Court Opinion

ID: 2783873
Source: CourtListenerOpinion
Date Created: 2015-03-04 15:05:24.726628+00
Date Added: 2024-06-11T08:30:19.355347
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
               APPROVAL OF THE APPELLATE DIVISION

                                    SUPERIOR COURT OF NEW JERSEY
                                    APPELLATE DIVISION
                                    DOCKET NO. A-5972-13T1

STATE FARM INDEMNITY
                                       APPROVED FOR PUBLICATION
COMPANY,
                                            March 4, 2015
     Plaintiff-Respondent,
                                         APPELLATE DIVISION
v.

NATIONAL LIABILITY & FIRE
INSURANCE COMPANY,

     Defendant-Appellant.
_____________________________

         Argued February 10, 2015 – Decided March 4, 2015

         Before Judges Reisner, Haas and Higbee.

         On appeal from Superior Court of New Jersey,
         Law Division, Camden County, Docket No. L-
         1846-14.

         Michael   Eatroff   argued  the cause  for
         appellant (Methfessel & Werbel, attorneys;
         Mr. Eatroff, on the brief).

         Suzanne E. Mayer       argued the cause for
         respondent (Newman     & Andriuzzi, attorneys;
         Ann Dee Lieberman      and Ms. Mayer, on the
         brief).

     The opinion of the court was delivered by

REISNER, P.J.A.D.
      This appeal concerns the interpretation of N.J.S.A. 39:6A-

11,   which     governs    disputes    between     insurance    companies      over

contribution      for     personal    injury     protection    (PIP)    benefits.

Defendant National Liability & Fire Insurance Company (National)

appeals from a July 25, 2014 order compelling arbitration of a

contribution      claim    by    plaintiff     State   Farm   Indemnity   Company

(State Farm).       National contends that the trial court should

have determined whether it owed coverage to the accident victim,

before    requiring       that   it   proceed    to    arbitration     over   State

Farm's claim for contribution for PIP benefits State Farm paid

to the victim.          Interpreting the statute in light of the clear

legislative purpose favoring arbitration of PIP disputes, and in

light of settled precedent, we affirm the trial court's ruling

that the entire dispute should be submitted to arbitration.                      We

also conclude that State Farm properly sought to enforce this

arbitration demand by filing an order to show cause pursuant to

Rule 4:67-1(a).

      N.J.S.A. 39:6A-11 caps the total amount of PIP benefits

payable    if    multiple       insurers   owe   PIP    coverage   to   the   same

accident victim, and it defines the method by which an insurer

that has paid the victim all of the PIP benefits due may recover

a pro-rata share from the other covering insurers.                   In one very

                                           2                              A-5972-13T1
long    sentence,      which   we   have       slightly   truncated   to    remove

irrelevant text, the statute reads as follows:

              If two or more insurers are liable to pay
              [PIP] benefits . . . for the same bodily
              injury, or death, of any one person, the
              maximum amount payable shall be as specified
              in   [N.J.S.A.    39:6A-4   and   39:6A-10],
              [N.J.S.A. 39:6A-3.1] and [N.J.S.A. 39:6A-
              3.3], respectively, if additional first
              party coverage applies and any insurer
              paying the benefits shall be entitled to
              recover from each of the other insurers,
              only by inter-company arbitration or inter-
              company agreement, an equitable pro-rata
              share of the benefits paid.

              [N.J.S.A. 39:6A-11.]

       To put the dispute over this provision in context, William

Jean was struck by a car while riding a bicycle.                William1 had no

auto insurance, but would be entitled to PIP coverage under the

policy of a family member with whom he resided.2                  See N.J.S.A.

39:6A-4, -4.2.         According to State Farm, William was a resident

relative of both his father, Hertelou Jean, who had a policy

with State Farm, and his cousin, Andre Beldor, who had a policy

with National.      State Farm paid the PIP benefits due to William,

and    then   sought    contribution   from       National.     After   National

1
  Since William and his father have the same last name, we refer
to William by his first name.
2
  The parties agree with that legal proposition which, therefore,
requires no further discussion.

                                           3                               A-5972-13T1
refused to contribute, State Farm filed a summary action in the

Law Division to compel arbitration under N.J.S.A. 39:6A-11.

    National denied that William and his cousin lived in the

same household at the time of the accident, and argued that the

trial   court    should       resolve   that   factual      issue,   which    would

determine coverage, before sending the contribution dispute to

arbitration.          The trial court disagreed, concluding that the

arbitrator      should        decide    all    issues       pertinent    to     the

contribution dispute, including whether William was covered for

PIP benefits under the National policy.

