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Government Employees Insurance Co. v. Bovit

Decided: June 10, 1976.


Matthews, Lora and Morgan. The opinion of the Court was delivered by Morgan, J.A.D.


In this appeal an insurance carrier (hereinafter GEICO) seeks a determination as to whether the arbitration clause of its uninsured motorists coverage embraces resolution of a coverage question dependent upon a question of fact equally relevant to the concededly arbitrable issue concerning the liability of the uninsured. Although the question raised is primarily one of law, a brief understanding of the underlying factual circumstances surrounding the automobile accident which triggered the controversy is helpful.

On October 29, 1973, at about 4 P.M. on a rainy afternoon, Mrs. Bovit (GEICO's insured) was operating her vehicle on Chapel Avenue, Cherry Hill, New Jersey. According to her deposition testimony, as she was passing a vehicle parked against the curb on her side of the road the parked vehicle pulled away from the curb, striking the Bovit car on its right rear. As a result of this impact Mrs. Bovit applied her brakes and the car went into a skid which carried it across the

road in a head-on collision with a third vehicle proceeding in the opposite direction.

Joseph H. Banasiak, the driver of this third vehicle, testified that the Bovit car suddenly went out of control for no apparent reason. He did not see the parked car which Mrs. Bovit asserts precipitated the subsequent collision. Banasiak's passenger, Joseph L. Domanski, could offer no explanation as to the cause of this accident since he was at the time looking out of a side window.

The police report failed to make mention of the "phantom" vehicle, never identified, and there seems to be no evidence, beyond Mrs. Bovit's testimony, of its existence. GEICO, in this suit, denies its existence and hence the availability of its uninsured motorists coverage to its insured, Mrs. Bovit.

On October 16, 1974, the Bovits filed a demand for arbitration with the American Arbitration Association in accordance with the pertinent provisions of their uninsured motorists coverage with GEICO, alleging injuries resulting from the negligent conduct of a hit-and-run driver. Several months later, on December 24, 1974, GEICO instituted the present action seeking a determination as to whether its uninsured motorists coverage pertained to the Bovits' claim thereunder, a restraint against the continuation of the arbitration proceeding pending disposition of the coverage issue, and counsel fees and costs. After several interim proceedural steps the trial judge denied GEICO's motion to restrain the arbitration, concluding that the policy in question intended that all disputes as to the involvement of an uninsured motorist in an accident was a matter for arbitration. It is from this order that GEICO appeals. Since no stay of this order or further relief by way of injunction was obtained, the arbitration proceeding was held on June 17, 1975 resulting in an award to Lois Bovit of $30,000. Thereafter, GEICO filed a complaint in the Chancery Division seeking a modification of the arbitrators' award for erroneously "stacking" coverages. This Chancery suit has not been resolved and, at any rate,

the question there involved is not before us on this appeal. The narrow issue presented here is whether coverage afforded by an uninsured motorists provision in an automobile policy, dependent upon resolution of a purely factual issue equally germane to the ultimate liability of the carrier to its insured thereunder, is an issue arbitrable under the terms of the arbitration clause included in such coverage.

The pertinent provision of GEICO's uninsured motorists coverage provides that "the company will pay all sums which the insured * * * shall be legally entitled to recover as damages from the owner or operator of an uninsured highway vehicle * * *." The term "uninsured highway vehicle" is defined in the policy as embracing a hit-and-run vehicle.*fn1 Mrs. Bovit, the insured, contends that her injuries resulted from the negligent operation of a hit-and-run vehicle; GEICO, in this action, denies the existence of such a vehicle and contends that the uninsured motorists provision of its policy affords no coverage. Hence coverage here depends upon resolution of this purely factual issue: whether a hit-and-run vehicle exists -- an issue germane to, although not dispositive of, GEICO's liability on its policy if coverage is found to exist.

The arbitration clause in the uninsured motorists coverage reads as follows:

If any person making claim hereunder and the company do not agree that such person is legally entitled to recover damages from the owner or operator of an ...

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