Does this case show that a party can invoke the arbitration clause in a contract and stay litigation?
In ST. Chiropractic, P.C. v. Geico General Ins. Co., NYLJ 1202766695437 http://law.justia.com/cases/new-york/appellate-term-second-department/2016/2016-ny-slip-op-26271.html. Plaintiff assignor was injured while in a vehicle insured by a New Jersey policy. Plaintiff moved for Summary Judgment and Defendant carrier cross moved for dismissal. Defendant argued, among other things, that New Jersey law controlled, and that New Jersey law and the subject insurance policy required that the matter be submitted to arbitration. Defendant however, did not move to compel arbitration pursuant to CPLR 7503 (a).
The Appellate Term said:
Since the insurance policy at issue contains a provision that “[t]he policy and any amendments and endorsements are to be interpreted pursuant to the laws of the state of New Jersey,” the substantive law of New Jersey applies (see Natural Therapy Acupuncture, P.C. v. Geico Ins. Co., 50 Misc 3d 107 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2015]; Bay Med., P.C. v. GEICO Ins. Co., 41 Misc 3d 145[A], 2013 NY Slip Op 52084[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2013]). However, New York’s procedural laws control. In Natural Therapy Acupuncture, P.C. and Bay Med., P.C., this court held that dispute resolution is not mandatory pursuant to NJSA §39: 6A-5.1 (a), as implemented by NJAC §11:3-5.1 (a) (see also New Jersey Mfrs. Ins. Co. v. Bergen Ambulatory Surgery Ctr., 410 NJ Super 270, 272-273 [2009]), which provides that a dispute regarding the recovery of no-fault benefits may be submitted to dispute resolution upon the initiative of either party to the dispute. Similarly, the insurance policy in question provides that a matter may be submitted to dispute resolution “on the initiative of any party to the dispute.” However, the existence in a contract of an option to arbitrate in the event of a dispute is not a ground to dismiss the complaint in a court action based on that dispute. Rather, where one party commences a court action, the adverse party may seek to exercise the arbitration clause by moving to compel arbitration. If that motion is granted, the court stays the action pending arbitration (see CPLR 7503 [a]). Here, defendant has not moved to compel arbitration (see Natural Therapy Acupuncture, P.C. v. Geico Ins. Co., 50 Misc 3d 107; Bay Med., P.C. v. GEICO Ins. Co., 41 Misc 3d 145[A], 2013 NY Slip Op 52084[U]). In view of the foregoing, we find no basis to disturb so much of the order as denied defendant’s cross motion for summary judgment dismissing the complaint.