Opinion
260005/08.
Decided on July 14, 2008.
Petitioner, Government Employees Insurance Company (GEICO), seeks to permanently stay arbitration for uninsured motorist (UM) benefits demanded by its insured, Hope Lawrence (Lawrence), or in the alternative request a hearing to determine: (1) whether Lawrence filed her demand for arbitration after the six year statute of limitations had expired; and/or, (2) whether the offending vehicle was uninsured at the time of the alleged collision. Respondent Lawrence opposes the application and contends that (1) the statue of limitations did not begin to run until September 25, 2005; and, (2) UM coverage will still apply to cover the percentage of fault for the truck that left the scene. For reasons set forth below, petitioner's application seeking a permanent stay of arbitration is hereby granted.
I.Background
In support of its motion to stay arbitration, petitioner submits a copy of,; inter alia,; respondent Lawrence's Request for Arbitration, dated December 3, 2007, a copy of Lawrence's automobile insurance policy, a copy of the relevant police action report, and a letter from Harco, dated September 26, 2001, where they deny any negligence on the part of their insured.
A review of the relevant documents reveals that O on Friday, August 24, 2001 just after 7 a.m., Lawrence was traveling southbound on the Whitestone Expressway. Concurrently, Brian Hill (Hill), the proposed additional respondent, drove a truck owned by proposed co-respondents AA Truck Renting Co (AA) that was insured by proposed co-respondents Harco National Insurance (Harco), southbound on the Whitestone Expressway. At approximately 7:15 a.m., at the Linden Boulevard exit of the southbound Whitestone Expressway, a third unidentified vehicle moved into Hill's lane causing him to steer his vehicle into Lawrence's lane to avoid a collision. As a result, Lawrence was forced to turn towards the divider striking a light pole. The description provided in the police accident report provides little more than confirmation of Lawrence's impact with the light pole and the involvement of a third unidentified vehicle which fled the scene.
On or about March 24, 2004, Lawrence commenced a personal injury action against Hill and AA. Hill and AA appeared in said action and their May 14, 2004 verified answer, made no mention of a third vehicle. Included in GEICO's supplemental affirmation in support of the instant petition, however, is a letter from a claims representative at Harco to Lawrence's attorneys where they make reference to an unidentified third vehicle as the proximate cause of the accident. Despite this letter and the police report, Lawrence, in opposition of the motion, asserts she was unaware of the involvement of a third vehicle in the accident until a September 25, 2005, deposition. This deposition was taken in Lawrence's personal injury action against Hill and AA. On or about February 26, 2007, Lawrence signed a Stipulation of Discontinuance, where she discontinued, with prejudice, all claims against Hill and AA arising out of the August 24, 2001 automobile accident. Petitioner GEICO did not receive a demand for arbitration from Lawrence for a UM claim until December 18, 2007.
II.Stay of Arbitration
GEICO seeks to stay the arbitration on the grounds that Lawrence's claim is time barred, or in the alternative, that the claim does not involve an uninsured motorist. It is well settled that an application seeking to stay arbitration is governed by CPLR 7503(b), which in pertinent part states, "a party who has not participated in the arbitration and who has not made or been served with an application to compel arbitration, may apply to stay arbitration on the ground that a valid agreement was not made or has not been complied with or that the claim sought to be arbitrated is barred by limitation under subdivision (b) of section 7502." Where a question exists as to the involvement of an unidentified vehicle, the relevant language concerns the authority to stay arbitration based upon the absence of compliance with a valid agreement. On the other hand, where the facts of a case raise issues as to whether the statute of limitations for the claim has run, CPLR 7503(b) permits a stay of arbitration where the claim is barred by CPLR 7502(b). CPLR 7502(b) provides, "[i]f, at the time that a demand for arbitration was made or a notice of intention to arbitrate was served, the claim sought to be arbitrated would have been barred by limitation of time had it been asserted in a court of the state, a party may assert the limitation as a bar to the arbitration on an application to the court."
A.Time Limitations
A stay of arbitration may be granted where the claim is barred by a time limitation. CPLR 7502(b); CPLR 7503(b). In relation to UM claims, a claim is time barred if: 1) the demand for arbitration is made after the applicable statute of limitations has expired; or, 2) the party demanding arbitration fails to provide notice of the potential for an UM claim within a reasonably acceptable time frame. CPLR 7502(b); CPLR 7503(b); see also, Allstate Ins. Co. v Furman, 84 AD2d 29, 445 NYS2d 236 (2nd Dept.[1981]); Travelers Property Cas. Corp. v Lee, 283 AD2d 583, 724 NYS2d 903 (2nd Dept.[2001]).
