Matthews, Fritz and Botter. The opinion of the court was delivered by Botter, J.A.D. Fritz, J.A.D. (dissenting).
This is an appeal from the refusal of the trial judge to stay arbitration demanded by Susan Mongiovi of her insurer, Travelers Indemnity Company (Travelers), under an uninsured motorists endorsement (see N.J.S.A. 17:28-1.1) to her automobile insurance policy.
For the purposes of this action the following facts are not disputed. Mongiovi was sitting in her parked car on June 5,
1972 when it was struck by an automobile owned by Ruperta Castro and operated by Regustian C. Mendez. The Castro auto was insured by Leatherby Insurance Co. (Leatherby).
Mongiovi sued Castro for damages and her attorneys sent a copy of the summons and complaint to Leatherby. Thereafter Leatherby notified Castro that it was "expressly disclaiming all coverage under your policy 524326, because of your lack of cooperation." A copy of said disclaimer letter was sent to Mongiovi's attorneys, who, in turn, sent the letter to Travelers and informed Travelers that: "Since there has been a disclaimer, we are making claim under the Uninsured Motorist provisions of the Travelers Policy."
Travelers apparently resisted Mongiovi's claim, and Mongiovi's attorneys demanded arbitration by the American Arbitration Association. In response, Travelers filed the complaint in this action and, on October 5, 1973, obtained an order to show cause why the arbitration hearing should not be stayed. The complaint asserts that the Castro vehicle was not an "uninsured" vehicle at the time of the accident; that Leatherby cannot disclaim if it was not prejudiced by the lack of cooperation: that the coverage afforded to Mongiovi under her insurance policy must be judicially determined as a condition precedent to arbitration (see Visselli v. American Fidelity Co., 155 Conn. 622, 237 A.2d 561 (Sup. Ct. Err. 1967)), and that arbitration, pursuant to the endorsement, applies only to a dispute as to (a) the liability of the owner or operator of the Castro vehicle and/or (b) the amount of damages, if any. The complaint sought a stay of the arbitration, a determination of the "validity of the attempted disclaimer," a determination of Mongiovi's right to arbitration, and such other relief as may be appropriate.
The trial judge ruled that Mongiovi was entitled to pursue her claim for damages against Travelers. Accordingly, he refused to stay the arbitration proceeding. Implicit in this determination is the holding that the Castro vehicle was an "uninsured" vehicle within the meaning of
the uninsured motorists endorsement issued by Travelers to Mongiovi. It is from the order denying the stay of arbitration that Travelers has appealed, although the issue of Leatherby's right to disclaim has not been resolved in the lower court.*fn1
The trial judge found that the right of Mongiovi to assert her claim for damages against Travelers in arbitration required a determination of whether "the notice of disclaimer rendered the Castro car uninsured." The trial judge applied the literal language of the policy endorsement and concluded that the uninsured motorists coverage could be invoked by Mongiovi since the endorsement defined an uninsured highway vehicle to include a vehicle insured by a company which "denies coverage" under its policy.
Since the Castro carrier denied coverage, "arbitration is available" to Mongiovi, the trial judge held. Also rejected was the contention of Travelers that Leatherby's right to disclaim must be adjudicated before Mongiovi can proceed with her claim against Travelers.
In our view, the disclaimer by Leatherby makes the Castro vehicle an "uninsured" vehicle within the meaning of the Travelers uninsured motorists endorsement. Therefore, Mongiovi can demand payment under that coverage without first concluding her claim against the driver of the Castro vehicle, and without Leatherby's right to disclaim having first been adjudicated.
The insurance coverage afforded by the policy endorsement is defined therein as follows:
I. UNINSURED MOTORISTS COVERAGE
(Damages for Bodily Injury and Property Damage Caused by Uninsured ...