November 27, 2012
ALLIED PROFESSIONALS INSURANCE COMPANY, A RISK RETENTION GROUP, INC., PLAINTIFF-APPELLANT/ CROSS-RESPONDENT,
JOANNA JODAR AND INTEGRAL ACUPUNCTURE, DEFENDANTS-RESPONDENTS. ILENE SCHNEIDER AND DAVID SCHNEIDER, HER HUSBAND, PLAINTIFFS-INTERVENORS/ CROSS-APPELLANTS,
INTEGRAL ACUPUNCTURE AND JOANNA JODAR, DEFENDANTS/THIRD-PARTY PLAINTIFFS-RESPONDENTS,
ALLIED PROFESSIONALS INSURANCE COMPANY, A RISK RETENTION GROUP, INC., THIRD-PARTY DEFENDANTAPPELLANT/CROSS-RESPONDENT.
On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket Nos. L-4216-10 and L-2044-10.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted September 4, 2012 -
Before Judges Alvarez, Nugent and Ostrer.
Plaintiff Allied Professionals Insurance Company, a Risk Retention
Group, Inc. (Allied) appeals from that portion of an October 7, 2011
order directing that it arbitrate a coverage dispute with its medical
malpractice insured, defendant Joanna Jodar, in New Jersey.*fn1
The relevant language in the arbitration clause of the
policy, Section V General Conditions, paragraph C, states: "Any
arbitration undertaken pursuant to the terms of this section shall
occur in Orange County, California." For the reasons that follow, we
Ilene Schneider and David Schneider, intervenors, are plaintiffs in the underlying medical malpractice action brought against Jodar and Integral Acupuncture for services rendered to Ilene on April 11, 2008. Jodar tendered the Schneiders' claim to Allied on October 6, 2008, after she renewed her policy. Allied declined coverage, asserting that Jodar made a material misrepresentation when she omitted any reference to a potential cause of action against her on the April 17, 2008 policy renewal application. On January 6, 2009, Allied cancelled the policy.
The Schneiders filed their malpractice complaint against Jodar and Integral Acupuncture shortly after the cancellation. Jodar and Integral Acupuncture then filed a third-party complaint against Allied in the medical malpractice lawsuit, seeking to compel coverage. In turn, Allied filed a separate proceeding against Jodar and Integral Acupuncture, pursuant to Rule 4:67, demanding arbitration under the terms of the policy.
In denying enforcement of the choice-of-forum clause in the arbitration section of the policy, the trial judge relied on the hardship that would be visited upon Jodar if she were required to arbitrate in California. He also concluded that in this case arbitration in a state other than New Jersey violates public policy, relying upon Param Petroleum Corp. v. Commerce & Indus. Ins. Co., 296 N.J. Super. 164 (App. Div. 1997). While agreeing that the Federal Arbitration Act, 9 U.S.C.A. §§ 1 to 16, strongly favors arbitration, he did not consider it to mandate enforcement of the choice-of-forum clause.
Allied asserts the following points of error for our consideration:
I. APPELLATE STANDARD OF REVIEW
II. [THE] JUDGE  ERRED BY REWRITING THE UNAMBIGUOUS APIC ARBITRATION CLAUSE AND ORDERING [THAT] ARBITRATION PROCEED IN NEW JERSEY PURSUANT TO NEW JERSEY LAW
A. The Arbitration Clause Must Be Enforced By the Court As Written As It is Not Unfair, Unreasonable or Contrary to New Jersey Public Policy
B. The Federal Arbitration Act Mandates that Arbitration Clauses Be Enforced As Written and Not Re-Written By Judicial Fiat.
C. The New Jersey Arbitration Act Also Compels The Arbitration Clause to Be Enforced As Written Generally we review a trial judge's conclusions of law on a de novo basis. Manalapan Realty, LP v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995). Furthermore, the interpretation of an insurance contract raises questions of law which we decide independently. See Polarome Int'l, Inc. v. Greenwich Ins. Co., 404 N.J. Super. 241, 260 (App. Div. 2008), certif. denied, 199 N.J. 133 (2009).
As the trial judge stated, forum selection clauses will be given effect unless found to be "unfair, unreasonable, or contrary to public policy." Kubis & Perszyk Assoc., Inc. v. Sun Microsystems, Inc., 146 N.J. 176, 192 (1996) (citing Air Economy Corp. v. Aero-Flow Dynamics, 122 N.J. Super. 456, 457-58 (App. Div. 1973)). He opined that it would be unfair to require Jodar to arbitrate in Orange County, and credited her assertion that her right to fully participate would be diminished by distance because of the expense of travel.
Additionally, the trial judge found the forum designation to be contrary to public policy. It is true, as Allied argues, that the precedent the judge relied upon, Param Petroleum, concerned an environmental pollution dispute which is more obviously tied to the place where it arises than a malpractice claim. But fair arbitration of this coverage question may require more than just Jodar's own testimony. Other witnesses from this state may be needed to fully present the facts related to the issue of coverage. We said in Param Petroleum that choice-of-forum clauses "should generally be ignored at least when the insured risk is in the state." Supra, 296 N.J. Super. at 170. The public's interest is implicated when insureds, attempting to enforce coverage, are required pursuant to boilerplate forum language in their policies to arbitrate out-of-state even though the covered risks, potential witnesses, and other evidence are located in this state. Therefore, we agree with the judge's conclusion.