May 23, 2005

Matter of State Farm Mut. Auto. Ins. Co. v Lumbermens Mut. Cas. Co. (2005 NY Slip Op 04234)

Headnote

The relevant facts that the court considered were a dispute over the "priority of payments" with State Farm arguing that it should not be 100% liable for first-party benefits solely based on its insured vehicle physically contacting an injured pedestrian. Lumbermens argued that the arbitrator's award was proper because there was no evidence of negligence on its insured driver's part. The main issue decided was whether the arbitrator's award was proper given the absence of proof of negligence on Lumbermens' part. The holding of the court was that the arbitrator's award was proper based on State Farm's failure to prove any negligence on the part of Lumbermens' insured driver, and even if the arbitrator misapplied applicable law, the award was not contrary to settled law and was not subject to vacatur under CPLR 7511(b)(1). Therefore, the court affirmed the judgment which denied State Farm's petition and dismissed the proceeding.

Reported in New York Official Reports at Matter of State Farm Mut. Auto. Ins. Co. v Lumbermens Mut. Cas. Co. (2005 NY Slip Op 04234)

Matter of State Farm Mut. Auto. Ins. Co. v Lumbermens Mut. Cas. Co.

2005 NY Slip Op 04234 [18 AD3d 762]

May 23, 2005

Appellate Division, Second Department

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

As corrected through Wednesday, July 20, 2005

In the Matter of State Farm Mutual Automobile Insurance Company, Appellant,
v
Lumbermens Mutual Casualty Co., Respondent.

—[*1]

In a proceeding pursuant to CPLR article 75 to vacate an arbitrator’s award, the petitioner appeals from a judgment of the Supreme Court, Queens County (Rios, J.), dated July 16, 2004, which denied the petition and dismissed the proceeding.

Ordered that the judgment is affirmed, with costs.

The appellant, State Farm Mutual Automobile Insurance Company (hereinafter State Farm), argues that, in this “priority of payments” dispute, the arbitrator erred in concluding that State Farm was 100% liable for the payment of first-party benefits solely on the basis that State Farm’s insured vehicle was the only vehicle that actually made physical contact with the injured pedestrian (see Insurance Law § 5105 [b]; 11 NYCRR 65-3.12 [e]; 65-3.14 [b] [3]; 65.15 [m] [2] [iii]; Matter of Pacific Ins. Co. v State Farm Mut. Auto. Ins. Co., 150 AD2d 455 [1989]). In opposition, Lumbermens Mutual Casualty Company (hereinafter Lumbermens) argues that the arbitrator’s award was proper in light of the absence of any competent evidence that would tend to prove that the negligence of its insured driver, whose car did not make any physical contact with the injured pedestrian, was in some way at fault in connection with the occurrence. [*2]

We agree with Lumbermens that the award could properly have been based on State Farm’s failure to prove any negligence on the part of Lumbermens’ insured driver. Also, even assuming that the arbitrator might have misapplied applicable law as argued by State Farm, the arbitrator’s award was at least supported by a “reasonable hypothesis” and was not contrary to what could be fairly described as settled law (Matter of Motor Veh. Acc. Indem. Corp. v Aetna Cas. & Sur. Co., 89 NY2d 214, 224 [1996]; see Matter of Smith [Firemen’s Ins. Co.], 55 NY2d 224, 231 [1982]; Matter of Hegarty v Board of Educ. of City of N.Y., 5 AD3d 771 [2004]; Matter of Hanover Ins. Co. v State Farm Mut. Auto. Ins. Co., 226 AD2d 533 [1996]; Matter of Adams v Allstate Ins. Co., 210 AD2d 319 [1994]; Matter of Shand, 74 AD2d 442, 454 [1980]). Thus, the arbitrator’s award was not subject to vacatur under CPLR 7511 (b) (1). Prudenti, P.J., Schmidt, Luciano and Lifson, JJ., concur.