June 19, 2013
PEDRO J. SALINAS, Plaintiff-Appellant,
NEW JERSEY RE-INSURANCE COMPANY, Defendant-Respondent.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued May 28, 2013.
On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-3674-10.
Mildred Vallerini Spiller argued the cause for appellant (Rinaldo and Rinaldo, attorneys; Matthew T. Rinaldo, on the brief).
Thomas A. Morrone argued the cause for respondent (Chasan Leyner & Lamparello, PC, attorneys; Mr. Morrone, of counsel; Samar Siyam, on the brief).
Before Judges Parrillo and Fasciale.
In this underinsured motorist coverage (UIM) declaratory judgment lawsuit, plaintiff appeals from a March 30, 2012 order denying his motion to compel UIM arbitration, and a June 26, 2012 judgment of no cause of action. The question is whether plaintiff waived his contractual right to proceed to UIM arbitration. We reverse, remand, and direct that the parties proceed to UIM arbitration.
In September 2005, plaintiff sustained injuries in an automobile accident. The tortfeasor maintained liability insurance in the amount of $35, 000, and plaintiff had $100, 000 in UIM insurance coverage with defendant. Plaintiff settled with the tortfeasor for $20, 000, issued a Longworth letter, and then demanded that defendant engage in UIM arbitration, which defendant ignored. In July 2010, plaintiff filed this complaint seeking to compel defendant to select a UIM arbitrator, proceed to UIM arbitration, and pay counsel fees. In October 2010, defendant filed its answer to the complaint.
Defendant's counsel acknowledged that he then forwarded to plaintiff's counsel his "form letter demanding discovery . . . tailored towards arbitration." The parties did not produce defendant's form arbitration-discovery letter on appeal. At trial, plaintiff's counsel summarized the contents of the letter by stating that defendant demanded
a list of all witnesses to be produced at . . . the [UIM] hearing, documentation [to establish] property damage, . . . medical records, . . . a statement under oath, which is the equivalent of a deposition. . . . And then [defendant] asked for a medical examination. And they ask[ed] for answers to interrogatories.
At trial, plaintiff's counsel referenced another defense discovery demand letter pertaining to the UIM insurance policy. The parties did not produce that letter on appeal.
Plaintiff's counsel maintains that the parties conducted discovery related to defendant's arbitration-related discovery demands. Plaintiff's counsel asserted that he complied with the demanded discovery because it was demanded for UIM arbitration. Plaintiff's counsel, therefore, responded to defendant's arbitration discovery demands, and when it became clear that defendant would not submit to UIM arbitration, he resorted to motion practice.
In January 2012, plaintiff filed a motion to compel defendant to proceed to UIM arbitration. Defendant opposed the motion contending that plaintiff waived his contractual right to proceed to UIM arbitration. In March 2012, a judge conducted oral argument and denied the motion without issuing a statement of reasons or conclusions of law. In April 2012, we denied plaintiff's motion for leave to appeal from the denial of his motion to compel UIM arbitration.
In June 2012, the parties appeared at trial before a different judge. Plaintiff appeared ready to try the declaratory judgment suit and immediately renewed his motion to compel UIM arbitration. Plaintiff maintained that he had a contractual right to UIM arbitration. Defendant objected to the motion and argued that plaintiff waived his right to UIM arbitration relying on Cole v. Jersey City Medical Center, 425 N.J.Super. 48 (App. Div. 2012), certif. granted, 212 N.J. 198 (2012). The judge agreed with defendant and denied plaintiff's motion. The judge then proceeded to a bench trial.
Plaintiff's counsel gave an opening statement, which related to plaintiff's contractual right to proceed to UIM arbitration. He stated that
[p]laintiff's complaint states that plaintiff made a demand for UIM arbitration. Defendant's answer admits that plaintiff made a demand for UIM arbitration.
Defendant's affirmative defenses . . . do not allege a defect in plaintiff's UIM arbitration demand.
Now I'm kind of surprised to be doing this because I anticipated that the defendant would be making a motion to dismiss given your preliminary ruling [denying plaintiff's motion to compel UIM arbitration], but not having done so[, ] and since we are considering this on the merits, the documents that I am going to show you, by themselves, establish that plaintiff is entitled to have this matter referred to UIM arbitration.
Defense counsel gave his opening statement and asserted that "[w]e are prepared to proceed to a jury trial on the issue as to whether or not plaintiff is entitled to an award of money damages for pain and suffering."
