BACKGROUND Mostafa Hekal (Assignor), a 29 year old male, was injured in a motor vehicle accident on March 8, 2019. Assignor was driving a 2018 Ford, with New Jersey plate L62KUG, when it was involved in a collision on the Southern State Parkway in Hempstead, New York. The 2018 Ford was a rental car owned by AutoTeam, Inc. and insured under New Jersey code 989, by Unitrin Preferred Insurance Company. Assignor maintained a business policy in New York through Hereford, which is a New York State livery insurer. Assignor submitted the claim to Hereford and Hereford denied the claim, because the rental car was not an insured vehicle under the Hereford policy. Assignor then submitted the claim to MVAIC who denied the claim because AutoTeam has a policy which covered the vehicle. The amount in dispute was $550.00. The parties submitted to arbitration to resolve the underlying dispute regarding no fault benefits. Corinne Pascariu (CP), the Arbitrator, held a hearing on June 29, 2020 and October 22, 2020 and issued a decision finding that MVAIC was not liable for the claim as a policy existed. CP further found: …where, as here, there may be more than one insurer — the insurer providing coverage to the vehicle Assignor had been renting and the insurer providing for hire coverage to the vehicle Assignor had been driving — liable for providing first-party No-Fault benefits, and “a dispute regarding priority of payment arises among insurers who otherwise are liable for the payment of first party benefits then the first insurer to whom notice of claim is given…shall be responsible for payment…. CP went on to find that as Hereford was the first to receive the notice of claim, it was responsible for processing the claim and its assertion that AutoTeam Inc is the insurer responsible must be resolved through intercompany arbitration.1 The award was confirmed by Victor J. D’Ammora (VD), a Master Arbitrator pursuant to decision dated March 1, 2021. VD agreed with CP’s analysis and conclusions and found that CP’s decision was neither arbitrary and capricious nor incorrect as a matter of law. THE PETITION Hereford filed the petition commencing this proceeding on May 14, 2021. MVAIC and Corona Medical both appeared by counsel and filed opposition and cross-petitions. On October 14, 2021, the papers were fully submitted, and on October 15, 2021, the case was assigned to this court for determination. The petition and cross-petitions are consolidated herein for determination. For the reasons stated below, the petition to vacate the award is granted and the cross-petitions are denied. There Was No Basis in the Record to Find Coverage by Hereford Existed CPLR §7511(b)(1)(iii) provides for an application for a party to vacate an arbitration award, where the arbitrator exceeded her power. While judicial review of arbitration awards is limited to the grounds set forth in CPLR 7511, an award that is the product of compulsory arbitration, such as the case at bar, has an additional layer of review to insure that the award is supported by evidence in the record and that the award is not arbitrary and capricious (Liberty Mutual Fire Insurance Co v. Global Liberty Insurance Co. of NY 144 AD3d 1160, 1161). In this case, the insurance policy issued by Hereford clearly on its face indicates it covers only the automobile owned by Assignor, and therefore provides no coverage for the vehicle Assignor rented and was driving when he got into the accident. The vehicle covered by Hereford is a 2015 Chevrolet, specifically identified by a PIN number on the declaration page of the policy issued by Hereford. The issue below was not one of priority of payment, as ruled on by the Arbitrator, but a lack of coverage defense, which the Arbitrator did not rule on, noting only that there “may” be coverage under the policy issued by Hereford without citing any evidence for this conjecture. It is well settled that where an insurance company made no contract of insurance with the person and for the vehicle involved in the accident, liability is properly denied (Zappone v. Homes Ins. Co. 55 NY2d 131, 136). In such a situation “…although the carrier may have some other relationship with the owner or driver of the vehicle, it has no contract with that person with respect to the vehicle involved and, there being no contractual relationship with respect to the vehicle, is not required to deny coverage or otherwise respond to a claim arising from an accident involving that vehicle except as statute mandates or courtesy suggests (Id at 136-137).” The court in Zapone further noted that the purpose of requiring company’s disputing priority of payment to go to intercompany arbitration was “…to avoid prejudice to the injured claimant…not, however to provide an added source of indemnification which had never been contracted for and for which no premium had ever been paid (Id at 137).” Additionally, a lack of coverage defense may be raised regardless of whether the insurer’s denial was timely or in proper form [Gentlecare Ambulatory Anesthesia Services v. Hereford 69 Misc 3d 144(A)]. Under these circumstances, and given the lack of evidence in the record for any finding that coverage by Herford exists, the award is arbitrary and capricious and must be vacated (Global Liberty Insurance Co. v. Medco Tech, Inc. 170 AD3d 558; Progressive Cas. Ins., Co. v. New York State Ins. Fund 850 NYS2d 478; Allstate Insurance Co v. Countrywide Insurance Co. 2002 NY Slip Op 40177(U)). The cross-petition of Corona Medical PC is denied for the reasons stated above. The cross-petition of MVAIC is also denied. Although, the court agrees with that portion of the arbitrator’s decision which found that there was no liability as pertains to MVAIC, because AutoTeam, Inc. had a policy, the court can not both vacate the award as against Hereford and confirm the award as to MVAIC. To do so would constitute a modification of the award, and there is no applicable basis under CPLR 7511(c) for this court to issue a modification.2 CONCLUSION Based on the foregoing, it is hereby ORDERED that the petition is granted to the extent of vacating and setting aside the award of Victor J’ D’Ammora, The Mater Arbitrator, dated March 1, 2021 with AAA Assessment Number 17-20-1157-8170, and the award of Corinne Pascariu, the Lower Arbitrator, dated October 28, 2020, upon the grounds that the award was arbitrary and capricious and exceeded the Master Arbitrator’s authority; and it is further ORDERED that the cross-petitions of MVAIC and Corona Medical PC are denied in their entirety; and it is further ORDERED that the Clerk of the Court shall enter judgment accordingly. This constitutes the decision and order of this court. Dated: October 20, 2021
