On appeal from Superior Court, Law Division, Burlington County.
King, Gruccio and Brochin. The opinion of the court was delivered by Gruccio, J.A.D.
On this appeal we must interpret New Jersey's current uninsured/underinsured motorist (UM-UIM) statute and its interplay with arbitration in the determination of verbal threshold issues. We conclude that where an arbitration clause directs
arbitration of disputes as to severity of injury and extent of damages, an arbitrator, not a court, must resolve these issues.
Plaintiff Frank Cutitta sought damages from his insurer, defendant Selective Insurance Co. of America (Selective), following a motor vehicle collision caused by the operator of an uninsured vehicle. Selective denied plaintiff's uninsured motorist claims "on the basis that Mr. Cutitta has not met the requirements of his verbal threshold." Thereafter, plaintiff's counsel submitted the demand for arbitration in accordance with the insurance policy. In response, Selective stated that it would not participate in arbitration since defendant had not "overcome his verbal threshold" and was ineligible for coverage.
A verified complaint was filed on behalf of plaintiff and sought an order compelling Selective to show cause why it should not participate in arbitration. The Law Division Judge issued an order the same day which directed defendant to show cause why the court should not enter judgment ordering Selective's participation in arbitration proceedings. Selective responded.
The Law Division Judge then entered an order denying plaintiff's petition after oral argument. She ruled that "the question of whether the plaintiff has met the threshold and is entitled to pursue his claim with the uninsured benefit is not an issue to be determined by the arbitrators, but rather is an issue that is determined at some other point and some other time. And it may be that that is an issue that rather than having the arbitrators determine, that the court needs to determine." The Judge also specifically rejected plaintiff's suggestion that, because the New Jersey insurance statute was an exact replica of the New York insurance statute, the New York case law speaking specifically to this issue should be followed.
The facts are as follows. Plaintiff, a resident of Riverside, New Jersey, was the owner and operator of a motor vehicle insured by Selective. On July 10, 1989, plaintiff was injured
when his vehicle was struck from behind in New York City by an uninsured automobile owned and operated by a resident of Clifton, New Jersey. Plaintiff received treatment for his injuries and then asserted a claim for damages under his UM-UIM policy provision. Plaintiff was age 63 at the time of the accident and suffered a strain injury to his left shoulder which exacerbated existing tendinitis.
The policy in question states:
We will pay damages which an "insured" is legally entitled to recover from the owner or operator of an "uninsured motor vehicle" or "underinsured motor vehicle" where such coverage is indicated as applicable in the schedule of declarations because of: (1) "bodily injury" sustained by an "insured" and caused by an accident; . . . the owner's or operator's liability for these damages must arise out of ...