AIU Ins. Co. v State Farm Ins. Co. (2010 NY Slip Op 51064(U))

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 9th and 10th JUDICIAL DISTRICTS

Appeal from an order of the District Court of Suffolk County, First District (James P. Flanagan, J.), entered July 20, 2009. The order, insofar as appealed from, upon granting defendant’s motion for reargument, denied defendant’s motion to vacate arbitration awards and granted plaintiff’s cross motion for summary judgment.

ORDERED that, on the court’s own motion, the instant action is converted to a special proceeding.

ORDERED that the order, insofar as appealed from, is affirmed without costs.

AIU Insurance Company (AIU) commenced the instant action to confirm arbitration awards issued against defendant State Farm Insurance Company (State Farm) in a mandatory inter-company arbitration proceeding (Insurance Law § 5105) brought by AIU to recover first-party no-fault benefits paid to its insureds as a result of injuries they had suffered in a multi-vehicle accident. State Farm contended that the awards were arbitrary and capricious, and sought to vacate the awards on that basis. The District Court found in favor of AIU, and this appeal by State Farm ensued.

As a preliminary matter, we note that, pursuant to CPLR 7502 (a), “[a] special proceeding shall be used to bring before a court the first application arising out of an arbitrable controversy,” and therefore the proper procedure was to commence a special proceeding, not an action, to confirm the arbitration awards pursuant to CPLR 7510 (see Scaduto v DT Indus., 266 AD2d 149 [1999]; Polednak v Country-Wide Ins. Co., 153 AD2d 930 [1989]). Consequently, on this court’s own motion, we convert the action to a special proceeding (see CPLR 103 [c]; see also Saratoga CCM, Inc. v Guarino, 21 Misc 3d 142[A], 2008 NY Slip Op 52385[U] [App Term, 2d & 11th Jud Dists 2008]). [*2]

Upon a review of the record, we find that the awards in this compulsory arbitration proceeding were supported by the evidence (see Matter of Motor Veh. Acc. Indem. Corp. v Aetna Cas. & Sur. Co., 89 NY2d 214 [1996]; Matter of State Farm Mut. Auto. Ins. Co. v Lumbermens Mut. Cas. Co., 18 AD3d 762 [2005]). The decisions by the arbitrator indicated that he had considered the evidence proffered by the parties, including the police report, as well as State Farm’s affirmative defense. Thus, it cannot be said that the awards were arbitrary and capricious or that they were unsupported by any reasonable hypothesis (see Matter of Motor Veh. Acc. Indem. Corp., 89 NY2d 214). Consequently, the District Court did not err in denying vacatur of the awards. We note that, in granting AIU’s cross motion for summary judgment, the District Court, in effect, confirmed the awards. Accordingly, the order, insofar as appealed from, is affirmed.

Tanenbaum, J.P., Molia and LaCava, JJ., concur.
Decision Date: June 11, 2010