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Supreme Court, Appellate Division, First Department, New York.

IN RE: Application of TRAVELERS INDEMNITY COMPANY/AETNA CASUALTY & SURETY COMPANY, Petitioner-Respondent, v. For a Judgment, etc., Nettie ROTH, et al., Respondents-Appellants.

Decided: February 18, 1999

SULLIVAN, J.P., ROSENBERGER, WILLIAMS and SAXE, JJ. Jerome F.X. Hoffman, for Petitioner-Respondent. Craig A. Post, for Respondents-Appellants.

Judgment, Supreme Court, New York County (Walter Tolub, J.), entered on or about October 21, 1997, which granted petitioner's application to stay permanently an underinsured motorist arbitration, unanimously reversed, on the law, without costs or disbursements, the application denied and the petition dismissed.

The underlying underinsured motorist (SUM) claim has its origins in a November 12, 1991 motor vehicle accident in which respondent Nettie Roth was injured.   Her lawsuit against the alleged tortfeasor for personal injuries, as well as her respondent husband's claim for loss of services, was settled for $100,000, the full limit of the tortfeasor's automobile liability policy.   At the time in question, respondents had an automobile policy with petitioner with a $300,000 single limit liability provision as well as an underinsured motorist endorsement with limits of $100,000 each person/$300,000 each accident.   On December 20, 1996, respondents, with respect to their underinsured motorist claims, sent a demand for arbitration, which, indisputedly, petitioner received on December 24, 1996.   On January 8, 1997, petitioner filed its notice and petition seeking a permanent stay of arbitration on the grounds of, inter alia, lack of timely notice, a condition precedent to coverage and the unavailability of SUM benefits because of an offset resulting from respondents' settlement with the tortfeasor for an amount equal to the limit of their underinsured coverage.   Finding that the underinsured motorist provision was never triggered, the IAS court granted a permanent stay, upon which, after the denial of the reargument, judgment was entered.   Since there is merit to respondents' argument that petitioner failed to obtain personal jurisdiction over them and allowed the time limitation with respect to an application to stay arbitration to run, we reverse and dismiss the petition.

 An application to stay arbitration must be made within 20 days of the date of service of the demand for arbitration.  (CPLR 7503[c].)  A special proceeding, such as one to stay arbitration, is deemed commenced upon the filing of the notice of petition and petition with the clerk of the court.  (See, CPLR 304;  Matter of Gershel v. Porr, 89 N.Y.2d 327, 331, 653 N.Y.S.2d 82, 675 N.E.2d 836.)   Under former CPLR 306-b(a), applicable at the time this proceeding was commenced, a petitioner was required to file proof of service within 15 days of the expiration of the 20-day limitations period.   If such proof were not timely filed and respondent did not make an appearance within that time the proceeding was automatically dismissed.  (See, Black v. Randall Medical Offices, 237 A.D.2d 110, 654 N.Y.S.2d 364.)   Thus, while petitioner's Article 75 proceeding was timely filed on January 8, 1997, petitioner, according to the opposition papers, which petitioner has not disputed, failed to file proof of service within 15 days of the expiration of the 20-day limitations period.   This proceeding was therefore automatically dismissed on January 25, 1997, 36 days from the date of service of the arbitration demand.

It is also undisputed that a search of the court files reveals that petitioner did not commence a new proceeding by filing and service of the notice of petition and petitioner within 15 days of the dismissal (see, CPLR 306-b[a] ).

In light of our determination we need not reach petitioner's other arguments relating to the merits of the underinsured motorist claim, which, in any event, are for the arbitrator.


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