Court Opinion

ID: 4430945
Source: CourtListenerOpinion
Date Created: 2019-08-20 19:49:42.698622+00
Date Added: 2024-06-11T14:58:51.027957
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                      APPROVAL OF THE APPELLATE DIVISION
     This opinion shall not "constitute precedent or be binding upon any court."
      Although it is posted on the internet, this opinion is binding only on the
        parties in the case and its use in other cases is limited. R. 1:36-3.

                                       SUPERIOR COURT OF NEW JERSEY
                                       APPELLATE DIVISION
                                       DOCKET NO. A-4956-16T2

ALLSTATE,

        Plaintiff-Appellant,

v.

GLOBAL LIBERTY INSURANCE
COMPANY OF NEW YORK,

     Defendant-Respondent.
______________________________

              Argued June 4, 2018 – Decided July 11, 2018

              Before Judges Sabatino, Ostrer and Firko.

              On appeal from Superior Court of New Jersey,
              Law Division, Morris County, Docket No. L-
              2257-16.

              William Hahn argued the cause for appellant
              (McDermott & McGee, LLP, attorneys; William
              Hahn, on the briefs).

              Jason   Tenenbaum        argued     the    cause     for
              respondent.

PER CURIAM

        Plaintiff Allstate appeals from the trial court's June 2,

2017 order denying its order to show cause seeking to confirm an

arbitrator's Personal Injury Protection ("PIP") subrogation award
in its favor, and granting the motion of defendant Global Liberty

Insurance Company of New York ("Global") to dismiss the complaint.

Allstate   also    appeals   from   the   denial   of   its   motion   for

reconsideration.      Allstate argues that the court should have

granted its application for two principal reasons. First, Allstate

claims that since the arbitration award was not vacated by Global

within 120 days by summary action filed in the Superior Court of

New Jersey, the award must be confirmed and entered as a judgment.

Second, Allstate claims that the New York action instituted by

Global was procedurally and substantively defective and should

have no binding effect.

     Having reviewed Allstate's arguments in light of the record

and applicable legal principles, we reverse and remand.

                                    I.

     The dispute between the parties arose out of an automobile

accident that occurred on I-78 westbound in Newark on November 28,

2012, according to the New Jersey Crash Investigation Report.1           As

a result of this rear-end collision case, Allstate was required

to pay PIP benefits in the amount of $208,622.70 to its insured,

Marsha Abramson.

1
  The complaint alleges that the accident occurred in Somerville.
The New Jersey Crash Investigation Report indicated that the State
Police from the Somerville station investigated the accident.

                                    2                             A-4956-16T2
      On December 3, 2014, Allstate filed a complaint in the

Superior Court of New Jersey, Morris County, against Global and

the   tortfeasor,   Nendi   Chen,   asserting    PIP   subrogation    rights

pursuant to N.J.S.A. 39:6A-9.1, which governs an insurer's right

to recover PIP benefits paid involving vehicular accidents in New

Jersey.2   Allstate argued that Chen was operating a "taxicab" or

"limousine" service and therefore, was required to maintain $1.5

million dollars in coverage pursuant to N.J.S.A. 48:16-14.

      A judge3 ordered the parties to binding arbitration pursuant

to an inter-company agreement, with Arbitration Forums, Inc., in

accordance with N.J.S.A. 39:6A-9.1(b).          The judge also dismissed

Allstate's complaint, without prejudice.          Global was duly served

with process, and participated in oral argument on October 23,

2015, when the order was entered.           The judge noted on the order

in handwriting, "All subject to N.J.S.A. 39:6A-9.1(b)."               Global

did not appeal from this order.          Therefore, it is final.

2
  Abramson settled her personal injury case against Chen for her
$100,000.00 liability limit with Global. This matter was filed
in the Superior Court in Essex County under Docket Number ESX-L-
474-14.
3
  Judge Robert J. Brennan entered the October 23, 2015 order
dismissing Allstate's complaint and compelling the parties to
arbitrate before Arbitration Forums, Inc. A different judge ruled
on the present motion.

                                     3                               A-4956-16T2
       Following resolution of the underlying personal injury matter

against Chen, Allstate and Global proceeded to binding arbitration

in Parsippany, pursuant to the rules of Arbitration Forums, Inc.

