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State Farm Guaranty Insurance Co. v. Hereford Insurance Co.

Superior Court of New Jersey, Appellate Division

March 14, 2018

STATE FARM GUARANTY INSURANCE COMPANY, Plaintiff-Respondent,
v.
HEREFORD INSURANCE COMPANY, Defendant-Appellant, and HANY S. LOZY, Defendant.

          Argued December 19, 2017

         On appeal from Superior Court of New Jersey, Law Division, Morris County, Docket No. L-0018-14.

          David J. Dickinson argued the cause for appellant (McDermott & McGee, LLP, attorneys; Gabrielle J. Pribula, on the brief).

          Leah A. Brndjar argued the cause for intervenor-respondent Arbitration Forums, Inc. (Goldberg Segalla LLP, attorneys; Leah A. Brndjar, of counsel and on the brief).

          Before Judges Hoffman, [1] Gilson, and Mayer.

          OPINION

          GILSON, J.A.D.

         Defendant Hereford Insurance Company (Hereford) appeals from a March 24, 2017 order denying its motion to compel the arbitration organization, Arbitration Forums, Inc. (AF), to hold an in-person hearing under the New Jersey Uniform Arbitration Act (Arbitration Act), N.J.S.A. 2A:23B-1 to -32. The contract under which AF provides arbitrators for such disputes does not require in-person hearings. Hereford contends, however, that it is entitled to an in-person hearing at a physical location under the Arbitration Act. We affirm because there is no language in the Arbitration Act requiring an in-person arbitration hearing. Moreover, Hereford made no showing of a specialized need for an in-person hearing. Thus, in the absence of a contract requiring in-person hearings or a showing of specialized need, a party to an arbitration proceeding is not entitled to an in-person hearing.

         I.

         This appeal arises out of an automobile accident and subsequent dispute between two insurance companies concerning reimbursement of personal injury protection (PIP) benefits. The relevant facts giving rise to the arbitration are not in dispute.

         State Farm Guaranty Insurance (State Farm) paid PIP benefits to its insureds, and on January 6, 2014, filed a complaint under N.J.S.A. 39:6A-9.1, seeking reimbursement of the PIP benefits from Hereford, the insurer of the tortfeasor. State Farm then filed a motion to compel arbitration. State Farm has a contract with AF, under which AF will arbitrate such PIP reimbursement disputes. Hereford is not a party to that contract. The contract does not require that arbitration hearings be in-person. In moving to compel arbitration, State Farm represented that AF was the least costly, charging a $70 fee, and the fastest forum with the most arbitrators. Thus, State Farm's motion requested arbitration through AF. Nevertheless, State Farm also stated that it was open to using another arbitration organization if requested by Hereford or ordered by the court.

         On February 24, 2016, the trial court granted State Farm's motion and ordered arbitration through AF. The court noted that Hereford had not suggested an alternative arbitration organization or provided a persuasive reason why AF should not conduct the arbitration.

         When the order was entered, AF was providing in-person arbitration hearings in New Jersey. Thereafter, AF discontinued its practice of in-person hearings in favor of telephonic hearings. On February 15, 2017, Hereford filed a motion to compel AF to conduct an in-person arbitration hearing at a physical location. Hereford identified no special reason why the PIP reimbursement arbitration warranted an in-person hearing. Instead, Hereford argued that the Arbitration Act required an in-person hearing for all arbitrations. State Farm initially supported Hereford's motion, but later withdrew its support and took no position. Similarly, on this appeal, State Farm takes no position.

         On March 17, 2017, the court heard oral argument on Hereford's motion, and on March 24, 2017, the court entered an order denying Hereford's motion to compel an in-person hearing. The trial court reasoned that in-person hearings are not required under the Arbitration Act, and the ...


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