Matter of State Farm Mut. Auto. Ins. Co. v Williams
Annotate this CaseDecided on May 31, 2005
Supreme Court, Kings County
In the Matter of the Petition of State Farm Mutual Automobile Insurance Company, Petitioner, For an order staying the arbitration attempted to be had by
against
Corlette Williams, ASIYAH DAVILA, AND RABIYYAH WILLIAMS, Respondents -and- ABAID IBRAHIME, CLAUDE J. JOURDAIN and AMICA MUTUAL INSURANCE COMPANY, Proposed Additional Respondents.
6331/04
Francois A. Rivera, J.
Petitioner moves pursuant to CPLR §7503 (b) for an order to permanently stay arbitration. Respondents had demanded arbitration pursuant to the uninsured motorist provision of respondent Corlette Williams' policy with petitioner. Respondents oppose the petition to stay arbitration.
This action arises out of an automobile accident that occurred on October 11, 2003. The respondents were all occupants in a vehicle owned by respondent Corlette Williams and insured by petitioner State Farm Mutual Automobile Insurance Company. Each respondent is making an uninsured motorist claim against petitioner, claiming that the vehicle they were riding in was struck by another vehicle which was uninsured at the time of the accident. The vehicle that struck the respondents' vehicle was owned and operated by Claude Jourdain. Claude Jourdain, a New Jersey resident, was insured by Amica Mutual Insurance Company under a policy of [*2]insurance issued in New Jersey. Amica Mutual issued a disclaimer of coverage to Claude Jourdain based on the livery exclusion found in their policy.
The respondents served a demand for arbitration on State Farm for uninsured motorist benefits. In response to the demand for arbitration, State Farm served this petition to stay arbitration. Pursuant to CPLR §7503 (b), a party who has grounds to oppose arbitration may preserve the right to litigate the underlying dispute in court by timely applying to the court for a stay of arbitration.
CPLR §7503 (b) states: Subject to the provisions of subdivision [c], a party who has not participated in the arbitration and who has not made or been served with an application to compel arbitration, may apply to stay arbitration on the ground that a valid agreement was not made or has not been complied with or that the claim sought to be arbitrated is barred by limitation under subdivision (b) of section 7502.
On September 22, 2004, a framed issue hearing was conducted to determine the validity of the disclaimer by Amica Mutual. At that time, Amica Mutual presented its case to support its disclaimer of coverage. Three witnesses testified at the hearing including two passengers in the Claude Jourdain vehicle, Pamela Neal and Earline Fulmore. Karen Rainer, a senior claims adjuster for Amica Mutual, also testified. Amica presented evidence that Claude Jourdain, the driver of the offending vehicle, was paid thirty dollars by each of his passengers to drive them to the Greenhaven Correctional Facility. The testimony indicated that on the day of the accident, Mr. Jourdain was driving a burgundy van with license plate PAT 16W. Amica claims that their policy excludes coverage when the vehicle is used as a taxi or for hire. At the end of Amica Mutual's case, State Farm moved for a directed verdict, asking the court to find Amica Mutual's purported disclaimer invalid as a matter of law.
From the evidence elicited at the framed issue hearing, it is undisputed that on June 1, 2003, the insured, Claude Jorndaine, signed an application for motor vehicle insurance with the insurer, Amica Mutual. The application listed the vehicle in question, a 1997 Ford E350 Club wagon licensed plate PAT 16W, as well as another vehicle, a 1994 Nissan Sentra two-door sedan. On page three of the application, when the insured was asked whether any of the vehicles listed will be used as a taxi or "for hire", the insured responded "no". Mr. Jourdain used at least two vehicles to transport passengers for a fee. One vehicle was clearly marked as a vehicle for hire while the other, a burgundy van, used on the day in question, was not. The testimony did reveal that Mr. Jourdain used the burgundy van on other occasions for the same purpose.
