Chubb Ins. Co. v GEICO Ins. Co.

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1 Chubb ns. Co. v GECO ns. Co NY Slip Op 32356(U) July 20, 2007 Supreme Court, New York County Docket Number: /2007 Judge: Marcy L. Kahn Republished from New York State Unified Court System's E-Courts Service. Search E-Courts ( for any additional information on this case. This opinion is uncorrected and not selected for official publication.

2 [* 1 ] ANNED ON SUPREME COURT OF THE STATE OF NEW YORK - NEW YORK COUNTY PRESENT: Hon. Marcy L. Kahn PART 50K Justice CHUBB NSURANCE NDEX NO /07 -v- GECO NSURANCE Sequence Number: 001 MOTON DATE MOTON $EO. NO. \ MOTON CAL. NO. VACATE were read on thla rnotlon to/* = - Notice of Motion/- - - Exhlblts 1 Answerlng Afffdavlts - Exhlbits WTWH S DECDED N ACCORD#N+CE MEMORANm ENTER: J.S.C. Check One: FNAL DSPOSTON 0 NON-FNAL DSPOSTON

3 [* 2 ] SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY: CVL TERM: AS PART 50K CHUBB NSURANCE a/s/o Chenille Bo ORDER AND JUDGMENT ON MOTON TO VACATE AWARD GECO NSURANCE and STATEWDE NSURANCE COMPARY, MARCY L. KAHN, J. : ndex No /07 By notice of petition and petition dated April 4, 2007, and the exhibits annexed thereto, petitioner Chubb nsurance Company ("Chubb" or "petitioner"), moves for an order pursuant to CPLR 7511(b)(l)(iii) vacating the amended award of the arbitrator, dated January 17, 2007, in the arbitration proceeding between petitioner and respondent, GECO nsurance Company ("respondent" or "GECO") on the ground that the arbitrator exceeded her powers, and seeks to reinstate the original award issued by the arbitrator on November 3, For the reasons stated, and in the absence of opposition from respondent, petitioner's motion to vacate the amended arbitration award is granted on default and the original award is reinstated.. FACTUAL AY D PROCEDURAL BACKG ROUND On January 22, 2003, Chenille Bonner ("Bonner"), a New York \ 1 City Transit Authority ("NYCTA") bus driver, was on duty in her bus when it became involved in a three-vehicle accident. As the NYCTA workers' compensation insurer, Chubb paid $42, in

4 [* 3 ] senefits to and on behalf of Bonner as a result of the accident. (Pet. Exh. B). n accordance with nsurance Law 55105, Chubb filed an inter-company arbitration demand against GECO and Statewide nsurance Company ( Statewide ), the insurers of the other two Jehicles, seeking reimbursement of the first-party benefits it lad paid to its insured. As one of the vehicles involved in the accident was a NYCTA bus weighing in excess of 6500 pounds inloaded and constituting a vehicle for hire (see Pet. Exh. A), the jurisdictional requirements of 5105(a) were satisfied. The Ease was then submitted to arbitration with Arbitration Forums nc. ( AF ) pursuant to Section 5105(b) and 11 NYCRR of the no-fault regulations on September 19, (Pet, Exh. C). On October 31, 2006, the arbitration was held before the AF arbitrator, Sabrina Owens ( Owens or the arbitrator ). 3n November 3, 2006, Owens issued her decision in the matter under AF Docket No (the original award finding each of the respondents to be fifty per cent liable and awarding Chubb a total of $42, (Pet. Exh. D). Thereafter, by letter to the arbitrator dated November 22, 2006, respondent GECO requested that the award against it be vacated due to an incorrect application of New York regulation? regarding PP loss transfer requirements.... (Pet. Exh. E). n essence, GECO argued that because GECO provided motor,! 2

5 [* 4 ] vehicle insurance coverage for the bus to the NYCTA, it was "united in interest" with Chubb and recovery by Chubb against it das barred. On January 17, 2007, the arbitrator issued an amended decision and award ("amended award"), in which she determined that Statewide bore fifty per cent of the liability and that SECO bore no liability in the case. (Pet. Exh. F). The amended award reduced Chubb's recovery to $21, Thereafter, petitioner commenced the instant proceeding in this court. 11. PETTONER'S CONTENTJQNS Petitioner makes arguments in support of its application to vacate the amended award based upon statutory grounds and upon the rules of AF (see "Personal njury Protection Rules & Regulations," [Arbitration Forums, nc. June 1, 20051, Pet. Exh. G [the "AF Rules"]). t argues that the amended award must be vacated because the arbitrator exceeded her powers in issuing the award in that the amended award constituted a change in the substance of the original award in violation of CPLR 7509 and 7511(c) e (Pet. 23, 24, 25). Petitioner also argues that such modification of the merits of the original award violated the AF Rules prohibiting modification of arbitral awards for other than clerical or administrative reasons. (Pet. 14, 18). Chubb, further maintains that GECO's request for modification of the jl 3 E

