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Matter of Discover Prop. & Cas. Ins. Co. v McCullough 2012 NY Slip Op 30614(U) March 9, 2012 Sup Ct, NY County Docket Number: 108141/2011 Judge: Robert E. Torres Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication.

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SUPREME COURT OF THE STATE OF NEW YORK - NEW YORK COUNTY
PRESENT!

PART

Index Number: 108141/2011 DISCOVER PROPERTY
vs

MCCULLOUGH, DERICK
Sequence Number : 001 COMPEL OR STAY ARBITRATION
The following papen, numbered 1 to

MOTION DATE
MOTION 8EQ.

NO.

0

I

MOTION CAL. NO.

were read on this motion tolfor

Notice of Motion/ Order to Show Cause
Answering Affidavit6 - Exhiblts Replying Aff idavtts

- Affldsvitm - Exhlbits ...

'


qq

Crb,ss-Motion:

Yes

No

Upon the foregoing papers, tt I ordered that this motion s

F I L E D I;

decision. This Constitutes the Decision and Order of the Court.

Dated:

2
FINAL DISPOSITION
r] NdNP-BNAL DISPOSITION

Check one:

Check if appropriate:

[3 DO NOT POST

0 REFERENCE

0 SUBMIT ORDER/JUDG.

0 SETTLE ORDER /JUDG.

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SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK, PART 29 PRESENT: HONORABLE ROBERT E. TORRES, J.S.C.
IN THE MATTER OF THE Application for an Order Staying All Arbitration Proceedings Attempted to be had between INDEX NUMBER: 108141/2011 DISCOVER PROPERTY and CASUALTY INSURANCE CO., and GALLAGHER BASSETT SERVICES, NC., As Third-party Administrator of the CITY OF NEW YORK, r NEW YORK CITY DEPARTMENT OF EDUCATION, and AMBOY BUS CO., INC., Petitioner, -against-

DERICK MCCULLOUGH
Respondent, and THOMAS HEARD, EAN HOLDINGS, LLC ( W a ENTERPRISE), and ELCO ADMINISTRATIVE SERVICES, and "JOHN DOE" the driver of Proposed Additional Respondent Vehicle Name and Identity currently Unknown, Proposed Additional Respondents.

The within action arises out of a motor vehicle accident that occurred on September 20,2010

on LexingtonAvenue, near its intersection with East 122"dStreet in Manhattan, The respondent was
the driver of the petitioner's vehicle in the course of his employment at the time of the accident. According to respondent driver's MV-104 and the Police accident Report, the proposed additional respondent's vehicle, driven by Thomas Heard, sideswiped petitioner's bus., Notably, there is no
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dispute as to the lack of negligence on the part of respondent driver Derick McCullough which would have caused or contributed to the subject accident. The vehicle driven by Thomas Heard, a 2010 Chrysler with NY Plate No. FAC5089, was a rental car registered by EAN and believed to be
1

The MV-104is submitted as Exhibit A of the petition and the Police Accident Report is submitted as Exhibit B of the petition.

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self insured on the date of the accident. Petitioner now moves for an Order pursuant to C.P.L.R. 8 7503, permanently staying the arbitration sought by the Respondent on the grounds that respondent failed to file a timely Notice
of Claim and failed to establish that the offending vehicles were "uninsked" which is a prerequisite

to their Petition for arbitration. Alternatively, Petitioner seeks a temporary stay of arbitration directing that the proposed additional respondents be added as respondents and setting the matter down for a frame issue hearing. In the event said relief is denied, the petitioner seeks an order requiring the respondent to furnish the petitioner with discovery prior to the proceeding to arbitration. Respondent DERICK MCCULLOUGH opposes the petition except for the branch seeking to add the additional party respondents. As to said branch, respondent McCullough takes no position. Respondent McCullough argues that there is no requirement herein to file a Notice of Claim against the Ct of New York or Department of Education as said parties were not the owner iy of the vehicle being operated by the Respondent. Moreover, respondent McCullough argues that he did not fail to establish that the offending vehicles were "uninsured" because although the offending vehicle was covered in normal instances by EAN Holdings LLC's insurance, it provides no coverage herein as the operator of the vehicle was arrested at the scene for unauthorized use and a valid disclaimer was issued to that effect. --Proposed additional respondents-EAN HOLDINGS; LLC (hereinafter "EAN") and ELCO
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ADMINISTRATIVE SERVICES (hereinafter "ELCO") oppose be joined as additional respondents.
EAN and ELCO m i t i that petitioner has failed to establish personal jurisdiction over them anan

because they were not properly served as mandated by the statute. Additionally, EAN and ELCO
argue that New Jersey choice of law governs because the rental agreement was issued in New Jersey

