ALLCITY INSURANCE COMPANY v. EAGLE INSURANCE COMPANY

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Supreme Court, Appellate Term, New York.

ALLCITY INSURANCE COMPANY a/s/o Jane Thomas, Appellant, v. EAGLE INSURANCE COMPANY and Arbitration Forums, Inc., Respondents.

Decided: September 03, 2003

Present:  PESCE, P.J., GOLIA and RIOS, JJ. Serpe, Andree & Kaufman, Huntington (Jonathan H. Kaufman of counsel), for appellant. Samuel K. Rubin, Bethpage (Lawrence R. Miles of counsel), for Eagle Insurance Company, respondent. Wade Clark Mulcahy, New York City (Nicole Y. Brown of counsel), for Arbitration Forums, Inc., respondent.

Appeal by petitioner, as limited by its brief, from so much of an order of the Civil Court, Queens County (K. Kerrigan, J.), entered August 7, 2002, as denied its petition to vacate the arbitrator's award.

Order unanimously modified by providing that the petition is granted insofar as it sought to vacate the arbitrator's award and matter remanded for arbitration before a different arbitrator;  as so modified, affirmed without costs.

Pursuant to the mandatory arbitration provisions of Insurance Law § 5105, petitioner Allcity Insurance Company a/s/o Jane Thomas (Allcity) filed a demand for arbitration on March 1, 1999 seeking reimbursement of no-fault payments it made to its subrogor by checks dated February 5, 1997.   Arbitration Forums Inc. twice denied the claim on the ground that the statute of limitations had expired.   Allcity commenced a special proceeding to vacate the arbitrator's award.   By order entered October 30, 2000, the court below granted Allcity's first petition and remanded the matter for a new hearing.   Allcity sought arbitration for a second time and, following the hearing, Arbitration Forums Inc., again dismissed the claim on the aforementioned statute of limitations ground.   Allcity then filed the instant petition to vacate the February 2002 arbitrator's award, and sought sanctions against Arbitration Forums, Inc. By order entered August 7, 2002, the court denied Allcity's second petition, finding that it was not based on one of the limited grounds upon which such an award may be vacated pursuant to CPLR 7511 and that the arbitrator applied the correct statute of limitations.

The Civil Court determined, upon granting Allcity's first petition and remanding the matter for arbitration, that the arbitrator's award dismissing the claim as barred by the statute of limitations was not based on the evidence and that it was arbitrary and capricious for the arbitrator to dismiss the claim since Allcity timely made its demand for arbitration within three years of its first no-fault payment (see CPLR 214[2];  Matter of Motor Vehicle Acc. Indem. Corp. v. Aetna Cas. & Sur. Co., 89 N.Y.2d 214, 652 N.Y.S.2d 584, 674 N.E.2d 1349;  Aetna Life and Cas. Co. v. Nelson, 67 N.Y.2d 169, 175, 501 N.Y.S.2d 313, 492 N.E.2d 386;  Matter of Budget Rent-A-Car [State Ins. Fund], 237 A.D.2d 153, 654 N.Y.S.2d 757;  Allcity Ins. Co. v. American Transit Ins. Co., N.Y.L.J., Feb. 8, 2000 [App. Term, 2d & 11th Jud. Dists.] ).

Upon a review of the record, we agree with the October 30, 2000 determination of the court below and note that inasmuch as the parties had a “full and fair” opportunity to litigate this issue, said determination constituted the law of the case and the August 2002 order of the court below erroneously fails to abide by same (see People v. Evans, 94 N.Y.2d 499, 706 N.Y.S.2d 678, 727 N.E.2d 1232, rearg. denied 96 N.Y.2d 755, 725 N.Y.S.2d 280, 748 N.E.2d 1076). Moreover, in Matter of Motor Vehicle Acc. Indem. Corp. v. Aetna Cas. & Sur. Co., 89 N.Y.2d 214, 652 N.Y.S.2d 584, 674 N.E.2d 1349, supra, the Court of Appeals determined that closer judicial scrutiny is required, and the arbitrary and capricious standard is applicable, if arbitration is compulsory pursuant to a statutory mandate (id. at 223, 652 N.Y.S.2d 584, 674 N.E.2d 1349).   To the extent that the Fourth Department case, Matter of Allstate Ins. Co. v. Clarendon Nat. Ins. Co., 259 A.D.2d 971, 688 N.Y.S.2d 855, is inconsistent with the Court of Appeals' holding in Matter of Motor Vehicle Acc. Indem. Corp. v. Aetna Cas. & Sur. Co. (supra ), it is not controlling.

Furthermore, although we deem the issue concerning the implicit denial by the court below of that branch of Allcity's petition seeking the imposition of sanctions against Arbitration Forums, Inc. abandoned since Allcity did not raise said issue in its appellate brief (see Baliva v. State Farm Mut. Auto. Ins. Co., 286 A.D.2d 953, 955, 730 N.Y.S.2d 655), we are disturbed by Arbitration Forums, Inc.'s, and its administrator's, willful disregard of a lawful court order.