Arbitration: Matter of Cordero v. New York Central Mutual Fire Insurance Co.

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New York State Court of Appeals

Arbitration

Appellate Review

Matter of Cordero v. New York Central Mutual Fire Insurance Co.
No. 164
Appealed from the Fourth Department

Background: On May 15, 2004, the petitioner was involved in a two-car collision. She later filed a claim for no-fault benefits with the respondent insurer, alleging she injured her shoulder. When the respondent denied the petitioner’s no-fault claim on the ground that her shoulder injury was not related to the accident, she challenged the denial in arbitration. Disagreeing with the respondent’s denial, in May 2008 the no-fault arbitrator ruled that the respondent’s denial based on lack of relatedness was inappropriate and awarded the petitioner $4,355 in no-fault benefits. After the petitioner settled her lawsuit against the driver of the other vehicle for that driver’s $25,000 policy limit, she sought SUM benefits in the amount of $75,000 from the respondent insurer. Citing the prior denial of no-fault benefits as being unrelated to the accident, the respondent denied the claim for SUM benefits.
On Feb. 28, 2008, during the no-fault arbitration, the petitioner sought to challenge the denial of SUM benefits in a separate arbitration proceeding. At the hearing held about two months after the decision in the no-fault arbitration, the respondent again argued the injury was unrelated to the accident. The petitioner countered that the SUM arbitrator was bound by the prior determination of the no-fault arbitrator under the doctrine of collateral estoppel. After the hearing, in August 2008, the SUM arbitrator issued an award in favor of the respondent, denying SUM benefits. In a finding directly opposite that of the no-fault arbitrator, the SUM arbitrator concluded the petitioner’s injury was not caused by the accident, and also found her recovery from the other driver was more than adequate compensation for any injuries sustained in the accident. The petitioner commenced this CPLR Article 75 proceeding to set aside the SUM arbitration award in the respondent’s favor, arguing the respondent was collaterally estopped from relitigating the causation issue. The respondent sought confirmation of the award. The supreme court vacated the SUM arbitration award and ordered a new arbitration to be scheduled before a different arbitrator. The Appellate Division reversed.

Ruling: The court affirms. The primary issue concerns whether the SUM arbitrator exceeded the scope of his authority by not giving preclusive effect to a prior arbitration award involving the same parties and accident. On appeal, the court finds it must apply the state’s well-established rule that an arbitrator’s rulings, unlike a trial court’s, are unreviewable.
“It is not for us to decide whether the SUM arbitrator erred in not applying collateral estoppel (i.e., not giving preclusive effect to the no-fault arbitrator’s determination on the issue of causation). Because the SUM arbitration award was not patently irrational or so egregious as to violate public policy, the instant SUM arbitration award (and whether the SUM arbitrator erred or exceeded his authority) is beyond this Court’s review powers.” The Appellate Division’s ruling is affirmed.

Hugh C. Carlin for the appellant; H. Ward Hamlin Jr. for the respondent