Commercial U. Ins. Co. v. Upjohn Co.

• Decision Date: 26 January 1976
• Docket Number: Civ. A. No. 751067.
• Citation: 409 F. Supp. 453
• Parties: COMMERCIAL UNION INSURANCE COMPANY v. The UPJOHN COMPANY
• Court: U.S. District Court — Western District of Louisiana

409 F. Supp. 453

COMMERCIAL UNION INSURANCE COMPANY v. The UPJOHN COMPANY

Civ. A. No. 751067.

United States District Court, W. D. Louisiana, Shreveport Division.

January 26, 1976.

A. K. Goff, III, Goff, Goff & Levy, Ruston, La., for plaintiff.

Dewey W. Corley, Cook, Clark, Egan, Yancey & King, Shreveport, La., for defendant.

RULING ON MOTIONS

DAWKINS, Senior District Judge.

We now have before us defendant's motion to strike plaintiff's claims for punitive damages and attorney's fees, together with a motion for a more definite statement. Rules 12(e), (f), F.R.Civ.P.

By complaint filed October 2, 1975, Commercial Union Insurance Company (Commercial) brought this products liability action against The Upjohn Company (Upjohn) for recovery of damages. The controversy arises out of a fire which occurred on or about August 4, 1975, during which a building owned by plaintiff's insured, Willie B. Hughes, together with its contents, was destroyed.

Commercial had written two policies of insurance protecting Hughes against the risk of loss by fire. In accord with the terms and conditions of these policies, plaintiff paid the insured, loss payees, and lienholders under the contracts the sum of $147,705.67, thereby becoming legally and conventionally subrogated to that extent.

Plaintiff contends that the intensity of the fire and extent of the accompanying destruction were aggravated greatly by the presence in the building of a urethane foam-spray insulation product developed, tested, manufactured, and marketed by Upjohn under the trade-name Isonate System CPR 425. Commercial further contends that Upjohn is liable under the theory of strict liability, and, in the alternative, ordinary negligence. Finally, plaintiff alleges that Hughes authorized the use of Isonate System CPR 425 by his contractor, Delta Refrigeration Co., in reliance upon certain express and implied warranties that the compound was fire-proof, fire-safe, and fire-retardant.

Commercial here seeks recovery of insurance claims paid, attorney's fees in the sum of $25,000.00, together with punitive damages of $1,000,000.00.

Jurisdiction is conferred upon us by 28 U.S.C. § 1332.¹

DEFENDANT'S MOTION TO STRIKE PLAINTIFF'S CLAIM FOR PUNITIVE DAMAGES

Upjohn contends as grounds for its motion to strike Commercial's claims for punitive damages that such properly is not a recoverable element of damages under Louisiana law. Plaintiff responds that Louisiana's substantive law is not determinative of the rights and liabilities of the parties, arguing instead that the law of the state of manufacture of the product should apply.

Properly treating defendant's motion as one to dismiss for failure to state a claim upon which relief may be granted, Rule 12(b)(6), F.R.Civ.P., we first must decide the issue of legislative jurisdiction; that is, the choice of state law to be applied to the controversy. Erie R. R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). In so doing, we are bound to apply the conflict of laws rules of Louisiana, the forum state. Klaxon v. Stentor Electric Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). The traditional lex loci delicti rule, or "vested rights" doctrine, recently was abandoned in Louisiana in Jagers v. Royal Indemnity Co., 276 So.2d 309 (La.S.Ct., 1973). There plaintiff and her then minor son, Louisiana domiciliaries, were involved in an automobile accident in Mississippi. Mrs. Jagers brought an action in Louisiana against her son's automobile liability insurer for recovery of damages sustained as a result of personal injuries. Defendant contended that Mrs. Jagers' action against her son was barred under Mississippi law.²

The Court deemed that issue immaterial, holding that the case posed a false conflict of laws question. Such posture is present "where only a single state has an interest in the application of its law." Jagers v. Royal Indemnity Co., supra at 311. The Court concluded that no policy of the State of Mississippi, the place of the tort, would be served by application of Mississippi law. Moreover a contrary conclusion would abrogate Louisiana's obligation to redress the injuries of its citizens harmed by the wrongful acts of others. Jagers v. Royal Indemnity Co., supra at 313.

