of law and fact committed by the arbitrator and the courts should not assume the role of overseers to mold the award to conform to their sense of justice.'" Metro. Transp. Auth. v. Wes field Fulton Ctr., LLC, 2024 WL 2853484, at *1 (1st Dept. 2024) (internal citations omitted).
In the present matter, Respondent's award does not exceed the $5,000.00 limit. As such, the Court is bound by the factual determinations of the arbitrators and review of the motion to vacate the award is limited to the bases enumerated in CPLR § 7511. Here, Petitioner contends that the arbitrators' awards are incorrect as a matter of law, relying on CPLR § 751 l(b)(1)(i), (iii) and (iv).
Petitioner argues that the arbitrators lacked subject matter jurisdiction to determine the present issue as Petitioner had previously been granted default judgment in the underlying matter. "An arbitration award may be vacated as barred by the preclusive effect of a judgment or settlement entered in prior litigation." Tokio Marine &Fire Ins. Co. v. Allstate Ins. Co., 778 N.Y.S.2d 315 (2nd Dept. 2004); see also Country-Wide Ins. Co. v. NYC Cmiy. Med. Care, PC, 2021 NY Slip Op 30156(U) (N.Y. Cty. Sup. Ct. 2021). "Ordinarily a default judgment in a declaratory judgment action will have res judicata effect barring any action [or arbitration] to recover no-fault benefits." Country-Wide Ins. Co. v. Avalon Radiology, PC, 2017 NY Slip Op 30606(U) (N.Y. Cty. Sup. Ct. 2017); see also Hereford Ins. Co. v. Iconic Wellness Surgical Servs., LLC, 115 N.Y.S.3d 796 (App. Term 1st Dept. 2019) ("While the preclusive effect of a pre-arbitration judicial decision may be sufficient to vacate an arbitral award, a post-arbitration judicial determination concerning the insurer's liability is not one of the limited grounds for vacating an arbitration award."). In the present matter, Petitioner commenced legal proceedings and sought default judgment prior to arbitration. Petitioner's motion to enter default judgment was granted on January 17, 2018. To date, Respondent has not sought to vacate said decision. Nonetheless, Respondent demanded arbitration approximately two months after the decision.
Respondent now argues that vacatur of a master arbitrator's award requires a lofty standard that has not been met by Petitioner. More specifically, Respondent identifies that vacatur of a master arbitrator's award for an error of law requires an egregious misinterpretation and/or misapplication of the law. However, to refuse vacatur in the present matter would be to render an order of the court meaningless. The decision granting default judgement states, in relevant part, "[Petitioner] owes no duty to Defendants Jean Bastien . . . and Quick Docs Medical, PLLC, to pay No Fault claims submitted in relation to the June 6, 2016 loss . . . In other words, the court there had already determined, legally, that Respondent's failure to appear precluded Respondent's recovery. Respondent failed to vacate the decision at any time prior to or during the arbitration at issue. To allow Respondent to now recover would be to grant Respondent immunity from the law and the courts. Court orders would be relegated to a suggestion prone to circumvention. Therefore, Respondent's argument is unconvincing. Accordingly, the arbitrators' determination is inapposite to the final determination of the court and incorrect as a matter of law. Thus, vacatur of the arbitration award is warranted.
Based on the foregoing, Petitioner has established that the arbitration award at issue requires vacatur as inapposite to the court's prior determination. Thus, the Court grants Petitioner Country-Wide Insurance's petition seeking to vacate the arbitration award in this matter. As such, it is hereby
ORDERED that the Petition is granted, and the award rendered in favor of Petitioner and against Respondent is vacated; and it is further
ORDERED and ADJUDGED that the hearing arbitrator's award dated September 4, 2019, and the master arbitrator's award dated November 18, 2019, are vacated.