Because the accident occurred in New York and the insured is a New Jersey resident operating a motor vehicle insured by a New Jersey policy of insurance, the court must first determine whether there is a choice of law conflict. The first step in any case presenting a potential choice of law issue is to determine whether there is an actual conflict between the laws of the jurisdictions involved (In the Matter of Arbitration Between Allstate Insurance Company v Stolarz, 81 NY2d 219 [1993]). If there is a conflict between the laws of two jurisdictions, the court must then choose the appropriate analysis when choosing which jurisdiction's laws to apply. [*3]
The historical approaches to choice of law in both tort and contract were rigid and mechanical. In tort cases, courts invariably applied 'lex loci delicti', the law of the place of the tort. Contract cases generally invoked the law of the place where the contract was made or was to be performed (see Sweift & Co v Banker's Trust co, 280 NY 135). These inflexible rules proved unsatisfactory because the location of the controlling event was sometimes fortuitous, did not reflect the parties' intentions, or was insignificant as against the location of other events. Moreover, the traditional approaches failed to accord any significance to the policies underlying the conflicting laws (Matter of Arbitration between Allstate Insurance Co v Stolarz, supra. 81 NY2d 219; Cooney v Osgood Mach. 81 NY2d 66).
In the context of tort law, New York now utilizes interest analysis to determine which of two competing jurisdictions has the greater interest in having its law applied in litigation. The greater interest is determined by an evaluation of the facts or contacts which relate to the purpose of the particular law in conflict (Schultz v Boy Scouts, 65 NY2d 189, 197 [1985]). Two separate inquiries are required to determine the greater interest: (1) what are the significant contacts and in which jurisdiction are they located; and (2) whether the purpose of the law is to regulate conduct or allocate loss (Padula v Lilarn Properties Corp., 84 NY2d 519 [1994]).
By contrast, contract cases often involve only the private economic interests of the parties. The "center of gravity" or "grouping of contacts" choice of law theory, applied in contract cases, enables the court to identify which law to apply without entering into the difficult, and sometimes, inappropriate, policy thicket. Under this approach, the spectrum of significant contacts, rather than a single possibly fortuitous event, may be considered. Critical to a sound analysis, is selecting the contacts that obtain significance in the particular contract dispute (In the Matter of Allstate v Stolarz, supra., 81 NY2d at 226). Traditional choice of law factors should be given "heavy weight" in a grouping of contacts analysis (Hang v Barnes, 9 NY2d 554, 560; Cooney v Osgood, 81 NY2d at 919. There are, however, instances where the public policies underlying conflicting laws in a contract dispute are readily identifiable and reflect strong governmental interests, and therefore, should be considered.
In this case, although the underlying action arose from a motor vehicle accident in New York, a tort action, the court is now faced with an issue that arises out the language of a contract and an exclusionary clause within that contract. The contract is a New Jersey automobile insurance policy between an insured, a New Jersey resident, and the insurer, a company licensed to do business in New Jersey. After applying a "grouping of contacts" analysis, it is plain that this dispute overwhelmingly centers on New Jersey. The Restatement, for example, enumerates five generally significant contacts in a contract case: the place of contracting, negotiation and performance; the location of the subject matter of the contract; and the domicile of the contracting parties (see Restatement [Second] of Conflict of Laws §188[2]; Matter of Allstate v Stolarz, supra).
Indisputably, New Jersey is the place where the contract was negotiated and made. The parties to the contract are both New Jersey entities. The subject matter of the contract, a vehicle, does not have a fixed location, but is registered in New Jersey. Thus most of the factors plainly point to New Jersey Law.
Regardless, the court does not find a conflict in law governing what a taxi or a "for hire" means. The evidence supports that the insured, Claude Jourdain, used the vehicle in question on [*4]several occasions to transport passengers for a set fee and that this service was available to the general public. Under New Jersey law, as well as New York law, a public or livery conveyance refers to a vehicle used indiscriminately in conveying the public, without limitation to certain persons or particular occasions or without being governed by special terms (see American Fidelity Fire Insurance Co v Pardo, 32 AD2d 536 [2nd Dept. 1969]; CSC Insurance Services v Graves, 293 NJ Super. 244 [1996]).
Although both New York and New Jersey law strictly construes exclusionary clauses in insurance policies against the insurer and that any ambiguity in an insurance policy must be construed against the insurer (see Greaves v Public Serv Mut Ins Co, 5 NY2d 120; CSC Insurance Services v Graves, supra. 293 NJ Super. at 249), especially where the ambiguity is in an exclusionary clause (see Sachs v American Cent. Ins. Co, 34 Misc 2d 687), the court finds that the insurer met their burden of proving that the occurrence came within the exclusionary clause. Therefore, the court finds that Mr. Jourdain held his van out to the public for hire and that this use of the vehicle was not covered by the insurance policy. Amica Mutual's disclaimer of coverage was valid.
Petitioner's request to stay arbitration is denied.
The foregoing constitutes the decision and order of the court.
______________________
J.S.C.
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
