WEBVTT 2 00:00:22.102 --> 00:00:44.265 APPEARANCES OF COUNSEL. (APPEARANCES OF COUNSEL ENTERED) 3 00:00:44.265 --> 00:00:47.279 CHIEF JUSTICE RABNER: WELCOME, COUNSEL. MR. MAHONEY, PLEASE GO AHEAD. 4 00:00:47.279 --> 00:00:51.321 SEAN P. MAHONEY: THANK YOU, YOUR HONOR. I'M PREPARED TO PROCEED 5 00:00:51.321 --> 00:00:54.672 WITH A BRIEF OPENING STATEMENT. IF IT PLEASE THE COURT I'D LIKE TO RESERVE TWO 6 00:00:54.672 --> 00:00:56.003 MINUTES FOR REBUTTAL. CHIEF JUSTICE RABNER: THAT'S FINE. 7 00:00:56.003 --> 00:01:04.218 SEAN P. MAHONEY: TODAY THIS COURT HAS THE OPPORTUNITY TO DO 8 00:01:04.218 --> 00:01:12.162 TWO VERY IMPORTANT THINGS. FIRST, IT HAS THE OPPORTUNITY TO CONFIRM THE LIMITED 9 00:01:12.162 --> 00:01:17.386 REACH OF OUR DIRECT ACTION STATUTE. THE STATUTE'S EXPRESS ISN'T VERY SPECIFIC 10 00:01:17.386 --> 00:01:30.731 TERMS INDICATE THAT IT DOES NOT APPLY TO ARC CHI TECH. SECOND, 11 00:01:30.731 --> 00:01:36.224 THIS COURT ALSO HAS A GOTTEN OPPORTUNITY TO REAFFIRM IT'S LONG STANDING AND FIRM 12 00:01:36.224 --> 00:01:40.866 COMMITMENT TO ARBITRATION AS A VIABLE MEANS OF RESOLVING COMMERCIAL 13 00:01:40.866 --> 00:01:45.711 DISPUTES. THE DIRECT ACTION STATUTE APPLIES ONLY TO WORKERS' COMPENSATION IN 14 00:01:45.711 --> 00:01:50.884 PERSONAL INJURY MATTERS AND TO PROPERTY DAMAGE CASES ARISING OUT OF THE USE OF MOTOR 15 00:01:50.884 --> 00:01:55.881 VEHICLES OR ANIMALS NONE OF WHICH IS INVOLVED IN THIS CASE. 16 00:01:55.881 --> 00:01:59.477 THIS COURT'S OPPORTUNITY TO CONFIRM THE SCOPE OF THE DIRECT ACTION STATUTE IS A 17 00:01:59.477 --> 00:02:03.489 QUESTION OF PUBLIC IMPORTANCE THAT THIS COURT HAS NOT ANSWERED TO DATE. 18 00:02:03.489 --> 00:02:10.634 IN TWO NON-PRESIDENTIAL DECISIONS A PANEL OF THE U.S. COURT OF APPEALS IN THE THIRD 19 00:02:10.634 --> 00:02:16.331 CIRCUIT ON ONE HAND AND THE SEPARATE PENL OF THE APPELLATE DIVISION HAVE REACHED 20 00:02:16.331 --> 00:02:21.210 OPPOSITE CONCLUSIONS. THIS COURT HAS THE OPPORTUNITY TODAY TO CONFIRM THE DIRECT 21 00:02:21.210 --> 00:02:25.412 ACTION STATUTE DOES ONE THING AND ONE THING ONLY. IT GRANTS THIRD-PARTY 22 00:02:25.412 --> 00:02:33.459 BENEFICIARY STANDING TO A SPECIFIC BUT POPULACE CLASS OF INJURED PLAINTIFFS 23 00:02:33.459 --> 00:02:39.900 DESCRIBED IN THE STATUTE TO SEEK RELIEF. IT DOES NOT DO SO FOR PLAINTIFFS 24 00:02:39.900 --> 00:02:47.832 SEEKING TO RECOVER DAMAGES FOR PURPORTED CONSTRUCTION DEFECTS AND FAULTY WORKMANSHIP 25 00:02:47.832 --> 00:02:53.492 AS WE HAVE HERE. THIS COURT, THEREFORE, HAS AN OPPORTUNITY TO CONFIRM THE 26 00:02:53.492 --> 00:02:57.851 LIMITED SCOPE OF THE DIRECT ACTION STATUTE THAT THE LEGISLATURE INTENDED. THIS COURT 27 00:02:57.851 --> 00:03:03.178 ALSO HAS THE OPPORTUNITY TO REAFFIRM ITS COMMITMENT TO ARBITRATION AS A VIABLE 28 00:03:03.178 --> 00:03:10.911 MEANS OF RESOLVING COMMERCIAL DISPUTES. IN 1981 IN {CASE CITED} THIS COURT STATED 29 00:03:10.911 --> 00:03:16.587 AS FOLLOWS: QUOTE, COMMERCIAL ARBITRATION IS A LONG ESTABLISHED PRACTICE 30 00:03:16.587 --> 00:03:22.223 IN NEW JERSEY CONSISTENTLY ENCOURAGED BY THE LEGISLATURE. EVEN UNDER 17TH CENTURY 31 00:03:22.223 --> 00:03:28.059 COLONIAL RULE ARBITRATION WAS FOSTERED BY STATUTE FLEBTING PUBLIC POLICY 32 00:03:28.059 --> 00:03:34.949 UNCHANGED TO THE PRESENT DAY AND EMBODIED IN THE CURRENT ARBITRATION ACT, END QUOTE 33 00:03:34.949 --> 00:03:37.729 THE APPELLATE DIVISION'S DECISION IN THIS MATTER IS A RADICAL DEPARTURE 34 00:03:37.729 --> 00:03:43.306 FROM THAT PUBLIC POLICY THAT WILL END UP COSTING EVERYONE MORE MONEY. THE APPELLATE 35 00:03:43.306 --> 00:03:48.946 DIVISION'S DECISION ELIMINATES PRIVATE ARBITRATION AS AN EFFICIENT AND 36 00:03:48.946 --> 00:03:54.617 EXPEDIENT MEANS OF RESOLVING COMMERCIAL DISPUTES IN A WIDE SWATH OF COVERAGE MATTERS. 37 00:03:54.617 --> 00:03:59.465 THE INCREASE IN PROJECT LITIGATION COST TO ENSURE IS LIKELY TO RESULT FROM 38 00:03:59.465 --> 00:04:02.683 THE APPELLATE DIVISION'S DECISION IS VERY LIKELY TO INCREASE THE COST OF LIABILITY 39 00:04:02.683 --> 00:04:06.922 INSURANCE FOR EVERYONE IN NEW JERSEY. THE APPELLATE DIVISION'S DECISION 40 00:04:06.922 --> 00:04:13.980 IS EQUALLY LIKELY TO INCREASE SUBSTANTIALLY THE CASELOAD OF NEW JERSEY COURTS WITH 41 00:04:13.980 --> 00:04:18.019 NUMEROUS LIABILITY INSURANCE COVERAGE DISPUTES THAT SHOULD HAVE BEEN 42 00:04:18.019 --> 00:04:22.863 RESOLVED QUICKLY EFFICIENTLY IN PRIVATE ARBITRATION. WE THERE EVER SUBMIT THAT 43 00:04:22.863 --> 00:04:26.786 THE APPELLATE DIVISION'S DECISION IN THIS MATTER DIRECTLY CONTRAVENES NEW 44 00:04:26.786 --> 00:04:32.070 JERSEY'S LONG-STANDING COMMITMENT TO ARBITRATION. IT CONTRAVENES NEW JERSEY JUDGMENT 45 00:04:32.070 --> 00:04:36.894 CREDITOR LAW AND ESTABLISHED PRINCIPLE OF EXPOSURE ESTOPPEL WITHOUT HAVING 46 00:04:36.894 --> 00:04:41.606 A SOUND BASIS TO DO SO AND WITH FAR REACHING AND DETRIMENTAL CONSEQUENCE FOR NEW JERSEY 47 00:04:41.606 --> 00:04:47.443 POLICYHOLDERS INSURERS ALIKE. THIS COURT HAS THE CHANCE TO IMPLEMENT A 48 00:04:47.443 --> 00:04:52.176 NECESSARY COURSE CORRECTION IN A MATTER OF SIGNIFICANT PUBLIC IMPORTANCE BY CONFIRMING 49 00:04:52.176 --> 00:04:57.378 THE LIMITED REACH OF THE DIRECT ACTION STATUTE AND REAFFIRMING ITS COMMITMENT 50 00:04:57.378 --> 00:05:02.117 TO ARBITRATION IT SHOULD REVERSE THE APPELLATE DIVISION'S DECISION AND REMAND BACK 51 00:05:02.117 --> 00:05:04.428 TO THE TRIAL COURT WITH INSTRUCTIONS TO DISMISS CRYSTAL POINT'S COMPLAINT 52 00:05:04.428 --> 00:05:09.832 IN FAVOR OF FILING BINDING ARBITRATION. I'LL NOW PROCEED TO ARGUMENT WITH THE 53 00:05:09.832 --> 00:05:11.308 COURT'S POSITION. CHIEF JUSTICE RABNER: ARE YOU DONE WITH 54 00:05:11.308 --> 00:05:13.309 YOUR OPENING STATEMENT? SEAN P. MAHONEY: I AM, YOU WERE. 55 00:05:13.309 --> 00:05:16.587 CAN I