Grondecki v. Axiom Mgmt., Inc.

• Decision Date: 28 January 2016
• Docket Number: CIVIL ACTION No. 12-6322
• Citation: 158 F.Supp.3d 345
• Parties: Katarzyna Grondecki, et al. v. Axiom Management, Inc.
• Court: U.S. District Court — Eastern District of Pennsylvania

158 F.Supp.3d 345

Katarzyna Grondecki, et al.

v.Axiom Management, Inc.

CIVIL ACTION No. 12-6322

United States District Court, E.D. Pennsylvania.

Signed January 28, 2016

John M. Eubanks, Mary Schiavo, James R. Brauchle, Motley Rice LLC, Mount Pleasant, SC, James P. Goslee, Cohen Placitella & Roth, Philadelphia, PA, for Katarzyna Grondecki, et al.

Jonathan Dryer, Wilson Elser Moskowitz Edelman & Dicker LLP, Karen M. Gottlieb, Wilson Elser Moskowitz LLP, Philadelphia, PA, Phillip A. Tumbarello, Wilson Elser Moskowitz Edelman & Dicker LLP, White Plains, NY, for Axiom Management, Inc.

MEMORANDUM

O'NEILL, District Judge.

Plaintiffs Antoni and Irena Cyrkler¹ were passengers on a Pennsylvania-registered tour bus owned by defendant Princeton Holdings, Inc., d/b/a Ameripol Tours,² , which was involved in a rollover accident in New York on August 3, 2011. See Dkt. No. 48–1 at ECF p. 6; see also Dkt. No. 45–8. The Cyrklers reside in New Jersey. Dkt. No. 1 at ¶ 8. Defendant is incorporated in Delaware with a principal place of business in Pennsylvania. Dkt. No. 27 at ¶ 11. The driver of the bus at the time of the accident was licensed in Pennsylvania. Dkt. No. 45–8 at ECF p. 15. Now before me is a motion by defendant seeking summary judgment³ on the Cyrklers' claims, Dkt No. 45, the Cyrklers' response (Dkt. No. 47), defendant's reply (Dkt. No. 49), the Cyrklers' supplemental exhibits (Dkt. No. 50) and defendant's response to the Cyrklers' supplemental exhibits (Dkt. No. 52). To decide defendant's motion, I must determine whether New York law applies to plaintiffs' claims and, if so, whether a material question of fact remains with respect to whether plaintiffs are entitled to damages. For the reasons that follow, I will grant defendant's motion.

DISCUSSION

I. Choice of Law

I must first decide whether the substantive law of New York or Pennsylvania governs this action. Defendant argues that New York law applies in this case. Plaintiffs assert that Pennsylvania law should apply to their claims. To answer a choice of law question, federal courts sitting in diversity are required to apply the choice of law rules of the forum state—in this case, Pennsylvania. See Klaxon Co. v. Stentor Electric Mfg. Co., Inc. , 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Pennsylvania law begins the inquiry with a determination of whether the laws of the competing states actually differ. Wilson v. Transp. Ins. Co. , 889 A.2d 563, 571 (Pa.Super.Ct.2005).

I find that there is an actual conflict between the relevant laws of New York and Pennsylvania. Under the New York State Insurance Law, NY Insurance Law § 5101, et seq., which is commonly known as New York's No-Fault Insurance Law, no-fault insurers reimburse covered-persons for up to $50,000 in “basic economic loss” without proof of fault of the other driver. NY Insurance Law § 5102(a). A right of recovery for non-economic loss under New York law exists only “in the case of serious injury.”⁴ N.Y. Ins. Law. § 5104(a).

Defendant argues that the relevant Pennsylvania law would be the Motor Vehicle Financial Responsibility Law (MVFRL), 75 Pa. C.S. §§ 1701 -1799.7. See Dkt. No. 45–1 at ECF p. 5. Under the MVFRL, Pennsylvania is a choice-no-fault state where drivers can choose to be insured under a “limited tort” plan or a “full tort” plan. 75 Pa. C.S. § 1705. Under the limited tort option, consumers, in exchange for a lower premium, generally waive their right to maintain an action for any noneconomic loss except, inter alia, in the case of a “serious injury.”⁵ 75 Pa. C.S. § 1705(d). Plaintiffs contend, however, that the MVFRL's limited tort option and its serious injury threshold for noneconomic damages do not apply to this case because the tort options apply only to a “private passenger motor vehicle,” defined as

A four-wheel motor vehicle...which is insured by a natural person and 1) is a passenger car neither used as a public or livery conveyance nor rented to others; or 2) has a gross weight not exceeding 9,000 pounds and is not principally used for commercial purposes other than farming.

75 Pa. C.S. § 1702. Plaintiffs argue that “[d]efendant's bus does not meet this definition. Among other reasons, it was insured by a corporation—not a natural person, it had a gross weight of 26,000 pounds, and it was principally used for commercial purposes.”⁶ Dkt. No. 47 at ECF p. 15. On this point, I agree with plaintiff.

Even if the MVFRL's limited tort option does not apply to this case, there is an actual conflict between the New York No-Fault law and Pennsylvania law, because unlike in New York, Pennsylvania law does not provide for automatic coverage without proof of fault for basic economic loss up to a threshold amount. Accordingly, an “interest analysis” must be performed: consideration of the policies of all interested states and then—based on the result of the inquiry—characterization of the conflict as a true conflict, false conflict, or unprovided-for conflict.

