Opinion
24484/04.
Decided December 13, 2004.
petitioner Allcity Insurance Company (Allcity) seeks an order granting it a permanent stay of the subject uninsured motorist arbitration or, alternatively, a temporary stay pending a hearing on the issues of (a) statute of limitations and (b) compliance with policy conditions preliminary to arbitration; or a temporary stay pending discovery with the proposed additional respondents, Amado Sanchez and Legion Insurance Company, added to the proceeding. Respondent Marcelo Cedena opposes the instant application on the ground that his demand for uninsured motorist arbitration was timely and otherwise compliant with all relevant statutory and contractual requirements.
On October 1, 1997, respondent was allegedly injured in a motor vehicle accident when the vehicle in which he was a passenger was rear ended by a vehicle which was owned and operated by Amado Sanchez. On or about December 24, 1997, respondent gave notice to Allcity of his no fault claim concerning said accident. At the time of the accident, Mr. Sanchez was insured by Legion Insurance Company (Legion). Respondent commenced an action against Mr. Sanchez in Supreme Court, Kings County under the index number 34377/00. A note of issue was filed in that action on January 16, 2002. Shortly thereafter, however, all actions involving Legion were stayed due to liquidation proceedings which were then pending in regard to Legion's insolvency. Respondent alleges that in June 2004, he was informed by a representative of the New York State Insurance Department Liquidation Bureau that there were no further funds available in the New York State Public Motor Vehicle Liability Security Fund (the PMV) for defense and/or liability expenditures on any Legion claims. Shortly thereafter, on July 16, 2004, respondent filed the instant demand for uninsured motorist arbitration.
"A demand for arbitration of an uninsured motorist's claim is subject to the six-year Statute of Limitations, which runs from the date of the accident or from the time when subsequent events render the offending vehicle `uninsured'" ( Matter of Allstate Ins. Co. v. Torrales, 186 AD2d 647). "[If] the offending vehicle is insured on the date of the accident, an uninsured motorist claim does not accrue until the vehicle thereafter becomes uninsured" ( Allstate Ins. Co. v. Giordano, 108 AD2d 910, 1 affd 66 NY2d 810). Where a claim is filed more than six years after the accident date, therefore, the party bringing said claim is "required to come forward with legally sufficient proof that a later accrual date applies" ( Allstate Ins. Co. v. Morrison, 267 AD2d 381).
Additionally, it is well settled that a claim for uninsured motorist benefits must be filed with the insurance carrier as soon as practicable ( see Matter of State Farm Mutual Automobile v. Fuccio, 288 AD2d 96, 47 [2001]; Matter of Eagle Ins. Co. v. Garcia, 780 AD2d 476; Matter of Travelers Ins. Co. v. DeLosh, 248 AD2d 924; State Farm Mutual Automobile Ins. Co. v. Romero, 109 AD2d 786). "An insured must give notice to his or her [insurance carrier] within the time limit provided in the insurance policy or within a reasonable time . . . [and] [a]bsent a valid excuse, failure to notify pursuant to the notice requirement in an insurance policy vitiates coverage" ( Matter of Eagle Ins. Co. v. Garcia, 280 AD2d 476). "[T]he phrase `as soon as practicable,'" however, "is an elastic one, not to be defined in a vacuum," and as such, necessitates "a determination of what was within a reasonable time in light of the facts and circumstances of the case at hand" ( Mighty Midgets v. Centennial Insurance Co., 47 NY2d 12.
With regard to uninsured motorist claims based upon the insolvency of the offending vehicle's insurance carrier post-accident, New York law differentiates between those insureds who have purchased Supplementary Uninsured/Underinsured Motorists coverage (SUM coverage) from their carriers and those who have merely purchased compulsory Uninsured Motorist coverage (UM coverage) as required by Insurance Law § 3420 (f) (2).
The recent Appellate Division, Second Department case Matter of Eagle Ins. Co. v. Hamilton, 4 AD3d 355, provides an excellent summary of the statutory and regulatory scheme established to provide for uninsured motorist benefits in the event of an insurance carrier's insolvency. In relevant part, the Court stated:
Insurance Law § 3420 (f) (1) mandates that all policies issued or delivered in [New York] state insuring against loss for bodily injury or death arising from a motor vehicle must contain a provision providing for UM coverage. Such compulsory UM coverage is triggered, inter alia, where an insured is entitled to recover damages from an insured motor vehicle but "the insurer disclaims liability or denies coverage." Insurance Law § 3420 (f) (2) requires an insurer to provide, at the option of the insured, the right to purchase supplementary SUM coverage. The regulations promulgated by the Superintendent concerning SUM coverage, generally referred to as Regulation 35-D, provide that such coverage is triggered, inter alia, by the "insolvency" of the alleged tortfeasor's insurer ( see 11 NYCRR 60-2.3 [f] [I] [c] [3] [iii]). Since 1958, the Legislature has also provided for a fund, currently known as the PMV fund, pursuant to article 76 of the Insurance Law. The PMV fund provides coverage for, inter alia, allowed claims of injured parties that remain unpaid, in whole or in part, due to the insolvency of an insurer (see Insurance Law § 7604). A claim to the fund is made with the Superintendent pursuant to Article 74 of the Insurance Law ( see Insurance Law art. 74, see also Insurance Law §§ 7607, 7608).
