Matarasso v. Continental Cas. Co., 56 N.Y.2d 264 (1982)
A motion to stay arbitration may be entertained outside the 20-day period specified in CPLR 7503(c) when the basis for the motion is that the parties never agreed to arbitrate.
Summary
Claimants sought uninsured motorist benefits under a commercial umbrella liability policy after recovering the maximum benefits from their primary policy. The insurer, Continental Casualty, moved to stay arbitration, arguing it never agreed to arbitrate such claims. Claimants argued the motion was untimely under CPLR 7503(c). The New York Court of Appeals held that the 20-day time limit to move for a stay of arbitration does not apply when the moving party argues that no agreement to arbitrate exists at all. In such cases, a motion to stay can be entertained even after the 20-day period expires.
Facts
Claimants were injured in an automobile accident involving an uninsured vehicle.
They received the maximum benefits under their primary automobile insurance policy’s uninsured motorist indorsement.
Claimants then sought to recover excess damages under Continental Casualty’s commercial umbrella policy.
The umbrella policy covered Daniel Matarasso and A. Matarasso & Co., Inc. for general, automobile, and employer liability above the limits of underlying policies.
One underlying policy was the automobile liability policy from which claimants already received uninsured motorist benefits.
Procedural History
Claimants served a demand for arbitration on Continental Casualty.
Continental Casualty moved to stay arbitration, arguing no agreement to arbitrate existed.
Special Term granted the stay.
The Appellate Division affirmed.
The Court of Appeals granted leave to appeal and affirmed the Appellate Division’s order.
Issue(s)
Whether a motion to stay arbitration can be entertained outside the 20-day period specified in CPLR 7503(c) when the moving party argues that no agreement to arbitrate exists between the parties.
Holding
Yes, because the 20-day preclusion in CPLR 7503(c) only applies when there is an existing agreement to arbitrate and a party is arguing the agreement is invalid or unfulfilled, but does not apply when a party argues no agreement to arbitrate ever existed.
Court’s Reasoning
The court emphasized that CPLR 7503(c) speaks in terms of “parties,” implying the statute targets parties to an arbitration agreement. The court reasoned that the legislature did not intend to bind individuals to arbitration by mere inaction when no agreement to arbitrate has ever been made.
The court distinguished between challenging the validity or compliance of an existing arbitration agreement (which requires a timely motion to stay) and arguing that no agreement to arbitrate exists at all. The 20-day time limit applies only when an agreement to arbitrate exists.
The court noted that the umbrella policy contained no arbitration provision. The court also determined that the mandatory uninsured motorist indorsement of section 167 of the Insurance Law, requiring uninsured motorist coverage in automobile liability policies, does not apply to the umbrella policy, because it is an excess liability policy covering various insurance types, not solely an automobile liability policy.
The court cited Aetna Life & Cas. Co. v Stekardis, 34 NY2d 182 to reinforce the strictness of the 20 day rule where an agreement to arbitrate exists. However, here the court emphasized that the statute’s wording implies it is directed towards actual parties to an agreement. The court stated, “Given the ease with which a broader class of persons could have been included within the statute’s ambit, we cannot impute to the Legislature an intent to bind persons to the arbitral process by their mere inaction for 20 days where no agreement to arbitrate has ever been made.”