ALLSTATE NEW JERSEY INSURANCE COMPANY v. INTERCOASTAL TRANSPORT COMPANY

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

ALLSTATE NEW JERSEY INSURANCE

COMPANY,

Plaintiff-Appellant,

v.

INTERCOASTAL TRANSPORT COMPANY,

LOUIS MAURICE WONQUE, JR., and

STAR INSURANCE COMPANY, c/o

MEADOWBROOK CLAIMS,

Defendants-Respondents.

__________________________________

April 4, 2014

Argued March 19, 2014 Decided

Before Judges Waugh and Accurso.

On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket

No. L-3155-10.

David J. Dickinson argued the cause for appellant (McDermott & McGee, LLP, attorneys; Gabrielle J. Pribula, on the briefs).

Edward L. Thornton argued the cause for respondents (Methfessel & Werbel, attorneys; Mr. Thornton, on the brief).

PER CURIAM

Plaintiff Allstate New Jersey Insurance Company (Allstate) appeals from the denial of its motion to confirm two arbitration awards and from the grant of defendant Star Insurance Company's (Star) motion to vacate the arbitration awards, stay the arbitration proceedings, and bind the parties to the outcome of the Law Division action between the parties' insureds. Because Star did not establish a basis for vacating the awards under Section 23 of the Arbitration Act, N.J.S.A. 2A:23B-1 to -32, we reverse.

The parties' insureds were involved in a car accident in Elizabeth. Allstate's insured and a passenger were in a private passenger automobile covered by the Allstate policy. Star's policy covered the commercial truck that allegedly caused the accident. Allstate paid personal injury protection (PIP) benefits for the insured and the passenger as required by its policy and sought reimbursement from Star pursuant to N.J.S.A. 39:6A-9.1.1 See Sherman v. Garcia Const., Inc., 251 N.J. Super. 352, 356 (App. Div. 1991).

Specifically, Allstate instituted a Law Division action against Star, demanding PIP reimbursement via arbitration. Star answered the complaint, admitting that it insured the commercial truck involved in the accident and denying that reimbursement was due. Allstate's motion to compel Star to submit the dispute to inter-company arbitration through Arbitration Forums, Inc. (Arbitration Forums) pursuant to N.J.S.A. 39:6A-9.1 was unopposed. Accordingly, the Law Division ordered the parties to inter-company arbitration through Arbitration Forums and dismissed Allstate's suit without prejudice.

Allstate thereafter filed a demand for arbitration with Arbitration Forums, claiming $282,840.87 in PIP reimbursement paid on behalf of its two claimants. Allstate sent a copy of its demand to Star's counsel. Star did not file an answer to the demand and did not appear at the hearing. The arbitrator entered awards against Star of $256,831.83 for the insured and $26,009.04 for the passenger, for a total of $282,840.87 in PIP reimbursement.

Star thereafter filed its motion to reopen the docket, vacate the awards, and bind the parties to the outcome of the Law Division action between the parties' insureds, which was scheduled for trial the following month in another county. Star's counsel filed a certification in support of the motion, relating the procedural history set forth above and stating:

Accordingly, when this matter was given an arbitration date of March 27, 2013, by [Arbitration Forums], request for one year deferral was the course of action. Unfortunately, it appears that said deferral was never filed with [Arbitration Forums] and accordingly, arbitration was held March 27, 2013 without confirmation to this defendant and without request for an appearance by this defendant and without a telephone call or other notice to the defendant's attorney that the arbitration was in progress.

Star further contended that it possessed meritorious defenses to the claim and that "[e]quity demands" that the arbitration dispute abide the outcome of the tort action.

Allstate opposed the motion and cross-moved to confirm the awards. It argued that the parties were ordered to inter-company arbitration and that Star was properly served with both the demand for arbitration and the notice of hearing and simply failed to appear. Allstate contended that the awards were properly entered and could only be vacated for one of the grounds enumerated in N.J.S.A. 2A:23B-23, none of which Star alleged, much less proved. Finally, Allstate requested oral argument on the motions.

