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Rafael Rivas Diaz v. Cure Personal Auto Insurance


September 14, 2012


On appeal from the Superior Court of New Jersey, Law Division, Camden County, Docket No. L-2628-11.

Per curiam.


Argued August 27, 2012

Before Judges Nugent and Ostrer.

In this uninsured motorist (UM) action, defendant Cure Personal Auto Insurance (Cure) appeals from a Law Division order that granted summary judgment to plaintiff Rafael Rivas Diaz and entered judgment against CURE in the amount of $15,000, the limits of plaintiff's UM insurance. Cure asserts that its policy provision binding it to an arbitration award of $15,000 or less did not bar it from appealing a UM arbitration award, even though the arbitrators expected the parties to "mold" the award to the policy limits. We affirm.

The facts are undisputed. In July 2008, plaintiff was driving his car on Harrison Avenue in Camden when he was injured in a two-car collision caused in part by the negligence of an uninsured driver. Plaintiff was insured by Cure under a "New Jersey Standard Personal Automobile Policy" that included UM coverage in the amount of $15,000 "for any one person injured in any one accident." The UM policy provisions provided, among other terms, the following:


A. If we and an "insured" do not agree:

1. Whether that "insured" is legally entitled to recover damages; or

2. As to the amount of damages which are recoverable by that "insured"; from the owner or operator of an "uninsured motor vehicle", then the matter may be arbitrated. However, disputes concerning coverage under this Part may not be arbitrated.

Both parties must agree to arbitration. If so agreed, each party will select an arbitrator. The two arbitrators will select a third. If they cannot agree within 30 days, either may request that selection be made by a judge of a court having jurisdiction.

C. Unless both parties agree otherwise, arbitration will take place in the county in which the "insured" lives. Local rules of law as to procedure and evidence will apply. A decision agreed to by two of the arbitrators will be binding as to:

1. Whether the "insured" 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 bodily injury liability specified by the financial responsibility law of the state in which "your covered auto" is principally garaged.*fn1 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.

Plaintiff and defendant could not agree as to the amount of damages plaintiff was entitled to recover, if any, so they arbitrated plaintiff's claim as required by the policy. The arbitrators determined that plaintiff was ten-percent liable for the accident, the uninsured tortfeasor was ninety-percent liable for the accident, plaintiff's damages were $75,000, and the uninsured tortfeasor was liable to plaintiff for $67,500. In a letter to the parties confirming "the UM . . . Arbitration Award," the arbitrator writing for the panel stated:

After reviewing the parties' submissions, considering the testimony of Claimant, Rafael Rivas-Diaz, and having weighed the arguments of counsel, the panel deliberated and determined that:

1) [T]he uninsured/underinsured tortfeasor . . . was 90% liable and Claimant, Rafael Rivas-Diaz, was 10% comparatively negligent with respect to the happening of the subject motor vehicle accident of July 9, 2008. This decision was unanimous;

2) Claimant, Rafael Rivas-Diaz, offered sufficient credible and persuasive proof of a permanent injury, within a reasonable degree of medical probability, to successfully overcome the [Automobile Insurance Cost Reduction Act] (AICRA) Verbal Threshold Statute, N.J.S.A. 39:6A-8a; DiProspero v. Penn, 183 N.J. 477 (2005); Serrano v. Serrano, 183 N.J. 508 (2005). This was a two-to-one majority decision . . .; and, 3) Claimant, Rafael Rivas-Diaz, suffered gross damages in the amount of $75,000, inclusive of all claims. This decision was unanimous. Molding this Award to properly reflect Claimant's 10% comparative negligence yields a Net Award of $67,500.

We leave it to the parties to mold this Arbitration Award to reflect any and all available coverage.

Seventeen days after the arbitration, defendant wrote to plaintiff and rejected the award, stating:

As you are aware, Arbitration of this matter was held on December 10, 2010. Please accept this letter as notice of NJ Cure's appeal of the decision rendered in this action. I would ask that you proceed with the filing of suit in this action and provide me with a copy of the Complaint once it is filed.