ASK YOU A QUESTION ABOUT THE SCOPE OF THE STATUTE. DO YOU HAVE A 56 00:05:16.587 --> 00:05:18.667 COPY IN FRONT OF YOU. SEAN P. MAHONEY: I DO. CHIEF 57 00:05:18.667 --> 00:05:21.483 JUSTICE RABNER: I'M GOING TO READ THIS FIRST PART OF IT AND INSERT SOME NUMBERS 58 00:05:21.483 --> 00:05:28.790 AND THEN ASK YOU WHAT THE FIRST COST THIS COVERS. THE STATUTE BEGINS NO 59 00:05:28.790 --> 00:05:35.720 POLICY OF INSURANCE, ONE, AGAINST LOSS OR DAMAGE RESULTING FROM ACCIDENT, TWO OR INJURY 60 00:05:35.720 --> 00:05:40.846 SUFFERED BY AN EMPLOYEE OR OTHER PERSON AND FOR WHICH THE PERSON INSURED 61 00:05:40.846 --> 00:05:48.058 IS LIABLE OR, TWO, AGAINST LOSS OR DAMAGED PROPERTY CAUSED BY ANIMALS OR BY ANY 62 00:05:48.058 --> 00:05:54.682 VEHICLE DRAWN DOT DOT DOT SHALL BE ISSUED OR DELIVERED IN THIS STATE DOT DOT 63 00:05:54.682 --> 00:06:01.303 DOT. THE SECOND CLAUSE APPLIES TO INJURIES CAUSED BY ANIMALS 64 00:06:01.303 --> 00:06:06.890 OR VEHICLES. WHAT DOES THE FIRST CLAUSE COVER? SEAN P. MAHONEY: 65 00:06:06.890 --> 00:06:11.634 IT COVERS INJURY TO NATURAL PERSONS IN WORKERS' COMPENSATION AND PERSONAL 66 00:06:11.634 --> 00:06:16.879 INJURY CONTEXT. THAT'S WHY I -- CHIEF JUSTICE RABNER: HOW GET THAT 67 00:06:16.879 --> 00:06:18.922 FROM THE LANGUAGE IN THE STATUTE. SEAN P. MAHONEY: IT SAYS 68 00:06:18.922 --> 00:06:24.103 RUT FRG ACCIDENTS OR INJURIES SUFFERED BY AN EMPLOYEE OR OTHER PERSON. A PERSON 69 00:06:24.103 --> 00:06:28.892 THERE IS ANOTHER KIND OF LIKELY AN EMPLOYEE THAT AN INDIVIDUAL PERSON IS WHAT WE'RE 70 00:06:28.892 --> 00:06:33.123 TALKING ABOUT THERE. IT'S ACCIDENT TO OR INJURIES SUFFERED BY A NATURAL PERSON 71 00:06:33.123 --> 00:06:36.875 AND FOR WHICH THAT PERSON, A PERSON INSURED IS LIABLE. WE HAVE NOTHING LIKE THAT 72 00:06:36.875 --> 00:06:40.520 IN THIS CASE. THIS IS NOT A WORKERS COME CASE. IT'S NOT A GENERAL LIABILITY 73 00:06:40.520 --> 00:06:46.242 CASE. IT'S NOT AN AUTO LIABILITY CASE. THIS IS AN INSURANCE COVERAGE DISPUTE 74 00:06:46.242 --> 00:06:51.251 OVER ALLEGED CONSTRUCTION DEFECTS CAUSED BY ALLEGED BREACHES OF PROFESSIONAL 75 00:06:51.251 --> 00:06:59.695 LIABILITY. IT'S SIMPLY NOT THE KIND OF CASE TO WHICH THIS STATUTE APPLIES. 76 00:06:59.695 --> 00:07:03.443 JUSTICE ALBIN: WELL CAN SOMEONE SUFFER AN INJURY FROM A CONSTRUCTION 77 00:07:03.443 --> 00:07:11.529 DEFECT? I'M IN TALKING NECESSARILY A PERSONAL INJURY. AN INJURY TO COST AS A 78 00:07:11.529 --> 00:07:19.447 RESULT OF HAVING TO ENTIRELY RECONSTRUCT A ROOF OR A PATIO OR A WALL. IS THAT 79 00:07:19.447 --> 00:07:23.786 NOT AN INJURY? SEAN P. MAHONEY: I DON'T THINK THAT THAT'S A 80 00:07:23.786 --> 00:07:27.849 -- I THINK THAT THERE COULD BE A LOSS BUT HERE WE'RE TALKING ABOUT AN ACCIDENT 81 00:07:27.849 --> 00:07:31.737 OR INJURY SUFFERED BY AN EMPLOYEE OR OTHER PERSON. I THINK WE'RE TALKING ABOUT 82 00:07:31.737 --> 00:07:34.941 BODILY INJURY HERE INCH THAT'S WHAT THIS STATUTE SAYS. JUSTICE 83 00:07:34.941 --> 00:07:39.211 ALBIN: I KNOW YOU SAY YOU THINK. AND THAT'S THE PROBLEM BECAUSE THE LANGUAGE IS 84 00:07:39.211 --> 00:07:44.707 FAR FROM CLEAR. BECAUSE WE KNOW THAT PERSON IS A CORPORATION AND YOU'RE 85 00:07:44.707 --> 00:07:53.472 ASSUMING THAT SOME EMPLOYEE IS INEXTRICABLY LINKED TO OTHER PERSON, AN EMPLOYEE 86 00:07:53.472 --> 00:07:57.277 HAS GOT TO BE A NATURAL PERSON AND, THEREFORE, YOU CONCLUDE THAT OTHER 87 00:07:57.277 --> 00:08:02.042 PERSON HAS TO BE A NATURAL PERSON. BUT WHY DOES THAT HAVE TO FOLLOW? BECAUSE IT 88 00:08:02.042 --> 00:08:05.927 SAYS OTHER PERSON. SEAN P. MAHONEY: IT DOES. BUT I THINK IT 89 00:08:05.927 --> 00:08:10.959 SAYS EMPLOYEE OR OTHER PERSON FOR WHICH THE PERSON INSURED IS LIABLE. I THINK THAT 90 00:08:10.959 --> 00:08:14.723 FOLLOWS BECAUSE IT DOESN'T MAKE CLEAR, IT TALKS ABOUT AN ACCIDENT. A BREACH 91 00:08:14.723 --> 00:08:19.792 OF PROFESSIONAL LIABILITY OR FAULTY WORKMANSHIP IS CERTAINLY NOT AN ACCIDENT. 92 00:08:19.792 --> 00:08:25.891 THAT'S NOT THE KIND OF -- THAT'S NOT THE KIND OF CASE -- JUSTICE 93 00:08:25.891 --> 00:08:29.738 ALBIN: BUT IT WOULDN'T NEED INJURY IF I ACCEPTED YOUR ARGUMENT RESULTING FROM AN 94 00:08:29.738 --> 00:08:36.458 ACCIDENT SUFFERED BY FOR WHICH -- IT SAYS AN ACCIDENT TO -- IT USES THE 95 00:08:36.458 --> 00:08:40.483 DISC TUNC ACTIVE OR INJURY OR INJURED. SEAN P. MAHONEY: IT DOES 96 00:08:40.483 --> 00:08:46.160 BUT IT SAYS -- I THINK THAT THE LANGUAGE SAYS EMPLOYEE OR OTHER PERSON. IT 97 00:08:46.160 --> 00:08:50.279 LINKS THE WORD PERSON TO THE WORD EMPLOYEE. I'VE NEVER HEARD OF NECESSARILY CORPORATION 98 00:08:50.279 --> 00:08:55.984 BEING AN EMPLOYEE. I THINK THAT THE FOCUS OF THIS STATUTE AND THE SPECIFIC 99 00:08:55.984 --> 00:09:01.057 CLASS OF PERSONS THAT RAISE THESE KIND OF CONCERNS ARE PEOPLE WITH BODILY INJURED 100 00:09:01.057 --> 00:09:07.971 CAUSED BY -- PERSONS WITH INDIVIDUAL, INDIVIDUAL NATURAL PERSONS WITH BODILY 101 00:09:07.971 --> 00:09:13.027 INJURY SUCH AS EMPLOYEES IN A WORKERS' COMPENSATION CONTEXT OR AUTO ACCIDENTS OR 102 00:09:13.027 --> 00:09:15.613 ACCIDENTS COVERED BY -- JUSTICE ALBIN: IS THIS A REMEDIAL 103 00:09:15.613 --> 00:09:21.440 -- WOULD YOU CONSIDER THIS A REMEDIAL STATUTE AND IF SO SHOULD WE BEACON 104 00:09:21.440 --> 00:09:31.274 TRUEING THE TERMS RELY VERTEBRALLY TO EMBRACE COVERAGE AS WIDE AS LOGICALLY POSSIBLY? 