Budget Rent-a-Car System, Inc. v. Chappell, 04-1931.
| Decision Date | 05 May 2005 |
| Docket Number | No. 04-1931.,04-1931. |
| Parties | BUDGET RENT-A-CAR SYSTEM, INC. v. Nicole CHAPPELL; Joseph Powell, III Nicole Chappell, Appellant |
| Court | U.S. Court of Appeals — Third Circuit |
Roger L. Simon, Esquire (Argued), Friedman & Simon, Jericho, NY, Counsel for Appellant.
Stephen A. Scheuerle, Esquire (Argued), Hohn & Scheuerle, Philadelphia, PA, Counsel for Appellee.
Before: SLOVITER, AMBRO and ALDISERT, Circuit Judges.
We apply Pennsylvania's choice-of-law rules to determine which state's substantive law (New York's, Michigan's or Pennsylvania's) governs the extent of vicarious liability of Budget Rent-a-Car System, Inc. ("Budget"), the owner of a vehicle involved in an accident that rendered Nicole Chappell ("Chappell"), a New York resident, permanently paralyzed. The accident occurred in Pennsylvania as Chappell and her boyfriend, Joseph Powell, III ("Powell"), a Michigan resident, were driving from New York to Michigan in a car Powell had rented from Budget in Michigan (and previously driven to New York).
Because the State of New York has the greatest interest in the application of its law to this dispute, we conclude that its law should apply. The contrary judgment of the District Court is reversed.
On the morning of February 12, 2002, Powell rented a Nissan Xterra from Budget in Michigan. Later that day, he drove eight hours to New York to visit Chappell. Powell stayed with Chappell in New York for the rest of that week. On the evening of February 15, after Chappell completed her work week, she and Powell left New York in the Xterra, planning to drive to Michigan to spend the weekend together there.
While driving through Pennsylvania early the next morning, Powell fell asleep at the wheel. The car drifted from the left lane of Interstate 80 across the right lane and into the right guardrail, causing it to flip over. Powell escaped the crash without substantial physical injury. However, the force of the impact ejected Chappell from the Xterra, causing severe injuries. Shortly after the accident, a helicopter transported her to Mercy Hospital in Pittsburgh, where doctors diagnosed, among other injuries, spinal trauma that has rendered Chappell permanently paraplegic.
Budget initiated this action in the United States District Court for the Eastern District of Pennsylvania, seeking a declaratory judgment against Powell and Chappell and asking the Court to determine which state's substantive law governed its vicarious liability as the owner of the vehicle.1 Budget argued that Michigan law should apply, capping its liability at $20,000. Chappell brought two counterclaims against Budget (vicarious liability and negligent entrustment) and a cross-claim against Powell. She argued that Budget faced unlimited vicarious liability under New York law.
The parties cross-moved for summary judgment on the choice-of-law issue, and the District Court granted summary judgment to Budget, holding that Pennsylvania law applied. Chappell moved for a certification of the issue and entry of a final judgment under Fed.R.Civ.P. 54(b). After the District Court granted that motion and entered a final judgment, Chappell timely appealed. We exercise appellate jurisdiction to review the District Court's final judgment under 28 U.S.C. § 1291.
To determine which state's substantive law governs, we must refer to the choice-of-law rules of the jurisdiction in which the District Court sits, here Pennsylvania. Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); Melville v. American Home Assur. Co., 584 F.2d 1306, 1308 (3d Cir.1978). Under Pennsylvania law, we begin with an "interest analysis" of the policies of all interested states and then— based on the result of that analysis—characterize the case as a true conflict, false conflict, or unprovided-for case. LeJeune v. Bliss-Salem, Inc., 85 F.3d 1069, 1071 (3d Cir.1996); Lacey v. Cessna Aircraft Co., 932 F.2d 170, 187 & n. 15 (3d Cir. 1991).
A true conflict exists "when the governmental interests of [multiple] jurisdictions would be impaired if their law were not applied." Lacey, 932 F.2d at 187 n. 15. If a case presents a true conflict, Pennsylvania choice-of-law rules "call for the application of the law of the state having the most significant contacts or relationships with the particular issue." In re Estate of Agostini, 311 Pa.Super. 233, 457 A.2d 861, 871 (1983). As explained in the Second Restatement of Conflict of Laws,
the factors relevant to the choice of the applicable rule of law include (a) the needs of the interstate and international systems, (b) the relevant policies of the forum, (c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue, (d) the protection of justified expectations, (e) the basic policies underlying the particular field of law, (f) certainty, predictability and uniformity of result, and (g) ease in the determination and application of the law to be applied.
Restatement (Second) of Conflict of Laws § 6 (1971).
"A false conflict exists if only one jurisdiction's governmental interests would be impaired by the application of the other jurisdiction's law." Lacey, 932 F.2d at 187. If there is a false conflict, we must apply the law of the only interested jurisdiction. See, e.g., Kuchinic v. McCrory, 422 Pa. 620, 222 A.2d 897, 899-900 (1966); Griffith v. United Air Lines, Inc., 416 Pa. 1, 203 A.2d 796, 807 (1964).
Finally, an unprovided-for case arises when no jurisdiction's interests would be impaired if its laws were not applied. Lex loci delicti (the law of the place of the wrong—here Pennsylvania) continues to govern unprovided-for cases. See, e.g., Miller v. Gay, 323 Pa.Super. 466, 470 A.2d 1353, 1355-56 (1983).
With this background, we turn to the competing state laws we consider applying.