Moreover, with regard to the recourse available to an insured from his or her own insurance carrier upon the insolvency of the tortfeasor's insurer, it is well established that "where . . . an injured policy holder is entitled to UM coverage but not SUM coverage from his or her own insurer, and the alleged tortfeasor's insurer has paid into the PMV fund but has been declared insolvent after the underlying accident, the injured policy holder's recourse is not against his or her own insurer for UM coverage, but against the PMV fund via the Superintendent pursuant to Insurance Law article 4" ( id. at 357); cf. Metropolitan Property Casualty Ins. Co. v. Carpentier, 7 AD3d 627 ["where . . . an insured has purchased SUM benefits as opposed to merely compulsory uninsured motorist benefits, the insured is entitled to seek such benefits upon the insolvency of the alleged tortfeasor's insur[er] and need not proceed against the PMV fund"]; accord Matter of American Manufacturers Mutual Ins. Co. v. Morgan, 296 AD2d 491, 494).
In the instant case, respondent's demand for uninsured motorist arbitration is timely and he is therefore entitled to proceed to arbitration. Allcity argues that because Legion was declared insolvent by an order dated August 22, 2003, that respondent's service of the demand for arbitration nearly one year later, and more than six years after the subject accident, was untimely. As an initial matter, Allcity concedes that the six year statue of limitations is measured either from the subject accident or "from the time when subsequent events render the tortfeasor's vehicle `uninsured.'" It is undisputed that the offending vehicle was insured at the time of the accident. However, contrary to Allcity's contentions, the subject vehicle did not become uninsured upon the insolvency of Legion, but rather upon the exhaustion of the PMV fund in regard to Legion claims. Allcity has submitted portions of the relevant insurance policy which demonstrate that respondent obtained standard UM coverage and that respondent's demand seeks UM, as opposed to SUM, arbitration. Given that respondent had purchased only standard UM coverage from Allcity, the insolvency of the tortfeasor's insurance company, Legion, was not the salient event for purposes of determining the offending vehicle's uninsured status ( see Matter of Eagle Ins. Co., 4 AD3d at 355). Rather, respondent was constrained to pursue payment on his claim from the PMV fund until such fund was exhausted (see generally id.; Metropolitan Property Casualty Ins. Co., 7 AD3d at 627; Matter of American Manufacturers Mutual Ins. Co., 296 AD2d at 494). Once respondent was informed that the PMV fund was exhausted in regard to Legion claims, he promptly filed a demand for uninsured motorist arbitration. Accordingly, such filing comported both with the six year statute of limitations, which did not start running until the PMV fund was exhausted, and with the requirement that notice of an uninsured motorist claim be made to the insurer as soon as practicable.
Allcity also argues that although respondent gave notice of his no fault claim to Allcity on or about December 24, 1997, respondent never gave notice to Allcity of his uninsured motorist claim. As previously discussed, the offending vehicle was deemed insured by Legion until the PMV fund for Legion's claims was exhausted in June 2004. In July 2004, respondent filed the requisite demand for arbitration which gave notice to Allcity of his uninsured motorist claim ( see generally Matter of Eveready Ins. Co., 198 AD2d 276 ["[a]ssuming that the respondent's demand for arbitration constituted written notice of the claim" for purpose of determining timeliness of said notice]). As a result, Allcity had notice of respondent's uninsured motorist claim within the relevant statute of limitations period and "as soon as practicable" under the circumstances.
As respondent has filed a timely and otherwise valid demand for arbitration, Allcity's application for a permanent stay of arbitration must be denied. To the extent, however, that Allcity seeks a temporary stay in order to conduct discovery, as provided for by the terms of the relevant insurance policy, such application is granted. Where an insurance company "is entitled to . . . discovery pursuant to the terms of the insurance policy," the carrier should be allowed to conduct discovery prior to arbitration ( see Matter of Allstate Ins. Co. v. Moya, 288 AD2d 309). Although such discovery is not sanctioned by the court in cases where the subject carrier "had ample time prior to the commencement of the [instant] proceeding within which to seek discovery of the respondent[s] . . . as provided for in the insurance policy, and unjustifiably failed to utilize that opportunity to obtain the discovery now sought" ( Matter of Interboro Mutual Indemnity Ins. Co. v. Pardon, 270 AD2d 266, 267 [internal quotation marks and citations omitted]), there is no evidence that Allcity has delayed in seeking such discovery. Moreover, its application to join Amado Sanchez, the driver and owner, and Legion, is also granted as discovery may be necessary to determine Legion's current financial status, including any reorganization of said company, for purposes of ascertaining if the offending vehicle is still uninsured.
In summary, Allcity's application for a permanent stay of the subject uninsured motorist arbitration is denied. Allcity's application for a temporary stay of said arbitration for the sole purpose of obtaining discovery, pursuant to the relevant insurance policy, is granted. All such discovery is to be completed within 120 days of the date of this order. Any extension of time for the completion of discovery shall be considered only upon formal application to the court for same.
The foregoing constitutes the order and decision of the court.