Flores v Allstate Ins. Co.

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Flores v Allstate Ins. Co. 2013 NY Slip Op 30133(U) January 16, 2013 Supreme Court, New York County Docket Number: 115505/10 Judge: Shlomo S. Hagler Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. SCANNED ON 112512013 [* 1] * c SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY + * PRESENT: PART Justice , Index Number : 11 5505/2010 FLORES, CLAUDIA vs. ALLSTATE INSURANCE COMPANY SEQUENCE NUMBER : 002 \ I INDEX NO. MOTION DATE MOTION SEQ. NO. RESTORE ACTION TO CALENDAR The following papers, numbered 1 to ,were read on this motion toifor Notice of MotionlOrder to Show Cause -Affidavits Answering Affidavits - Exhibits - Exhibits INo&). / a INo(@. L Replying Affidavits Upon the foregoing papers, it is ordered that this motion is Dated: \ [ ib \ \ 9 ..................................................................... 2. CHECK AS APPROPRIATE: .............. MOTION I : S NON-FINAL DISPOSITION I CHECK ONE: . 3. CHECK IFAPPROPRIATE: ................................................ GRANTED 0SUBMIT ORDER 0SETTLE ORDER 0DO NOT POST 0FIDUCIARY APPOINTMENT 0REFERENCE [* 2] I SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: PART 17 CLAUDIA FLORES, Individually, and as Mother and Natural Guardian of LUIS DIEGO ROJAS, an infant, Petitioner, INDEX NO.: 115505/10 -against- DECISION/ORDER Peti tioner Claudia Flores ( Flores or petitioner ) moved by notice of petitionjand petition to vacate andor modify an arbitration award dated November 17,2010 ( Award ) pursuant to CPLK 4 751 1. (See Exhibit A to the Petition). Flores essentially argued that the Award should be vacated for four (4) reasons: (1) the arbitrator exceeded his authority by granting Allstate two adjournments to permit i t to locatc a witness, Susan Kingston ( Kingston ), the driver of the vehicle that struck the infant, Luis Diego Rojas ( child or Rojas ), (2) based on the arbitrator s statement that the child s hospital stay was basically uneventful and was mainly observation, the petitioner argued that the arbitrator did not read the hospital records which, in part, indicated more serious iiictlical tiearinenr, ( 3 ) the xbitr3tor should have awarded more than the policy limits of $100,000, and (4) the arbitrator miscalculated the Award as he applied the child s 50% comparative negligence ber orc thc set-off of $SO,OOO. Respondent Allstate Insurance Company ( Allstate or respondent ) opposed the petition. By interim decision and order dated September 23,201 I ( Interim Order ), the Hon. Emily Jane Goodman, J.S.C. rejected petitioner s first three arguments, and held in abeyance the fourth argument as to the arbitrator s,method of calculation as well as directed the parties to i [* 3] 4 Y submit briefs on the above issue. The parties complied, but the case was mistakenly marked disposed as a result of the entry of the Interim Order, and the remaining issue was never decided. As a result, petitioner now moves to restore this proceeding to the active calendar for a determination ot tlic i criiai ning ISSUC. Respondent partially opposes the restoration arguing that Justice Goodman had previously decided the first three issues and Ihe matter should be limited to determining the remaining issuc. In ,reply, petitioner acknowledges that the restoration should be limited to resolution of the above fourth argument as Justice Goodman has decided all other issues. Backwound The facts were recited in the Interim Order and for sake of brevity will not be repeated hercin. However, this Court will recite the following brief facts that are needed to determine the remaining issue. The child was injured as a result of an accident that occurred on September 18, 2008. The underlying third-party carrier subsequently tendered to petitioner their policy of $50,000. Thereafter, petitioner submitted a demand for arbitration against respondent seeking recovery of the under-insurance policy limits of $100,000. Allstate s policy contained a standard New SUM Endorsement which included a voluntary arbitration clause providing the petitioner with the option to resolve the matter through arbitration. (See, Exhibit A to respondent s opposition papers to the n underlying p e t i ~ ~ oat , 12). After a hearing, the arbitrator found the child was 50% comparatively negligent. Thc arbitrator awarded a gross sum of $100,000. He then first subtracted 50% of $100,000 for the child s comparative negligence and then applied the set-off of $50,000, which resulted a net award of $0. -2- [* 4] Vacature/Confirmation of an Arbitration Award There is a strong public policy in New York State favoring arbitration as an efficacious method of dispute resolution. This policy is especially pronounced in the context of commercial matters as arbitration is routinely relied upon for expeditious resolutions of disputes by arbitrators with practical knowledge of the subject area. (Mutter oj GoZdfinger v Lisker, 68 NY2d 225 [ 19861.) Courts are reluctant to set aside arbitration awards even when arbitrators err in deciding the law or facts lest the value of this method of resolving controversies be undermined. (68 NY2cl ,it 33 I .) The policy favoring arbitration gives rise to judicial deference because it is imperativc that the integrity of the process, as opposed to the correctness of the individual decision, bc zealously safeguarded. (&) Consistent with this strong public policy, there are few grounds for vacating or modifying arbitration awards and they are narrowly applied. It is wcll settled law that courts must confirm an arbitration award pursuant to CPLR 5 75 10, unless there are grounds to vacate or modify the award pursuant to CPLR 75 1 I . CPLR 4 7.5 1 1(b)( 1 ) enumerates the following grounds for vacating an award where the parties participated in the arbitration: (I) corruption, fraud, or misconduct in procuring the award; or (11) partiality of an arbitrator