       On June 10, 2016, the arbitrator issued a written opinion and

concluded that, "Based on all the evidence submitted, it is more

likely than not that the [tortfeasor's] vehicle is a limousine and

not a taxi."    This distinction is a significant one because at the

time, the required liability coverage for bodily injury or death

under New Jersey law was $1.5 million dollars for a limousine, as

per N.J.S.A. 48:16-14, whereas a taxi4 only required $35,000 as

per N.J.S.A. 48:16-3.    Global argued that under New York Taxi and

Limousine Regulations, there is no such distinction.         Relying upon

the     evidence   submitted,    the       arbitrator   determined     that,

"Photographs of the vehicle show that it is a Toyota Highlander

which is gray in color.         There are no visible markings on the

vehicle identifying the vehicle as a taxi."

       With respect to coverage, the arbitrator found, "The policy

issued to [Chen] is in the name of an individual and not a business

although it is a business policy . . . [Chen] has not provided any

type of licensing information such as a taxi license or number."

4
    A taxi is referred to as an "autocab" in N.J.S.A. 48:16-1.

                                       4                             A-4956-16T2
     In his conclusion, the arbitrator found that "[s]ince the

vehicle appears to be more akin to a limousine than a taxi, it

should have had coverage for a limousine, which is $1.5 million.

[Chen's]   policy   is   [consequently]   reformed     to    include   such

coverage   in   accordance   with   New   York   and   New   Jersey    law,

specifically [11] N.Y.C.R.R. 60-1.1(e) and [N.J.S.A.] 48:16-14."

     Allstate was found to have proven its damages in the amount

of $208,622.70 in PIP payments.     The arbitrator noted that Global

did not dispute the amount of damages but only the allegation that

its insured was operating a "limousine" service.

     Global did not pay the award or move to vacate the award

within 120 days as required by N.J.S.A. 2A:23B-23, which provides

as follows:

           A summary action pursuant to this section
           shall be filed within 120 days after the
           aggrieved party receives notice of the award
           pursuant to section 19 of this act or within
           120 days after the aggrieved party receives
           notice of a modified or corrected award
           pursuant to section 20 of this act, unless the
           aggrieved party alleges that the award was
           procured by corruption, fraud, or other undue
           means, in which case the summary action shall
           be commenced within 120 days after the ground
           is known or by the exercise of reasonable care
           would have been known by the aggrieved party.

           [(Emphasis added).]

                                    5                              A-4956-16T2
     Instead, Global filed a notice of petition to vacate the

award in the Supreme Court of New York.   No plausible explanation

was provided by Global as to why it did not move to vacate the

award in the Superior Court of New Jersey and instead brought

proceedings in New York.

     As Global admits, counsel for Allstate was not served with

the petition and instead, Global's counsel "mailed" the petition

to "Allstate offices" located in New York, through the New York

State Department of Financial Services. Global defended its manner

of service by asserting that "[t]he underlying New York action was

a 'new' proceeding seeking to vacate an arbitral matter and,

therefore, service only needed to be effectuated on the entity

sued." In an effort to rationalize his actions, counsel for Global

asserted that he did not serve Allstate's New Jersey counsel

because insurance companies in "his experience" sometimes "switch"

attorneys in various proceedings.

      Allstate argues that, either pursuant to Rule 1:6-3(c) of

our Rules of Court or N.Y. C.P.L.R. §§ 7501 and 7506(d), service

was mandated to be made upon counsel of record and not solely the

corporate entity.   No courtesy copy of the petition was sent to

counsel for Allstate, either.

     On August 30, 2016, the New York court conducted a "Special

Proceeding", and entered a final decision and order vacating the

                                6                          A-4956-16T2
New Jersey PIP arbitration award, by default.        The New York court

was persuaded by Global that Chen was not operating a limousine

under New York State regulations, thereby dispensing with her need

to have such [greater level of] insurance. Allstate did not appear

in the New York case or oppose the petition because it claims that

service   was   improvidently    made   upon   an    Allstate   "entity"

recognized under New York law, despite the fact that the real

party in interest was, "Allstate New Jersey Insurance Company,"

which is a different entity.      Thus, Allstate argues that it was

denied procedural and substantive due process of law.

     Allstate thereafter filed another complaint, by way of an

order to show cause, in the Superior Court in Morris County

seeking: to enforce the arbitration award and enter judgment

thereon; to declare the order entered in New York be null and

void; to be awarded counsel fees pursuant to N.J.S.A. 2A:23B-25;

and post-judgment interest.     After a courtesy copy was served upon

counsel for Global, counsel for Allstate claims that he was then

informed, for the first time, that Global had previously moved to

vacate the arbitration award in New York.           Global's failure to

                                   7                             A-4956-16T2
vacate the award within 120 days of entry was "fatal", according

to Allstate.5

     The second motion judge scheduled oral argument on November

28, 2016.   Meanwhile, Global filed a notice of removal to federal

court on November 17, 2016.    On December 16, 2016, Chief Judge

Jose Linares of the United States District Court of New Jersey

remanded the matter back to the Superior Court in Morris County,

on the basis of lack of diversity of citizenship and subject matter

jurisdiction under 28 U.S.C. § 1332, because Allstate and Global

are both citizens of Illinois, and other states.     Judge Linares

specifically identified Allstate as, "Allstate New Jersey," in his

order.   Global never appealed Judge Linares' remand decision.

