Carrick v. Zurich-American Ins. Group

• Decision Date: 25 January 1994
• Docket Number: No. 93-3311,ZURICH-AMERICAN,93-3311
• Citation: 14 F.3d 907
• Parties: Sandra CARRICK, Individually and as administratrix of the Estate of Michael J. Carrick, deceased v.INSURANCE GROUP, Appellant
• Court: U.S. Court of Appeals — Third Circuit

Page 907

14 F.3d 907

Sandra CARRICK, Individually and as administratrix of the Estate of Michael J. Carrick, deceased v. ZURICH-AMERICAN INSURANCE GROUP, Appellant

No. 93-3311.

United States Court of Appeals Third Circuit.

Argued Dec. 17, 1993.

Decided Jan. 25, 1994.

Victor J. Kinnunen (argued), Fuller, Kinnunen, Petruso, Gamble, Fabian & Hall, Titusville, PA, for appellee.

Robert J. Marino (argued), Dickie, McCamey & Chilcote, Pittsburgh, PA, for appellant.

Before: GREENBERG and ROTH, Circuit Judges, and FULLAM, District Judge. ^*

OPINION OF THE COURT

GREENBERG, Circuit Judge.

I. BACKGROUND

This case is before this court on appeal from an order entered on May 24, 1993, in this declaratory judgment diversity action. We will affirm.

The appellee Sandra Carrick filed this action, individually, and as executrix of the Estate of Michael J. Carrick, in the Court of Common Pleas of Crawford County, Pennsylvania, against the defendant-appellant Zurich-American Insurance Group, an Illinois corporation. Zurich removed the case to the district court pursuant to 28 U.S.C. Sec. 1441. In her complaint, Carrick sought a declaratory judgment "adjudicating the respective rights and duties of [Carrick] and [Zurich] as to the subrogation claim of [Zurich] as against any settlement and/or verdict obtained against one or more third party defendants in ... wrongful death and/or survival actions pending in the State of Vermont."

The facts underlying this controversy are not in dispute. Carrick had been married to Michael J. Carrick until his death on January 16, 1991. Carrick and her husband were Pennsylvania citizens and residents when he died, and she continues to be a Pennsylvania citizen and resident. Siemens Stromberg-Carlson Corporation employed Michael J. Carrick until his death, and he did most of his work for Siemens in Pennsylvania. On January 16, 1991, while working for Siemens Michael J. Carrick was killed in a motor vehicle accident in Vermont.

Carrick thereafter filed a workers' compensation claim in Pennsylvania against Siemens. A referee awarded Carrick workers' compensation benefits pursuant to Pennsylvania law, and neither Siemens nor Zurich, its workers' compensation insurance carrier, appealed from the award. Accordingly, Zurich has made workers' compensation payments to Carrick. Carrick also filed actions in Vermont against various defendants, alleging they were responsible for her husband's injury and death, but the defendants in the Vermont cases are not parties to this declaratory judgment case. While Zurich seeks to subrogate to the potential recoveries in those actions, Carrick contends that Zurich is not entitled to share in any recovery she may make in the Vermont actions. ¹

The dispute between Zurich and Carrick has generated a choice of law question because of the differing treatment of subrogation claims derived from motor vehicle accidents for workers' compensation payments in Pennsylvania and Vermont at the time of Michael J. Carrick's death. Under 75 Pa.Cons.Stat.Ann. Sec. 1720 (Supp.1993), a workers' compensation insurance carrier had no right of subrogation or reimbursement for workers' compensation benefits from a claimant's tort recovery in an action arising out of the maintenance or use of a motor vehicle. On the other hand, under Vt.Stat.Ann. tit. 21 Sec. 624 (1992), subrogation was and continues to be authorized in the same situation. Not surprisingly, Carrick points to Pennsylvania law to bar Zurich's subrogation claim but Zurich contends that it should be allowed to assert a subrogation claim under Vermont law. The district court accepted Carrick's argument and thus entered a summary judgment declaring that Pennsylvania law governs the subrogation claim. Zurich appeals and we have jurisdiction under 28 U.S.C. Sec. 1291.

II. DISCUSSION

In a diversity action, "the choice of law rules of the forum state [determines] which state's law will be applied." Shuder v. McDonald's Corp., 859 F.2d 266, 269 (3d Cir.1988) (citing Klaxon v. Stentor Electric Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021, 85 L.Ed. 1477 (1941)). Accordingly, we apply Pennsylvania's choice of law rules. Our scope of review is plenary, as the district court decided this matter on a motion for summary judgment and we decide this case through the application of legal precepts.

