Case Name: IN THE MATTER OF ARBITRATION BETWEEN WILMER GROVER, JR. AND UNIVERSAL UNDERWRITERS INSURANCE COMPANY
Court: New Jersey Superior Court, Appellate Division
Jurisdiction: New Jersey
Decision Date: 1977-07-07
Citations: 151 N.J. Super. 403
Docket Number: 
Parties: IN THE MATTER OF ARBITRATION BETWEEN WILMER GROVER, JR. AND UNIVERSAL UNDERWRITERS INSURANCE COMPANY.
Judges: 
Reporter: New Jersey Superior Court Reports
Volume: 151
Pages: 403–422

Head Matter:
IN THE MATTER OF ARBITRATION BETWEEN WILMER GROVER, JR. AND UNIVERSAL UNDERWRITERS INSURANCE COMPANY.
Superior Court of New Jersey Appellate Division
Argued May 16, 1977
Decided July 7, 1977.
Lamer, J. A. D., filed dissenting opinion.
Before Judges Carton, Kole and Larner.
Mr. Peter R. Brogan argued the cause for appellant Universal Underwriters Insurance Company (Messrs. Pollock & Brogan, attorneys).
Mr. Donald W. Moore argued the cause for respondent Wilmer Grover, Jr.

Opinion:
The opinion of the court was delivered by
Carton, P. J. A. D.
Defendant Universal Underwriters Insurance Company (Universal) appeals from a final judgment upholding an arbitrator's award under the uninsured motorist endorsement of a motorcycle insurance policy issued by it to plaintiff 'Wilmer Grover, Jr.
On August 4, 1973 Grover was involved in a serious motorcycle accident. Patrolman Daniel Eenske of the South Brunswick Police arrived at the scene about two minutes after the accident and found Grover unconscious and underneath a split-rail fence off the roadway.
In his report of the accident Patrolman Eenske included Grover's statement, taken upon his recovery, that two motor vehicles were involved. Grover stated to Fenske that "he was eastbound on West New Road at approximately 30-35 mph, as he came to curve and began around same a vehicle coming in the opposite direction was on his side of the road. He went to the right off the road and attempted to keep going but he was unable to keep control of his vehicle and accident took place." The report indicates that Eenske found only Grover's damaged motorcycle at the scene.
In September 1975 Grover filed a demand for arbitration with the American Arbitration Association after Universal refused to honor his claim on the accident. Their dispute related to whether the losses sustained in the accident were covered by the hit-and-run, no-contact provision of the policy. The arbitration demand was acknowledged by Universal and both parties proceeded to arbitration.
The arbitration clause in the Universal policy was in the standard motor vehicle insurance policy form and provides:
If any person making claim hereunder and the company do not agree that such person is legally entitled to- recover damages from the owner or operator of an uninsured highway vehicle because of bodily injury or property damage to the insured, or do not agree as to the amount of payment which may be owing under this insurance, then, upon written demand of either, the matter or matters upon which such person and the company do not agree shall be settled by arbitration, which shall be conducted in accordance with the rules of the American Arbitration Association unless other means of conducting the arbitration are agreed to between the insured and the company, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. Such person and the company each agree to consider itself bound and to be bound by any award made by the arbitrators pursuant to this insurance.
The arbitration proceeding was conducted in November 1975. Prior to the hearing the parties stipulated that if liability were found to exist the award would be for $15,000, the face amount of the policy. No recording was made of the evidence taken In the proceeding. However, it is clear that the focus of the hearing was whether Grover had carried Ms burden under the policy to prove that a motor vehicle, without physical conduct with Grover or his motorcycle, caused the accident. The relevant portions of the uninsured motorist endorsement provide:
The company will pay all sums which the insured * shall be legally entitled to recover as damages from the owner or operator of an uninsured highway vehicle because of bodily injury or property damage, caused by accident and arising out of the ownership, maintenance or use of such uninsured highway vehicle; .
