On appeal from the Superior Court of New Jersey, Law Division, Burlington County, L-2799-00.
Before Judges Havey, Newman and Fall.
The opinion of the court was delivered by: Newman, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
This appeal addresses whether an underinsured motorist carrier (UIM) who intervenes in the action between its insured and the other party to the accident, conducts discovery, and fully participates in the automobile arbitration proceeding, yet fails to file a de novo appeal following the arbitration after having consented to its insured's settlement with the other driver, is subject to the judgment where the insured has moved for confirmation of the arbitration award. The UIM carrier contends that it still could avail itself of the arbitration clause contained in the contract of insurance. We disagree and hold that the contract arbitration clause is unenforceable under Zirger v. Gen. Accident Ins. Co., 144 N.J. 327 (1996). The judgment entered as a result of the confirmation award is, therefore, valid and enforceable since the UIM carrier fully participated as a party to the previous arbitration.
The facts which are not in dispute may be summarized as follows. Plaintiff, Carol Wylie, was in an auto accident with an auto driven by defendant, Christopher Hamilton, on November 4, 1998. Plaintiff was idling in traffic on the Tacony Palmyra Bridge in Palmyra when defendant rear-ended her with his vehicle. According to defendant, while traveling behind plaintiff, traffic came to a sudden stop and despite applying his brakes, he was unable to stop in time to avoid an accident with her. As a result of being hit by defendant, plaintiff then struck the vehicle in front of her.
At the time of the accident, Hamilton maintained auto insurance through American Independent Insurance Company with split policy limits of $15,000/$30,000 and $5000 in property damage. Plaintiff maintained auto insurance through defendant CNA Insurance Company (CNA) with UM/UIM limits of $100,000. By letter dated December 3, 1998, plaintiff notified CNA of her intention to file a UIM claim since her injuries exceeded Hamilton's minimum insurance coverage. On October 10, 2000, plaintiff filed suit against Hamilton in the Law Division, Burlington County. CNA filed a motion to intervene in the suit pursuant to Rule 4:33-1, which was granted on April 27, 2001.
On January 25, 2002, plaintiff's motion for partial summary judgment on the issue of liability was granted. CNA submitted its own set of interrogatories to plaintiff, took plaintiff's deposition, served subpoenas for plaintiff's medical and employment records, and had plaintiff examined by an orthopedist. On May 1, 2002, Wylie, Hamilton, and CNA attended mandatory, non-binding arbitration pursuant to Rule 4:21A-1 to -6. The arbitrator attributed 100% liability to Hamilton and entered an award in favor of plaintiff for $118,000. After obtaining consent from CNA, plaintiff settled with Hamilton for his policy limit of $15,000.
CNA did not move under Rule 4:21-6 to reject the award and demand a trial de novo within thirty days after filing of the arbitration award. When CNA failed to file for a trial de novo, plaintiff moved to confirm the arbitration award as to CNA pursuant to Rule 4:21A-6(a)(3).
Opposing the motion, CNA argued it was unnecessary to file for a trial de novo since CNA was not a defendant in the action, and the next appropriate step for the UIM claim was arbitration in accordance with the contract of insurance. Assignment Judge Sweeney ruled that CNA as an intervenor was bound to the arbitration award under the holding of Zirger, supra. Barred from enforcing the arbitration provision of the UIM policy, the court found Zirger required CNA to file for a trial de novo to protect its interests in the litigation. Not having done so, Judge Sweeney confirmed the arbitration award against CNA in the amount of $85,000, constituting the difference between the UIM policy limit of $100,000 and the $15,000 received from Hamilton.
On appeal, CNA raises the following issues for our consideration.
THE TRIAL COURT WAS IN ERROR WHEN IT ENTERED JUDGMENT AGAINST CNA INSURANCE COMPANY BECAUSE THE INSURANCE CONTRACT BETWEEN THE PARTIES REQUIRES THAT THIS UIM CLAIM PROCEED TO MANDATORY ARBITRATION AND THIS MATTER IS NOT GOVERNED BY THE EXCEPTION TO REQUIRED UIM ...