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The Rogak Report: 02 Feb 2006 ** Uninsured Motorists - Comp Offsets **

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  • Lawrence Rogak
    Message 1 of 1 , Feb 2, 2006

      CNA Global Resource Managers v. Berry, NYLJ 2/02/06 (Supreme Court,
      Kings County) (SCHACK, j)

      CNA Global Resource Managers and Custom Towing, Inc. moved to vacate
      and set aside a $300,000.00 March 16, 2005 arbitration award to
      respondent Berry "for any and all injuries sustained as a result of
      the occurrence of April 15, 2002," issued in a SUM arbitration
      between the parties, on the grounds that the arbitrator exceeded his
      powers by issuing an award that was arbitrary and capricious; or, in
      the alternative petition, to modify the $300,000.00 arbitration award
      on the grounds that the arbitrator failed to reduce the award by
      workers' compensation benefits previously paid to the respondent.
      Respondent Berry opposed the petitions on the grounds that the
      petitioners waived any right to a workers' compensation offset when
      they failed to request such at the arbitration proceeding.

      The SUM arbitration arose out of an accident, allegedly occurring on
      April 15, 2002, when respondent's tow truck was struck in the rear
      while stopped at the intersection of East 37th Street and Avenue I,
      in Brooklyn. According to the arbitration award, Mr. Berry testified
      that his vehicle was struck in the rear while stopped for a red
      light. The force of the collision reportedly caused the offending
      vehicle to be impaled upon the tow truck's rear metal lift.
      Subsequently, the operator of the offending vehicle fled the scene.

      During the arbitration proceeding, two workers' compensation
      applications with regard to the accident were proffered. The initial
      application, dated July 17, 2002, stated that the accident occurred
      at Avenue J and 23rd Street [this intersection does not exist in
      Brooklyn]. The subsequent application, dated November 2, 2002,
      identified the accident location as Avenue I and East 37th Street.

      In determining liability, the arbitrator noted that any denial of
      respondent's claim "would have to be based upon his total and
      complete responsibility for the happening of this occurrence."
      Moreover, the arbitrator made clear that "the question of whether or
      not there was a contact by [an] adverse vehicle into [respondent's]
      tow truck was not before [him]." Upon considering the "significant
      testimony" of respondent with regard to the happening of the accident
      and the location of its occurrence, the arbitrator determined that
      there was "no evidence" submitted which would allow him to find
      respondent solely responsible for the subject accident.

      In this petition, petitioners contended that the arbitration award
      should be vacated because the arbitrator overlooked "strong evidence
      of fraud on the part of [respondent] regarding whether an accident
      ever even occurred at all." Specifically, petitioners argued that the
      arbitrator overlooked inconsistencies in respondent's workers'
      compensation applications with regard to where the accident actually
      took place. Further, petitioners argued that the arbitrator
      improperly overlooked or failed to credit evidence that a traffic
      control device did not exist at the intersection of East 37th Street
      and Avenue I. They also contended that the arbitrator erred in
      failing to provide an opportunity to the petitioners to submit
      additional definitive proof on the issue of the absence of a traffic
      light at the purported accident scene.

      Respondent contended that petitioners did not offer any evidence that
      he was solely responsible for the alleged accident and, therefore,
      the arbitrator's liability determination was not arbitrary or
      capricious. He also argued that the absence of a traffic light at
      the intersection did not demonstrate that the accident did not occur
      or that respondent was solely responsible for the accident since, in
      any event, he claims that he was actually stopped at the intersection
      of East 37th Street and Avenue I at the time of the accident due to a
      red traffic light located approximately one block ahead of him.

      The Appellate Division, Second Department, has applied the CPLR
      Article 78 "arbitrary and capricious" standard of review to petitions
      to vacate compulsory arbitration awards. In State Farm Mut. Auto Ins.
      Co. v. City of Yonkers, 21 AD3d 1110, 1111 (2005) the Court stated,
      that an arbitration award in a mandatory arbitration proceeding will
      be upheld if it is supported by the evidence and is not arbitrary and
      capricious. On review, an award may be found to be rational if any
      basis for such a conclusion is apparent to the court based upon a
      reading of the record.

      "An arbitrator's paramount responsibility is to reach an equitable
      result, and the courts will not assume the role of overseers to mold
      the award to conform to their sense of justice. Thus, an arbitrator's
      award will not be vacated for errors of law and fact committed by the
      arbitrator. Even where the arbitrator states an intention to apply a
      law, and then misapplies it, the award will not be set aside," held
      the Court.

