Friday, June 27, 2008

UM Arbitration Award of $15,000 for Scalp Scar Confirmed Over Claims of Arbitrator Partiality, Bias, or Prejudice

Travelers Prop. Cas. Co. of Am. v. Swen
(Sup. Ct., Queens Co., decided 6/24/2008)

Swen arbitrated his hit-and-run UM claim against Travelers. After a hearing, the arbitrator found that that the accident was solely attributable to the negligence of the hit-and-run vehicle, the scar on Swen's scalp qualified as "a significant disfigurement" pursuant to Insurance Law §5102(d), and the value of that injury was $15,000. Swen brought this CPLR article 75 special proceeding to vacate the arbitrator's award pursuant to CPLR § 7511(b) based on the arbitrator's alleged partiality, bias and/or prejudice. Travelers cross moved to confirm the arbitration award.

Swen contended that the arbitrator and Traveler's defense attorney had worked together at The Robert Plan for many years. He alleged that "these critical facts" were never presented to him prior to the hearing, and that had he been aware of the close relationship between the arbitrator and Traveler's attorney, he would not have consented to the arbitrator's appointment. Additionally, he argued that the arbitrator has an unfavorable view of scarring injuries, relying on one other decision rendered by the arbitrator in a matter involving a scar.

Travelers opposed Swen's application and supported its cross motion with an affirmation of its counsel, who explained that although he and the arbitrator were employed by the same company for just over one year a decade earlier, at no time had he ever maintained a social relationship with the arbitrator. Travelers also pointed out the arbitrator had disclosed his employment history prior to the start of the arbitration, and both sides agreed to go forward.

In denying Swen's petition and granting Travelers' cross motion to confirm the award, Queens County Supreme Court Justice Jaime Rios held:
CPLR 7511(b) provides that an application to vacate an arbitration award by a party who has participated in the arbitration may only be granted upon the grounds that the rights of that party were prejudiced by corruption, fraud, or misconduct in procuring the award, partiality of the arbitrator, the arbitrator exceeded his powers or failed to make a final and definite award, or a procedural failure that was not waived (citations omitted).

* * * A party who proceeds with an arbitration with actual knowledge of a relationship between his adversary and the arbitrator, waives his objection to the arbitration (citations omitted). Furthermore, a party that has facts that would reasonably prompt further inquiry has a responsibility to ascertain the potentially disqualifying facts (citations omitted).

Swen waives any claim related to the bias or partiality of the arbitrator since he proceeded with the arbitration after learning of the prior relationship (citation omitted). His claim that he was not aware of the alleged relationship prior to attending the hearing is of no consequence, since it is undisputed that the arbitrator disclosed the prior employment relationship prior to the commencement of the arbitration and, although, he was given the opportunity to object, he chose to go forward.

An arbitrator is not required to justify his award, it must merely be evident that there exists a rational basis for it upon a reading of the record (citations omitted).

Here, the arbitrator's decision was based upon Swen's testimony, medical reports and records, his review of the scars and photographs taken. The arbitrator found that the scar on Swen's scalp, which he described as "clearly visible, as an extensive whitish discoloration" qualified as "a significant disfigurement". He concluded that "while the scarring on the knee and shoulder are also visible, they are on parts of the body that are generally concealed by clothing", and that Swen's other injuries were not based upon "competent medical proof".

Swen's allegation that he was prejudiced by the arbitrator's unfavorable view of "scarring injuries" is unsubstantiated.

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