New York law imposes unlimited vicarious liability on the owners of vehicles. It provides that "[e]very owner of a vehicle used or operated in [that] state shall be liable and responsible for ... injuries to person[s] ... resulting from negligence in the use or operation of such vehicle...." N.Y. Veh. & Traf. Law § 388(1) (McKinney 2002). By passing § 388(1), the New York "[l]egislature intended that the injured party be afforded a financially responsible insured person against whom to recover for injuries." Plath v. Justus, 28 N.Y.2d 16, 319 N.Y.S.2d 433, 268 N.E.2d 117, 119 (1971).
It is beyond dispute that § 388(1) has extraterritorial scope, that is, it can apply to accidents occurring beyond New York's borders. Farber v. Smolack, 20 N.Y.2d 198, 282 N.Y.S.2d 248, 229 N.E.2d 36, 40 (1967) (). This dispute requires us to assess the extent of the extraterritorial scope of § 388(1). The New York Court of Appeals has held that "vicarious liability imposed by section 388(1) does not extend to owners of vehicles that have never been registered, used, operated or intended for use within [New York]." Fried v. Seippel, 80 N.Y.2d 32, 587 N.Y.S.2d 247, 599 N.E.2d 651, 654 (1992) (emphasis added). We later address whether (under New York law) the Xterra in our case falls within that exclusion.
Michigan also imposes vicarious liability on the owners of vehicles. Its law provides that Mich. Comp. Laws § 257.401(1) (2003) ("Subsection 1"). Liability is capped, however, in certain circumstances: "[The liability of] a person engaged in the business of leasing motor vehicles who is the lessor of a motor vehicle under a lease providing for the use of the motor vehicle by the lessee for a period of 30 days or less ... is limited to $20,000.00 because of bodily injury to or death of 1 person in any 1 accident ...." Mich. Comp. Laws § 257.401(3) (2003) ("Subsection 3"). In effect, vicarious liability is imposed on an owner when the driver's negligence causes an accident in another state so long as the owner-driver relationship was entered into in Michigan. Sexton v. Ryder Truck Rental, Inc., 413 Mich. 406, 320 N.W.2d 843, 856 (1982).
At the time of Chappell's accident, Michigan law provided that it was a misdemeanor for "an owner knowingly [to] permit to be operated, upon any highway, a vehicle required to be registered ... unless there is attached to and displayed on the vehicle ... a valid registration plate issued for the vehicle ...." Mich. Comp. Laws §§ 257.255(1), (2) (2001).2
Pennsylvania follows the common law rule that, absent an employer-employee relationship, an automobile's owner is not vicariously liable for the negligence of its driver. Solomon v. Commonwealth Trust Co., 256 Pa. 55, 100 A. 534, 535 (1917); Shuman Estate v. Weber, 276 Pa.Super. 209, 419 A.2d 169, 172 (1980).
The District Court's opinion is a plot-twister. The case starts simply enough: "the parties [sought] a declaratory judgment... whether the law of New York or Michigan governs the extent of Budget's vicarious liability to Chappell ...." Budget Rent-A-Car System, Inc. v. Chappell, 304 F.Supp.2d 639, 644 (E.D.Pa.2004) (emphases added). "[M]indful" of what it described as "[a] delicious irony in how the parties briefed this case," id. at 650 n. 17, the District Court "concluded that Pennsylvania law controls the resolution of the issues," id. at 651 (emphasis added).
This conclusion unfolds as...
To continue reading
Request your trial
-
Mzamane v. Winfrey
...unfair." Allstate Ins. Co. v. Hague, 449 U.S. 302, 312-13, 101 S.Ct. 633, 66 L.Ed.2d 521 (1981); see Budget Rent-A-Car Sys., Inc. v. Chappell, 407 F.3d 166, 175 (3d Cir. 2005); Powers v. Lycoming Engines, 328 Fed.Appx. 121, 125 (3d Cir.2009) (non-precedential opinion) (noting that once the ......
-
Hammersmith v. Tig Ins. Co.
...apply the law of the state with the "most significant contacts or relationships with the particular issue." Budget Rent-A-Car Sys., Inc. v. Chappell, 407 F.3d 166, 170 (3d Cir.2005) (quoting In re Estate of Agostini, 311 Pa.Super. 233, 457 A.2d 861, 871 We think it is incorrect to use the t......
-
Panthera Rail Car LLC v. Kasgro Rail Corp.
...if one jurisdiction's governmental interests would be impaired by the application of another jurisdiction's law. Budget Rent–A–Car v. Chappell, 407 F.3d 166, 170 (3d Cir.2005). When there is a false conflict, the Court must apply the law of the only interested jurisdiction. Id. If no jurisd......
-
Teva Pharm. Indus., Ltd. v. United Healthcare Servs., Inc.
...if an actual conflict exists, the court must determine whether the conflict is "true" or "false." See Budget Rent–A–Car Sys., Inc. v. Chappell, 407 F.3d 166, 169–70 (3d Cir. 2005) ; LeJeune v. Bliss–Salem, Inc., 85 F.3d 1069, 1071 (3d Cir. 1996). A "true" conflict exists when both states ha......
-
Criminal Justice is Local: Why States Disregard Universal Jurisdiction for Human Rights Abuses.
...v. Stentor Electric Mfg, Co., 313 U.S. 487 (1941). have come to similar conclusions. See, e.g., Budget Rent-A-Car System Inc. v. Chappell, 407 F3d 166 (3d Cir. 2005) (reversing district court's decision to apply tort law of place of injury - Michigan--and holding that law of New York, which......