      "The liability determination in the instant arbitration award was not
      arbitrary and capricious. Therefore, this Court will not disturb the
      award with respect to the arbitrator's finding that respondent did
      not cause the accident. The arbitrator, in his award, stated: [d]
      enial of [Mr. Berry's] claim on the question of liability would have
      to be based upon his total and complete responsibility for the
      happening of this occurrence. There is no evdence submitted on behalf
      of [CNA and Custom Towing] that would allow me to make such a
      distinction on the question of liability."

      "The arbitrator based his decision upon respondent's testimony that
      he was struck from behind while his vehicle was stopped at the
      intersection of East 37th Street and Avenue I. The arbitrator gave no
      weight to [an investigator's] testimony that no traffic light existed
      at the subject intersection, given that his testimony was not
      accompanied by any photographs or other documentary evidence.
      Moreover, even if some evidence existed that there was no traffic
      control device located at the subject intersection, such evidence
      would not prove that Mr. Berry was not stopped at the intersection at
      the time of the accident, was not struck in the rear by a vehicle
      whose driver fled the scene, and that Mr. Berry in any way
      contributed to the proximate cause of the occurrence."

      "The arbitration award clearly, and correctly, states that the
      question of whether any contact ever occurred between respondent's
      vehicle and the alleged offending vehicle was not before the
      arbitrator. The Court, in Nationwide Ins. Co. v. McDonnell, 272 AD2d
      547, 548 (2d Dept 2000), held that it is well settled that a court,
      and not an arbitrator, must resolve the issue of whether there was
      actual contact with a hit-and-run vehicle. Accordingly, an
      arbitrator acts in excess of his or her powers when he or she
      considers the question of contact and reviews evidence that there may
      have been no contact between the allegedly offending vehicle and the
      vehicle operated by the claimant seeking uninsured motorist

      "However, with regard to petitioners' application to modify the
      arbitration award, the Court finds that it is appropriate to remand
      the proceeding to the arbitrator solely for a determination of the
      amount, if any, of a set-off based upon payment to respondent of
      workers' compensation benefits."

      "In the instant matter, the relevant insurance policy contains a non-
      duplication clause which states that the uninsured motorist coverage
      provided pursuant to the policy shall not duplicate benefits payable
      pursuant to the workers' compensation law. Therefore, to the extent
      that any portion of the $300,000 award rendered in favor of
      respondent Berry compensates him for the same economic loss for which
      he has already received workers' compensation benefits, the award
      should be reduced by such benefits. The failure to reduce benefits
      would result in the duplication of compensation which the non-
      duplication clause seeks to avoid."

      "Although an arbitration award is not rendered susceptible to vacatur
      or modification if the arbitrator has made a mistake of fact or law,
      the award may be set aside if the arbitrator excluded pertinent
      evidence from the hearing."

      "In this matter, respondent apparently refused to produce any
      evidence of his receipt of workers' compensation benefits to
      petitioners. The arbitrator excluded such evidence from the hearing
      as irrelevant. However, given the existence of the non-duplication
      clause in the subject insurance policy, as well as the fact that
      evidence as to respondent's economic loss was presented at the
      hearing (although an economist's report was apparently not credited
      by the arbitrator), the court finds that the arbitrator incorrectly
      excluded evidence of respondent's receipt of workers' compensation
      benefits from the hearing."

      "Further, although respondent claims that such award solely reflects
      compensation for non-economic loss such as pain and suffering, the
      award itself states that it represents payment for all injuries
      sustained as a result of the occurrence of April 15, 2002, and does
      not explicitly limit the award to injuries of a non-economic nature."

      "The court notes that by remanding the matter to the arbitrator, the
      arbitrator is not directed to modify the award to reflect workers'
      compensation benefits offsets, as requested by petitioners, but
      rather, the arbitrator is directed to consider any evidence of
      workers' compensation benefit payments with regard to his
      determination of the monetary award to be issued to respondent."

      The Court therefore ordered a new arb hearing "to the extent that the
      matter shall be remanded to the arbitrator for the sole purpose of
      determining whether such an offset is warranted and, if so, to modify
      the monetary award to reflect same." Respondent Berry was
      ordered "to produce any and all documentation concerning his receipt
      of workers' compensation benefits with regard to the subject accident
      within 90 days of the date of the notice of entry of this decision
      and order... upon remand, the arbitrator shall consider such
      documentation in determining whether a workers' compensation offset
      to the award is appropriate."

      Larry Rogak
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