2 Statute of Limitations
A permanent stay of arbitration will be granted when the demand for arbitration is served after the applicable statute of limitations has expired. Travelers Property Cas. Corp. v Lee, supra . UM claims made pursuant to an insurance policy are contract actions. Preferred Mut. Ins. Co. v Rand, 15 Misc 3d 1112(A), 839 NYS2d 436; see also, Matter of DeLuca, 17 NY2d 76, 78; Jenkins v. State Farm Ins. Co. , 21 AD3d 529 (2nd Dept[2005]); New York City Health Hospitals Corp. v. Degarter, 133 Misc 2d 93, 97, 506 NYS2d 644. CPLR 213(2) states, in relevant part, an action based upon a contractual obligation must commence within six years. Thus, "a demand for arbitration of an uninsured motorist claim is subject to a six year Statute of Limitations." Allstate Ins. Co. v. Giordano, 108 AD2d, 910, 911, 485 NYS2d 797 (2nd Dept.[1985]) citing 17 NY2d 76.
Neither the GEICO nor Lawrence challenge the applicability of a six-year statute of limitations in this case. They, however, disagree on when the six-year clock began running. Lawrence asserts the statute began to run as of September 23, 2005 following a deposition in her personal injury action against Hill and AA wherein a witness, possibly Hill, revealed the involvement of the unidentified third vehicle. A review of the police accident report dated August 27, 2001, reveals the existence of a third vehicle that purportedly left the scene. Similarly by letter dated September 24, 2001, proposed co-respondent Harco notified Lawrence's counsel of the existence of an unknown vehicle which was believed to have been the proximate cause of the accident". The date at which Lawrence became aware of, or reasonably should have known of, the existence of a third vehicle is relevant in determining when the statute of limitations began to run.
In relation to a demand for arbitration of an UM claim, the "Statute of Limitations . . . runs from the date of the accident or from the time when subsequent events render the offending vehicle uninsured." Allstate Ins. Co. v. Torrales, 186 AD2d 647, 648, 588 NYS2d 420 (2nd Dept. [1992]). The burden of proof falls upon the party purporting a subsequent event, not the accident, triggers the statue of limitations. Allstate Ins. Co. v. Morrision, 267 AD2d 381, 381, 700 NYS2d 74 (2nd Dept.[1999]). Therefore, Lawrence must provide "legally sufficient proof that a later accrual date applies" as well as evidence of her diligence in determining the insurance status of vehicles involved in the accident. Id.
Diligence is proven by providing evidence of efforts made to determine the insurance status of the offending vehicle; a lack of evidence of such will result in the respondent failing to meet their burden. Eagle Ins. Co. v. Bernardine, 226 AD2d 543, 544, 699 NYS2d 85 (2nd Dept.[1999]), see also Continental Ins. Co. v. Josephson, 280 AD2d 546, 547, 720 NYS2d 392 (2nd Dept.[2001]). Additionally, Lawrence must show that the existence of a third vehicle could not have been discovered before the September 2005 deposition through diligent effort. State Farm Ins. Co. v. Colangelo , 44 AD3d 868 , 843 NYS2d 667 (2nd Dept. [2007]).
In the case at hand, the evidence proffered clearly demonstrates that Lawrence should have had notice of the involvement of a third vehicle well before the September 2005 deposition. The police report made on the date of the accident, August 24, 2001, notes Hill's assertion to the reporting officer that a third vehicle changed lanes causing Hill to move into Lawrence's lane, resulting in the collisions. The officer reports that the third vehicle left the scene before being identified. Additionally, the letter, dated September 26, 2001, from Harco to Lawrence's attorney in which Harco disclaims liability on the part of Hill or AA mentions the involvement of a third unknown vehicle. Based on these facts, Lawrence should have reasonably known of the potential involvement of an uninsured vehicle had she obtained a copy of the police accident report that was available soon after the date of the accident, and most definitely by the September 2001 letter. See, State Farm Mut. Auto. Ins. Co. v. Fuccio, 288 AD2d 46, 47, 732 NYS2d 220 (1st Dept.[2001]). Citing Matter of Metropolitan Prop Co Ins. Co. v. Mancuso, 93 NY2d 487, 497, 693 NYS2d 81.
2.Timeliness
Irrespective of the Statue of Limitations issue, a permanent stay of arbitration is appropriate in this case due to the untimely notice of a potential UM claim. When the potential for an UM claim exists the rule is, "[a]n insured must give notice of his uninsured motorist claim to the insurer within the time limit provided in the insurance police or within a reasonable time under all circumstances." Nova Cas. Co. v. Helmstadt, 204 AD2d 330, 330, 611 NYS2d 271 (2 nd Dept.[1994]). See 130 AD2d 744.