$ '.'fi £ :Js Sj« i'r
"hit-and-run vehicle" means (i) a highway vehicle which causes an accident resulting in bodily injury to an insured arising out of physical contact of such vehicle with the insured or with a vehicle which the insured is occupying at the time of the accident, or (ii) a highway vehicle which without physical contact with the insured or with a vehicle which the insured is occupying at the time of the accident causes bodily injury to an insured arising out of an accident in New Jersey, provided:
(d) with respect to subdivision (ii) the facts of such accident can be corroborated by competent evidence other than the testimony of any person having a claim under this or any other similar insurance as the result of such accident;
sha»#**#
"uninsured highway vehicle" means: a hit-and-run vehicle, but only with respect to bodily injury caused thereby; .
Defendant carrier did not raise any jurisdictional objection to the first arbitration hearing on the issue of coverage. It is undisputed that the sole witness at that proceeding was Grover and that the only additional evidence factually describing the cause of the accident was the police report. Universal objected to the relevant portions of the report, including the summary of the accident given to Patrolman Eenske by Grover.
The arbitrator, in December 1975, found Universal liable and awarded $15,000 to Grover. The arbitrator failed to make any findings or state any reasons for the award.
Thereafter, Grover filed a complaint in the Chancery Division and obtained an order to show cause seeking to confirm the award with interest and counsel fees. Universal moved to vacate the award pursuant to N. J. S. A. 2A :24-7. Judge Lenox in effect conditionally vacated the award, but entered an order affording Grover the opportunity to appear before the arbitrator again "to offer, and the Arbitrator to hear, any and all evidence pursuant to Rule of Evidence 8(1), whether from plaintiff or others, which might establish the admissibility of the statement of plaintiff to the police officer following the accident."
As a result a second hearing was conducted before the same arbitrator in June 1976. In that proceeding plaintiff produced two witnesses. One of these was Patrolman Eenske of the South Brunswick Police, who signed the police report and who testified regarding the source of the information. Contradicting the report itself, which indicated the information was obtained by telephone, this witness stated that the factual description of the accident was derived from an interview with Grover at the hospital about a week after the accident. The interview was delayed because prior to that time .the doctors would not permit Eenske to see Grover.
Eenske testified that, although Grover appeared .to be in pain, he was calm and coherent during the interview. He also testified that while he had. passed several cars coming from the scene of the accident as he 'drove there, he found no evi dence that the phantom car existed during his on-scene investigation. He further explained that he had issued a summons to Grover for failing to drive on the improved part of the highway because, due to interna] problems in the police department, he feared that he might be brought up on charges if ho acted otherwise.
Grover also testified at the second hearing. He corroborated the testimony of Patrolman Fenske regarding the hospital interview. He did not state his version of the accident because of the limited nature of the hearing. However, he did testify that he did not regain consciousness until about three days after the accident, and that the interview took pla.ce more than a day after he regained consciousness.
After the second hearing the arbitrator expressly found that Grover's statement in the police report was inadmissible under the Rules of Evidence. Nevertheless, he concluded that these rules were not applicable to an arbitration proceeding and, relying upon what we consider to be equitable considerations, ruled the police report admissible and competent on the corroboration issue. Having admitted the report, the arbitrator found adequate corroboration for Grover's claim, noting that "from all of the evidence, fraud, deceit or collusion does not exist . Consequently, the arbitrator ruled in Grover's favor.
Thereafter, Grover filed an amended verified complaint and obtained from Judge Greenberg, who had in the interim replaced Judge Lenox in the Chancery Division, an order to show cause to enforce the arbitrator's second award. Universal also moved to vacate this award.
