Monday, October 6, 2008

De Novo Action Following Master Arbitration Award of No-Fault Benefits Upheld

Progressive Ins. Co. v. Strough
(4th Dept., decided 10/3/2008)

Is it possible for a no-fault insurer to challenge a master arbitration award? Yes. 11 NYCRR § 65-4.10(h) provides:

(h) Appeal from master arbitrators award.

(1) A decision of a master arbitrator is final and binding, except for:

(i) court review pursuant to an article 75 proceeding; or

(ii) if the award of the master arbitrator is $5,000 or greater, exclusive of interest and attorney’s fees, either party may, in lieu of an article 75 proceeding, institute a court action to adjudicate the dispute de novo.

(2) A party who intends to commence an article 75 proceeding or an action to adjudicate a dispute de novo shall follow the applicable procedures as set forth in CPLR article 75. If the party initiating such action is an insurer, payment of all amounts set forth in the master arbitration award which will not be the subject of judicial action or review shall be made prior to the commencement of such action.

In this case Progressive commenced a de novo action following a master arbitration award, seeking a declaration not only that it should not have to pay the master arbitration award, but that it was not obligated to indemnify the insured for any claims arising from her accident based on her alleged lack of cooperation.

In AFFIRMING the denial of both parties' summary judgment motions, the Fourth Department held:

We conclude that Supreme Court properly denied defendant's motion seeking summary judgment dismissing the complaint and confirming the award of the master arbitrator and properly granted that part of the cross motion of plaintiff seeking a de novo determination of its claim that it has no duty to indemnify defendant for claims arising from the motor vehicle accident, including claims for no-fault benefits. Contrary to the contention of defendant, the action is not barred by the doctrine of res judicata. Although the doctrine of res judicata generally applies with respect to a final arbitration award (see Rembrandt Indus. v Hodges Intl., 46 AD2d 623, 623-624, affd 38 NY2d 502), Insurance Law § 5106 (c) and 11 NYCRR 65-4.10 (h) (1) (ii) expressly provide that either party to a matter submitted to arbitration has the right to a de novo determination of the dispute in the event that the master arbitrator's award is $5,000 or greater, exclusive of interest and attorney's fees, and that is the case here (see Matter of Greenberg [Ryder Truck Rental], 70 NY2d 573, 576-577; Matter of Capuano v Allstate Ins. Co., 122 AD2d 138, 139).

We further conclude that the court properly denied that part of plaintiff's cross motion for summary judgment declaring that plaintiff has no duty to indemnify defendant for claims arising from the motor vehicle accident in question, including claims for no-fault benefits. Plaintiff failed to support its motion with evidence provided by an individual with personal knowledge of the facts (see Chiarini v County of Ulster, 9 AD3d 769, 769-770), and the documents provided by plaintiff in support of the cross motion do not establish that defendant failed to cooperate with plaintiff, as alleged in the complaint. Thus, plaintiff failed to meet its burden of establishing its entitlement to judgment as a matter of law (see generally Zuckerman v City of New York, 49 NY2d 557, 562; New York Cas. Ins. Co. v Kushner, 309 AD2d 1235).
With the abundance of reported cases denying summary judgment motions based on the lack of supporting affidavits from individuals with personal knowledge -- especially in the no-fault arena -- one would think that this procedural deficit could and would easily be avoided. A summary judgment motion without a party's affidavit is like an omelette without eggs.

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