105 00:09:31.274 --> 00:09:36.081 GO AHEAD. SEAN P. MAHONEY: WHAT THIS DOES, YOUR HONOR, I THINK 106 00:09:36.081 --> 00:09:41.337 THIS STATUTE HAS VERY SPECIFIC LANGUAGE. IT COULD HAVE HAD -- THE LEGISLATURE 107 00:09:41.337 --> 00:09:47.972 INTENDED THIS TO APPLY ALL TYPES OF POLICIES AND INTENDED TO COVER ALL 108 00:09:47.972 --> 00:09:51.776 TYPES OF LOSES OR ALL TYPES OF INSURANCE POLICIES IT COULD HAVE SAID THAT. IT DOESN'T. 109 00:09:51.776 --> 00:09:57.165 IT HAS SOMETHING VERY SPECIFIC HERE. IT HAS A NARROW SPECIFIC CLASS OF PERSONS 110 00:09:57.165 --> 00:10:01.690 TO WHICH THE STATUTE APPLIES. CHIEF JUSTICE RABNER: BUT THE NARROWNESS 111 00:10:01.690 --> 00:10:05.503 APPEARS TO COME FROM THE LIMITING WORDS THAT YOU'VE ADDED TO THE STATUTE 112 00:10:05.503 --> 00:10:10.312 LIKE BODILY INJURY AND A LIMITED DEFINITION THAT YOU'RE PROVIDING FOR OTHER 113 00:10:10.312 --> 00:10:15.153 PERSON. SHOULDN'T WE BE READING THE WORDS OF THE STATUTE IN A PLANE AND 114 00:10:15.153 --> 00:10:18.650 ORDINARY MEANING. SEAN P. MAHONEY: I AGREE, YES. BUT CERTAINLY 115 00:10:18.650 --> 00:10:25.565 THE PLAIN AND ORDINARY MEANING OF THE STATUTE SHOULD GOVERN HERE. IT IS THE SAME 116 00:10:25.565 --> 00:10:30.195 LANGUAGE THAT SETS FORTH SPECIFIC CATEGORIES OF PERSONS TO WHICH THE 117 00:10:30.195 --> 00:10:33.689 STATUTE APPLIES, REFERS TO THE WORDS ACCIDENT OR INJURIES SUFFERED BY AN EMPLOYEE 118 00:10:33.689 --> 00:10:38.330 OR OTHER PERSON. I DON'T THINK THAT THAT THIS CONTEMPLATES A BREACH OF 119 00:10:38.330 --> 00:10:43.320 PROFESSIONAL LIABILITY CAUSING CONSTRUCTION DEFECTS WITH NO INJURY TO A NATURAL 120 00:10:43.320 --> 00:10:49.328 PERSON WHATSOEVER. THAT'S SIMPLY -- THIS IS NOT A STATUTE THAT APPLIES TO 121 00:10:49.328 --> 00:10:55.012 ARCHITECTS OR ENGINEERS PROFESSIONAL LIABILITY POLICIES OR BREACHES OF PROFESSIONAL 122 00:10:55.012 --> 00:11:00.178 LIABILITY THAT CAUSE THESE KIND OF CONSTRUCTION DEFECTS. IN FACT, WORKERS' 123 00:11:00.178 --> 00:11:06.175 COMPENSATION AUTO AND GENERAL LIABILITY FOR BODILY INJURY OR PROPERTY DAMAGE ARE 124 00:11:06.175 --> 00:11:10.085 ACTUALLY EACH THE SUBJECT OF SPECIFIC EXCLUSIONS FOR COVERAGE IN THESE POLICIES. 125 00:11:10.085 --> 00:11:13.631 IN OUR VIEW THE APPELLATE DIVISION CORRECTLY REASONED THAT THE DIRECT 126 00:11:13.631 --> 00:11:16.926 ACTION STATUTE SENSE TO OTHER TYPES OF POLICIES EVEN THOUGH THE STATUTE DOES NOT 127 00:11:16.926 --> 00:11:21.574 IDENTIFY OR MENTION ANY OTHER TYPES OF POLICIES. ACTUALLY THE SPECIFIC 128 00:11:21.574 --> 00:11:26.966 TYPES OF POLICIES IDENTIFIED IN THE DIRECT ACTION STATUTE TO INDICATE THAT REMEDY 129 00:11:26.966 --> 00:11:30.664 WAS NOT PRESCRIBED FOR ALL POLICIES. JUSTICE PATTERSON: I'LL 130 00:11:30.664 --> 00:11:37.084 ASK YOU ABOUT YOUR ARBITRATION. YOU SAID THE FAA AND THE N.J. AAS YOUR ARGUMENT 131 00:11:37.084 --> 00:11:46.316 THAT IF THE -- IF UNDER THE APPELLATE DIVISION'S DECISION THE ARBITRATION PROVISION 132 00:11:46.316 --> 00:11:55.513 IS NOT ENFORCED BUT OTHER ASPECTS OF THINGS POLICY ARE ENFORCED, THAT 133 00:11:55.513 --> 00:12:01.826 ARBITRATION IS -- AN ARBITRATION CLAUSE IS BEING DISFAVORED IN A MANNER THAT UNDER 134 00:12:01.826 --> 00:12:12.680 THE U.S. SUPREME COURT'S JURISPRUDENCE UNDER THE FA A IS A VIOLATION OF 135 00:12:12.680 --> 00:12:17.281 FAA. SEAN P. MAHONEY: I AGREE WITH THAT. THE APPELLATE 136 00:12:17.281 --> 00:12:22.305 DIVISION'S DECISION STAND, THAT WOULD BE TANTAMOUNT TO PROJECTING ARBITRATION AS 137 00:12:22.305 --> 00:12:26.930 A VIABLE MEANS OF RESOLVING COMMERCIAL ASHL DISPUTES. JUSTICE 138 00:12:26.930 --> 00:12:36.446 PATTERSON: JUST TO DRILL DOWN A LITTLE BIT ON THAT. IT SEEMS TO ME THAT CRYSTAL POINT 139 00:12:36.446 --> 00:12:43.335 IS -- WANTS TO OBVIOUSLY GET COVERAGE UNDER THIS POLICY AND STAND IN THE 140 00:12:43.335 --> 00:12:55.483 SHOES OF THE INSURED AS THIRD-PARTY BENEFICIARY. BUT DOES NOT WANT TO BE BOUND 141 00:12:55.483 --> 00:13:01.215 BY THE ARBITRATION CLAUSE, AM I CORRECT IN CHARACTERIZING WHAT THE ARGUMENT 142 00:13:01.215 --> 00:13:03.617 IS ON YOUR ADVERSARY'S PART. SEAN P. MAHONEY: YES, YOUR HONOR. I WOULD 143 00:13:03.617 --> 00:13:07.176 AGREE WITH THAT. JUSTICE PATTERSON: I KNOW YOU SAY THAT 144 00:13:07.176 --> 00:13:11.382 VIOLATES THE FAA AND THE N.J. AA BUT WITH RESPECT TO THE FAA SPECIFICALLY 145 00:13:11.382 --> 00:13:20.630 THE JURISPRUDENCE IS QUITE DETAILED IN THE SUPREME COURT ON THE FAA. IS YOUR 146 00:13:20.630 --> 00:13:26.462 ARGUMENT THAT THAT IS A DISFAVORING OF SOME PROVISIONS OVER OTHERS THAT DISFAVORS 147 00:13:26.462 --> 00:13:31.230 ARBITRATION DOESN'T TREAT IT AS ANY OTHER CONTRACT PROVISION AND, THEREFORE, 148 00:13:31.230 --> 00:13:36.818 VIOLATES THE FAA? SEAN P. MAHONEY: YES, IT IS. THE FAA 149 00:13:36.818 --> 00:13:41.756 PROVIDES THAT ARBITRATIONS ARE ENFORCEABLE AS IT WOULD BE ENFORCEABLE UNDER STATE 150 00:13:41.756 --> 00:13:49.903 CONTRACT. AND HERE UNDER STATE CONTRACT LAW IT WOULD BE PRINCIPLES OF EQUITABLE 151 00:13:49.903 --> 00:13:55.730 ESTOPPEL FOR WHICH ARE IN FAVORS AND WHICH ONES -- JUSTICE ALBIN: 152 00:13:55.730 --> 00:14:03.567 ISN'T YOUR ARGUMENT JUST SIMPLY LOOK AT THE STATUTE, THE STATUTE USES THE 153 00:14:03.567 --> 00:14:09.261 LANGUAGE UNDER THE TERMS OF THE POLICY. I THOUGHT THAT'S YOUR ARGUMENT. LOOK AT THE 154 00:14:09.261 --> 00:14:13.891 STATUTE, IT SAYS YOU'RE BOUND BY THE POLICY, YOU'RE BOUND BY THE POLICY 155 00:14:13.891 --> 00:14:18.516 LIMITS AND YOU'RE BOUNDZ ALL OF THE TERMS OF THE POLICY. ONE OF THE TERMS OF THE 156 00:14:18.516 --> 00:14:21.366 POLICY HAPPENS TO BE ARBITRATION. SEAN P. MAHONEY: ABSOLUTELY 157 00:14:21.366 --> 00:14:23.767 CORRECT. JUSTICE ALBIN: YOUR STRONGEST ARGUMENT IS THIS IS 158 00:14:23.767 --> 00:14:28.938 A SIMPLE STATUTORY INTERPRETATION AND NOT A POLICY ARGUMENT. THAT'S WHAT THE STATUTE 159 00:14:28.938 --> 00:14:32.191 SAYS, AM I CORRECT? SEAN P. MAHONEY: THAT IS CORRECT, YES. 160 00:14:32.191 --> 00:14:36.949 IF WE'RE TALKING ABOUT THE DIRECT ACTION STATUTE STATUTE ABSOLUTELY. THE 161 00:14:36.949 --> 00:14:41.229 ARGUMENT SAYS THAT ANY SUCH PROCEEDING SHALL BE BROUGHT UNDER THE TERMS OF THE 162 00:14:41.229 --> 00:14:46.576 POLICY. THE PURPOSE OF THAT IS TO COMBINE THE CLAIMANTS'S CLAIMS TO THE 163 00:14:46.576 --> 00:14:51.185 CONTRACT PROVISIONS OF THE POLICY. THE ARBITRATION AGREEMENT HAS TO BE 164 00:14:51.185 --> 00:14:54.827 TREATED JUST AS EQUALLY AS ALL OF THE OTHER TERMS LIMITATIONS AND EXCLUSIONS THAT 165 00:14:54.827 --> 00:14:57.849 ARE IN THE POLICY. AND THERE'S NO SOUND REASON WHY CRYSTAL POINT SHOULD 166 00:14:57.849 --> 00:15:04.006 BE ABLE TO REJECT THAT AND REJECT THAT PART OF THE POLICY, THAT PART OF THE CONTRACT 167 00:15:04.006 --> 00:15:07.705 BUT EMBRACE THE FULL CONTRACTUAL BENEFIT OF THE POLICY WHEN IT WANTS TO 168 00:15:07.705 --> 00:15:11.766 SEEK ALL OF THE COVERAGE SUBJECT TO ALL OF THE LIMITS OF THE POLICY. 