Monday, August 25, 2008

Carolina In Their Mind

Matter of Government Employees Insurance Co. v. Integon National Ins. Co.

(Sup. Ct., Richmond Co., decided 8/12/2008)

GEICO commenced this special proceeding to stay arbitration of the UM claim of its insured, Nadirah Shakoor, who allegedly was injured in a rear end collision on November 4, 2006. The police report listed the other driver as Jose Manuel Salas Oleda of 207 Vance Street, Wilson, North Carolina 27093 (maybe he lived above the beauty salon? and there is no such zip code), who produced an insurance ID card bearing an Integon National Insurance Company policy number. By letter dated January 29, 2007, Integon indicated that it received notice of an accident having occurred on November 17, 2006, and disclaimed coverage based on Mr. Oleda's failure to cooperate in its accident investigation.

CPLR § 7503(c) provides that “[a]n application to stay arbitration must be made by the party served within twenty days after service upon him of the notice or demand, or he shall be so precluded." Although GEICO filed this special proceeding 21 days after receiving Shakoor's arbitration demand, the 20th day fell on a Sunday, so GEICO's application for a stay was timely under New York General Construction Law § 25(a)(1).

With respect to the validity of Integon's disclaimer, Integon argued that because Oledo purchased his insurance policy in North Carolina for an automobile registered in North Carolina, that North Carolina law should apply in this matter. Richmond County Supreme Court Justice Joseph Maltese agreed, citing the Second Department's decision in Matter of Eagle Insurance Company v. Singletary, holding that insurance contracts are governed by the law of the state where the principal parties understood to be the “. . . principal location of the insured risk[.]" Under North Carolina law, an insured's breach of a policy's cooperation clause must be "material and prejudicial", ordinarily questions of fact for a jury.

In granting GEICO's motion for a temporary stay of arbitration pending a framed issue hearing to determine whether the Oleda vehicle was uninsured at the time of the alleged accident, the court found:
Based on the factual landscape currently before this court, it is impossible to hold as a matter of law that Integon’s disclaimer of coverage based breach of the cooperation clause is lawful under the laws of the state of North Carolina.

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