MTA Bus Co. v. ACE USA

Full title: In the Matter of the Arbitration of Certain Controversies Between MTA BUS…

Court: SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: IAS PART 40 B

Date published: Jun 13, 2012

2012 N.Y. Slip Op. 31610 (N.Y. Sup. Ct. 2012)

Opinion

Index No.: 403338/2011

06-13-2012

In the Matter of the Arbitration of Certain Controversies Between MTA BUS COMPANY, Petitioner, v. ACE USA, Respondent.

PETER H. MOULTON

PETER H. MOULTON,

Petitioner MTA Bus Company (MTA Bus) moves for an order pursuant to CPLR 7511 vacating an arbitration award on the grounds that the award was arbitrary and capricious, and that the arbitrator exceeded his authority by improperly asserting jurisdiction over the matter. MTA Bus also argues that, pursuant to CPLR 7507, the award should be vacated since it was not signed and affirmed by the arbitrator. Respondent ACE USA, who is owed $16,415.62 according to the award, argues that the petition should be denied as untimely and that the award should be confirmed.

BACKGROUND AND FACTUAL ALLEGATIONS

On April 29, 2008, nonparty Mintra Busgith (Busglth), a home attendant, was injured during the course of her employment while on the wheelchair lift of an MTA Bus. ACE USA was the workers' compensation carrier for Busgith's employer, and paid Busgith benefits, including lost wages and medical expenses, in the total amount of $32,831.23. On May 18, 2011, ACE USA initiated an arbitration request through Arbitration Forums, Inc., seeking to recoup from MTA Bus what it paid to Busgith. Section 5105 of the Insurance Law (Comprehensive Motor Vehicle Insurance Reparations) provides that insurers, self-insurers and worker's compensation insurers are subject to mandatory arbitration for disputes. Arbitration Forums, Inc. is the designated arbitrator for this mandatory arbitration process. MTA Bus does not believe that it should have been subject to mandatory arbitration since, among other reasons, it immediately disputed its responsibility to reimburse ACE USA, a workers' compensation provider.

To commence arbitration, ACE USA filed an online "NY PIP-Form," which is the form required for Personal Injury Protection (PIP) Arbitration Forum disputes. Both ACE USA and MTA Bus are subject to the additional New York PIP Arbitration Rules. The NY PIP Rule Revisions, attached as part of the record, state that these procedures "apply to the mandatory intercompany arbitration process pursuant to Section 65-4.11 (d) of the New York State Insurance Department Regulation No. 68." MTA Bus's Exhibit F, at 1.

In its PIP Arbitration Contentions Sheet, ACE USA cited to A.J. Transp. v New York State Ins. Fund (301 AD2d 380 [1st Dept 2003]), a case in which an arbitration was allowed to proceed whereby a workers' compensation provider attempted to, and recovered for, benefits it paid to a passenger on a bus.

MTA Bus responded and filled out its PIP Arbitration Contentions Sheet in which there was a space to list affirmative defenses. MTA Bus did not list any. In its contentions, MTA Bus gave a synopsis of its argument, and mainly contended that, regardless of MTA Bus's alleged liability, it was not liable for any payments to Busgith. No-fault regulations state that mandatory arbitration between insurers does not apply to claims where an insurer asserts, in good faith, a lack of coverage. MTA Bus maintains that Busgith was not covered under Insurance Law Section 5105 (a) because she was a passenger on a bus, rather than an owner, operator or employee of a bus company. Moreover, it argues that the present situation differs from the facts of the case cited to by ACE USA.

