ALLSTATE NEW JERSEY INSURANCE COMPANY VS. EMPIRE FIRE AND MARINE INSURANCE COMPANY (L-7922-17, ESSEX COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-4294-17T2

ALLSTATE NEW JERSEY
INSURANCE COMPANY,

Plaintiff-Appellant,

v.

EMPIRE FIRE AND MARINE
INSURANCE COMPANY,

Defendant-Respondent.
_____________________________

Argued June 4, 2019 – Decided June 25, 2019

Before Judges Fasciale and Rose.

On appeal from the Superior Court of New Jersey, Law
Division, Essex County, Docket No. L-7922-17.

David James Dickinson argued the cause for appellant
(Tango, Dickinson, Lorenzo, McDermott & McGee
LLP, attorneys; David James Dickinson, on the brief).

Paul M. Schofield, Jr. argued the cause for respondent.

PER CURIAM
 In this auto-insurance dispute, plaintiff Allstate Insurance Company

(Allstate), appeals from an April 16, 2018 order denying its motion to vacate an

arbitration award in favor of defendant, Empire Insurance Company (Empire) .

Following oral argument, Judge Jeffrey B. Beacham entered the order. On

appeal plaintiff argues that the arbitrator lacked jurisdiction to hear the case,

exceeded his powers, and miscalculated damages. We affirm.

I.

On May 1, 2015, Demetrio Ortiz rented a 2010 Lamborghini Gallardo

Spyder from Signature Car Collection (Signature). On May 9, 2015, the vehicle

was damaged in a car accident. At the time of the accident, Ortiz was insured

by Allstate, and Signature was insured by Empire. After the accident, Empire

paid Signature for the damage to the vehicle, pursuant to the auto collision

coverage of the Empire policy. Empire sought recovery of the payment from

Ortiz, citing the rental agreement, which stated,

I Demetrio Soler Ortiz agree to the above stated
description of the rental vehicle and acknowledge that
I am responsible and liable for all damages, and excess
mileage during my rental period, and agree to pay the
repair costs, extra mileage charges, and all loss-of-use
and fees associated with the condition of the vehicle
upon return.

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In September 2015, Allstate issued a letter to Signature denying coverage, on

behalf of Ortiz, stating that Empire's policy had the "primary obligation with

respect to collision coverage[.]"

At the time of the accident, Allstate and Empire were members of the

Arbitration Forums, Inc. (AF), Special Arbitration Forum. And in January 2017,

Empire filed for inter-company arbitration in the AF's Special Arbitration forum

seeking reimbursement from the auto collision coverage portion of the Allstate

policy. In March 2017, counsel for Allstate sent a letter to Empire stating that

Allstate was denying coverage because the Empire policy applied to the loss

from the accident evidenced by their payment of the claim. The letter explained,

"[p]ursuant to the auto collision insurance provision of the Allstate . . . policy,

when there is other insurance available to cover a collision loss the Allstate . . .

policy states 'when this insurance covers a substitute auto or non -owned auto,

we will pay only after all other collectible insurance has been exhausted.'" In

July 2017, an inter-company arbitration award was entered in favor of Empire

in the amount of $100,200. In August 2017, Allstate raised a post -decision

inquiry and appeal with AF. AF denied Allstate's request to vacate or modify

the award.

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 In November 2017, Allstate filed a verified complaint and order to show

cause seeking to vacate or modify the arbitration award. On April 12, 2018, the

judge conducted oral argument, and issued an order denying Allstate's motion

to vacate the arbitration award. The judge found that there was not a "sufficient

basis to vacate the award of damages."

II.

"It . . . is well settled that 'there is a strong preference for judicial

confirmation of arbitration awards.'" Minkowitz v. Israeli, 433 N.J. Super. 111,

135 (App. Div. 2013) (quoting Linden Bd. of Educ. v. Linden Educ. Ass'n, 202

N.J. 268, 276 (2010)). Courts will grant arbitration awards "considerable

deference." Borough of E. Rutherford v. E. Rutherford PBA Local 275, 213

N.J. 190, 201 (2013). It is the party seeking to vacate an arbitration award that

"bears the burden of demonstrating 'fraud, corruption, or similar wrongdoing on

the part of the arbitrator[].'" Minkowitz, 433 N.J. Super. at 136 (alteration in

original) (quoting Tretina Printing, Inc. v. Fitzpatrick & Assocs., 135 N.J. 349,

357 (1994)). Therefore, "[j]udicial review of an arbitration award is very

limited." Bound Brook Bd. of Educ. v. Ciripompa, 228 N.J. 4, 11 (2017)

(quoting Linden Bd. of Educ., 202 N.J. at 276). Because the decision to vacate

an arbitration award is a matter of law, this court reviews a denial of a motion

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to vacate an arbitration award de novo. Manger v. Manger, 417 N.J. Super. 370,

376 (App. Div. 2010).