Plaintiff commenced this action by filing a complaint on May 23, 2011. Defendant filed an answer and separate defenses on September 6, 2011. On November 30, 2011, plaintiff filed and served his summary judgment motion, contending that the arbitration award was binding. On January 6, 2012, the trial court decided the summary judgment motion in favor of plaintiff, concluding that because defendant's maximum exposure under its insurance policy was $15,000 -- the minimum limit for liability under N.J.S.A. 39:6A-3(a) -- the arbitration award was binding. This appeal followed.

Summary judgment must be granted if "the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c). See also Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 529-30 (1995). When reviewing an order granting summary judgment, we "'employ the same standard [of review] that governs the trial court.'" Henry v. N.J. Dep't of Human Servs., 204 N.J. 320, 330 (2010) (quoting Busciglio v. DellaFave, 366 N.J. Super. 135, 139 (App. Div. 2004)). Thus, we must determine whether there was a genuine issue of material fact, and if not, whether the trial court's ruling on the law was correct. Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). Legal conclusions are subject to de novo review. Henry, supra, 204 N.J. at 330.

In D'Antonio v. State Farm Mut. Auto. Ins. Co., 262 N.J. Super. 247, 249 (App. Div. 1993), we considered, in the context of an underinsured motorist (UIM) claim, policy language nearly identical to the arbitration provision at issue in the case before us. We noted that the contractual intent of the parties was "evident: to permit a post-arbitration trial only in cases of a certain magnitude, i.e., only where the 'amount of damages' fixed by the arbitrators exceeds $15,000." Ibid. We explained that because the policy did not define the term "'damages,' . . . [i]ts meaning must be drawn from the setting in which it is used." Ibid. We further explained:

The arbitration is conducted to determine the carrier's liability for UIM payments. If a trial is available, it too will determine only the carrier's UIM obligation. It follows that the extent of the carrier's UIM liability -- not the tortfeasor's liability -- should determine whether the case is of sufficient magnitude to justify a trial. The parties' purpose in foreclosing trials in modest cases would be substantially frustrated if the right to demand a trial turned on the damages attributable to the underinsured tortfeasor.

[Id. at 249-50.]

Here, Cure argues that "under the clear terms of the . . . policy, either party had the right to reject the arbitration award and demand a trial on damages." Cure attempts to distinguish D'Antonio by asserting that, unlike the policy in D'Antonio, the UM insuring provision in Cure's policy*fn2 defines "damages." That is not so. The UM section of Cure's policy, designated as "Part C," defines the terms "Insured" and "Uninsured motor vehicle." It does not define the term "damages." Throughout Part C, defined terms are enclosed in quotation marks. Part C does not enclose the word "damages" in quotation marks.

The "Limit of Liability" section of Cure's policy, referenced by Cure in its argument, states:

The limit of liability shown in the Declarations for each person for [UM] Coverage is our maximum limit of liability for all damages, including damages for care, loss of services or death, arising out of "bodily injury" sustained by any one person in any one accident. Subject to this limit for each person, the limit of liability shown in the Declarations for each accident for [UM] Coverage is our maximum limit of liability for all damages for "bodily injury" resulting from any one accident.

This "Limit of Liability" section of the policy does not contain a definition of "damages," but rather identifies types of damages, and does not refer to the policy's arbitration provision. The "Limit of Liability" provision does refer to a defined term, "bodily injury," which is enclosed in quotation marks, as is the case with other "defined terms." Cure also argues that the actual amount of the arbitration award in D'Antonio was $15,000 because the gross award of $40,000 was molded to reflect $25,000 plaintiff received from the underinsured tortfeasor. Significantly, the D'Antonio arbitrators did not mold the award. Rather, the parties agreed that the liability proceeds received by the plaintiff were to be credited against the gross arbitration award, thus reducing the carrier's UIM obligation to $15,000. Id. at 248-49.

Here, the letter announcing the arbitration award provided expressly that the arbitrators were "leav[ing] it to the parties to mold the Arbitration Award to reflect any and all available coverage." Thus, the arbitrators' "decision" -- the term used in the Cure policy to define when an arbitration would be binding -- contemplated that the award would be molded to the policy limits of $15,000, which was Cure's UM obligation.

Because Cure's UM obligation did not exceed $15,000, the trial court correctly concluded that the arbitrators' decision was binding.


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