In the case at bar, the insurance policy requires notice of a UM claim "as soon as practicable". The courts have established "as soon as practicable" to mean not "that notice be immediate' or even prompt,' relative as even those concepts are," but that it calls for a determination based on the facts and circumstances particular in each case. . .such clauses do not require instantaneous notice, but rather call for notice to be given with reasonable dispatch, in view of all the facts and circumstances of each particular case." Matter of Metropolitan Prop Co Ins. Co. v. Mancuso, 93 NY2d 487, 497, 693 NYS2d 81 (internal citations omitted). As soon as practicable' "means notice given with reasonable promptness after the insured knew or should reasonably have known that the tortfeasor was underinsured." Hermitage Ins. Co. v. Alomar, 301 AD2d 465, 465, 754 NYS2d 15 (1st Dept.[2003]); see also Matter of Metropolitan Prop Co Ins. Co. v. Mancuso, 93 NY2d 487, 693 NYS2d 81. Additionally, "[w]hile reasonableness of notice must be determined on an ad hoc basis, a delay of more than one year has been held to be unreasonable as a matter of law." Rekemeyer v. State Farm Mut. Auto. Ins. Co. , 7 AD3d 955 , 956, 777 NYS2d 551 (3rd Dept.[2004]); see also Unwin v. New York Cent. Mut. Fire Ins. Co., 268 AD2d 669, 670, 700 NYS2d 580; Matter of Nationwide Ins. Co. [De Rose], 241 AD2d 607, 608, 659 NYS2d 342). Thus, in the case at hand, timeliness of notice will turn on when Lawrence knew or reasonably should have known an uninsured motorist was involved, and, from this point in time, how long did Lawrence wait to notify GEICO of a potential UM claim. The mention of a third vehicle in the police report should have given Lawrence notice of a potential UM claim well before the September 2005 deposition. State Farm Mut. Auto Ins. Co. v. Katehis, 23 AD2d 224, 224, 803 NYS2d 546 (1st Dept.[2005]), See also Nova Cas. Co. v. Helmstadt, 204 AD2d 330, 330, 611 NYS2d 271 (2nd Dept.[1994]). Even if Lawrence was unaware of the existence of the third vehicle until the September 2005 deposition, Lawrence did not notify GEICO of her UM claim until December 2007, more than two years. As an unjustified delay of more than one year is unreasonable as a matter of law, Lawrence has failed to put forth sufficient evidence to adequately explain the delay in notice. Rekemeyer, supra . For reasons given herein, the petitioners request for permanent stay of arbitration must be granted.
B.Uninsured Motorist
A permanent stay of arbitration is appropriate where compliance with the terms of a valid agreement is lacking. CPLR 7503(b). Two of the essential requirements in an UM claim are: 1) the offending vehicle is uninsured Allstate Ins. Co. v. Giordano, 108 AD2d, 910, 911, 485 NYS2d 797 (2nd Dept.[1985]) citing 102 AD2d 725; and 2) physical contact with the offending vehicle. McKinney's Insurance Law 5217; Motor Vehicle Acc. Indemnification Corp. v. Eisenberg, 18 NY2d 1, 2, 218 NE2d 524 [1966. Therefore, when one of these requirements is absent a stay of arbitration is proper.
The purposed of the physical contact requirement in hit-and-run cases is to eliminate, or at least greatly reduce, the risk of fraudulent claims. Motor Vehicle Acc. Indemnification Corp. v. Eisenberg, 18 NY2d 1, 4, 218 NE2d 524. The courts, not the arbitrators, must determine the existence of physical contact as a condition precedent to an arbitration demand in hit-and-run cases. Matter of Motor Veh. Acc. Indem. Court v Lupo, 18 AD2d 717, 718, 236, NYS2d 464 (2nd Dept.[1961]).In determining whether physical contact with an uninsured vehicle is present the courts have stated, physical contact "occurs when the accident originates in a collision with an uninsured vehicle or an integral part of an uninsured vehicle." Gov. Employees v. Yarmoluk, 262 AD2d 561 .
While physical contact is a condition precedent in such case, "such contact need not directly be between insured's vehicle and the unidentified vehicle." Insurance Law 5217, State Farm Mut. Auto Ins. Co. v. Johnson, 287 AD2d 640, 732 NYS2d 21 (2nd Dept.[2001]). Rather, where the uninsured "vehicle causes an involuntary intermediary to come into contact with claimant's vehicle," the physical contact requirement will have been met. New York City Health Hospitals Corp. v. Degarter, 133 Misc 2d 93, 95, 506 NYS2d 644." Some examples of an involuntary intermediary are: another vehicle pushed by the uninsured vehicle into the claimant's vehicle; a fence which prevents actually contact with the uninsured vehicle but does not prevent a collision; a light pole struck by an uninsured vehicle and sent into another vehicle. Motor Vehicle Acc. Indemnification Corp. v. Eisenberg, 18 NY2d 1, 4, 218 NE2d 524.
In the case at hand, Lawrence presents no evidence to support a finding of physical contact between her vehicle and the unidentified vehicle. The only evidence available to the court in determining the existence of physical contact is the police report. However, the police report makes no mention of physical contact between Lawrence's vehicle and the vehicle that left the scene; nor does the police report mention any physical contact between the vehicle driven by Hill and the vehicle that fled the scene. In as much as respondent's demand for arbitration was untimely and was made after the statute of limitations had expired, the court need not determine whether the required physical contact was present in this case. Based on the foregoing, petitioner's motion seeking to permanently stay the arbitration is granted. It is hereby
ORDERED that respondent demand for arbitration is hereby deemed to have been served after the expiration of the statute of limitations. It is further
ORDERED that respondent failed to file a demand for arbitration as soon as practicable. It is further
ORDERED that respondent did not provide timely notice its demand for arbitration, and as such, arbitration is permanently stayed.
ORDERED that plaintiff serve a copy of this decision and order, with notice of entry upon all parties, via regular mail, within thirty days hereof.
This constitutes this Court's decision and Order.