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A New Jersey appellate court held that even though the statute of limitations for the underlying cause of action had already run, the statute of limitations would not foreclose a motion to compel arbitration because the parties’ attorneys had already stipulated to arbitration as a means of resolving their dispute.
In Estate of Hainthaler v. Zurich Commercial Insurance, 903 A.2d 1103 (N.J. Super. Ct. App. Div. Aug. 7, 2006), Hainthaler was involved in a car accident in December 1997, and there was a dispute regarding underinsured motorist coverage.
In the years following the accident, counsel for both parties exchanged letters, documents and discovery requests. At one point in 1999, after settlement negotiations failed, each party selected an arbitrator to resolve the dispute. For the next few years, Zurich repeatedly requested medical records from Hainthaler and received no response.
On December 8, 2003, Hainthaler’s attorney informed Zurich that she intended to move forward with the claim. In response, Zurich’s counsel asserted that the statute of limitations barred the claim and precluded a motion to compel arbitration.
The Court held that the statute of limitations did not apply because Zurich had recognized its obligation to arbitrate and had not repudiated its position. In rejecting Zurich’s statute of limitations argument, the Court pointed out that Hainthaler initiated court proceedings to compel arbitration, not to receive compensation for her injuries, and that Hainthaler had already pursued her right to arbitrate.
While the Court noted that Zurich never sought a court order to compel discovery or arbitration, it also questioned whether Hainthaler might be estopped from compelling arbitration because of a failure to prosecute. Accordingly, the Court remanded the case for a determination of whether Hainthaler forfeited her right to arbitrate by failing to prosecute.
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