169 00:15:11.766 --> 00:15:16.297 JUSTICE ALBIN: I WANT TO ASK YOU A QUESTION. YOUR FIRST ARGUMENT IS THAT THE 170 00:15:16.297 --> 00:15:21.704 DIRECT ACTION STATUTE DOESN'T APPLY, NUMBER ONE, CORRECT? 171 00:15:21.704 --> 00:15:24.468 SEAN P. MAHONEY: YES. JUSTICE ALBIN: MY QUESTION TO YOU IS IF 172 00:15:24.468 --> 00:15:30.231 THIS STATUTE DID NOT APPLY IS THERE A COMMON LAW ARGUMENT THAT CRYSTAL POINT IS 173 00:15:30.231 --> 00:15:35.795 THE THIRD-PARTY BENEFICIARY UNDER THE COMMON LAW THAT WOULD BE ABLE TO 174 00:15:35.795 --> 00:15:38.108 PROCEED? SEAN P. MAHONEY: IF -- JUSTICE ALBIN: 175 00:15:38.108 --> 00:15:43.292 EVEN IN THE ABSENCE OF THE STATUTE. JUSTICE ALBIN: IF CRYSTAL 176 00:15:43.292 --> 00:15:49.519 POINT -- ONE WAY CRYSTAL POINT OBTAINED AN ASSIGNMENT (INAUDIBLE) AS A JUDGMENT 177 00:15:49.519 --> 00:15:56.745 CREDITOR IT MAY HAVE AN ARGUMENT THAT IT IF WERE A THIRD-PARTY BENEFICIARY IF ITS 178 00:15:56.745 --> 00:16:01.009 CLAIM ARISES OUT OF THE CONTRACT ITSELF AND THAT'S -- IT'S EMBRACING THE FULL 179 00:16:01.009 --> 00:16:06.343 BENEFIT OF THE CONTRACT THAT IT SEEKS TO RECOVER FOR INDEMNITY COVERAGE FOR EACH 180 00:16:06.343 --> 00:16:10.820 OF ITS JUDGMENTS, IT WOULD HAVE TO CLAIM THAT IT'S A THIRD-PARTY BENEFICIARY 181 00:16:10.820 --> 00:16:14.919 BENEFICIARY UNDER THE AGREEMENTS. THAT WOULD HAVE TO BE THE VEHICLE. BUT NEW JERSEY LAW 182 00:16:14.919 --> 00:16:18.940 IS VERY CLEAR THAT IF YOU ARE A THIRD-PARTY BENEFICIARY OF A CONTRACT YOU ARE 183 00:16:18.940 --> 00:16:23.910 BOUND BY ALL THE RESTRICTIONS OF THE CONTRACTS AS WELL. THAT INCLUDES THE ARBITRATION 184 00:16:23.910 --> 00:16:29.884 PROVISIONS, JUSTICE, MUCH AS IT INCLUDES THE LIMITATIONS OF COVERAGE, 185 00:16:29.884 --> 00:16:33.732 LIABILITY, ET CETERA. SO IN YOU WOULD EVENTS CRYSTAL POINT WOULD HAVE TO ARBITRATE 186 00:16:33.732 --> 00:16:37.459 ITS CLAIM -- JUSTICE ALBIN: YOUR ARGUMENT IS NO MATTER HOW 187 00:16:37.459 --> 00:16:43.507 YOU SLICE IT, STATUTE, COMMON LAW, YOU'RE STANDING IN THE SHOES OF THE INSURED 188 00:16:43.507 --> 00:16:48.283 AND YOU ARE NOT ENTITLED TO ANY BETTER -- SEAN P. MAHONEY: 189 00:16:48.283 --> 00:16:52.035 YES. JUSTICE ALBIN: TERMS THAN THE INSURED WOULD HAVE HAD 190 00:16:52.035 --> 00:16:55.706 AGAINST THE INSURER. SEAN P. MAHONEY: THAT'S EXACTLY RIGHT. 191 00:16:55.706 --> 00:16:58.798 THAT'S CONSISTENT WITH JUDGMENT CREDITOR LAW WHICH WE'VE EXPLAINED IN OUR BRIEFS 192 00:16:58.798 --> 00:17:02.978 WHERE A JUDGMENT CREDITOR STANDS SQUARELY IN THE SHOES OF THE INSURED. THE 193 00:17:02.978 --> 00:17:11.385 INSURER HAS ALL THE RIGHTS AND OFFENSES AGAINST THE THIRD PARTY CLAIMANT AS, THE 194 00:17:11.385 --> 00:17:15.455 THIRD PARTY CLAIMANT WOULD HAVE IT BEST WITH WHATEVER RIGHTS BUT NO MORE. 195 00:17:15.455 --> 00:17:18.453 JUSTICE FERNANDEZ-VINA: IS THE STATUTE ACTUALLY NECESSARY HERE? AND THE 196 00:17:18.453 --> 00:17:22.089 STANDARD IN A PERSONAL INJURY LAWSUIT, THE PLAINTIFF SUES THE DEFENDANT 197 00:17:22.089 --> 00:17:27.593 BUT THE INSURANCE CARRIER STANDS TO UNDER THE INSURANCE CONTRACT TO PAY THE JUDGMENT. 198 00:17:27.593 --> 00:17:37.146 SO DO YOU REALLY NEED THE STATUTE HERE? FOR THE PURPOSES OF RECOVERY? 199 00:17:37.146 --> 00:17:41.291 THAT'S STANDARD EVERY PERSONAL INJURY CAME, EVERY PROPERTY DAMAGE CASE. IS THERE 200 00:17:41.291 --> 00:17:47.404 ANY NEED TO GO FOR THE STATUTE. SEAN P. MAHONEY: WE'RE ONLY 201 00:17:47.404 --> 00:17:50.925 LOOKING AT THE STATUTE BECAUSE CRYSTAL POINT DECIDED AS A POTENTIAL FWOOZ 202 00:17:50.925 --> 00:17:56.964 OVERRIDE THE PROVISIONS. IT WAS NEVER ASSIGNED IN THE ORIGINAL COMPLAINT FILED 203 00:17:56.964 --> 00:18:00.764 IN THE TRIAL COURT AND HERE AS WE ARGUED PREVIOUSLY NO MATTER WHICH WAY YOU 204 00:18:00.764 --> 00:18:07.303 SLICE THINGS THEY HAVE TO GO TO ARBITRATION OVER THIS. THEY COULD BE A THIRD-PARTY 205 00:18:07.303 --> 00:18:11.821 BENEFICIARY, AN ASSIGNEE OF THE INSURED EVEN THE DIRECT ACTION STATUTE APPLIES TO 206 00:18:11.821 --> 00:18:15.546 THIS KIND OF CASE YOU'D STILL HAVE TO ARBITRATE THIS CLAIM AGAINST KINSALE. 207 00:18:15.546 --> 00:18:20.054 JUSTICE PATTERSON: RELATED TO JUSTICE FERNANDEZ-VINA'S QUESTION, 208 00:18:20.054 --> 00:18:25.184 ONE OF THE CURIOUS THINGS TO ME IN LOOKING AT THE STATUTE WHICH WAS RECEIVED VERY 209 00:18:25.184 --> 00:18:30.780 LITTLE JUDICIAL ATTENTION OVER THE YEARS IS IF THIS REALLY DOES APPLY LET'S 210 00:18:30.780 --> 00:18:35.704 TAKE YOUR ARGUMENT THAT IT'S LIMITED TO ANIMALS AND MOTOR VEHICLES WELL SINCE THE 211 00:18:35.704 --> 00:18:41.829 STATUTE WAS ENACTED LET'S DECIDE ANIMAL ACCIDENTS FOR A MOMENT AND TALK 212 00:18:41.829 --> 00:18:46.134 ABOUT MOTOR VEHICLES. THERE ARE OBVIOUSLY MILLIONS OF MORE VEHICLES ON THE ROAD 213 00:18:46.134 --> 00:18:50.204 OVER THE YEARS HUNDREDS OF THOUSANDS OF ACCIDENTS THAT COULD HAVE BEEN COVERED 214 00:18:50.204 --> 00:18:59.876 HERE AND THEN OBVIOUSLY A SUBSET OF THOSE, A SUBSTANTIAL SUBSET WOULD BE THE SMALL 215 00:18:59.876 --> 00:19:03.408 INSUREDS. MY OVERALL QUESTION YOU'RE NOT REALLY DIRECTLY GOING TO YOUR 216 00:19:03.408 --> 