Following GEICO v. Bovit, 142 N. J. Super. 268 (App. Div. 1976), certif. den. 71 N. J. 502 (1976), Judge Green-berg held that questions of coverage under the uninsured motorist endorsement must be decided by a court of law and not an arbitrator. Although he raised the issue, he made no determination as to whether Universal had waived a judicial determination of coverage by proceeding through the arbitration without objection. Judge Greenberg decided the case on the basis of the facts adduced at the arbitration hearings rather than holding another factual hearing. He reasoned that the policy language requiring corroboration would be satisfied by reasonable proof of the facts surrounding the happening of an accident, even though all of the details of the accident might not be corroborated. He concluded that Grover had produced such competent evidence and therefore was entitled to the $15,000 award under the policy. Later he granted Grover's motion for a counsel fee in the sum of $5,700 and allowed interest at the rate of 8% a year from the date of the second award, August 4, 1976.
Universal appealed from the whole of the judgment and from the order allowing counsel fees.
We affirm the judgment of the trial judge upholding the award in favor of Grover, but not for the reasons expressed in his opinion. Thus, we do not pass on whether the judge properly held that competent evidence had been adduced within the meaning of the policy's corroboration requirement of competent evidence "other than the testimony of any person having a claim under" the policy.
The arbitration was provided by an agreement of the parties through the insurance policy. Either party could waive, by conduct or otherwise, a provision of that agreement without implicating the rule that a court's subject matter jurisdiction may not be waived. See Migneault v. United Services Automobile Ass'n, 21 Ariz. App. 397, 519 P. 2d 1162 (App. Ct. 1974); Annotation, "Participation in Arbitration Proceedings As Waiver of Objections to Arbitrability," 33 A. L. R. 3d 1242 (1970). Cf. McKeeby v. Arthur, 7 N. J. 174, 180-182 (1951); Dist. 65, R.W.D.S.U. v. Paramount Surg. Sup. Co., 117 N. J. Super. 125 (App. Div. 1971). See also, Polshek v. Bergen Cty. Iron Works, 142 N. J. Super. 516, 521-523 (Ch. Div. 1976).
The record clearly shows that Universal was aware from the outset that the primary dispute related to coverage under the hit-and-run provision of its insurance policy. Universal acknowledged Grover's demand for arbitration, and the first arbitration proceeded to a conclusion without the carrier raising any jurisdictional objection to the arbitration. Indeed, prior to the hearing, it stipulated that if liability were found, the award should be in the amount of $15,000, the face amount of the policy. Nor is it denied that Grover testified at the first arbitration proceeding and offered other evidence of the accident.
At that point Universal had clearly waived its right to have the coverage question decided by the court. It had already, without timely or proper objection, permitted the claim to be submitted to the arbitrator. If the carrier wished a judicial determination of the coverage issue, it should have raised that question before proceeding to arbitration under its contract, rather than waiting until the arbitrator rendered a decision on the merits. Acceptance of the carrier's argument would frustrate the rationale for providing for arbitration in the insurance contract. See Collingswood Hosiery Mills v. Am. Fed. of Hosiery Wkrs., 31 N. J. Super. 466, 473 (App. Div. 1954).
Consequently, we conclude that Judge Lenox erroneously remanded the matter to the arbitrator for consideration of further evidence on the jurisdictional issue, and that he should have entered a final judgment confirming the award. Our conclusion is not altered by the fact that Judge Lenox's remand order was interlocutory and hence appeal-able only by leave of this court. See In re Old Colony Coal Co., 49 N. J. Super. 117, 123 (App. Div. 1958); R. 2:2-4. We properly consider the propriety of Judge Lenox's remand because the appeal of Judge Greenberg's judgment necessarily presents for our review the validity of the prior interlocutory order, particularly where, as here, manifest injustice would result if the erroneous interlocutory order was not noticed and corrected by us. See Amico v. Bd. of Rev., 49 N. J. 159, 163 (1967); In re Contempt of Carton, 48 N. J. 9, 15 (1966); Andersen v. Well-Built Homes of Central Jersey, Inc., 69 N. J. Super. 246, 255 (App. Div. 1961).