We conclude, for reasons given infra, that we presently are faced with a true conflicts question. Unfortunately, however, the rejection in Jagers of the lex loci delicti rule in cases of false conflicts left ". . . a vacuum in Louisiana conflicts principles unfulfilled by the remainder of the opinion." Brinkley & West, Inc., v. Foremost Insurance Co., 499 F.2d 928, 931, 932 (5th Cir., 1974).³ There has been no plain statement that Louisiana now will employ the precepts of the Restatement, (Second), Conflict of Laws (1971), in a true conflicts case; that is, the standard has not been "declared by the legislature or by decision of the highest court of the state." Erie R. R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 822, 82 L.Ed. 1188, 1194 (1938). Accordingly, we "must utilize the same methodology that would be employed by the state courts themselves when they are confronted with a question for which no authoritative answer can be found." First Nat. Life Ins. Co. v. Fid. & Dep. Co. of Md., 525 F.2d 966 (5th Cir., 1976). We sit, "`in effect, as only another court of the State.' Angel v. Bullington, 330 U.S. 183, 187, 67 S.Ct. 657, 659, 91 L.Ed. 832, 835 (1947); Mississippi Power Co. v. Roubicek, 462 F.2d 412 (5th Cir., 1972)." First Nat. Life Ins. Co. v. Fid. & Dep. Co. of Md., supra.

We are of one mind with the Fifth Circuit that the Jagers "weather vane" points to the inescapable conclusion that Louisiana Courts will hold that interest analysis principles embodied in the Restatement must be employed in the judicial resolution of a true conflicts problem. The Jagers Court noted:

"That some modern methods for determining whether to apply the law of the forum are faulty in some respects should not deter a court in the application of the law of the forum to its citizens, when not otherwise prohibited." Jagers v. Royal Indemnity Co., supra at 312.

The footnote immediately following that passage cites the choice of law principles at § 6, Restatement, (Second), Conflict of Laws (1969), the interest analysis rule.⁴

The Restatement commentators suggest that the more important factors to be weighed in a tort action are: (1) relevant policies of the forum state; (2) relevant policies of other interested states and the relative interest of those states in determining the particular issue; and (3) ease in determination and application of the law to be applied. See Brinkley & West, Inc., v. Foremost Insurance Co., supra at 932.

Section 145, Restatement, (Second), Conflict of Laws (1971), sets down further guide for determining which state has the most significant relation to a tortious occurrence:

"§ 145. The General Principle

"(1) The rights and liabilities of the parties with respect to an issue in tort are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the occurrence and the parties under the principles stated in § 6.

"(2) Contacts to be taken into account in applying the principles of § 6 to determine the law applicable to an issue include:

"(a) the place where the injury occurred,

"(b) the place where the conduct causing the injury occurred,

"(c) the domicile, residence, nationality, place of incorporation and place of business of the parties, and

"(d) the place where the relationship, if any, between the parties is centered.

These contacts are to be evaluated according to their relative importance with respect to the particular issue."

In the case before us, the alleged injury undisputedly occurred in Louisiana. However, the conduct of tortiously substandard design, testing, and manufacture occurred, if at all, in a foreign state.⁵ Neither party is incorporated in Louisiana; yet both do business in the forum state. Finally, the parties appear to have no truly centered relationship.

Section 147 of the Restatement further refines § 145 in providing:

"§ 147. Injuries to Tangible Things

"In an action for an injury to land or other tangible thing, the local law of the state where the injury occurred determines the rights and liabilities of the parties, unless, with respect to the particular issue, some other state has a more significant relationship under the principles stated in § 6 to the occurrence, the thing, and the parties, in which event the local law of the other state will be applied."

Comment e thereunder provides:

"e. When Conduct and Injury Occur in Different States.

"For reasons stated in § 146, Comment e, the local law of the state where the injury occurred to the tangible thing will usually be applied to determine most issues involving the tort (See § 145, Comments d-e and §§ 156 through 166 and 172) on the rare occasions when conduct and the resulting injury to the thing occur in different states.

"The local law of the state where the injury occurred is most likely to be applied when the injury is done to land or to a chattel that has a settled connection with the state, which means that it is located in the state for other than a temporary purpose."⁶

Thus, Louisiana clearly has a significant relationship to the occurrence, much more strongly than the mere interest of a forum state that its rules of trial administration be followed. Moreover, the substantive law of Louisiana should be applied unless the state of manufacture has a greater interest in the application of its law under § 6 principles. This is not to say that the choice of law is determined by a mere tallying of contacts; rather, where contacts lie within more than one state, and there is a true conflict of substantive law, the forum state is entitled to considerable attention being given to applicable § 6 principles where injury to a tangible thing occurs...