    On   this     appeal,      National    repeats    its    argument   that    the

issue of coverage must be decided by the court.                      Parsing the

language of the statute as though the two halves of the sentence

were essentially unrelated, National contends that arbitration

is only required "if two or more insurers are liable to pay

benefits."       N.J.S.A.      39:6A-11.       Hence,     National   argues,    the

determination of coverage is a prerequisite to the obligation to

arbitrate,      and    must    be   decided    by   the   court.      Relying    on

O'Connell v. New Jersey Manufacturers Insurance Co., 306 N.J.

Super. 166, 172-73 (App. Div. 1997), appeal dismissed, 157 N.J.

537 (1998), National argues that, as a general principle, courts

should decide coverage issues before submitting other insurance-

related disputes to arbitration.                National further urges that

                                          4                              A-5972-13T1
"residency"      can    be   a   complex           legal    and    factual        issue    that

arbitrators are not qualified to decide.

      State Farm responds that O'Connell is not on point because

it    involved    construction        of       an     insurance          contract,    not     a

statute.       State    Farm     relies    on       State    Farm        Insurance    Co.    v.

Sabato, 337 N.J. Super. 393, 394 (App. Div. 2001), where the

court, construing the no-fault statute, N.J.S.A. 39:6A-1.1 to

-35, held that coverage was to be decided by the arbitrator.

State Farm also contends that an arbitrator can readily decide

the   "resident     relative"        issue,         and    that    arbitration        of    all

issues is consistent with the purpose of N.J.S.A. 39:6A-11.                                 See

State Farm Mut. Auto. Ins. Co. v. Molino, 289 N.J. Super. 406,

411    (App.     Div.    1996).           We       find     State        Farm's    arguments

persuasive.

      Our      courts        have     acknowledged                that      "transactional

efficiency" is the "legislative grail" of our State's no-fault

auto insurance system.           Rutgers Cas. Ins. Co. v. Ohio Cas. Ins.

Co., 299 N.J. Super. 249, 263 (App. Div. 1997), aff'd o.b., 153

N.J. 205 (1998); see also Coalition for Quality Health Care v.

N.J. Dep't of Banking & Ins., 348 N.J. Super. 272, 311 (App.

Div.),   certif.       denied,      174   N.J.       194    (2002).         To     that    end,

arbitration requirements in the statute are broadly construed in

favor of the submission of all issues to arbitration rather than

                                               5                                     A-5972-13T1
in   favor     of     bifurcating      issues     between    the      courts     and

arbitration.        See Molino, supra, 289 N.J. Super. at 409-11.

      In Ideal Mutual Insurance Co. v. Royal Globe Insurance Co.,

211 N.J. Super. 336, 338 (App. Div. 1986), this court addressed

a dispute between two insurers over whether a claim for inter-

company arbitration was barred by the statute of limitations.

We   pointedly      observed    that    that    dispute    itself     belonged    in

arbitration:

             Overlooked by plaintiff is the fact that
             this     enactment    [N.J.S.A.    39:6A-11]
             specifically provides that the right to
             recovery of contribution may be enforced
             "only by inter-company arbitration or inter-
             company agreement. . . ." (Emphasis ours).

                  Where an act is plain and unambiguous
             in its terms there is no room for judicial
             construction since the language employed is
             presumed to evince the legislative intent.
             The purpose of a provision requiring inter-
             company arbitration is "[t]o reduce the
             burden of litigation in the courts. . . ."
             In construing provisions of the New Jersey
             Automobile Reparation Reform Act, N.J.S.A.
             39:6A-1, et seq., our Supreme Court has
             favorably noted "approaches which minimize
             resort to the judicial process. . . ." That
             New Jersey courts are precluded by statute
             from determining liability among insurers
             and that such issue must be resolved in this
             State   by   arbitration   or   inter-company
             agreement has been elsewhere noted.

             [Id. at 339 (citations omitted).]

      After    noting    that    "the    statute       permits   of   no   way    to

determine     whether    plaintiff's     right    to    relief   is   time-barred

                                         6                                 A-5972-13T1
except     in     terms     of    equitable            principles      applicable         to

arbitration," we decided the limitations issue only to avoid

"additional delay and expenditure of resources" in that case.

Id. at 340.       However, the interpretation of N.J.S.A. 39:6A-11 in

Ideal    Mutual     is    unmistakably        clear.          All    disputes     between

insurance       companies   arising       under        that   provision     are     to   be

decided by an arbitrator.

