Opinion
1146052004
Decided May 2, 2005.
Alex Muller, Esq., New York NY, for the Petitioners.
William D. Ryan, Esq., Melli, Guerin, Wall, New York NY, for the Respondent.
This is an CPLR Article 75 proceeding to compel respondent State Farm Indemnity Company to participate in an arbitration with the petitioners pursuant to an uninsured motorist endorsement. All of the issues raised by the parties, save one, were, with the court's assistance, resolved by way of a "so ordered" stipulation at the March 2, 2005 oral argument. In paragraph 9 of the stipulation, the parties agreed that this court will determine the choice of law to be applied by the arbitrator. For the reasons set forth below, the court concludes that New York law shall apply.
Petitioner Jacqueline Santiago, a resident of New York City, was a passenger in a car owned by New Jersey resident and co-petitioner Manuel Lopez when they were involved in a motor vehicle accident at Riverside Drive and 90th Street in New York County on June 11, 2003. Lopez's vehicle was insured by respondent, a New Jersey-based company. By the plain terms of Lopez's policy, Santiago was an insured person (Aff. in Opp. Ex. H, State Farm Car Policy [hereinafter "Policy"] at 3, 25-26). The other vehicle was uninsured, as defined under Lopez's insurance policy (Policy at 25; Pet. Ex. B, Letter from New Jersey Property-Liability Ins. Guaranty Assoc. to Muller). Coincidentally, the other vehicle was owned by a New Jersey company and its driver was a New Jersey resident (Aff. in Opp. Ex. A, Police Accident Report).
In paragraph 8 of the March 2, 2005 stipulation, the parties have agreed that arbitration is to take place in New York City, Santiago's place of residence. This accords with the insurance policy's language which provides that
The arbitration shall take place in the county in which the insured resides unless the parties agree to another place.
As concerns coverage disputes, which are not to be arbitrated according to the policy terms, they are to be "decided by a judge of a court in the county in which the insured resides." (Policy at 26, emphasis in original.)
(Policy at 26, emphasis in original.) At issue is the next sentence of the policy which states:
State court rules governing procedure and admission of evidence shall be used.
(Policy at 26.)
The parties disagree as to whether this sentence is to be understood as requiring New Jersey law to apply in the arbitration, or whether it means to say that the law to be applied is that of the state where the arbitration takes place, which is most likely the state in which the insured resides. Respondent argues that the policy was written by an insurance corporation licensed in New Jersey to sell automobile insurance in New Jersey, and which maintains offices solely in New Jersey and issues policies of insurance only to New Jersey residents, and that the law pertinent is therefore New Jersey's (Aff. in Opp. ¶ 8). Petitioners argue that the policy intends for New York law to apply in this instance, given that Santiago, an insured under the policy, is a New York resident and that the arbitration will take place in New York.
State Farm Mutual Automobile Insurance is a separate company doing business in New York State (Aff. in Opp. ¶ 9).
Neither party has addressed the contents of the first sentence of the paragraph following the sentence at issue in the policy, which reads:
The written decision of any two arbitrators shall be binding on each party unless the amount of the damages awarded exceeds the minimum limit of liability specified by the financial responsibility law of New Jersey.
(Policy at 26.) Here, unlike the sentence in the previous paragraph, the policy specifies that a certain law of New Jersey is to be applied as concerns the amount of the award. It is therefore logical to assume that because the policy clearly specified New Jersey law in this context, in other contexts where New Jersey's law is not specified, but only "state" law, the policy means to apply the law of the state in which the arbitration is conducted.
Applying a choice of law analysis does not lead to a different conclusion. The first step where there is a potential choice of law issue is to determine whether there is a conflict between the laws of the two jurisdictions involved ( Matter of Allstate Ins. Co. [Stolarz], 81 NY2d 219, 223). Here, the arbitration panel will be called upon to determine the tort elements of fault and damages. Petitioners argue that there are no "relevant differences" between New York and New Jersey law as concerns these issues, in particular because it is a "regular auto accident case" (Aff. in Reply at 8). Respondents do not explicitly refute this argument. However, if it is assumed that the law differs such that a choice of law analysis is imperative, the court will analyze this tort case by applying an interest analysis so as to determine whether New Jersey or New York has the greater interest in having its law applied ( Padula v. Lilarn Props. Corp., 84 NY2d 519, 521).
To determine the greater interest, the court must determine (1) the significant contacts and the jurisdiction in which they are located and (2) whether the purpose of the law at issue is to regulate conduct or allocate loss ( Padula at 521, citing Schultz v. Boy Scouts, 65 NY2d 189, 197, 198). As noted above, the insurance policy, the primary insured, and the vehicle are New Jersey-based, while the accident occurred in New York and injured a New York resident. However, the purpose of the laws governing operation of motor vehicles is to regulate conduct ( see, Padula, 84 NY2d at 522; Matter of Allstate [Stolarz], 81 NY2d at 225), and where the purpose is to regulate conduct, "`the jurisdiction in which [the defendant's] allegedly wrongful conduct occurred would usually have a predominant, if not exclusive concern . . . so as to give effect to that jurisdiction's interest in regulating conduct within its borders'" ( Tooker v. Lopez, 24 NY2d 569, 573, quoting Babcock v. Jackson, 12 NY2d 473, 483). The accident occurred in New York and involved a New York County resident who was injured due to the negligence of a driver who failed to follow New York City's Traffic Rules and Regulations and/or New York State's Vehicle and Traffic Law. New York has an overriding interest in that it seeks both to regulate the conduct of drivers within its borders and to distribute loss after the accident ( see, Matter of Allstate [Stolarz], 81 NY2d at 255). Accordingly, the arbitration shall proceed applying New York law. It is
ORDERED and ADJUDGED that the petition to compel arbitration is granted to the extent provided in the parties' "so ordered" stipulation of March 2, 2005 and in accordance with the principles of New York law.
This constitutes the decision, order and judgment of this court.