00:19:09.395 ARGUMENT BUT WHY IS THERE SO LITTLE ATTENTION TO THIS AND PERHAPS THE ANSWER IS 217 00:19:09.395 --> 00:19:14.782 FOUND IN JUSTICE FERNANDEZ-VINA'S QUESTION WHICH IS THAT THE -- IT IT APPLIES, 218 00:19:14.782 --> 00:19:21.416 THE DIRECT ACTION STATUTE IS SUPERFLUOUS BECAUSE OF THE WAY IN WHICH JUDGMENT 219 00:19:21.416 --> 00:19:26.467 CREDITORS WERE TREATED IN INSOLVENCY SITUATIONS UNDER OTHER LAW. SEE WHAT 220 00:19:26.467 --> 00:19:32.948 I'M SAYING? HOW COULD THE STATUTE EXIST FOR, YOU KNOW, GOING ON 90 YEARS I GUESS 221 00:19:32.948 --> 00:19:40.130 AND BARELY TOUCHED BY -- BARELY LITIGATED RARELY IN ANY ATTENTION FROM JUDGES 222 00:19:40.130 --> 00:19:47.496 ANYWHERE UNLESS IT'S REALLY BEEN ULTIMATELY DISPLACED FOR -- IN LARGE MEASURE 223 00:19:47.496 --> 00:19:52.146 BY SUBSEQUENT EVENTS IN THE COMMON LAW. AND UNDER STATUTES THAT OBVIOUSLY 224 00:19:52.146 --> 00:19:55.227 GOT THEM. SEAN P. MAHONEY: YES -- SORRY, GO AHEAD. 225 00:19:55.227 --> 00:19:58.232 JUSTICE PATTERSON: PLEASE GO AHEAD. SEAN P. MAHONEY: I WOULD AGREE. 226 00:19:58.232 --> 00:20:02.616 I THINK THE LACK OR THE DEARTH OF CASE LAW ON THE DIRECT ACTION STATUTE 227 00:20:02.616 --> 00:20:07.903 IS INDICATIVE OF ITS LIMITED APPLICABILITY. I THINK IT'S INDICATIVE OF THE 228 00:20:07.903 --> 00:20:12.429 UNDERSTANDING THAT IT IS LIMITED IN SCOPE POTENTIALLY SUPERSEDED BY COMMON LAW 229 00:20:12.429 --> 00:20:17.125 REMEDIES IF THERE ARE ANY OR OTHER CIRCUMSTANCES NOT PRESENT HERE IN THIS 230 00:20:17.125 --> 00:20:21.122 CASE. MOST OF THE CASES THAT HAVE DISCUSSED IT HAVE REALLY APPLIED IT IN AUTO 231 00:20:21.122 --> 00:20:24.558 ACCIDENT CASES. THAT'S WHERE IT TYPICALLY COPS UP. IN FACT. 232 00:20:24.558 --> 00:20:28.988 JUSTICE PATTERSON: BUT NOT EVEN THAT VERY OFTEN. OBVIOUSLY, YOU KNOW, WE SEE THE 233 00:20:28.988 --> 00:20:35.789 STATUTES THAT GOVERN AUTO ACCIDENT CASES, AND INSURANCE IN AUTO ACCIDENT 234 00:20:35.789 --> 00:20:41.169 CASES PIP BEING THE MOST PROMINENT, ARE LITIGATED AND LITIGATED IN EVERY DETAIL 235 00:20:41.169 --> 00:20:48.550 AND NUANCE IS EVENTUALLY WORKED OUT THROUGH INTERPRETATIONS OR LEGISLATIVE 236 00:20:48.550 --> 00:21:00.844 ACTION BUT THIS DIRECT ACTION STATUTE OR THE GRANDPA OF ALL OF THEM SEEMS TO BE 237 00:21:00.844 --> 00:21:06.301 IGNORED IN IS A MOTOR VEHICLE SETTING YOU ARE ARGUMENTING IS ONLY ONE OF 238 00:21:06.301 --> 00:21:12.379 TWO SET WHICH APPLIES. MAYBE IT IS REALLY SUPERFLUOUS TO OTHER LAWS THAT APPLY TO THE 239 00:21:12.379 --> 00:21:16.547 EXTENT THAT IT APPLIES. SEAN P. MAHONEY: IT VERY WELL MAY 240 00:21:16.547 --> 00:21:22.477 BE. I THINK WHAT WE HAVE HERE -- AS I SAID, I THINK THAT THE LIMITED CASE 241 00:21:22.477 --> 00:21:28.154 LAW MIGHT INDICATE THAT IT IS SOMEWHAT SUPERFLUOUS TO OTHER REMEDIES BUT WHAT WE'RE 242 00:21:28.154 --> 00:21:32.223 DEALING WITH HERE WHAT I WAS ACTUALLY SAYING AND WHAT KIND OF CASES DOES 243 00:21:32.223 --> 00:21:37.073 IT APPLY TO, THERE IS A SPECIFIC LIMITED LIST OF THE KINDS OF POLICIES TO WHICH 244 00:21:37.073 --> 00:21:41.293 IT APPLIES. IT'S JUST SIMPLY NOT THE ONE THAT WE HAVE HERE AND IN ANY EVENT 245 00:21:41.293 --> 00:21:46.271 WHAT'S MORE IMPORTANT HERE I THINK IS THAT EVEN IF IT DID APPLY HE'S NOT GOING TO 246 00:21:46.271 --> 00:21:49.529 -- THERE IS NO SOUND BASIS FOR THE APPELLATE DIVISION'S REASONING THAT 247 00:21:49.529 --> 00:21:53.792 THIS SHOULD OVERRIDE THE ARBITRATION CLAUSES OF THE POLICIES. 248 00:21:53.792 --> 00:21:57.334 JUSTICE ALBIN: LET ME ASK YOU ONE QUESTION. LISTEN TO ME CLEAR. WE'RE JUST 249 00:21:57.334 --> 00:22:02.604 TALKING ABOUT COVERAGE, NOT ABOUT THE LIABILITY ACTION BETWEEN THE PLAINTIFF 250 00:22:02.604 --> 00:22:08.361 AND IF THE INSURANCE COMPANY WAS SUBSTITUTED AND THE INSURANCE COMPANY. WE'RE 251 00:22:08.361 --> 00:22:12.633 JUST TALKING ABOUT WHETHER OR NOT THE INSURANCE COMPANY IS LIABLE TO HAVE 252 00:22:12.633 --> 00:22:16.106 COVERED THE INSURED, CORRECT? SEAN P. MAHONEY: THAT'S CORRECT, YES. 253 00:22:16.106 --> 00:22:20.215 THAT'S THE SCOPE OF THE ARBITRATION CLAUSES HERE AND I WOULD ADD THAT I 254 00:22:20.215 --> 00:22:24.957 THINK AS A THRESHOLD MATTER I THINK IT SHOULD BE UNDISPUTED BETWEEN THE PARTIES 255 00:22:24.957 --> 00:22:30.426 HERE AND IT SHOULD BE CLEAR THAT BUT FOR CRYSTAL POINT'S CHALLENGE TO THE 256 00:22:30.426 --> 00:22:35.059 ARBITRATION CLAUSES BASED ON THE DIRECT ACTION STATUTE, THE BREACH OF CONTRACT AND 257 00:22:35.059 --> 00:22:39.184 COVERAGE CLAIMS THAT IT HAS ASSERTED IN THIS MATTER CLEARLY FALL WITHIN THE 258 00:22:39.184 --> 00:22:43.369 PURVIEW OF THE ARBITRATION AGREEMENT. IT APPLIES TO ALL COVERAGE DISPUTES UNDER 259 00:22:43.369 --> 00:22:47.580 THE POLICY AND ANY RIGHTS SUPPORT BY THE POLICY. THAT'S WHAT WE'RE TALKING 260 00:22:47.580 --> 00:22:53.059 ABOUT HERE. THESE ARE CRYSTAL POINT'S CLAIMS FOR INDEMNITY COVERAGE FOR JUDGMENTS 261 00:22:53.059 --> 00:22:57.570 IT HAS SAERNS AGAINST ITS INSUREDS. CONSTRUCTIVE POSSESSION HAS NEVER 262 00:22:57.570 --> 00:23:00.517 ACTUALLY DEMONSTRATED IT COULD NOT OBTAIN ALL OF THE RELIEF IT SEEKS IN ARBITRATION 263 00:23:00.517 --> 00:23:04.875 AGAINST KINSALE. CRYSTAL POINT HAS NEVER CRITICIZED THE ARBITRATION PROCESS 264 00:23:04.875 --> 00:23:09.614 OUTLINED IN THE KINSALE POLICIES. CRYSTAL POINT HAS NEVER DEMONSTRATED A PROCEEDING 265 00:23:09.614 --> 00:23:15.397 IN ARBITRATION WAS -- (INAUDIBLE). JUDGE JOSE L. FUENTES: 266 00:23:15.397 --> 00:23:26.156 I WANT TO MAKE SURE I HAVE TO FOLLOW UP TO JUSTICE ALBIN'S QUESTION. YOUR 267 00:23:26.156 --> 00:23:32.178 INVOCATION OF THE ARBITRATION CLAUSE IS TO DETERMINE WHETHER THE PLAINTIFF CLAIMS 268 00:23:32.178 --> 00:23:36.537 ARE COVERED UNDER THE POLICY. IF THAT'S DETERMINED THAT THE PLAINTIFF CLAIMS 269 00:23:36.537 --> 