     On February 23, 2017, the second motion judge entered an

order scheduling oral argument on May 5, 2017.   On March 10, 2017,

Global filed a motion to dismiss Allstate's complaint.          Oral

argument was held on May 5, 2017, and the judge entered an order

on June 2, 2017 denying Allstate's order to show cause and request

to enter the arbitration award as a judgment.

     In her statement of reasons, the judge expressed "serious

concerns" about the "questionable procedures" undertaken by Global

5
  It is noteworthy that the same attorneys have been involved in
this matter at all levels since its inception.

                                 8                          A-4956-16T2
to vacate the award in New York.          The judge noted that the parties

went to "binding" arbitration to adjudicate the PIP subrogation

claim.    In failing to serve counsel for Allstate with the New York

petition, the judge disapproved of the "sharp practice" exercised

by counsel for Global, and she noted, more than once, her "serious

concerns about the procedures used by [Global] to vacate the

arbitration award entered in New Jersey in a different state."

She   further    questioned     the       propriety   of   Global's     legal

machinations, and pointed out that she was "troubled" by the

process "from an ethical and professional standpoint."           The judge

also found that Allstate's first complaint had been withdrawn,

without     prejudice,     by   consent,        thereby    vitiating       any

jurisdictional objection by Global.

      Notwithstanding her criticisms of Global's actions, the judge

determined that the order entered in New York must be given "full

faith and credit."       The judge also determined that "res judicata

principles controlled", and, "prohibit this court from confirming

the arbitration award entered in New Jersey at this time, since a

judgment was entered in this matter in the State of New York."

      The judge therefore dismissed Allstate's complaint without

prejudice, and anticipated, by way of dicta, that Allstate would

move to vacate default and set aside the decision rendered in New

York, and revisit the merits of its application in Morris County

                                      9                               A-4956-16T2
Superior Court.      Allstate asserts it has no intention of doing so

because jurisdiction lies in the Superior Court in New Jersey, and

there is no "dual" jurisdiction in New York.         Thereafter, Allstate

filed a motion for reconsideration, which was denied.               Its appeal

was filed in the interim.

                                    II.

     We begin by restating fundamental principles governing PIP

arbitration.   Our Court has recognized that consensual arbitration

is a favored means of resolving disputes.          Martindale v. Sandvik,

Inc., 173 N.J. 76, 84 (2002).         "Our courts have long noted our

public policy that encourages the 'use of arbitration proceedings

as an alternative forum.'"        Wein v. Morris, 194 N.J. 364, 375-76

(2008)   (citation    omitted).      Arbitration     is   chosen    to     avoid

litigation   and   judiciary   involvement,    and    the    role    that     the

judiciary should aim at is to have no role at all.             Perini Corp.

v. Greate Bay Hotel & Casino, Inc., 129 N.J. 479, 519 (1992).

     Embracing     this   policy,   the   No-Fault   Act's    reimbursement

provision, Section 9.1, creates a statutory right of reimbursement

for PIP insurers against certain tortfeasors by allowing an insurer

who pays PIP benefits to:

           recover the amount of payments from any
           tortfeasor who was not, at the time of the
           accident, required to maintain personal injury
           protection   or   medical   expense   benefits
           coverage, other than for pedestrians, under

                                    10                                   A-4956-16T2
          the laws of this State . . . In the case of
          an accident occurring in this State involving
          an insured tortfeasor, the determination as
          to whether an insurer . . . is legally entitled
          to recover the amount of payments and the
          amount of recovery, including the costs of
          processing benefit claims and enforcing rights
          granted under this section, shall be made
          against the insurer of the tortfeasor, and
          shall be by agreement of the involved parties
          or, upon failing to agree, by arbitration.

          [N.J.S.A. 39:6A-9.1 (emphasis added).]

     There are no grounds to debate that the location of the

accident is the controlling factor for determining the venue of

the arbitration:

          In the case of an accident occurring in this
          State involving an insured tortfeasor, the
          determination as to whether an insurer, health
          maintenance   organization   or   governmental
          agency is legally entitled to recover the
          amount of payments and the amount of recovery,
          including the costs of processing benefit
          claims and enforcing rights granted under this
          section, shall be made against the insurer of
          the tortfeasor, and shall be by agreement of
          the involved parties or, upon failing to
          agree, by arbitration.

