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Allstate Insurance Co. v. Universal Underwriters Insurance Co.

May 11, 2000

ALLSTATE INSURANCE COMPANY,
PLAINTIFF-APPELLANT,
V.
UNIVERSAL UNDERWRITERS INSURANCE COMPANY,
DEFENDANT-RESPONDENT.



Before Judges King, Lefelt and Lintner.

The opinion of the court was delivered by: Lefelt, J.S.C., (temporarily assigned).

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued April 19, 2000

On appeal from the Superior Court of New Jersey, Law Division, Monmouth County.

This appeal arises from a 1993 automobile accident between Joseph Herstek, an insured of plaintiff Allstate Insurance Company, and a commercial vehicle operated by Sean Borchers, owned by Woodbury Automotive, and insured by defendant Universal Underwriters Insurance Company. Allstate's insured requested and recovered personal injury protection ("PIP") benefits from Allstate. Allstate then sought reimbursement for these payments from Universal. N.J.S.A. 39:6A-9.1. After making an initial reimbursement payment in 1993, Universal asserted the applicable statute of limitations and refused additional reimbursement in 1996.

After agreeing that the statute of limitations issue would be appealable to the Law Division, Allstate and Universal submitted the dispute to arbitration. The arbitrators found in favor of Allstate, and Universal appealed. The Law Division judge stated that "[i]n the absence of a waiver of the applicability of the statute of limitations by Universal, Allstate was obliged to make a formal demand for arbitration within two years of [the] claim having been made for P.I.P. benefits by its insured." Thus, the judge vacated the arbitration award because he believed Universal had not "waived" its right to assert the statute. Allstate appealed from that determination, and we reverse.

I.

Allstate paid initial PIP benefits to its insured shortly after the July 28, 1993 automobile accident. Allstate then sought reimbursement from Universal. Michelle Ertle, a pre-litigation manager for the Robert P. Clark law firm stated on behalf of their client Allstate, "I enclose herein our proofs of loss and request upon completion of your review you contact me so that an amicable settlement may be reached." In response to this request, Universal paid Allstate $6,411.22, which represented Allstate's total PIP payments to its insured at that time. Universal's check, however, indicated that the payment was "full and final settlement." On November 15, 1993, Ertle wrote to Paul Sitkus, the claim's examiner handling this matter for Universal. Ertle noted, "[a]s you are aware the within matter has been amicably resolved relative to Allstate's direct right of claim representing payments for PIP on behalf of Joseph Herstek. As you are also aware this claim is presently ongoing." She therefore requested a check without the full and final settlement language. Consequently, on November 30, 1993, Universal issued another check in the same amount, but without the "full and final settlement" notation.

Allstate and Universal had no further contact until Allstate's counsel wrote Universal on November 12, 1996, in pertinent part, as follows:

Our client has advised that this claim [is] presently ongoing.

Accordingly, I enclose herein additional proofs in the amount of $20,432.56 and request upon completion of your review you contact this office so that an amicable resolution may be obtained or in the alternative, forward your company's draft in the amount of $20,432.56[.]

In the event that the within matter may not be amicably resolved, this office is formerly [sic] demanding arbitration.

Apparently, the medical bills for which Allstate was now seeking reimbursement had been paid in 1994 and 1995.

On December 12, 1996, Universal refused Allstate's request for additional PIP reimbursement because, according to Universal, Allstate failed to satisfy the N.J.S.A. 39:6A-9.1 two-year statute of limitations. Allstate then demanded arbitration. After some procedural wrangling, the parties agreed to arbitrate before a panel of three arbitrators. As to the issues to be submitted to the arbitrators, the only dispute focused on whether the arbitrators would be permitted to decide the statute of limitations issue. Ultimately, the parties agreed that the limitations issue would be presented to the panel. In a June 4, 1997 letter, however, Universal indicated that it did not agree that the statute of limitations issue would be "binding," and "[i]n the event either ...


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