00:23:42.680 ARE COVERED UNDER THE POLICY BUT ARE NOT THE -- BUT THE DEFENDANT IS LIABLE, 270 00:23:42.680 --> 00:23:48.054 THAT WOULD BE A JURY TRIAL? SEAN P. MAHONEY: NO. I THINK THAT 271 00:23:48.054 --> 00:23:51.764 WOULD -- THAT WOULD BE SUBJECT TO ARBITRATION. THAT WOULD BE RESOLVED BY A PANEL 272 00:23:51.764 --> 00:23:56.922 IN ARBITRATION TO DETERMINE WHETHER KINSALE OWES ANY INDEMNITY COVERAGE TO 273 00:23:56.922 --> 00:23:59.428 CRYSTAL POINT FOR THE JUDGMENTS THAT IT WANTS TO HAVE. JUDGE JOSE L. 274 00:23:59.428 --> 00:24:05.527 FUENTES: WHY SHOULDN'T IT BE COVERED UNDER ARBITRATION IF THE INSURED WAS STILL 275 00:24:05.527 --> 00:24:11.614 A VIABLE COMPANY, IT WOULD HAVE BEEN SUED BY THE PLAINTIFF AND LET'S ASSUME 276 00:24:11.614 --> 00:24:16.877 THAT THERE WAS NO ARBITRATION PROVISION BETWEEN THE -- YOUR INSURED AND THE 277 00:24:16.877 --> 00:24:23.896 PLAINTIFF IN THIS CASE. IT WOULD BE TRIED IN A COURT BEFORE A JURY AND IF IT WOULD 278 00:24:23.896 --> 00:24:28.899 BE FOUND LIABLE WOULDN'T YOUR COMPANY BE RESPONSIBLE FOR THE UP TO THE LIMITS 279 00:24:28.899 --> 00:24:31.766 POLICY? SEAN P. MAHONEY: IF COVERAGE EXISTED THEN WE WOULD 280 00:24:31.766 --> 00:24:35.888 BE RESPONSIBLE FOR THE JUDGMENT UP TO THE LIMITS OF THE POLICY, NUMBER ONE. 281 00:24:35.888 --> 00:24:37.526 JUDGE JOSE L. FUENTES: RIGHT. SEAN P. MAHONEY: BUT NUMBER 282 00:24:37.526 --> 00:24:43.959 TWO IN THIS CASE THAT QUESTION HAS TO BE RESOLVED BY THE BINDING ARBITRATION 283 00:24:43.959 --> 00:24:46.667 BECAUSE THAT'S WHAT THE CONTRACTS PROVIDE. JUDGE JOSE L. FUENTES: 284 00:24:46.667 --> 00:24:49.428 THE QUESTION OF COVERAGE. SEAN P. MAHONEY: YES, WHETHER KINSALE 285 00:24:49.428 --> 00:24:54.034 MUST PROVIDE COVERAGE FOR THE JUDGMENTS AT ISSUE HERE THAT'S THE ONLY QUESTION 286 00:24:54.034 --> 00:24:58.336 HERE I THINK IN THIS CASE THAT CRYSTAL POINT HAS ASSERTED AGAINST -- I MEAN AGAINST 287 00:24:58.336 --> 00:25:01.116 KINSALE HERE AND THAT ABSOLUTELY HAS TO BE SUBJECT TO THE ARBITRATION CLAUSES 288 00:25:01.116 --> 00:25:08.294 IN THE POLICY. JUSTICE PATTERSON: IS THAT BECAUSE THERE'S A 289 00:25:08.294 --> 00:25:12.041 DEFAULT? SEAN P. MAHONEY: THERE IS A -- CRYSTAL POINT APPARENTLY 290 00:25:12.041 --> 00:25:16.535 OBTAINED A DEFAULT JUDGMENTS AGAINST THE INSURED. JUSTICE 291 00:25:16.535 --> 00:25:21.997 PATTERSON: YES. SO ANY QUESTION AS TO THE LIABILITY OF THE INSURED IS SUBJECT 292 00:25:21.997 --> 00:25:26.509 TO THE DEFAULT JUDGMENT SO THERE'S NOT GOING TO BE A JURY TRIAL ABOUT THAT. 293 00:25:26.509 --> 00:25:29.283 THAT'S KIND OF A DONE DEAL. SEAN P. MAHONEY: CORRECT. WE'RE NOT 294 00:25:29.283 --> 00:25:33.956 LITIGATING ANY LONGER IN THIS CASE WE ARE NOT LITIGATING THE INSURANCE LIABILITY 295 00:25:33.956 --> 00:25:38.036 TO CRYSTAL POINT. THAT'S BEEN SETTLED BECAUSE THERE IS A DEFAULT JUDGMENT. 296 00:25:38.036 --> 00:25:41.329 JUSTICE ALBIN: SO YOU'RE NOT ARGUING -- YOU'RE GIVING -- YOU'RE 297 00:25:41.329 --> 00:25:51.683 NOT GOING TO ARGUE THAT IT -- ARBITRATOR FINDS THERE IS COVERAGE. I'M RESPONSIBLE 298 00:25:51.683 --> 00:25:57.022 FOR THESE TWO I'LL CALL THEM INSOLVENTS. THAT NOW I HAVE SINCE I'M ON THE 299 00:25:57.022 --> 00:26:01.979 HOOK I HAVE A RIGHT TO BE HEARD. I'M AN INDEPENDENT PARTY. YOU'RE PREPARED TO 300 00:26:01.979 --> 00:26:06.027 PAY THE JUDGMENT. THAT'S WHAT YOU'RE SAYING? I WANT TO BE CLEAR ABOUT 301 00:26:06.027 --> 00:26:08.563 THIS. SEAN P. MAHONEY: WE'RE SAYING THAT IN ARBITRATION THE 302 00:26:08.563 --> 00:26:13.113 ONLY QUESTION WILL BE WHETHER KINSALE HAS TO PROVIDE COVERAGE FOR THE JUDGMENTS 303 00:26:13.113 --> 00:26:17.431 AT ISSUE. I THINK THAT THE LIABILITY OF THE INSURED IS -- HAS BEEN DECIDED. 304 00:26:17.431 --> 00:26:23.743 THERE ARE NONE AGAINST THE INSURED AT THIS POINT. BUT IN ARBITRATION AS I WAS 305 00:26:23.743 --> 00:26:28.216 SAYING THERE'S NO REASON WHY THAT PROCESS COULDN'T AFFORD CRYSTAL POINT ALL 306 00:26:28.216 --> 00:26:32.615 THE RELIEF IT SEEKS ON THAT QUESTION. IT -- IT WOULD HAVE A FULL AND FAIR OPPORTUNITY 307 00:26:32.615 --> 00:26:37.023 TO PRESENT WHATEVER EVIDENCE IT WANTS TO PRESENT TO MAKE AN ARGUMENT THAT 308 00:26:37.023 --> 00:26:42.188 COVERAGE EXISTS AS WE WOULD TO ARGUE THAT COVERAGE DOES NOT. SO THERE IS NO -- 309 00:26:42.188 --> 00:26:45.369 THERE'S BEEN NO DEMONSTRATION THAT CRYSTAL POINT HAS NEVER ARGUED THAT SOMEHOW 310 00:26:45.369 --> 00:26:52.355 THE ARBITRATION PROCESS IS UNFAIR OR DEFINED IT AS SOME MEANINGFUL TO MAKE ITS 311 00:26:52.355 --> 00:26:56.138 CASE. SO THAT'S ONE OF THE REASONS WHY THE CIRCUMSTANCES OF THIS CASE DO NOT 312 00:26:56.138 --> 00:27:01.661 WARRANT ANY DEPARTURE FROM THIS COURT'S COMMITMENT TO ENFORCING ARBITRATION 313 00:27:01.661 --> 00:27:06.542 PROVISIONS TO RESOLVE COMMERCIAL ARBITRATION DISPUTES. PATS I'M SORRY, CHIEF. 314 00:27:06.542 --> 00:27:11.589 CHIEF JUSTICE RABNER: THE LANGUAGE IN THE POLICY THAT SAYS 315 00:27:11.589 --> 00:27:14.655 -- COVERAGE RESOLVED FROM ARBITRATION, NO? SEAN P. MAHONEY: 316 00:27:14.655 --> 00:27:17.487 YES, I AM, THAT'S CORRECT. CHIEF JUSTICE RABNER: MAY I TAKE 317 00:27:17.487 --> 00:27:21.212 YOU BACK TO THE FIRST QUESTION, THE SCOPE OF THE STATUTE. ARE YOU FAMILIAR 318 00:27:21.212 --> 00:27:31.392 WITH A CASE BURD SUSSEX MUTUAL COMPANY. SEAN P. MAHONEY: YES. 319 00:27:31.392 --> 00:27:34.057 CHIEF JUSTICE RABNER: THAT INVOLVED NEITHER INJURY FROM A VEHICLE FROM 320 00:27:34.057 --> 00:27:40.469 AN ANIMAL OR A CONTACT SIX. THE COURT OFFERED LANGUAGE ABOUT CLAIMANT'S 321 00:27:40.469 --> 00:27:45.752 INTEREST BEING DERIVATIVE OF THE INSUREDS. WHAT DO YOU TAKE FROM THE COURT'S 322 00:27:45.752 --> 00:27:47.904 INTERPRETATION OF THE STATUTE IN THAT CASE. SEAN P. MAHONEY: 323 00:27:47.904 --> 00:27:56.163 WELL, I THINK THAT IT