On appeal from the Superior Court, Law Division, Passaic County.
Michels and Havey. The opinion of the Court was delivered by Havey, J.A.D.
Plaintiffs appeal from an order entered in the Law Division denying their application to confirm an arbitration award rendered pursuant to an underinsured motorist (UIM) endorsement under a policy issued by CIGNA as servicing carrier for defendant New Jersey Full Insurance Underwriting Association (JUA). The UIM endorsement provides that if the insured's claim is submitted to arbitration, "either party may demand the right to a trial" within 60 days of the arbitrators' decision. The trial court concluded that the carrier's timely rejection of the award and demand for a trial satisfied the policy language and nullified the arbitration award. The court therefore required a trial on the merits. Plaintiffs argue that the carrier's failure to file an action in the Law Division demanding a trial within 60 days of the award compelled the trial court to confirm the arbitrators' decision. We reject the argument and affirm.
The facts are not in dispute. Plaintiffs Michele and Servaas Verbiest, Sr. and their child Servaas Verbiest, Jr., sustained bodily injuries in an automobile accident with one George Biggans. Plaintiffs' suit against Biggans was settled when he paid the entire proceeds of his $100,000 general liability policy to plaintiffs.*fn1 Plaintiffs were insured under a policy issued by
CIGNA as servicing carrier for the JUA. The policy included a UIM endorsement in the amount of $300,000. The endorsement provided for arbitration to resolve the issues of whether the "covered person" was "legally entitled to recover damages" as well as the amount of damages to which the "covered person" was entitled. The arbitration provision provided that:
A decision agreed to by two of the arbitrators will be binding as to:
1. Whether the covered person is legally entitled to recover damages; and
2. The amount of damages. This applies only if the amount does not exceed the minimum limit for liability specified by the financial responsibility law of New Jersey. If the amount exceeds that limit, either party may demand the right to a trial. This demand must be made within 60 days of the arbitrators' decision. If this demand is not made, the amount of damages agreed to by the arbitrators will be binding.
Any person seeking coverage under this endorsement must also promptly send us copies of the legal papers if a suit is brought.
Upon settlement with Biggans, plaintiffs demanded UIM coverage from the carrier. The matter proceeded to arbitration and on May 8, 1991, the arbitrators unanimously awarded Michele $150,000, Servaas, Sr. $60,000, and Servass, Jr. $12,500. After crediting plaintiffs with the settlement amounts received from Biggans, Michele was awarded $90,000 and Servass, Sr. $35,000. Because Servaas, Jr. received a ...