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Zirger v. General Acc. Ins. Co.


(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

Martin S. Zirger v. General Accident Insurance Company (A-68-95)

(NOTE: This is a companion case to Green v. Selective Insurance Co. also decided today.)

Argued January 2, 1996 -- Decided June 12, 1996

STEIN, J., writing for a unanimous Court.

The issue on this appeal is whether Martin Zirger, who has tried to Conclusion in the Law Division his claim against a tortfeasor and has received an award of damages, can nevertheless be compelled to relitigate the issue of damages before an arbitration panel pursuant to the arbitration clause in the underinsured motorist (UIM) endorsement of his own automobile liability policy.

On January 4, 1991, Martin Zirger was injured in an accident with a car operated by Joseph Filsaime. Filsaime's liability insurance policy provided only $15,000 in coverage. Zirger's automobile policy issued by General Accident provided UIM coverage of $1,000,000. General Accident's UIM endorsement contained a standard arbitration clause widely used in the insurance industry. That clause enabled the parties to choose to arbitrate UIM coverage issues. In addition, the contract also provided that any judgment for damages arising out of a "suit" brought without the insurer's written consent is not binding on the insurer (the consent to sue clause).

Zirger sued Filsaime to recover damages for the injuries he sustained in the accident. On February 19, 1993, Zirger's attorney notified General Accident of Filsaime's limit of liability and asked General Accident for permission to settle with Filsaime for the policy limit in order to pursue a UIM claim under Zirger's policy. Zirger's attorney also demanded arbitration pursuant to the UIM endorsement. Although General Accident consented to Zirger's proposed settlement of his claim against Filsaime for the policy limit, that settlement never occurred. After a trial on liability only, a jury determined that Filsaime was at fault for Zirger's injuries. Filsaime's insurer then offered to settle the case for $15,000, Filsaime's policy limit. Zirger's attorney notified General Accident that he was going to reject the offer and proceed to a jury trial on damages. General Accident's attorney informally authorized Zirger's request to proceed to trial but General Accident stresses that counsel never waived the contractual right to arbitrate the damages issue.

The jury awarded Zirger $400,000. Zirger then demanded payment of that amount from General Accident less the $15,000 recovery against Filsaime. General Accident refused payment and Zirger instituted this action.

The parties filed cross-motions for summary judgment. The trial court granted Zirger's motion, concluding that General Accident impliedly had consented to the litigation of Zirger's claims against Filsaime, thereby waiving its contractual right to arbitration.

On appeal, the Appellate Division reversed, concluding that General Accident's acquiescence to Zirger's suit for damages was not a waiver of the contractual right to arbitration. The court also found that General Accident could not be collaterally estopped from relitigating the damages question because its interests and Filsaime's were not sufficiently similar to conclude that Filsaime's litigation of the damages claim provided adequate representation of General Accident's interests.

The Supreme Court

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