IS IN ALL EVENTS, AS IMMEDIATE TO THIS CASE, CRYSTAL 324 00:27:56.163 --> 00:28:02.002 POINT'S ARGUMENT ON THE INSURED, IT IS CLAIMANT WHATEVER THE INSURED ALSO INTEREST 325 00:28:02.002 --> 00:28:06.667 WAS UNDER THE STATUTE. IT'S NO SGRART OR LESS THAN WHAT THE INSUREDS HAD. 326 00:28:06.667 --> 00:28:10.705 THE COURT DOESN'T WRITE A BETTER CONTRACT FOR THE INSUREDS THAN THE ONE THAT IS 327 00:28:10.705 --> 00:28:15.467 AT ISSUE THAT HAS ALREADY BEEN -- THE ONE THAT'S IN PLACE. SO I THINK THE IMPORT 328 00:28:15.467 --> 00:28:20.770 OF THAT IS THAT CRYSTAL POINT WHATEVER CAUSE OF ACTION MIGHT HAVE AGAINST 329 00:28:20.770 --> 00:28:26.655 KINSALE FOR COVERAGE FOR THESE INDEMNITY JUDGMENTS IS GOING TO BE SUBJECT TO THE 330 00:28:26.655 --> 00:28:30.340 FOUR CORNERS OF THE INSURANCE CONTRACTED ISSUE. THOSE FOUR CORNERS CLUE 331 00:28:30.340 --> 00:28:34.552 THE ARBITRATION PROVISIONS WHICH IS WHY KINSALE AND CRYSTAL POINT HAVE TO ARBITRATE 332 00:28:34.552 --> 00:28:37.347 THESE CLAIMS. CHIEF JUSTICE RABNER: IF YOUR 333 00:28:37.347 --> 00:28:41.388 INTERPRETATION OF THE STATUTE IS CORRECT, THOUGH, THEN THE COURT HAD NO REASON TO 334 00:28:41.388 --> 00:28:46.048 TOUCH UPON THE SCOPE OF THE STATUTE BECAUSE IT DIDN'T FALL WITHIN THE THREE 335 00:28:46.048 --> 00:28:49.377 BUCKETS THAT YOU OUTLINED FOR US WHICH YOU BELIEVED THE STATUTE IS LIMITED 336 00:28:49.377 --> 00:28:58.198 TO. SO, AGAIN, I'D ASK WHAT DO YOU MAKE OF THE COURT'S LANGUAGE ABOUT THE STATUTE 337 00:28:58.198 --> 00:29:02.554 OUTSIDE OF THE AREAS WHICH YOU'VE ARTICULATED IS ALL THAT THE STATUTE 338 00:29:02.554 --> 00:29:08.072 COVERS? SEAN P. MAHONEY: WELL IN THAT CASE I THINK IT IS DICTA. 339 00:29:08.072 --> 00:29:15.180 IT'S NOT SOMETHING THAT WAS ESSENTIAL TO THE COURT'S HOLDING AS I RECALL FROM BURD 340 00:29:15.180 --> 00:29:20.638 VS. SUSSEX MUTUAL BUT THERE HASN'T BEEN ANY BOINDZING PRECEDENT EITHER FROM 341 00:29:20.638 --> 00:29:25.633 THIS COURT OR THE APPELLATE DIVISION THE BEST OTHER EXAMPLE WE HAVE IS FERGUSON 342 00:29:25.633 --> 00:29:32.625 VERSUS TRAVELERS INDEMNITY COMPANY WHICH HELD THAT THIS STATUTE APPLIED APPLIED 343 00:29:32.625 --> 00:29:39.856 TO THIS STATUTE INVOLVED TO E AND O LIABILITY POLICIES FOR BROKER MALPRACTICE BUT IN 344 00:29:39.856 --> 00:29:43.302 EITHER CASE I DON'T THINK -- THE PLAIN LANGUAGE OF THE STATUTE IN BOTH CASES 345 00:29:43.302 --> 00:29:48.118 DOESN'T REALLY -- DOESN'T EXTEND TO THAT CASE EITHER OF THOSE TWO CASES OR TO THIS 346 00:29:48.118 --> 00:29:53.567 CASE AS WELL. CHIEF JUSTICE RABNER: SO YOU GIVE THE LANGUAGE 347 00:29:53.567 --> 00:29:57.149 IN BURD NO MEANING ALL, THE SUPREME COURT'S LANGUAGE FROM 1970; IS THAT FAIR. 348 00:29:57.149 --> 00:30:01.726 SEAN P. MAHONEY: WELL I THINK IT'S NOT THE RIGHT ANSWER FOR 349 00:30:01.726 --> 00:30:07.207 THIS CASE BECAUSE IT'S NOT WHAT THE STATUTE SAYS. THE STATUTE HERE HAS A 350 00:30:07.207 --> 00:30:10.267 SPECIFIC LIST OF POLICIES TO WHICH IT APPLIES. JUSTICE ALBIN: 351 00:30:10.267 --> 00:30:14.954 I'M TRYING TO FIGURE OUT WHY YOU'RE ARGUING SO HARD ON THIS POINT FOR THIS 352 00:30:14.954 --> 00:30:19.002 REASON. BECAUSE YOU SEEM TO ACKNOWLEDGE THAT YOU'RE GOING TO GET TO THE SAME PLACE 353 00:30:19.002 --> 00:30:22.668 WHETHER OR NOT YOU APPLY THE STATUTE OR YOU APPLY THE COMMON LAW. YOU'RE GOING 354 00:30:22.668 --> 00:30:28.915 TO GET TO YOUR ARBITRATION. YOU'RE GOING TO SAY A CLAIMANT'S HISTORICALLY 355 00:30:28.915 --> 00:30:34.014 IS OF THE INSUREDS WHICH IS WHAT BURD SAYS AND THE COMMON LAW SAYS. YOU WANT IT 356 00:30:34.014 --> 00:30:36.433 IN THE SAME PLACE. SEAN P. MAHONEY: THAT'S EXACTLY RIGHT. 357 00:30:36.433 --> 00:30:40.742 I AGREE NO MATTER HOW YOU SLICE THIS YOU END UP IN ARBITRATION NO MATTER 358 00:30:40.742 --> 00:30:47.191 WHAT THE VEHICLE IS, WHETHER IT'S THE STATUTE OR OUTSIDE. EVEN IF BURD HAS 359 00:30:47.191 --> 00:30:52.389 LANGUAGE THAT (INAUDIBLE) IT DOESN'T CHANGE -- JUSTICE ALBIN: 360 00:30:52.389 --> 00:31:01.258 I'M RAISING THIS BECAUSE I'M WONDERING WHY YOU'RE RESISTING SO HARD THE CHIEF 361 00:31:01.258 --> 00:31:05.660 JUSTICE'S PROPOSED INTERPRETATION. THAT'S WHY I'M ASKING THAT. YOU'RE WINDING 362 00:31:05.660 --> 00:31:09.656 UP IN THE SAME PLACE ANY WAY. SEAN P. MAHONEY: YES, I AGREE 363 00:31:09.656 --> 00:31:13.474 WE SHOULD WIND UP IN THE SAME PLACE AND THAT'S THE MOST SALIENT POINT HERE 364 00:31:13.474 --> 00:31:21.051 THAT NO MATTER WHAT THE OUTCOME IS OR WHAT THE VEHICLE IS, THIS CASE FALLS UNDER 365 00:31:21.051 --> 00:31:26.584 ARBITRATION. THE TRIAL COURT'S WAS CORRECT TO DISMISS CRYSTAL POINT'S COMPLAINT. 366 00:31:26.584 --> 00:31:31.683 THE COMMON LAW REMEDY IS THE VEHICLE OR OTHERWISE. IN ALL EVENTS CRYSTAL POINT'S 367 00:31:31.683 --> 00:31:37.691 RIGHTS IF ANY UNDER THE POLICY ARE DERIVATIVE OF THE INSUREDS. BURD V 368 00:31:37.691 --> 00:31:41.231 SUSSEX MUTUAL SAYS THAT AND JUDGMENT CREDITOR LAW IN NEW JERSEY IS CONSISTENT WITH 369 00:31:41.231 --> 00:31:46.347 THAT. THAT INCLUDES THE ARBITRATION PROVISIONS JUDGE AS MUCH IT INCLUDES THE 370 00:31:46.347 --> 00:31:51.066 TERMS OR OTHER EXCLUSIONS AND LIMITATIONS OF THE POLICY. AND EQUITABLE ESTOPPEL 371 00:31:51.066 --> 00:31:55.674 SHOULD PREVENT CRYSTAL POINT FROM SELECTING WHICH PROVISION OF THE POLICIES IT 372 00:31:55.674 --> 00:31:59.333 WANTS, THAT IT LIKES THAT MIGHT GET COVERAGE AND DISREGARDING OTHER 373 00:31:59.333 --> 00:32:03.127 PROVISIONS LIKE THE ARBITRATION PROVISION. I THINK THE DIRECT ACTION STATUTE, THE 374 00:32:03.127 --> 00:32:07.492 APPELLATE DIVISION'S DECISION, ITS ATTEMPT TO CREATE THIS NEW EXCEPTION 375 00:32:07.492 --> 00:32:13.847 TO THE ENFORCEABILITY EVER THE ARBITRATION PROVISION AS I MENTIONED IN MY OPENING 376 00:32:13.847 --> 00:32:17.858 STATEMENT IS ACTUALLY LIKE