Budget Rent–A–Car Sys., Inc. v. Chappell , 407 F.3d 166, 170 (3d Cir.2005). A true conflict exists “when the governmental interests of both jurisdictions would be impaired if their law were not applied.” Id. (citation omitted). If a true conflict exists, the Court must determine which state has the “greater interest in the application of its law,” Cipolla v. Shaposka , 439 Pa. 563, 267 A.2d 854, 856 (1970), by “ ‘weigh[ing] the contacts on a qualitative scale according to their relation to the policies and interests underlying the [particular] issue.’ ” Hammersmith v. TIG Ins. Co. , 480 F.3d 220, 231 (3d Cir.2007) (alteration in original), quoting Shields v. Consol. Rail Corp. , 810 F.2d 397, 400 (3d Cir.1987). A false conflict exists if only “one jurisdiction's governmental interests would be impaired by the application of the other jurisdiction's law.” Budget Rent–A–Car , 407 F.3d at 170 (citation omitted); see also Wensley v. Scott , 459 F.Supp.2d 388, 393 (W.D.Pa.2006) (“in a false conflict, only one state is a ‘concerned jurisdiction’ that is, the state is ‘truly concerned with the result’ ”), citing Kuchinic v. McCrory , 422 Pa. 620, 222 A.2d 897, 899–900 (1966). If there is a false conflict, the Court must apply the law of the only interested jurisdiction. Budget Rent–A–Car , 407 F.3d at 170. Finally, an unprovided-for conflict, arises when “no jurisdiction's interests would be impaired if its laws were not applied.” Id.

New York enacted its statutory no-fault insurance regime to “ensure prompt compensation for losses incurred by accident victims without regard to fault or negligence [and] to reduce the burden on the courts [.]” Med. Soc'y of State of N.Y. v. Serio , 100 N.Y.2d 854, 768 N.Y.S.2d 423, 800 N.E.2d 728, 731 (2003). Further, the New York Court of Appeals has recognized that the legislature intended the No-Fault law “to weed out frivolous claims and limit recovery to significant injuries.” Dufel v. Green , 84 N.Y.2d 795, 622 N.Y.S.2d 900, 647 N.E.2d 105, 107 (1995). In Pennsylvania, “the MVFRL was enacted to control the costs of automobile insurance, and also to address issues caused by uninsured and underinsured motorists.” Kidd v. State Farm Mut. Auto. Ins. Co. , No. 13–2625, 2015 WL 9479997, at *2 (M.D.Pa. Dec. 29, 2015), citing Lambert v. McClure , 407 Pa.Super. 257, 595 A.2d 629, 631 (1991). The MVFRL was meant to “provide protection for persons who suffer injury arising out of the maintenance or use of a motor vehicle and are legally entitled to recover damages therefor from owners or operators of underinsured motor vehicles.” Sherwood v. Bankers Standard Ins. , 424 Pa.Super. 13, 621 A.2d 1015, 1017 (1993), rev'd on other grounds, 538 Pa. 397, 648 A.2d 1171 (1994).

Defendant contends that in this case, there is a false conflict and the New York No-Fault law applies to plaintiff's claims “because Pennsylvania has no interest in utilizing its MVFRL to decide this action.” Dkt. No. 45–1 at ECF p. 9; see also Dkt. No. 49 at ECF p. 3. Defendant argues that “New York's [g]overnmental interest would be severely impaired if...plaintiffs were able to maintain this action without proving a serious injury under New York Law” because “New York has a strong interest in ensuring out-of-staters are not fraudulently taking advantage of its regulatory regime by first taking advantage of its very generous first party...benefits and the[n] pursuing recovery in a third party action seeking payment for pain and suffering” under a different state's standard for what constitutes a serious injury. Dkt. No. 45–1 at ECF p. 9. Defendant notes that although plaintiffs contend that Pennsylvania law should apply to their claims, “[p]laintiffs elected to receive substantial benefits under New York's no-fault statute.” Dkt. No. 49 at ECF p. 3.

Defendant also argues that Pennsylvania has no interest in this action “because Mr. and Mrs. Cyrkler did not hold any policy under Pennsylvania law, they did not live in Pennsylvania and had no contact with Pennsylvania.” Id. Defendant asserts that “[a]side from [d]efendant['s] licensing, every other contact is with New York or New Jersey.” Id. Accordingly, defendant argues that “[e]ven if this was a ‘true conflict’, New York has the strongest interest in applying its laws to the issues at hand” because

[t]he incident occurred in New York. The place of injury was New York. The place of conduct was New York. The traffic laws that applied were New York's. The liability insurance trigger was in New York, New York no-fault damages were paid. Plaintiffs received treatment for their injuries in both New York and New Jersey. Plaintiffs began their trip in New Jersey and travelled to New York. New York emergency personnel assisted Plaintiffs' after the crash. Plaintiffs [ ] were not domiciled in Pennsylvania, they lived in New Jersey.

Id. at ECF p. 3-4.

Plaintiffs argue that Pennsylvania law should apply because Pennsylvania “is the only jurisdiction whose contacts are significant and directly related to the issue...