          [Ibid. (emphasis added).]

Hence, New Jersey is and continues to be, the forum state, and had

original jurisdiction in this matter.

     Thus, the No-Fault Act confirmed jurisdiction of the PIP

arbitration in New Jersey, since the accident occurred here, and

                               11                           A-4956-16T2
it was so ordered by a judge of this State, and remanded back to

our State court by a federal judge.

                               III.

     We consider first Allstate's argument that the judge should

have confirmed the award and entered it as a judgment, as Global

did not move to vacate it summarily within 120 days.    Allstate's

motion for confirmation was filed "as of right" pursuant to

N.J.S.A. 2A:23B-23(a)(3), which authorizes same from "an order

confirming or denying confirmation of an award." Allstate stresses

that the award "remains valid," and that Global's failure to vacate

the award within 120 days of entry is "fatal."

     Allstate argues that the judge erred in relying upon the

"full faith and credit clause", U.S. Const. art. IV, § 1, and

determining that the New York order is entitled to res judicata

principles.   We agree.

     "The full faith and credit clause requires that a judgment

entered in one state be respected and enforced by the courts of

another state provided that the first state had jurisdiction over

the subject matter and the parties."      Arnold, White & Durkee,

Prof'l Corp. v. Gotcha Covered, Inc., 314 N.J. Super. 190, 194

(App. Div. 1998) (citing Nevada v. Hall, 440 U.S. 410, 421 (1979)).

     New Jersey is the "first" state under this analysis, and not

New York, because the proceedings were properly commenced here.

                               12                           A-4956-16T2
The goal of the clause is to integrate the states into a unified

nation in which a litigant could enforce a valid claim, regardless

of that claim's goal.    Id. at 195.       Global's surreptitious tactic

of filing the petition in New York is in derogation of this

constitutional mandate.

     Allstate's    argument   that    it   was   denied   due   process    is

supported by our jurisprudence, in tandem with the No-Fault Act.

"A judgment entered in violation of due process of law is not

entitled to full faith and credit."         Hupp v. Accessory Distribs.

Inc., 193 N.J. Super. 701, 708 (App. Div. 1984).                In essence,

Global "collaterally attacked" the arbitration decision in the

"second state" (New York). Id. at 709. We cannot condone Global's

actions.

     New Jersey has long adhered to "the general rule that the

court which first acquires jurisdiction has precedence in the

absence of special equities."    Yancoskie v. Del. River Port Auth.,

78 N.J. 321, 324 (1978); see also O'Loughlin v. O'Loughlin, 6 N.J.

170, 179 (1951).     Special equities include "great hardship and

inconvenience" to one party.         Sensient Colors, Inc. v. Allstate

Ins. Co., 193 N.J. 373, 387 (2008).         The first-filed rule, which

has deep roots in our federal system, has been recognized by many

courts.    See e.g., Riggs v. Johnson Cty., 73 U.S. 166, 196 (1868)

("[T]he court that first obtains possession of the controversy,

                                     13                             A-4956-16T2
or of the property in dispute, must be allowed to dispose of it

without interference or interruption from the coordinate court");

see also First Midwest Corp. v. Corp. Fin. Assocs., 663 N.W.2d

888, 890-91 (Iowa 2003); Medtronic, Inc. v. Advanced Bionics Corp.,

630 N.W.2d 438, 448-49 (Minn. Ct. App. 2001).                      Our Court has

recognized   the    "first-filed    rule"   to    be   .   .   .    "the   guiding

principle by which each state's courts decide the appropriate

choice of forum when substantially similar actions are filed in

more than one jurisdiction."        Sensient Colors, Inc., 193 N.J. at

397.

       Under the first-filed rule, a state court ordinarily will

stay or dismiss a civil action in deference to an already pending,

substantially-similar lawsuit in another state, unless compelling

reasons   dictate    that   the    second   state      retain      jurisdiction.

O'Loughlin, 6 N.J. at 179.

       We are unpersuaded by Global's argument that it had grounds

to petition the New York Court for relief based upon the affidavit

of its representative, Mr. Gutierrez, stating that "the $100,000

[i]nsurance policy was paid to Ms. Abramson and no further proceeds

remained on the insurance policy."               That fact concerning the

complaint against the tortfeasor in Essex County does not alter

the fact that Allstate's PIP subrogation action in Morris County

was filed before the New York complaint.