The three-arbitrator panel issued an award "the PIP Decision" published on September 1, 2011, and awarded ACE USA $16,415.62, which was 50% of the damages it was seeking. The arbitrators summarized the dispute as follows: "[a]pplicant contends that Respondent [sic] improper operation of wheelchair lift was the proximate cause of injury regarding Worker's [sic] Compensation benefit. Respondent contends Applicant has no right to recovery." The decision indicated that ACE USA proved 50% liability against MTA Bus and proved all damages. The arbitrators concluded with the following, in pertinent part:

What evidence caused you to render this decision and why?
Applicant supplies no Information as to theory of liability vs. Respondent or exact mechanism which caused injury. We only know injury was caused by "fall from lift." However, Respondent was cited for "improper use of lift"-which may be for allowing wheel chair and injured assistant on lift at same time. No mechanical issues with lift found upon inspection. Award
State Negligence Law applied to award calculations: Pure Comparative.

MTA Bus's Exhibit A, at 1.

On September 23, 2011, MTA Bus submitted an appeal of the arbitrators' decision. In its appeal, MTA Bus cited to the general rules, not the specific PIP rules, and wrote that MTA Bus was entitled to pursue an appeal if there was a clerical or jurisdictional error. MTA Bus explained that a jurisdictional error had been made since the arbitrators failed to rule on an affirmative defense and/or decided an issue that was beyond their jurisdiction.

On October 11, 2011, a representative from Arbitration Forums, Inc. responded to MTA Bus and advised it that, pursuant to the PIP rules, there was no appeal process allowed for PIP claims. The representative explained to MTA Bus that the prior decision was final and binding. Regardless, even if there were an appeal process, according to the representative, the decision would be upheld. The letter to MTA Bus stated the following:

There is no review or appeal process under the NY PIP intercompany arbitration rules and regulations. The New York is [sic] Insurance Department, Regulation 68, addresses the issue of reviewing a decision. A decision rendered by a panel is final and binding with no right to rehearing or appeal. Arbitration Forums has no authority to review the panel's decision on issues of fact or law. Under Regulation 68, Arbitration Forums is authorized to correct only those decisions where Arbitration Forums' staff has made a clerical or typographical error.
I have reviewed your contentions and no affirmative defenses were raised. In order to assert an affirmative defense, the Respondent must check the affirmative defense section of the contention sheet and raise any issue that does not address the dispute itself but rather raises issues that may be impediments to the arbitrator's right to consider the dispute itself in this area.
In this case, neither party argued liability. However, the Applicant provided enough evidence to support the injury was caused by falling from the lift and that the Respondent was cited for improper use of lift. It appears the evidence further supported the Applicant insured may have been partially responsible; the panel only awarded 50%. The decision was within the discretion of the arbitrator, the issue of liability has been decided, and AF lacks the authority to void the decision.

MTA Bus's Exhibit E, at 1.

On December 30, 2011, MTA Bus filed a petition seeking to vacate the letter dated October 11, 2011 from Arbitration Forums, Inc.

DISCUSSION

Pursuant to CPLR 7511 (a), " [a] n application to vacate or modify an [arbitration] award may be made by a party within ninety days after its delivery to him." See e.g. Matter of Kunju v MTA, 94 AD3d 585 (1st Dept 2 012) ("Petitioner's application to vacate the arbitration award was made more than 90 days after the award was delivered to him and is therefore untimely").

MTA Bus received the arbitration award on September 1, 2011, and this petition was not served until at least December 30, 2011. MTA Bus alleges that the letter received by Arbitration Forums, Inc. should be considered the final and binding arbitration award. As such, according to MTA Bus, it had 90 days from the date of this letter to file the petition. However, as set forth below, the record indicates that the award dated September 1, 2011 is the only arbitration award received by the parties.

As previously mentioned, both parties are subject to additional PIP rules as part of their mandatory arbitration. PIP Rule 5 (i) states that "[a] decision of an arbitrator, or a majority of an arbitration panel on issues of fact or law is final and binding." MTA Bus's Exhibit F, at 4. However, the parties may seek a correction of a clerical or administrative error within 3 0 days of receiving the decision. In its appeal, MTA Bus was not seeking the review of a clerical or administrative error, but was arguing that the decision should not be upheld for legal and jurisdictional reasons.