The Pennsylvania Supreme Court's leading choice of law decision is Griffith v. United Air Lines, Inc., 416 Pa. 1, 203 A.2d 796 (1964). See Lacey v. Cessna Aircraft Co., 932 F.2d 170, 187 (3d Cir.1991). In Griffith the court abandoned the traditional lex loci delicti conflicts rule for "a more flexible rule which permits analysis of the policies and interests underlying the particular issue before the court." Griffith, 203 A.2d at 805. In commenting on the development of Pennsylvania's flexible rule, we have indicated:

this new conflicts methodology has evolved into a hybrid approach that 'combines the approaches of both Restatement II (contacts establishing significant relationships) and "interest analysis" (qualitative appraisal of the relevant States' policies with respect to the controversy).'

Lacey, 932 F.2d at 187 (quoting Melville v. American Home Assurance Co., 584 F.2d 1306, 1311 (3d Cir.1978)).

The Pennsylvania Supreme Court has not rendered any opinion after Lacey impugning the validity of Lacey's exposition of Pennsylvania's flexible choice of law rule. ² Moreover, the Pennsylvania Supreme Court has summarized succinctly its major choice of law rules as follows (1) This Court in Griffith v. United Air Lines, Inc., held that in resolving a potential conflict between the application of state laws we must consider the policies and interest underlying the particular issue before the court. Id. at 21, 203 A.2d at 805.

(2) As further explained in McSwain v. McSwain, 420 Pa. 86, 215 A.2d 677 (1966), we must analyze ... the extent to which one state rather than another has demonstrated, by reason of its policies and their connection and relevance to the matter in dispute, a priority of interest in the application of its rule of law.

(3) Furthermore, in evaluating the interests of one jurisdiction over another, we must view the factors qualitatively as opposed to quantitatively, Cipolla v. Shaposko, 439 Pa. 563, 267 A.2d 854 (1970).

Myers v. Commercial Union Assurance Companies, 506 Pa. 492, 485 A.2d 1113, 1115 (1984). These rules comport with Lacey.

The district court indicated that "Pennsylvania courts have consistently held that the state where the worker's compensation policy is regulated is the state with the most significant contacts regarding workers' compensation subrogation." It cited Allstate Ins. Co. v. McFadden, 407 Pa.Super. 537, 595 A.2d 1277, 1279 (1991), alloc. denied, 529 Pa. 644, 602 A.2d 855 (Sup.Ct.1992), and Van Den Heuval v. Wallace, 382 Pa.Super. 242, 555 A.2d 162 (1989), for this proposition and we agree with its analysis.

Allstate involved a Pennsylvania resident, acting in the course of his employment for his Pennsylvania employer, who was injured in a motor vehicle accident in New Jersey. Allstate, 595 A.2d at 1277. The resident received benefits under the Pennsylvania Workers' Compensation Act, and he settled a tort claim against the other driver.

His workers' compensation insurer and his employer itself brought an action in Pennsylvania seeking reimbursement of the workers' compensation benefits, claiming that New Jersey law, which permits subrogation, should govern the issue. The court held that "Pennsylvania is the state with the most significant interest in determining the right of an employer to subrogation where it has made payments to any injured employee." Id. at 1279. Thus, pursuant to 75 Pa.Cons.Stat.Ann. Sec. 1720, subrogation was not allowed. While the court recognized that New Jersey had an interest in vehicular accidents within its boundaries, it found that the issue before the court was "not who was responsible for the accident but whether the appellants have a right to subrogation of the monies paid to appellee under the [Pennsylvania] Workmen's Compensation Act when he has made settlement with the tortfeasor." Id. at 1279.

The Allstate court cited Van Den Heuval v. Wallace, 555 A.2d 162, in which the court found that because the workers' compensation benefits were made pursuant to Delaware law, a third-party damage action in Pennsylvania stemming from an accident in Pennsylvania should be governed by Delaware law which allowed subrogation. 555 A.2d at 163-64. Thus, notwithstanding section 1720, the workers' compensation carrier was permitted to intervene in the Pennsylvania action. We therefore are satisfied that a Pennsylvania court would apply the law of the state which governs the workers' compensation benefits to a worker's compensation insurance carrier's subrogation claim to recoveries from claims arising from motor vehicle accidents in other states. ³ While Allstate and Van Den Heuval are decisions of the Superior Court, we believe that the Pennsylvania Supreme Court would follow them, as they are consistent with the choice of law principles as they have developed under Griffith, and thus so do we. See Dillinger v. Caterpillar, Inc., 959 F.2d 430, 434 n. 11 (3d Cir.1992); Nationwide Mut. Ins. Co. v. Hampton, 935 F.2d 578, 580 (3d Cir.1991).

But Zurich makes an argument not addressed in Allstate or Van Den Heuval. It contends that if Pennsylvania law bars its subrogation claim, then we should find that 75 Pa.Cons.Stat.Ann. Sec. 1722 (Supp.1993) should apply in the Vermont cases. At the time of Michael J. Carrick's death, section 1722 complemented section 1720 as section 1722 provided that in "any action for damages ... arising out of the maintenance or use of a motor vehicle, a person who is eligible to receive [workers' compensation] benefits ... shall be precluded from recovering the amount of [workers' compensation] benefits paid or payable...." Thus, the sections...