        SUPREME COURT OF THE STATE OF NEW YORK
           Appellate Division, Fourth Judicial Department

1387
CA 14-00945
PRESENT: SCUDDER, P.J., SMITH, CARNI, LINDLEY, AND SCONIERS, JJ.


IN THE MATTER OF ARBITRATION BETWEEN USAA
INSURANCE COMPANY, PETITIONER-RESPONDENT,

                    AND                           MEMORANDUM AND ORDER

DANIEL B. ARMSTRONG AND MANDY M. ARMSTRONG,
RESPONDENTS-APPELLANTS.


GREENE & REID, PLLC, SYRACUSE (EUGENE W. LANE OF COUNSEL), FOR
RESPONDENTS-APPELLANTS.

SUGARMAN LAW FIRM, LLP, SYRACUSE (KEVIN R. VAN DUSER OF COUNSEL), FOR
PETITIONER-RESPONDENT.


     Appeal from an order of the Supreme Court, Onondaga County (Hugh
A. Gilbert, J.), entered December 24, 2013 in a proceeding pursuant to
CPLR article 75. The order granted the petition for a temporary stay
of arbitration.

     It is hereby ORDERED that the order so appealed from is
unanimously affirmed without costs.

     Memorandum: In this proceeding pursuant to CPLR 7503 (b),
respondents appeal from an order granting the petition of USAA
Insurance Company (USAA) for a temporary stay of arbitration. Supreme
Court granted the petition on the ground that respondents’ demand for
arbitration was premature inasmuch as respondents had not complied
with the terms of the endorsement for supplementary
uninsured/underinsured motorist (SUM) coverage by submitting to an
examination under oath and providing other discovery. Respondents
contend that the default judgment they obtained against the
underinsured tortfeasor is conclusive on the issue of damages under
the terms of the SUM endorsement, thereby precluding USAA from
challenging the amount of damages at arbitration; as a consequence,
respondents assert that discovery is irrelevant with respect to the
issue of damages. We reject that contention. We conclude that, “the
terms of the SUM endorsement clearly provide that any sum [USAA] was
obligated to pay [respondents] . . . was subject to arbitration”
(Matter of Aftor v Geico Ins. Co., 110 AD3d 1062, 1064; see 11 NYCRR
60-2.3 [f] [condition 12]). We further conclude that, while the SUM
endorsement requires USAA to pay respondents any amount to which
respondents are “legally entitled,” such payment is contingent upon
the satisfaction of the “Exclusions, Conditions, Limits and other
provisions of [the] SUM endorsement” (11 NYCRR 60-2.3 [f]). The
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                                                         CA 14-00945

conditions to be satisfied include the discovery provisions set forth
in the SUM endorsement (see 11 NYCRR 60-2.3 [f]; see generally Matter
of AIG Claims Servs., Inc. v Bobak, 39 AD3d 1178, 1179). The court
therefore properly granted the temporary stay of arbitration “to
permit [r]espondents to comply with” such terms.




Entered:   January 2, 2015                     Frances E. Cafarell
                                               Clerk of the Court