First, Allstate contends that the judge should have modified the arbitration

award because the arbitrator made a mathematical error when calculating the

award. N.J.S.A. 2A:23B-24(a)(1) provides that a court shall modify or correct

an award if "there was an evident mathematical miscalculation or an evident

mistake in the description of a person, thing, or property referred to in the

award[.]"

In the inter-company arbitration filing by Empire, it states that the

"contribution sought" is $100,200. However, in the "Itemized Damages

Claimed" section of the filing, it states that the total itemized damages is

$136,000. Under this section, it provides a break-down of the damages: "Actual

Cash Value $136,000.000 [Empire] paid $111,350.00 Insured Deductible =

$25,000.00 Salvage Proceeds = < $35,888.00 > Total Subro Balance Due =

$100,200.00 pro rata payment from Geico $21,616.56 balance due from

[A]llstate $78,581.44." In the "Disputed Damages" section of the arbitration

filing, Allstate wrote "[Empire] has failed to prove a basis for [its] damages."

Allstate argues that it was "implicit" in its answer that Empire's claim should

have been limited to $78,581.44. Thus, Allstate concludes that the arbitrator

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should have applied the credit from the Geico payment, and awarded Empire

recovery of $78,581.44, as was set forth in the Itemized Damages Claimed

section of the filing.

But, Allstate did not properly raise an objection to damages. The AF

Rules governed the arbitration between Allstate and Empire. Rule 2 -5 provides

that if a party is disputing damages, "it must present all damages arguments and

disputed dollar amounts, if known, in the Dispute[d] Damages section.

Arguments raised in any other section will not be considered by the arbitrator.

This includes, but is not limited to, issues such as repair and/or rental amounts,

causation, and partial exclusions." Moreover, Rule 3-5 provides that an

arbitrator may only consider "[d]isputed damages if specifically pled in the

Dispute[d] Damages section." Allstate's general assertion that Empire failed to

prove a basis for their damages does not satisfy AF's Rules that disputed

damages be "specifically pled."

III.

Next, Allstate contends that AF did not have jurisdiction to arbitrate the

dispute because Allstate denied coverage, and the dispute was not over

concurrent coverage. Allstate asserts that there was no agreement to arbitrate,

and therefore, the award should be vacated, pursuant to N.J.S.A. 2A:23B-

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23(a)(5) (stating that a court shall vacate an arbitration award if "there was no

agreement to arbitrate, unless the person participated in the arbitration

proceeding without raising the objection . . . not later than the beginning of the

arbitration hearing").

In AF's Special Arbitration Agreement, Article First provides compulsory

provisions, and outlines disputes that must be submitted to arbitration. In

pertinent part, Article First states:

[S]ignatory companies must submit any unresolved
disputes to [AF] where:

. . . (b) each has issued separate policies of property or
casualty insurance providing, or as a self-insured
provides, concurrent coverage to the same party or
parties asserted to cover an accident, occurrence or
event out of which a first or third party claim or suit for
bodily injury or property damage arises[.]

Article Second provides exclusions and outlines disputes that are not required

to be submitted to arbitration. In pertinent part, Article Second states:

No company shall be required, without its written
consent, to arbitrate any claim or suit if:

. . . (e) it has asserted a denial of coverage to the party
or parties seeking coverage under the policy for the
claim or suit otherwise subject to arbitration[.]

Pursuant to AF's Rule 2-4, a case will be "administratively closed as

lacking jurisdiction," if a denial/disclaimer of coverage is pled, and a copy of

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the denial/disclaimer of coverage letter to the parties seeking liability is

attached. The rule further provides, "[i]f no such letter is provided or where the

issue concerns concurrent coverage . . . , the case will be heard and the

arbitrator(s) will consider and rule on the coverage defense." The AF Rules also

set forth definitions of key terms. Concurrent coverage is defined as "[t]wo or

more policies of insurance and/or self-insureds providing coverage to the same

party or parties or the same risk or risks for the same accident, occurrence, or

event. Concurrent coverage includes primary/excess disputes."

Denial/Disclaimer of coverage is defined as

[a] company's assertion that: a. there was no liability
policy in effect at the time of the accident, occurrence,
or event, or b. a liability policy was in effect at the time
of the accident, occurrence, or event, but such coverage
has been denied/disclaimed to the party seeking
liability coverage for the claim in dispute.

Here, the Allstate policy issued to Ortiz contained first party collision

damage coverage for Ortiz's vehicle. However, the policy also contains a clause

for when there is other insurance, which provides "[w]hen this insurance covers

a substitute or non-owned auto, we will pay only after all other collectible

insurance has been exhausted." Relying on this clause, Allstate argues that

because the Empire policy provided first party collision coverage and paid the

damages to the vehicle, then there is no coverage under the Allstate policy

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because Signature was made whole from Empire. In its letter purporting to deny

coverage, Allstate concludes that "[b]ecause the Empire policy has the primary

obligation with respect to collision coverage, coverage is not afforded under the

Auto Collision Insurance of the Allstate policy."

