Friday, September 5, 2008

SUM Claim Arbitration Not Barred By Res Judicata or Collateral Estoppel

Matter of Interboro Ins. Co. v. Rienzo

(2nd Dept., decided 9/2/2008)

In Matter of State Farm Ins. Co. v Smith, 277 AD2d 390 (2nd Dept. 2000), the Second Department ruled that the claimant was not barred by the doctrine of collateral estoppel from pursuing her SUM claim against State Farm even though she had previously been awarded only $25,000 in an arbitration concluding her personal injury claim against the tortfeasor. While acknowledging that collateral estoppel effect can be given to arbitration awards, the court noted that the claimant and tortfeasor had limited the scope of their arbitration by stipulating in their written arbitration agreement that the decision rendered by the arbitrator was to be conclusive "only as to the matters being adjudicated in said arbitration, pertaining to the parties present," and was to have no "collateral estoppel effect as to the same or similar issues in companion claims or actions arising out of the incident which is the subject of said arbitration."

In this case, the Second Department's citation to and reliance on Matter of State Farm Ins. Co. v Smith implies that Interboro Insurance Company made the same argument -- that collateral estoppel from a prior arbitration award or result collaterally estopped its insured from pursuing coverage under her policy with Interboro. The Second Department affirmed that part of Suffolk County Supreme Court's order which denial of Interboro's petition to permanently stay arbitration of the SUM claim:
The Supreme Court correctly concluded that the respondent was not barred by the doctrines of res judicata or collateral estoppel from pursuing arbitration against the petitioner with respect to her claim for supplementary uninsured/underinsured motorist benefits; accordingly, that branch of the petition which was for a stay of the arbitration on that basis was properly denied (see Matter of State Farm Ins. Co. v Smith, 277 AD2d 390; Kerins v Prudential Prop. & Cas., 185 AD2d 403).
The court reversed that part of the lower court's order denying Interboro discovery of the insured's SUM claim prior to arbitration:
However, the Supreme Court should have granted the alternative branch of the petition, which the respondent, Theresa Rienzo, did not oppose, which was to direct Rienzo to submit to an examination under oath and a physical examination, and to furnish pertinent medical documentation or authorizations for the petitioner to obtain that documentation, prior to arbitration (see 11 NYCRR 60-2.3[f][2], [3]; Matter of Interboro Mut. Indem. Ins. Co. v Wiener, 267 AD2d 310).

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