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Allstate Ins. Co. v. Stolarz

Court of Appeals of New York

February 11, 1993, Argued ; May 4, 1993, Decided

No. 56

Opinion

 [*222]  [**936]  [***904]    Chief Judge Kaye.

 In this automobile insurance dispute, both Supreme Court and the Appellate Division concluded that there was a conflict between New York and New Jersey law, and that New York law should control. We conclude there [****5]  is no such conflict, and in any event New Jersey law applies. Accordingly, we reverse.

On February 18, 1989, Kathleen Stolarz and her husband were injured in a two-car accident on Route 6 in Woodbury, New York. The Stolarz vehicle was a company car leased by her employer, Blue Cross/Blue Shield of New Jersey, and registered in New Jersey. New Jersey Manufacturers Insurance Company (NJM) insured the vehicle under a policy issued to Blue Cross and written to conform to New Jersey law. Stolarz regularly garaged the vehicle at her home in Monroe, New York, a few miles north of the New Jersey border.

The carrier insuring the other vehicle paid the Stolarzes $ 20,000, the liability limits of its insured's policy. When Allstate Insurance Company, the insurer of the Stolarzes'  [**937]   [***905]  personal cars, disputed the amount payable under that policy's underinsurance coverage, the Stolarzes served a demand for arbitration and Allstate, in turn, brought a special proceeding in Supreme Court to stay arbitration. NJM, which also disputed the amount payable under its policy's uninsured/underinsured coverage, joined in the proceeding and sought declaratory relief fixing [****6]  the rights and obligations of the parties. Allstate, having settled with the Stolarzes, is not before us on this appeal.

The NJM policy contains a single limit of uninsurance/underinsurance in the amount of $ 35,000. In accordance with a New Jersey statute, 1 the policy also provided: "Any amount  [*223]  payable under this [Uninsured and Underinsured Motorists] insurance shall be reduced by all sums paid by or for anyone who is legally responsible." NJM argued that, in accordance with the policy terms and New Jersey law, it was entitled to offset $ 20,000 (the amount collected by the Stolarzes from the other driver's insurance carrier) from the $ 35,000 policy limit. The Stolarzes, however, claimed that under New York case law (see, Matter of United Community Ins. Co. v Mucatel, 127 Misc 2d 1045, affd without opn 119 AD2d 1017, affd for reasons stated at Special Term 69 NY2d 777), offset clauses in underinsurance coverage are void, and they demanded $ 35,000 without reduction. 

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81 N.Y.2d 219 *; 613 N.E.2d 936 **; 597 N.Y.S.2d 904 ***; 1993 N.Y. LEXIS 1162 ****

In the Matter of the Arbitration between Allstate Insurance Company, Petitioner, and Kathleen Stolarz et al., Respondents; New Jersey Manufacturers Insurance Company, Appellant.

Prior History:  [****1]   Appeal, by permission of the Court of Appeals, from an order of the Appellate Division of the Supreme Court in the Third Judicial Department (the appeal having been transferred by order of the Appellate Division of the Supreme Court in the Second Judicial Department), entered December 31, 1991, which affirmed an order of the Supreme Court (Robert J. Stolarik, J.), entered in Rockland County, denying the petition by Allstate Insurance Company to stay arbitration, declaring that the full underinsurance coverage provided for in the policies issued by petitioner Allstate Insurance Company and respondent New Jersey Manufacturers Insurance Company shall be available and applied to the benefit of respondents Kathleen and John Stolarz to the extent they have not been fully compensated by the amounts already received from a third insurance carrier, and directing that if the parties cannot agree as to the amount of damages sustained by respondents Stolarz, they may seek arbitration.

 Matter of Allstate Ins. Co. (Stolarz--N. J. Mfrs. Ins. Co.), 178 AD2d 899, reversed.

Disposition: Order reversed, etc.

CORE TERMS

reduction, underinsurance, insured, coverage clause, endorsement, uninsured, coverage, contacts, void, regulation, underinsured coverage, choice of law, grouping, misleading, parties, combined, offset, conflict of laws, limits, invalidate, contract case, retroactive, courts, driver, cases, underinsured motorist coverage, governmental interest, lex loci contractus, insurance policy, company car

Insurance Law, Coverage, Underinsured Motorists, General Overview, Policy Interpretation, Ambiguous Terms, Civil Procedure, Federal & State Interrelationships, Choice of Law, Torts, Procedural Matters, Conflict of Law, Significant Relationships, Preliminary Considerations