This case deals with procedures for determining primary and secondary coverage in the context of uninsured motorist arbitration proceedings, an issue not fully addressed in Ciecka v. Transamerica Ins. Group , 81 N.J. 421 (1979).
The facts are not in dispute. Rosemari Jaworski was an insured under an auto liability insurance policy issued by Motor Club of America (MCA) on June 30, 1975. The policy contained an uninsured motorist (UM) endorsement, as required by N.J.S.A.
17:28-1.1. On the above date Jaworski was a passenger on a motorcycle owned and operated by Theodore Vecchione which collided with an uninsured vehicle owned and operated by Isaac Hollmon. Vecchione was insured by Midwest Mutual Insurance Company, which also provided statutory UM coverage.
Jaworski brought a civil action against Vecchione and Hollmon. When the case was reached for trial on May 16, 1977 she settled her liability claim against Vecchione for $9,000. Jaworski's attorney attempted to negotiate a UM settlement with MCA at that time but was unsuccessful. Jaworski then brought suit against MCA for unpaid personal injury protection benefits (PIP) and for UM benefits. That complaint was filed on September 7, 1978. The PIP suit was settled. MCA then moved for summary judgment, and on May 27, 1980 the court sent the UM claim to arbitration, as required by the policy. Jurisdiction was retained for the sole purpose of confirming, modifying or vacating any award entered. N.J.S.A. 2A:24-4, N.J.S.A. 2A:24-7.
A petition for arbitration was filed against MCA on July 17, 1980. Jaworski did not join Midwest as a respondent in that matter. An arbitrator was designated by the American Arbitration Association (AAA) and a hearing date was set for October 24, 1980. On the hearing date counsel for MCA requested the arbitrator to rule that Midwest Mutual Insurance Company provided the primary UM coverage, citing Ciecka v. Transamerica Ins. Group, supra , as authority and asked for a continuance until Midwest could be joined. Counsel for MCA also requested a credit of $9,000 on any award made by the arbitrator, citing a provision of its UM endorsement. The arbitrator denied both requests. MCA then proceeded with the arbitration, reserving the right to seek judicial declaration of its rights.
The arbitration proceeded, with Jaworski submitting proof of the uninsured's liability and her damages. MCA did not submit any liability proofs. The arbitrator entered an award on November 18, 1980 in the amount of $13,500.
On December 3, 1980 MCA filed a declaratory judgment action against Midwest and Jaworski for a declaration that Midwest's UM coverage is primary and MCA's policy is excess; that a credit of $9,000 should be given against the arbitrator's award and that plaintiff should be enjoined from confirming the award until these issues can be determined.
At oral argument on this matter, during which these facts were stipulated, Jaworski's attorney conceded knowledge of the holding in Ciecka , but stated that he elected to proceed against MCA alone, believing that Midwest had treated plaintiff fairly and had paid its fair share of plaintiff's claim.
The issues presented by these facts are: (1) whether Jaworski can selectively present a claim for UM coverage against her insurance company and disregard her host driver's UM coverage; (2) whether MCA waived any rights it had against Midwest by failing to enjoin the arbitration proceeding and (3) whether the $9,000 liability settlement with Midwest should have been deducted from the award.
The "other insurance" clause in the MCA policy and the Midwest policy are substantially identical. The terms of each policy, in connection with the decision in Motor Club of America v. Phillips , 66 N.J. 277 (1974), makes the host driver's UM coverage primary while the passenger's policy remains as "excess insurance." In Ciecka, supra , 81 N.J. at 429, the Supreme Court noted the ...