The judge did not hold oral argument, notwithstanding the parties' right to argument pursuant to Rule 1:6-2(d). On the bottom of the order vacating the arbitration awards, the judge wrote:

Under N.J.S.A. 2A:23B-23[,] the spirit of the rule was not complied with. In the interests of fairness this matter should be resolved on the merits with both sides participating. While it is clear that [Allstate] complied with arbitration rules, [Star's] conduct constituted excusable neglect in their reliance on the PIP [issues] to be decided in the Union County tort action.

This appeal followed.

On appeal, Allstate argues that the trial court was without authority to vacate the arbitration awards because Star failed to allege or prove a basis for vacating the awards under N.J.S.A. 2A:23B-23. We agree.

N.J.S.A. 2A:23B-23 provides only six grounds upon which an arbitration award may be vacated: it was "procured by corruption, fraud, or other undue means;" evident corruption, partiality or misconduct by the arbitrator; the arbitrator refused to postpone a hearing or consider evidence material to the controversy, or otherwise conducted the hearing so as to substantially prejudice a party; the award exceeded the arbitrator's powers; there was no agreement to arbitrate; or the arbitration proceeded without proper notice, to the substantial prejudice of a party. N.J.S.A. 2A:23B-23a(1)-(6). It is clear from the judge's brief statement on the order vacating the awards that he did not do so for any of the reasons allowed by statute.

Instead, the judge found that, notwithstanding Allstate's compliance with Arbitration Forums' rules, the award should be vacated by Star's "excusable neglect" in not requesting a deferment of the arbitration and failing to appear for the hearing. That was error. A court's power to vacate an arbitration award is strictly limited by statute. Fawzy v. Fawzy, 199 N.J. 456, 470 (2009). A party's neglect in participating in the arbitration is not among the reasons the Legislature has deemed a basis for setting aside an arbitration award. See Selective Ins. Co. v. Nat'l Cont'l Ins. Co., 385 N.J. Super. 62, 68-69 (App. Div.), certif. denied, 188 N.J. 218 (2006).

Star argues that the judge's vacation of the arbitration award was proper because "[d]efendant never received notice of the March 2013 hearing." Star did not make this argument to the trial court and it is belied by documents included in Allstate's appendix on appeal. Moreover, Star's counsel confirmed to us at oral argument that there is no certification in the record from his client attesting to that "fact." There is thus no basis in the record for such a determination. As the burden to prove that grounds existed to vacate the arbitration awards was on Star, see Del Piano v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 372 N.J. Super. 503, 510 (App. Div. 2004), certif. granted, 183 N.J. 218, dismissed as improvidently granted, 195 N.J. 512 (2005), its failure to have produced proof of its claim is fatal on appeal.2 Accordingly, we reverse. See Tretina Printing, Inc. v. Fitzpatrick & Assocs., Inc., 135 N.J. 349, 358 (1994) ("Because the record before us contains not even a hint of misconduct by the arbitrator, and because no statutory ground exists for invalidating or modifying the award, we uphold the arbitrator's award.").

The order under review is reversed and the matter remanded for entry of an order confirming the arbitration awards and ordering payment due within thirty days of the satisfaction of the related bodily injury claims pursuant to N.J.S.A. 39:6A-9.1b.

Reversed.

1 N.J.S.A. 39:6A-9.1 provides, in pertinent part that

a. An insurer . . . paying . . . [PIP] benefits . . . as a result of an accident occurring within this State, shall . . . have the right to recover the amount of payments from any tortfeasor who was not, at the time of the accident, required to maintain [PIP] . . . coverage . . .

b. In the case of an accident . . . involving an insured tortfeasor, the determination as to whether an insurer . . . is legally entitled to recover the amount of payments and the amount of recovery, . . . shall be made against the insurer of the tortfeasor, and shall be by agreement of the involved parties or, upon failing to agree, by arbitration. Any recovery by an insurer . . . pursuant to this subsection shall be subject to any claim against the insured tortfeasor's insurer by the injured party and shall be paid only after satisfaction of that claim, up to the limits of the insured tortfeasor's motor vehicle . . . liability insurance policy.

2 Star's remaining argument, that the matter is not ripe for appeal because the judge ordered the matter returned to arbitration in the event the personal injury action is not resolved by jury verdict, is without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).