In re the Arbitration Between Graphic Arts Mutual Insurance & Leno
Court: Appellate Division of the Supreme Court of the State of New York; April 28, 1995; New York; State Appellate Court
The court modified the prior order and affirmed it, remitting the matter to the Supreme Court for further proceedings. Lorraine Leno sought uninsured motorists coverage from Graphic Arts Mutual Insurance Company for Edward and April Leno, which was denied. Following a demand for arbitration by Leno, Graphic Arts petitioned for a stay of arbitration or reasonable discovery regarding the Lenos' entitlement to coverage. The Supreme Court denied the stay, confirming the Lenos as "insureds" under the policy, and ruled that two issues—coverage and damages—were subject to arbitration. The court found that the policy included a limited arbitration clause, which only covered disputes over the insured's right to recover from an uninsured motorist and the amount of damages. However, an exclusion in the endorsement regarding non-permissive use of the vehicle raised a coverage issue that should be resolved by the court, not arbitration. The court's denial of reasonable discovery regarding the Lenos' belief in their entitlement to use the vehicle was deemed an error, as factual issues existed. The court directed that, upon completion of discovery, it should determine if the Lenos are entitled to coverage or if they are excluded due to non-permissive use. If coverage is denied, a permanent stay of arbitration will be granted; if coverage is found, the matter will proceed to arbitration. The court clarified that the stay request was not untimely since it was based on a claim of lack of coverage due to an exclusion. The appeal resulted in modifications granting discovery regarding the Lenos' vehicle use and staying arbitration until the court's determination.