                                     14                                    A-4956-16T2
       Even more problematic is the fact that Global never challenged

jurisdiction, other than its removal application, in New Jersey.

Jurisdiction "may not be raised in a second state in an action to

enforce the judgment rendered in the first state."            Ibid. (citing

Underwriters Nat'l Assurance Co. v. N.C. Life & Accident & Health

Ins. Guar. Ass'n, 455 U.S. 691, 706 (1982)).            We see no basis to

have    another   state   review    a    statutory   and   court-sanctioned

arbitration which took place here in New Jersey.

            Global has failed to meet its burden of establishing

"special equities," such as forum non conveniens.             The accident

occurred on Route 78 in New Jersey, and the No-Fault statute

mandated    PIP   arbitration      in   this   State,   without   prejudice.

Moreover, an "injustice would be perpetrated" upon Allstate, and

"no hardship, prejudice, or inconvenience" would inure to Global.

Ibid.

       The motion judge misapplied res judicata principles.               Res

judicata applies when:

            (1) the judgment in the prior action must be
            valid, final, and on the merits; (2) the
            parties in the later action must be identical
            to or in privity with those in the prior
            action; and (3) the claim in the later action
            must grow out of the same transaction or
            occurrence as the claim in the earlier one.

            [McNeil v. Legislative Apportionment Comm'n,
            177 N.J. 364, 395 (2003) (quoting Watkins v.

                                        15                           A-4956-16T2
            Resorts Int'l Hotel & Casino, Inc., 124 N.J.
            398, 412 (1991) (citations omitted)).]

Evaluated under full faith and credit and due process standards,

we   conclude    that   the    New   York   proceeding   was    invalid,   and

Allstate's motion to enforce the arbitration award is not barred

by res judicata.

      Further, the entire controversy doctrine applies to multi-

forum litigation.       Global's New York action asserted an identical

set of facts as the New Jersey matter.               Therefore, the entire

controversy applies to preclude its subsequently-filed claims in

New York.       Allstate New Jersey Ins. Co. v. Cherry Hill Pain &

Rehab. Inst., 389 N.J. Super. 130, 140 (App. Div. 2006) (citations

omitted).

      In applying this analytical framework, we conclude that both

cases involve the same parties, the same claims, and the same

legal issues.      Therefore, Allstate was denied due process, and

jurisdiction must be retained in New Jersey.

                                      IV.

      Turning    now    to    Allstate's    second   argument   relating     to

procedural and substantive defects, Rule 1:5-1 provides that:              "In

all civil actions, unless otherwise provided by rule or court

order, orders, judgments, pleadings subsequent to the original

complaint, written motions . . . shall be served upon all attorneys

                                      16                              A-4956-16T2
of record in the action."       The purpose of this rule is to prevent

"prejudice in taking further steps in the litigation."                        See

Pressler & Verniero, Current N.J. Court Rules, cmt. 1 on R. 1:5-1

(2018) (emphasis added).        By serving an Allstate entity in New

York by mail, Global was derelict, and its actions do not withstand

judicial scrutiny.

     N.J.S.A. 2A:23B-7 dictates in subsection (f) that:

            If a party commences a summary action to order
            arbitration, the court on just terms shall
            stay any judicial proceeding that involves a
            claim alleged to be subject to the arbitration
            until the court renders a final decision
            pursuant to this section.

     An order that compels (or denies) arbitration is deemed

"final" for purposes of appeal, but the trial court retains

jurisdiction to address other issues.           GMAC v. Pittella, 205 N.J.

572, 586 (2011).    Thus, Global's argument is conspicuously flawed

since New Jersey continues to have exclusive jurisdiction over

this controversy, since a final order has yet to be entered.

                                      V.

     In sum, we conclude that the judge incorrectly applied the

doctrines    of    res     judicata    and     full   faith        and   credit,

notwithstanding      her     astute        comments   as      to     procedural

irregularities.    We thus reverse and vacate the June 2, 2017 order

and reinstate Allstate's complaint.           We specifically remand for a

                                      17                                 A-4956-16T2
determination   as   to   whether   the    arbitration   award   should    be

confirmed and judgment entered thereon, modified, or vacated in

accordance with N.J.S.A. 2A:23B-23.6

     Allstate's argument that its motion for reconsideration was

not adjudicated is moot and lacks sufficient merit to warrant

discussion in a written opinion.          R. 2:11-3(e)(1)(E).

     Reversed and remanded.     We do not retain jurisdiction.

6
  During the appellate oral argument, counsel for Global did not
object to such a remand, in the event we were to conclude that the
New York court lacked jurisdiction.

                                    18                              A-4956-16T2