6 [* 5 ] ]ward was untimely under both CPLR and the AF rules. (Pet. 22, 14, 16)- Because of the conclusion reach with respect to ietitioner's statutory claims, it is unnecessary to address t he Zlaims based upon the AF Rules. L. ps;scu SSON Under CPLR (b) (l), the court may vacate an arbitration award if the party's rights were prejudiced by: 1) corruption, fraud or misconduct in procuring the award; ii) partiality of an arbitrator appointed as a neutral, except where the award was by confession; or 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 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 no notice of the defect and without objection. (CPLR 7511 [b] [l] 1. Judicial interference with arbitral awards should be avoided, except where the award \\is violative of a strong public policy, totally irrational or in excess of a specifically enumerated limitation upon arbitral authority." (Matter of the Board of Educ. of the Dover Union Free School Dist. v. Dover-Winsdale Teachers' Ass 'n, 61 NY2d 913,915 [1984]; Matter Qf $ ilverman v. C ooper, 61 NY2d 299,308 [1984]). Section 7511 provides the exclusive grounds for vacation by the court of an arbitration award, and the party seeking vacation must have 4

7 [* 6 ] een prejudiced by the arbitrator s conduct in violation of one f the four grounds enumerated in the statute. (Silbar V. ;ilber, 204 AD2d 527,528 [Znd Dept ). At common law, an arbitrator lacked the power to modify an irbitration award previously issued. (See perbst, v. Haspnaers, L37 NY 290 [1893]; Matter of New Paltz Central School Dist. [New?aLtz United Teachersl, 99 AD2d 907 [3rd Dept ; Matter of 4o1e [Oueep ns, Co. 1, 14 AD2d 1,2 [4th ). Once the award lad been rendered, the arbitrator was prohibited from re-opening the case and modifying OF setting aside the award, whether at?is own instance or on the motion of the parties, and regardless 3f the grounds urged in support. (a). Section 7509 of the CPLR creates a narrow exception to the common law rule, providing that [oln written application of a party to the arbitrators within twenty days after delivery of the award to the applicant, the arbitrators may modify the award upon the grounds stated in subdivision c of section The latter section permits modification of an award on grounds that: 1. there was a miscalculation of figures or a mistake in the description of any person, thing or property referred to in the award; or 2. the arbitrators have awarded upon a matter not submitted to them and the award may be corrected without affecting the merits of the decision upon the issues submitted; or 3. the award is imperfect in a matter of form, not affecting the merits of the controversy. 5

8 [* 7 ] l rule, an arbitrator is authorized to modify an award only in conformity with the requirements of section (New Paltz Central School Dist., m). Any modification of an award not undertaken in strict compliance with the terms of the statute is unauthorized, and constitutes action in excess of the arbitrator's jurisdiction. (L). Thus, when an arbitrator alters the substance of an award, the modified arbitration award is subject to vacation pursuant to CPLR 7511(b) (1) (iii). (a; see Wol f & Munier, pc. v. Diesel Co ngtr. Co., 41 AD2d 618 (1'' 1 Dept. 1973). ' i Furthermore, CPLR expressly requires that any party seeking modification of an arbitration award do so "[oln written application... to the arbitrators within twenty days after delivery of the award to the applicant....' Absent compliance with the procedural requirements of the statute, an arbitrator is without authority to vacate an award. (See Matter *, nt ns. Co,, 241 AD2d 451 ' 1 [Znd Dept ). Accordingly, any request for modification in 1!an award must be made during the twenty days following the 1 L n the present case, the arbitrator modified the award to 6

9 [* 8 ] eliminate any liability on the part of respondent GECO, apparently' based upon GECO's contention in its November 22, 2006 letter to AF that the award was a misapplication of New York law. (Pet. Exh. F). There can be no doubt that the change in the award prejudiced the petitioner, who was then left w ith an award for relief which had been diminished by fifty per cent.! 'Nor can it be disputed that the amended award effected a to award. (Matter of New Paltz CentxaJ, $c hool Dist., supra; Wolff & Munier, nc. v. Diesel Constr. Co., supra). i Chubb's untimeliness claim, however, is not sufficiently well-pleaded to entitle it to relief. The petition contains self-contradictory claims as to the date of issuance of the original award (Pet.? 9, 16), erroneously calculates the elapsed time between the publication of the award and the mailing of GECO's letter (Pet. 16, 22), and nowhere mentions the date of delivery of the award to the applicant, which is the operative date for purposes of section For these reasons, 7

10 [* 9 ] inder CPLR 7509 and 7511(c) in modifying the original award, ;he amended award issued on January 17, 2007 must be vacated,.caving the original award extant. jchooi Dist., supra). (Matter of New Paltz Central :V. CONCLUSON For all the foregoing reasons, petitioner s application t o racate the amended arbitration award issued on January 17, 2007 Ls granted, and the amended award is vacated. The arbitration 3ward of November 3, 2006 is hereby reinstated. The foregoing constitutes the decision, order and judgment f this court. ENTER: Dated: New York, New York July 20, 2007

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