TO HARM EVERYONE IN NEW JERSEY, BOTH 377 00:32:17.858 --> 00:32:22.235 POLICYHOLDERS AND INSURANCE ALIKE. I THINK BOTH ARE GOING TO END UP PAYING MORE 378 00:32:22.235 --> 00:32:27.144 MONEY. THE COURT'S DECISION IS LIKELY TO AFFECT THOUSANDS OF INSURANCE POLICIES 379 00:32:27.144 --> 00:32:33.989 ALREADY ISSUED IN NEW JERSEY. THE REJECTION OF THE LONG-STANDING ENFORCEMENT OF 380 00:32:33.989 --> 00:32:39.841 ARBITRATION PROVISIONS IS LIKELY TO -- (INAUDIBLE). BECAUSE ARBITRATION 381 00:32:39.841 --> 00:32:44.061 IS OFTEN MORE IMPORTANT, THAT IN TURN IS GOING TO INCREASE THE COST OF LIABILITY 382 00:32:44.061 --> 00:32:48.505 INSURANCE THROUGH NEW JERSEY POLICYHOLDERS. THEREFORE, WE SUBMIT 383 00:32:48.505 --> 00:32:53.882 THAT THE COURT SHOULD NOT ENDORSE THE APPELLATE DIVISION'S NEW AND SUBSTANTIAL 384 00:32:53.882 --> 00:32:59.452 DEPARTURE FROM THIS COURT'S SETTLED COMMITMENT TO ENFORCING COMMERCIAL 385 00:32:59.452 --> 00:33:06.389 ARBITRATION PROVISIONS. SO I THINK THAT THE APPELLATE DIVISION'S 386 00:33:06.389 --> 00:33:09.849 DECISION IN THIS MATTER UNFORTUNATELY DEPARTS FROM SEVERAL ACCEPTED PRINCIPLES OF 387 00:33:09.849 --> 00:33:12.952 NEW JERSEY LAW DISCUSSED TODAY. JUSTICE PATTERSON: AN ARBITRATION 388 00:33:12.952 --> 00:33:16.726 IS REALLY VERY TIP IN COVERAGE DISPUTES, WOULD YOU AGREE WITH THAT? 389 00:33:16.726 --> 00:33:19.510 SEAN P. MAHONEY: ABSOLUTELY. IT'S COMMONPLACE AT THIS POINT. I THINK 390 00:33:19.510 --> 00:33:23.881 THAT AND PROBABLY BECAUSE OF A NUMBER OF DISPUTES OVER LIABILITY INSURANCE 391 00:33:23.881 --> 00:33:29.220 POLICIES THAT ARISE, IT CREATES A VERY E IF ISSUE AND EXPEDIENT MECHANISM FOR BOTH 392 00:33:29.220 --> 00:33:34.925 THE INSURERS AND THE POLICYHOLDERS TO RESOLVE THOSE MATTERS QUICKLY AND 393 00:33:34.925 --> 00:33:38.517 EXPEDIENTLY AND IF THERE'S NO REASON WHY THAT WOULDN'T WORK TO CRYSTAL POINT'S 394 00:33:38.517 --> 00:33:41.452 BENEFIT HERE. FRANKLY -- JUSTICE PATTERSON: YOUR OTHER ARGUMENT 395 00:33:41.452 --> 00:33:45.675 REGARDING THE SCOPE OF THE STATUTE REALLY WOULD BOLDLY BE MATERIAL AS I 396 00:33:45.675 --> 00:33:50.799 UNDERSTAND IT, TELL ME IF I'M WRONG, IN A CASE WHERE WITH THE ARBITRATION CLAUSE. 397 00:33:50.799 --> 00:33:53.265 SEAN P. MAHONEY: YES. HONESTLY IF YOU AGREE THAT WE GET TO 398 00:33:53.265 --> 00:33:58.702 THE SAME PLACE, IF THIS COURT AGREES THAT THIS MATTER BELONGS IN ARBITRATION 399 00:33:58.702 --> 00:34:01.740 IRRESPECTIVE OF WHETHER THE DIRECT ACTION STATUTE APPLIES TO THIS KIND OF CASE, 400 00:34:01.740 --> 00:34:05.113 THEN THE APPELLANT'S DECISION SHOULD BE VACATED AND THIS MATTER SHOULD BE 401 00:34:05.113 --> 00:34:07.720 DISMISSED IN FAVOR OF THE ARBITRATION. JUSTICE PATTERSON: I'M ASSUMING 402 00:34:07.720 --> 00:34:11.931 YOUR CLIENTS HAS AN ARBITRATION CLAUSE IN EVERY ONE OF THOSE POLICIES. 403 00:34:11.931 --> 00:34:15.134 SEAN P. MAHONEY: I'VE DONE A LOT OF WORK FOR MY CLIENT FOR 404 00:34:15.134 --> 00:34:20.075 MANY YEARS I HAVE NOT SEEN A POLICY YET THAT DOES NOT HAVE THIS BINDING ARBITRATION 405 00:34:20.075 --> 00:34:23.378 ENDORSEMENT IN IT. CHIEF JUSTICE RABNER: COULD THAT EXPLAIN 406 00:34:23.378 --> 00:34:29.066 THE QUESTION THAT WAS FOUND END EARLIER WHY THERE WAS FEW CASES INTERPRETING 407 00:34:29.066 --> 00:34:32.847 THE STATUTE. SEAN P. MAHONEY: IT'S VERY POSSIBLE. MOST OF 408 00:34:32.847 --> 00:34:38.220 THESE ISSUES ARE RESOLVED OUTSIDE OF COURT BECAUSE OF ARBITRATION AGREEMENTS IN 409 00:34:38.220 --> 00:34:42.965 MORE EFFICIENT SETTINGS THAT MAY VERY WELL BE A REASON WHY THIS HASN'T BEEN 410 00:34:42.965 --> 00:34:47.746 BATTERED AROUND IN NEW JERSEY COURTS FOR THE LAST 50 OR 60 YEARS. BUT 411 00:34:47.746 --> 00:34:52.730 HERE I THINK THE APPELLATE DIVISION IS ESSENTIALLY BLUE PENCILED THE INSURANCE 412 00:34:52.730 --> 00:34:58.364 CONTRACT IN THIS CASE TO ELIMINATE THE ARBITRATION PROVISIONS. IT ALSO 413 00:34:58.364 --> 00:35:02.722 WAS INCONSISTENT WITH MORE THAN 50 YEARS OF JUDGMENT CREDITOR LAW WHICH MANDATES 414 00:35:02.722 --> 00:35:06.264 THAT CRYSTAL POINT SHOULD HAVE NO GREATER RIGHTS THAN THE INSUREDS UNDER THE 415 00:35:06.264 --> 00:35:11.414 POLICIES HERE. THAT IGNORES WHAT I WOULD SUBMIT ARE ESTABLISHED PRINCIPLES EVER 416 00:35:11.414 --> 00:35:16.384 EQUITABLE ESTOPPEL THAT ARE SUPPOSED TO PREFLT THE KIND OF GAMESMANSHIP AS THE 417 00:35:16.384 --> 00:35:21.576 THIRD CIRCUIT POINTED IN PLEX SEE MAN BY A THIRD PARTY CLAIM CHERRY HILL 418 00:35:21.576 --> 00:35:25.108 PICKING WHAT IT LIKES ABOUT THE CONTRACTS AND WHAT IT DOESN'T LIKE ABOUT THE CONTRACTS. 419 00:35:25.108 --> 00:35:31.448 BUT SAME SIMULTANEOUSLY EMBRACING THE ENTIRE CONTRACT TO SEEK THE FULL 420 00:35:31.448 --> 00:35:35.758 CONTRACTUAL BENEFIT OF THE POLICIES. ACCORDINGLY WE THINK THE -- THINK COURT 421 00:35:35.758 --> 00:35:39.821 SHOULD CONCLUDE THE DIRECT ACTION STATUTE IS IS INAPPLICABLE TO THIS CASE 422 00:35:39.821 --> 00:35:45.861 BUT EVEN IF IT DOES APPLY WE GET TO THE SAME PLACE. CRYSTAL POINT IS UNDER THE 423 00:35:45.861 --> 00:35:49.412 ARBITRATION PROVISIONS OF THE POLICIES. WE ALSO REQUEST THAT THE COURT 424 00:35:49.412 --> 00:35:53.813 GRANT KINSALE'S PENDING MOTION IN THIS COURT TO STAY THIS MATTER PENDING THE COURT'S 425 00:35:53.813 --> 00:36:01.355 DECISION AS TO THE ARBITRABILITY. A TRIAL HAS BEEN SCHEDULE IN THE TRIAL COURT 426 00:36:01.355 --> 00:36:07.466 FOR FEBRUARY 22ND, 2022 AS WE EXPLAINED IN THIS INN OUR MOTION UNTIL THE COURT 427 00:36:07.466 --> 00:36:11.894 DETERMINES WHETHER THIS DISPUTE BELONGS IN ARBITRATION WE THINK IT'S APPROPRIATE 428 00:36:11.894 --> 00:36:16.076 TO AVOID WASTED RESOURCES BY THE PARTIES AND THE TRIAL COURT. UNLESS THE COURT 429 00:36:16.076 --> 00:36:19.076 HAS ANY FURTHER QUESTIONS FOR ME I WILL CONCLUDE MY ARGUMENT.