The October n, 2011 letter written to MTA Bus also explicitly stated that the prior decision was final and binding. Furthermore, the letter indicated that MTA Bus had no right to appeal. It even went on to explain that, among other things, even if MTA Bus had the right to appeal based on MTA Bus's argument that the arbitrators failed to rule on MTA Bus's affirmative defenses, the original form sent to the arbitrators did not have any affirmative defenses listed underneath the heading. As such, this argument made by MTA Bus, seeking additional review, had no merit.

Despite receipt of this letter, which was clearly not an arbitration "award" pursuant to CPLR 7511 (a), MTA Bus waited more than 90 days from the receipt of the September 1, 2011 award to file this petition. Notably, petitioner was well within the statute of limitations when it received the letter, yet chose to ignore it.

MTA Bus attempts to excuse this failure by citing to rule 2-12 with respect to "Property and Special Forums" which specifies that an "appeals panel's decision will be final and binding with no right to further review." However, this arbitration was a PIP arbitration, and not one under Property or Special Forums. It is evident that MTA Bus was aware that the PIP rules applied as the forms all had PIP in the letterhead. MTA Bus also attached a copy of the additional PIP specific rules in its record, and the rules specified that they would "apply to the mandatory intercompany arbitration process pursuant to Section 65-4.11 (d) of the New York State Insurance Department Regulation No. 68." That regulation, in turn, clearly provides that "[t]he decision of a majority of an arbitration panel shall be final and binding upon the insurers to the controversy. There shall be no right of rehearing or appeal. However, this provision does not preclude correction of clerical or typographical errors" (11 NYCRR § 65-4.11 [a] [3]). MTA Bus's misunderstanding of the applicability of Property or Special Forums provisions in this PIP case, cannot overcome statutory deadlines. Furthermore, although MTA Bus complains that the award was unsigned, the general rules of Arbitration Forums, Inc. provide for electronic signatures and the affidavit from a manager at Arbitration Forums, Inc. indicates that the award was electronically signed. As such, MTA Bus's application to vacate the award is dismissed as untimely and the court need not address MTA Bus's arguments on the merits. See e.g. Werner Enters. Co. v New York City Law Dept., 281 AD2d 253, 253 (1st Dept 2001) ("Contrary to petitioner's argument, there is nothing to suggest that, because petitioner seeks to vacate the subject awards upon grounds set forth in CPLR 7511 (b) (2), the time limitation set forth in CPLR 7511 (a) may be dispensed with").

Pursuant to CPLR 7511 (e), "[u]pon denying a motion to vacate or modify an arbitration award, the court must confirm the award." Larsen & Toubro Ltd. v Millenium Mgt., Inc., 45 AD3d 453, 453-454 (1st Dept 2007); see also Matter of American Fed. Group v AFG Partners, 111 AD2d 119 (1st Dept 2000) ("the court must confirm an award upon denying a motion to vacate or modify it" even when confirmation is not sought in opposition to an untimely motion to vacate). As .confirmation is mandated, the merits of the dispute are of no import and therefore, will not be addressed. But compare Matter of New York Tel. Co. v State Farm Ins. Co., 137 Misc 2d 376, 378-79 (Sup. Ct, New York County 1987). The September 1, 2011 arbitration award is confirmed in accordance with CPLR 7511 (e). See e.g. Matter of Rodriguez v New York City Tr. Auth., 269 AD2d 600, 600 (2d Dept 2000).

CONCLUSION AND JUDGMENT

Accordingly, it is hereby

ADJUDGED that the petition of MTA Bus Company is denied as untimely; and it is further

ADJUDGED that the arbitration award dated September 1, 2011 is confirmed; and it is further

ADJUDGED that ACE USA have judgment and recover against MTA Bus Company, in the amount of $16,415.62 plus interest at the rate of 9% per annum from the date of September 1, 2011, as computed by the Clerk in the amount of $ ___________, together with costs and disbursements in the amount of $ ___________ as taxed by the Clerk, for the total amount of $ ___________, and that ACE USA have execution therefor.

ENTER:

______________________

J.S.C