    Moreover, in construing other arbitration provisions in the

same statute, our courts have clearly held that "coverage issues

are to be decided by the arbitrator in the same manner as issues

dealing with the extent of injury and the amount of recovery."

Sabato, supra, 337 N.J. Super. at 396-97 (citing Molino, supra,

289 N.J. Super. at 410-11).               We specifically disapproved efforts

by insurers "'to avoid arbitration simply by characterizing PIP

disputes    as    questions      of   .   .       .   "coverage"     and   then   seeking

judicial resolution of those issues.'"                         Id. at 397 (quoting

Molino, supra, 289 N.J. Super. at 411).                             We reach the same

conclusion here.

    Defendant argues that "residency" is too complex an issue

for an arbitrator to decide.              We disagree.         The issue is no more

complex than the issues presented in Ideal Mutual or Sabato, and

may be as simple as deciding, factually, whether William and

Beldor lived under the same roof at the time of the accident.

                                              7                                   A-5972-13T1
See   Molino,        supra,    289    N.J.       Super.     at    411.          Defendant's

additional         arguments    on    the    arbitration          issue       are    without

sufficient merit to warrant discussion in a written opinion.                                R.

2:11-3(e)(1)(E).

      Defendant also argues that no rule or statute permitted

plaintiff to proceed summarily by order to show cause under Rule

4:67-1(a), which authorizes that procedure in "all actions in

which the court is permitted by rule or by statute to proceed in

a   summary    manner."         We    acknowledge         that    two     other     statutes

providing      for     arbitration      —    the     Alternative             Procedure     for

Dispute    Resolution         Act    (APDRA),      N.J.S.A.           2A:23A-4,      and   the

Uniform     Arbitration        Act,     N.J.S.A.      2A:23B-7           –     specifically

authorize     summary     actions      to    enforce       arbitration          agreements.

See Kimba Med. Supply v. Allstate Ins Co. of N.J., 431 N.J.

Super. 463, 468 (App. Div. 2013) (noting, in another context,

that Department of Banking and Insurance regulations governing

PIP arbitrations "incorporated aspects of the APDRA").                              However,

focusing      on    the   no-fault      auto      insurance       statute,          with   its

emphasis      on    the   expeditious        resolution          of    PIP     disputes     by

arbitration, we find that a summary action under Rule 4:67-1(a)

was also appropriate here.               Because the only cognizable issue

before the court was whether defendant had refused plaintiff's

demand for inter-company arbitration, this dispute was ideally

                                             8                                       A-5972-13T1
suited for summary treatment.   See Ideal Mutual, supra, 211 N.J.

Super. at 339.   While N.J.S.A. 39:6A-11 does not specifically

address the issue, we infer that a summary action is what the

Legislature would have intended.

    By analogy with Rutgers Casualty Insurance Co. v. Vassos,

139 N.J. 163, 175 (1995), which held that Longworth3 disputes

with UIM insurers should be promptly resolved by order to show

cause, we conclude that refusals to arbitrate under N.J.S.A.

39:6A-11 should likewise be resolved by order to show cause.

Although N.J.S.A. 39:6A-11 does not specifically so provide, it

is implicit in the legislative purpose of the statute that an

action to enforce inter-company arbitration should be pursued by

3
  Longworth v. Van Houten, 223 N.J. Super. 174 (App. Div. 1988),
sets forth the procedures to be followed when an accident victim
wishes to settle with an underinsured tortfeasor and still
maintain the right to pursue an underinsured motorist (UIM)
claim against the victim's own insurer.          Approving that
procedure, Rutgers held:     "If the insurer does not respond
within the time allotted for rejection of the award or
settlement offer, the insured victim may, consistent with
Longworth, supra, move for a declaratory ruling on order to show
cause concerning the parties' rights and responsibilities."
Rutgers, supra, 139 N.J. at 175.       The Court approved that
procedure, although not specifically authorized by Rule 4:67-
1(a), because of the need for expeditious resolution of the
UIM/settlement issues. Ibid.

                                9                        A-5972-13T1
the most expeditious and efficient possible means, which in this

case is a summary action filed under Rule 4:67-1(a).4

     Affirmed.

4
  We emphasize that our holding is limited to the enforcement of
arbitration demands under N.J.S.A. 39:6A-11, and should not be
over-read to extend to disputes arising outside of the no-fault
statute.

                               10                       A-5972-13T1