appointed as a neutral, except where the award was by confession; or (iii) an arbitrator, or agency or person making the award exceeded his [or her] power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made; or (iV failure to follow the procedure in this article, unless the party applying to vacate the award continued with the arbitration with notice of the defect and w i t h o u t o bj ec t 1on I The grounds for modifying an award are set forth in CPLR 8 751 l(c) as follows: 1. there was a miscalculation of figures or a mistake in the description of any person, thing or property referred to in the award; or -3- [* 5] 2. the arbitrators have awarded upon a matter not submitted to them and the award may be corrected without affecting the merits of the decision upon the issues submitted; or 3. the award IS imperfect in a matter of form, not affecting the merits of the controversy. Where a dispute has been arbitrated pursuant to an ,agreement between the parties, the award may not be set aside unless it violates a strong public policy, is totally irrational or clearly exceeds a specifically enumerated limitation on the arbitrator s power. (MutterofTown of Cullicoon / ( i i ~ i l. S o n 1 t m p l s . Assri., 7owji of Cullicnorz Unit], 70 NY2d 907, 909 [1987]j; Mutter of New York City 7 r. Auth. v Trunsport Workers Union ojAm., Locul100, 14 NY3d 119, 123 [2010].) Moreover, if the parties are subject to compulsory arbitration, the award must also satisfy furtherjudicial scrutiny In that it must have evidentiary support and cannot be arbitrary and c C i p r i c i o ~ \ (C itv School Di\t. ofthr Cin, of N,Y , v McGruhum, i 17 NY3d 917, 919 [201I ] quoting Mntter of hlotor Veh. Acc. Inchi. Corp. v Artnu Cas. B Sur. Co., 89 NY 2d 2 14,223 [ 19961.) (See also Mount St. Mciry s Hosp. of Niaguru Fulls v Cutliewood, 26 NY2d 493[1970]). The hearing officer s determination as to the credibility of witnesses is entitled to deference and is largely unreviewable because the hearing officer observed the witnesses. (Lackow v Department of Educ. / o r Board / qf Ct qfN.Y., 51 AD3d 563, 568 [lst Dept 20081j. The judicial review, therefore, iy may partially implicatc application of both Article 75 and 78 of the CPLR. Modification of Award based on Miscalculation As stated above, one ground for modification of an arbitration award is the miscalculation of figures. (CPLR 3 75 I 1 [c][ I]). Simply stated, where the arbitrator made a computational error, the courts may modify the award to correct such an error. However, where the error involved the arbitrator s exercise of judgment or discretion and was not a computational -4- [* 6] error, i t IS not grounds for modification of the arbitration award. (Mutter of M r i White ors Fushions, Inc. [Susquehunna Mills, Inc. J , 295 NY 450 [1946]; Mutter of Vewers & Schueller ( 11 /f://iorvMircVi. & Tool Cob/,190 AD2d 1079 [4th Dept 19931). Indeed, an arbitrator s conscious, substantive [decision], made on the merits does not constitute grounds for rnodrfication of a n award. (Mutter of Leombruvzo [City oj GZens Falls], 110 AD2d 996 [3rd Dept 19851). In this case, the arbitrator was faced with a substantive decision as to the proper method of calculation of the child s 50% comparative fault and the $50,000 set-off. The methods of calculating these two variables were discussed and decided by the Court of Appeals in W h l e n v Kuwasaki Motors Corp., U.S.A., 92 NY2d 288 (1998) and are known as setllement-first and fault-first. In the settlement-first approach, the set-off of $50,000 is first deducted from the gross award of $100,000 and then the child s 50% comparative fault is applied, which results in a net award of $25,000. In the hult-first approach, the child s 50%) comparative fault is first applied to the gross award of $100,000 and then the $50,000 set-off is deducted, which results in a net award of $0. The Court of Appeals adopted the settlement-first i i p p r oach 3 s i t better encouragcd parties to settle their differences and advanced the primary piirpose of General Obligations Law 15-108. (Zd. at 296). The arbitrator selected the fdult-first approach i n calculating the Award. While this Court is obligated by sture decisis to follow the Court of Appeal s st ttlt nicnt-first approach, slid It would be reversible cn-or to calculate i t in a contrary manner, courts are reluctant to set aside arbitration awards even when the arbitrator errs in deciding the 1aw lcst the value of this method of resolving controversies be undermined. (Matter of G uldjirigrr v Lisker, 68 NY2d 225, 231 [1986].) Moreover, Article 75 of the CPLR does not -5- [* 7] provide grounds to either vacate or modify the Award under such circumstances as the arbitrator did not make a computational error, but rather made a substantive decision to calculate the Award utilizing the fault-first approach. However, if the parties were subject to compulsory arbitration, then the award must also satisfy further judicial scrutiny of Article 78 of the CPLR in that it must have evidentiary support and cannot be arbitrary and capricious. Article 78 is not implicated hcrein as it is uncontroverted that the arbitration was optional (and selected by petitioner) and not compulsory. Conclusion Accordingly, it is hereby ORDERED and ADJUDGED, that the petition is denied and the proceeding is dismissed. The clerk shall enter a judgment accordingly. The foregoing constitutes the decision and order of this Court. Courtesy copies of this decision and order have been sent to counsel for the parries. J" Ikitccl 20 I3 New York, New York +ILtriuury 16, . - Hon. d h l o I h d L Eagler, J.S.C. f .. . C UNFILED JUDGMENT nls judgment has not been entered by the County Clerk fu and notice: of entry cannot be served based hereon. To sbbin entry. counsel or authorized representative must appear in person at the Judgment Clerk's Desk (Rogm

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