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to a New Jersey registered vehicle. EAN and ELCO also argue that nowpermissive use operator voids insurance coverage under the subject rental agreement. Specifically, they maintain that
Thomas Heard was not listed in the rental agreement as an operator and allegedly stole the rental
car.2 Finally, EAN and ELCO maintain that the New Jersey insurance carrier may deny coverage

due to lack of cooperation on behalf of named insured and driver. It is well settled that in a proceeding in which an insurer is seeking a stay of uninsured motorist arbitration, the petitioning insurer "bears the initial burden of proving that the offending vehicle was in fact insured at the time of the accident.'*Matter of E& Tic-,

Inswance C o m p w

185 A.D.2d 884,885 (2nd Dept. 1992).In other words the petitioning insurer must establish

a prima facie case of coverage for the adverse or offending vehicle. "On an application to stay
arbitration,the petitioner has the burden of establishingthe existence of evidentiaryfacts, sufficient to conclude that there is a genuine preliminary issue, which requires a trial and justifies a stay."

M o n a 1 Grmne Mutual Insurance Co, v. Diaz, 111 A.D.2d 700 (lJt Dept. 1985).
In the case at bar, the Court finds petitionerhas met its burden. Issues of fact have been raised

of whether the offending vehicle was insured on the date of the accident. Thus, THOMAS HEARD,
EAN HOLDINGS, LLC ( W a ENTERPRISE), and ELCO ADMINISTRATIVE SERVICES, and "JOHN DOE" the driver of`Proposed Additional Respondent Vehicle Name and Identity currently unknown must be joined as a party respondents to the proceeding for a hearing to resolve these
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issues. ( b i e r of L m b o me m Mut;Cas. Co, v, Beliard 256 A-.D;2&579[2nd Dept. 1998];-Matte~-

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9fNatlonwde h . Co. v. Sillma, 266 A.D.2d 55 1[2nd Dept. 19991; New York C e d Mut, Fire s

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EAN and ELCO maintain that an individual that identifiedhimselfas Milton Williams, the authorizedrenter ofthe subject vehicle, called the Enterprise Newark, NJ Assistant Branch Manager Chamila Muherjee on September 2 1,20 10 and informed her that his "guest" stole the subject rental card. They submit Ms. Muherjee's notarized affidavit as Exhibit C of their papers.

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Ins. Co. v. Rozeubgq , 281 A.D.2d 330[lst Dept. 20011).

Accordingly, it is

ORDERED, that leave is granted to join THOMAS HEARD, EAN HOLDINGS, LLC ( m a
ENTERPRISE), and ELCO ADMINISTRATIVE SERVICES, and "JOHN DOE" the driver of
Proposed Additional Respondent Vehicle Name and Identity currently unknown to the proceedings

as additional respondents; and it is further
ORDERED that Petitioner's motion is granted to the extent that the arbitrationis temporarily
stayed pending a framed issue hearing to determine all coverage issues; and it is further

ORDERED that petitioner is hereby directed to serve said additional respondents with a
supplemental notice of petition, and a supplemental petition pursuant to C.P.L.R. further

8 1003, and it is

ORDERED that the respondent is directed to produce a copy of all relevant medical records
and authorizations, and to submit to an Examination Under Oath and a physical examination prior to proceeding to arbitration; and it is further
ORDERED that said framed issue hearing is hereby referred to a Special Referee to hear and

report; and it is further OFtDERED that a copy of this order wt notice of entry shall be served upon the Special ih
Referee Clerk, Room 119M to arrange a date for the reference to a Special Referee. This-shall constitute the decision and order-of this Court.
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