At the bench trial, plaintiff testified that he was injured in the accident, settled the claim against the tortfeasor, and then plaintiff demanded UIM arbitration. Plaintiff's counsel contended throughout the trial that defendant was estopped from arguing plaintiff failed to prove he was contractually entitled to UIM arbitration. Plaintiff's counsel asserted that defendant initially opposed plaintiff's summary judgment motion contending solely that plaintiff waived his right to such a proceeding, not that plaintiff was without a contractual right to a UIM arbitration. In fact, plaintiff's counsel argued to the bench judge that, in opposition to plaintiff's motion for summary judgment, defense counsel stated to the judge "[c]andidly, the applicable policy language permits plaintiff to proceed to arbitration." Plaintiff rested and defendant moved for a directed verdict. The bench judge then stated that
the case came [to me] as a request or a complaint for declaratory judgment [regarding UIM arbitration].
[T]oday . . . is basically or should have basically been a trial on [the amount of personal injury] damages . . . .
[Plaintiff's] counsel . . . brought to my attention that the defense attorney here has, in his reply to the [initial] summary judgment [motion], responded that the [UIM] policy permits arbitration . . . .
And the [c]ourt, based on the paucity of the information before it, . . . can't make that finding that the plaintiff is entitled to judgment in this action.
The bench judge then dismissed plaintiff's declaratory judgment complaint and entered a verdict of no cause of action concluding that plaintiff failed to establish he was entitled to compensatory damages. This appeal followed.
On appeal, plaintiff argues the motion and bench judges erred by determining that he waived his contractual right to UIM arbitration. He also contends that the bench judge "improperly tried the case on the issue of [compensatory] damages and incorrectly issued a no-cause ruling."
We note at the outset that the motion judge did not comply with Rule 1:7-4(a), which provides in relevant part that "[t]he court shall, by an opinion or memorandum decision, either written or oral, find the facts and state its conclusions of law . . . on every motion decided by a written order . . . ." We focus, however, on the bench trial judge's ruling, based on Cole, supra, that plaintiff waived his contractual right to UIM arbitration.
We conclude that Cole is factually distinguishable and any reliance on it is therefore misplaced. In Cole, supra, 425 N.J.Super. at 50, the plaintiff filed a lawsuit against his employer and a hospital alleging retaliatory discharge in violation of the Conscientious Employee Protection Act (CEPA), N.J.S.A. 34:19-1 to -8; defamation; tortious interference with contract; and disability discrimination in violation of the Law Against Discrimination (LAD), N.J.S.A. 10:5-1 to -42. The plaintiff filed the complaint against the employer even though his employment agreement contained an arbitration clause. Ibid. "As a matter of litigation strategy, [the employer] opted to participate in the suit . . . for a period of twenty months and did not raise the issue of arbitration until three days before trial." Id. at 51. The employer waited to file its motion to compel arbitration until after the plaintiff settled with the hospital. Id . at 55-56. We determined that the employer knowingly and deliberately decided to forgo arbitration, held that the employer was equitably estopped from seeking arbitration, and reversed the judge's order compelling arbitration. Id. at 61.
"There is a presumption against waiver of an arbitration agreement, which can only be overcome by clear and convincing evidence that the party asserting it chose to seek relief in a different forum." Spaeth v. Srinivasan, 403 N.J.Super. 508, 514 (App. Div. 2008). In Cole, we concluded that the employer strategically decided not to demand arbitration because it wanted to avoid "the risk of two inconsistent findings by two separate fact-finders." Id . at 59. The plaintiff relied on the employer's litigation strategy to his detriment. Ibid. Therefore, the employer clearly waived its right to arbitration by its conscious decision to participate in the suit.
By contrast here, plaintiff demanded UIM arbitration before he filed this complaint; filed a declaratory judgment complaint seeking to require defendant to select a UIM arbitrator and compel UIM arbitration; received defendant's "form letter demanding discovery . . . tailored towards arbitration"; received another defense discovery demand letter pertaining to the UIM insurance policy; complied with the demanded discovery because it was demanded for UIM arbitration; filed a motion to compel defendant to proceed to UIM arbitration (a contractual right to which defendant conceded existed); filed a motion for leave to appeal the motion judge's denial of his motion to compel UIM arbitration; and at trial plaintiff renewed his request to compel UIM arbitration Under these facts we are unable to conclude that plaintiff knowingly and voluntarily waived his contractual right to UIM arbitration
Finally even if one inferred that plaintiff somehow waived his right to UIM arbitration the better course would have been to adjourn the trial date after the bench trial judge denied plaintiff's renewed motion to compel arbitration to give plaintiff an opportunity to prepare for a trial in which he would seek compensatory damages Although the complaint was never amended to include a count for compensatory damages defense counsel indicated to the bench trial judge after she denied the motion that he was prepared to "proceed to a jury trial on the issue as to whether or not plaintiff is entitled to an award of money damages for pain and suffering" Rather the judge conducted the bench trial
We therefore reverse and remand the matter to proceed to UIM arbitration