Opinion
Index No. 651645/2022 MOTION SEQ. No. 001
09-21-2022
WESCO INSURANCE COMPANY Petitioner, v. GEICO GENERAL INSURANCE COMPANY A/S/O NANCYANNE CORCIONE, Respondent.
Unpublished Opinion
MOTION DATE 05/05/2022
PRESENT: HON. LYLE E. FRANK, Justice
DECISION + ORDER ON MOTION
LYLE E. FRANK, J.S.C.
The following e-filed documents, listed by NYSCEF document number (Motion 001) 2, 20, 21,22, 26, 27, 29, 31,32, 33, 34, 35, 36, 37, 38, 39, 40, 41,42, 43, 44, 45, 46, 47, 48, 49, 50, 52, 53, 54, 55, 56 were read on this motion to/for VACATE - DECISION/ORDER/JUDGMENT/AWARD.
Petitioner, WESCO INSURANCE COMPANY ("Wesco"), seeks an order pursuant to CPLR § 751 l(b)(1)(iii) to vacate the arbitration award #1068-08977-21-00 from Arbitration Forums, Inc. in favor of Respondent GEICO GENERAL INSURANCE COMPANY ("Geico") dated January 27, 2022 ("Award"), on the basis that the arbitrator exceeded his/her powers, alleging that the award was so imperfectly executed that a final award upon the subject matter submitted was not issued. Petitioner also seeks an order for a judgement on the merits or, in the alternative, referring this matter back to Arbitration Forums Inc. for a re-hearing and final determination based on the merits. For the reasons set forth below the petition is granted and respondents' cross-petition to confirm the decision is denied.
Background
Respondent GEICO filed for loss transfer arbitration against Petitioner WESCO, seeking reimbursement for Personal Injury Protection ("PIP" or "No-Fault") benefits paid on behalf of its named insured, Davina Walsh, as a result of an accident occurring on August 23, 2018 ("Underlying accident"), while GEICO's insured was operating a "loaner car" owned by Respondent WESCO's insured to be used while the GEICO insured vehicle was out of service due to repairs from August 14-23, 2018.
Discussion Vacating the Award
Pursuant to CPLR §7511(b)(1), an arbitration award can be vacated or modified on the grounds that:
(i) corruption, fraud, or misconduct in procuring the award;
(ii) partiality of an arbitrator appointed as a neutral, except where the award was by confession;
(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 submitted was not made; or
(iv) failure to follow the procedure of this article, unless the party applying to vacate the award continued with the arbitration with notice of the defect and without objection.
To be upheld, the award must have evidentiary support or other basis in reason, appear in the record, and not be arbitrary or capricious (Motor Veh. Acc. Indem. Corp, v Aetna Cas. &Sur. Co., 89 N.Y.2d 214 [1996]; Mount St. Mary's Hosp, v Catherwood, 26 N.Y.2d 493 [1970]).
In the award, Arbitrator 2000448554 of Arbitration Forums, Inc. bases their decision on a similar case involving the same parties from Nassau County Supreme Court (Index # 601078/2019), only stating that "The decision is most persuasive when it states: "That agreement purported to transfer PIP Liability to [the driver/loanee]'s insurer in the first instance. But that agreement cannot be controlling. Otherwise, New York's insurance priority regulations - written for the benefit of the insurers - could be altered at the whim of the insureds." The arbitrator did not provide further justification for the award. It is the Court's opinion that the basis for the decision of the arbitration award is insufficient and is so imperfectly executed that a final and definite award upon the subject matter submitted was not made.
Judgment on the merits
The PIP endorsement specifically incorporates the liability section of the policy when determining coverage. Under the liability section of the GEICO policy, GEICO is obligated to provide coverage when an insured person is operating a "Temporary Substitute Auto." More specifically, under the liability section of the policy, a "Temporary Substitute Auto" is included in the owned auto definition. The policy states:
(6) Owned Auto means:
(a) A vehicle described in this policy for which a premium charge is
shown for these coverages ...
(d) a temporary substitute auto.
(10) Temporary Substitute Auto means an auto or trailer, not owned by you, temporarily used with the permission of the owner. This vehicle must be used as a substitute for the owned auto or trailer when withdrawn from normal use because of its breakdown, repair, servicing, loss or destruction.
Under the liability section GEICO agrees to provide liability coverage that would, cover a "Temporary Substitute Auto" as this section states as follows:
LOSSES WE WILL PAY FOR YOU Under Section I, we will pay damages which an insured becomes legally obligated to pay because of:
1. bodily injury sustained by a person; and
2. property damage
Arising out of the ownership, maintenance or use (including loading or unloading) of the owned auto or a non-owned auto ...
In ELRAC, Inc, v. M.ehlinger, 258 A.D.2d 500, 501-502 (2nd Dept, 1999), the Second Department has stated that:
The purpose of a substitution clause is to afford continuous coverage to the insured during the period that a vehicle scheduled under the policy is out of commission, and at the same time limit the risk of the insurer to one operating automobile at a time for a single, fair premium (see, VanMinos v Merkley, 48 A.D.2d 281, 285; 12 Couch, Insurance § 45:219, at 512 [2d ed]). The protection is limited to the occasional or infrequent use of a vehicle not owned by the insured; it is not intended as a substitute for insurance on vehicles regularly used by the insured (see, Liberty Mut. Ins. Co. v Sentry Ins., 130 A.D.2d 629, 630, rearg granted 135 A.D.2d 508; see also, Federal Ins. Co. v Allstate Ins. Co., 111 A.D.2d 146, 147). The significant question in the present case is whether Mehlinger's van, expressly designated as the insured vehicle under the Commercial insurance policy, was "out of normal use" as that term may be construed in the context of the "temporary substitute" provision of the policy.
The law is clear that a "loaner", or "temporary substitute vehicle", is covered under an insureds policy. Upon the foregoing, it is therefore
ORDERED that the petition of Petitioner WESCO INSURANCE COMPANY is granted; and the Award #1068-08977-21-00 from Arbitration Forums, Inc. is vacated; and it is further
ORDERED AND ADJUDGED that GEICO is required to provide coverage to insured Davina Walsh in the underlying accident; and it is further
ORDERED that the Clerk shall enter judgment accordingly.