In the affirmative defenses section of Allstate's responsive filing, Allstate

stated that it would not provide coverage. Allstate cites to the "other insurance"

clause of the policy, which provides that "[w]hen this insurance covers a

substitute or non-owned auto, we will pay only after all other collectible

insurance has been exhausted." Allstate further states,

clearly in this matter the insurance provided by
[Empire] for the damage to their insured's vehicle was
sufficient to repair the vehicle and there is no claim
being made in excess of the [Empire] policy. This is
not a situation with competing excess clauses but is a
situation where [Empire]'s coverage applies and
[Allstate] has no coverage. [Empire] has denied
coverage with regard to this claim.

The arbitrator considered and rejected Allstate's defense, finding: "This is a

concurrent coverage dispute which is compulsory under Article First of the

Special [A]rbitration [A]greement. As a signatory member of Special

[A]rbitration, Allstate agrees to have all compulsory cases heard by AF. Any

proven coverage defenses will be considered in the decision."

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 Following oral argument, the judge concluded that the arbitrator did not

abuse his discretion in finding that the issue was concurrent coverage, and

therefore, within the jurisdiction of AF. Likewise, we also conclude that the

arbitrator did not abuse his discretion in finding that it was a matter of concurrent

coverage. Allstate argues that because Empire paid Signature's damages in full,

then Allstate does not have any coverage because Signature was made whole.

But Empire is seeking reimbursement for the payment, arguing that Allstate's

insured, Ortiz, was fully responsible.

Moreover, the issue was whether the dispute was over concurrent

coverage. If it was not, and Allstate outright denied coverage, then the parties

would not be required to arbitrate, but they still could, as set forth in AF's Special

Arbitration Agreement. The parties were voluntary members of AF. The

arbitrator considered Allstate's defense that it did not provide coverage because

Empire paid all the damages to Signature. The arbitrator rejected Allstate's

defense and determined that the issue was concurrent coverage, and thus, it was

required to be arbitrated, pursuant to Article First of the Special Arbitration

Agreement. Allstate did not raise the defense that AF lacked jurisdiction to

arbitrate the matter. Allstate has not alleged or argued that the AF decision was

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procured by fraud, corruption, or wrongdoing on the part of the arbitrator. See

Tretina, 135 N.J. at 357.

IV.

Lastly, Allstate contends that the arbitrator exceeded his powers by

misapplying New Jersey law, and thus, the award should be vacated, pursuant

to N.J.S.A. 2A:23B-23(a)(4). Both Allstate and Empire are voluntarily members

of AF, and voluntarily entered into the Special Arbitration Agreement.

According to AF's Rule 2-12(d), a party may appeal a decision, and that

"decision will be final and binding with no right to further review, appeal, or

inquiry." As noted above, the Article First of the Special Arbitration Agreement

requires that disputes over concurrent coverage must be submitted to arbitration.

Thus, AF's decision should be binding and not subject to our review.

Nevertheless, we have reviewed plaintiff's arguments and conclude that they do

not warrant reversal.

Moreover, Allstate fails to provide evidence that the arbitrator misapplied

New Jersey law. The arbitrator considered Allstate's and Empire's policies and

considered the signed car rental agreement. The arbitrator concluded:

While Empire paid for the damages to [its] auto, as
Allstate is not an insured and as there is no coverage for
Allstate under Empire's policy, Allstate's excess
language would not apply. This would make Allstate's

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 coverage primary. Allstate disputed damages based on
[its] liability/coverage arguments. No other damage
arguments were raised. Damages awarded in the
amount sought. Allstate requested a personal
representation but did not call in on the scheduled day
and time. The case was heard without the personal rep.
There were no questions.

Primarily, Allstate again asserts that there was auto collision coverage

available under the Empire policy because it paid for the damage to Signature's

(its insured) vehicle. The Allstate policy provided that there is no collision

coverage when the insured is operating a non-owned vehicle, until any other

collision coverage is exhausted. But just because Empire paid the damages,

does not mean that it is not entitled to reimbursement. The Empire policy

provides that it is primary, except when it is in the care, custody or control of

another. Here, the vehicle was in the care, custody, and control of Ortiz. The

arbitrator considered the language of the two policies and concluded that

Allstate's coverage was primary. Accordingly, we conclude that the arbitrator

did not exceed his powers, and thus, we decline to disturb the arbitration award.

To the extent we have not addressed plaintiffs' remaining arguments, we

conclude that they lack sufficient merit to warrant discussion in a written

opinion. R. 2:11-3(e)(1)(E).

Affirmed.

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