Even if we could conclude that Universal did not waive the jurisdictional objection to the first arbitration of Grover's claim because of its participation in the first arbitration proceeding, beyond question it waived that objection when it entered the second round of arbitration on the same claim before the same arbitrator. In that proceeding Grover again testified, as did the police officer. Only after Grover prevailed before the arbitrator a second time, filed his amended complaint to enforce the arbitrator's second award and Universal made its motion to vacate that award was the issue of coverage and the question of waiver of jurisdiction raised, and then apparently only by Judge Greenberg. Judge Greenberg could properly have confirmed the second award on waiver grounds alone, without examining the merits of the arbitrator's decision pursuant to N. J. S. A. 2A:24-8. See Daly v. Komline-Sanderson Engineering Corp., 40 N. J. 175, 178 (1963); Local Union 560 v. Eazor Express, Inc., 95 N. J. Super. 219, 227 (App. Div. 1967).
We are satisfied that the record clearly shows that the arbitrator intended to decide the coverage question in accordance with notions of fairness to Doth parties (apparently based upon his view that the purpose of the instant arbitration provision was to prevent fraudulent claims), rather than endeavoring to apply any settled principles of lav/. We so conclude even though in the second award he cited cases relating to the corroboration requirement. Accordingly, even apart from the matter of waiver of the coverage issue, the arbitrator's awards are unassailable under the "undue means" criteria of the statute, N. J. S. A. 2A:24-8 a, and could have been confirmed by both judges below under established precedent relating to such awards. See Local Union 560 v. Eazor Express, Inc., supra, 95 N. J. Super, at 227-28; Wm. J. Burns, Inc. v. N. J. Guards Union, Inc., 61 N. J. Super. 301, 312-13 (App. Div. 1960), certif. den., 34 N. J. 464 (1961). See also La Stella v. Garcia Estates, 66 N. J. 297, 303-304 (1975).
Finally, we conclude that the trial judge's allowance of a counsel fee was a proper exercise of its discretion under R. 4:42-9(a) (6). That rule gives the court discretion to award counsel fees in an action upon a liability policy of insurance in favor of a successful claimant. Although the court specifically found that Universal was not acting in bad faith in contesting the arbitrator's decision, it properly allowed the fee in order to make the claimant whole. See Corcoran v. Hartford Fire Ins. Co., 132 N. J. Super. 234, 246 (App. Div. 1975); N. J. Mfrs. Ins. Co. v. Consolidated Mut. Ins. Co., 124 N. J. Super. 598, 602 (Law Div. 1973).
We have considered appellant's other contentions and find them to be without merit.
Affirmed.
The arbitrator found that the "self-serving declaration obtained by Patrolman Fenske and included in his motor vehicle accident report was obtained at the earliest possible time since the claimant was unconscious at the scene of the accident and was held incommunicado at the hospital because of his critical condition"; that timely notice of the accident had been given the carrier, and that there was an early on-the-scene police investigation.
Nevertheless, we believe that in an appropriate factual setting, credible proofs of the type relied upon by the trial judge could lead to the inference that a "phantom car" accident did occur and that the claim is not fraudulent. The reasonable expectations of the parties and the' manner in which insurance contracts should be construed might well justify such an interpretation. Bryan Constr. Co. Inc. v. Employers' Surplus Lines Ins. Co., 60 N. J. 375 (1972). See also, Immer v. Risko, 56 N. J. 482, 493-495 (1970). See, and compare Pasterchich v. Insurance Co. of North America, 150 N. J. Super. 90 (App. Div. 1977) with Jones v. Heymann, 127 N. J. Super. 542 (App. Div. 1974), which cases discuss the validity of the corroboration requirement.
We note that had Universal not waived judicial consideration of the jurisdictional question, the court, rather than the arbitrator, would have been required to decide the issue, GBIOO v. Bovit, supra, and that any factual hearing should have been conducted by the trial judge.