In re Arias, Civil Action No. 99-3836 (NHP) (D. N.J. 9/28/2000)
| Decision Date | 28 September 2000 |
| Docket Number | Civil Action No. 99-3836 (NHP). |
| Parties | Re: Rafael Arias, et al. Budget Rent A Car Systems, Inc., et al. |
| Court | U.S. District Court — District of New Jersey |
Esther K. Min, Esq., RAGYES & MIN, Fort Lee, NJ, Attorneys for Plaintiff.
Joseph T. Calabria, Esq., West Orange, NJ, Attorney for Defendant.
James Mercado, James E. Egbert, Esq., GALLAGHER, REILLY, LACHAT & EGBERT, Pennsauken, NJ, Attorneys for Budget Group, Inc.
Dear Counsel:
This matter comes before the Court under diversity jurisdiction, pursuant to 28 U.S.C. §1332, on the following three motions: (1)Defendant, Budget Group, Inc.'s Motion for Summary Judgment Under Federal Rule of Civil Procedure 56; (2) Defendant James Mercado's Motion to Apply New Jersey Law and to Dismiss Plaintiff's Complaint; and (3) Plaintiff's Cross-Motion to Apply New York Law. This Court heard oral argument on September 11, 2000 and reserved decision.
On December 20, 1998, an accident involving three vehicles occurred on the approach to the George Washington Bridge toll plaza in Fort Lee, New Jersey. Defendant James Mercado ("Mr. Mercado") struck Tara Gilmartin ("Ms. Gilmartin") from behind, who in turn struck Plaintiff, Rafael Arias ("Mr. Arias") from behind. See Arias Brief ("Arias Br.") at 1.
Mr. Arias sustained injuries as a result of this accident, and instituted claims against Budget Group, Inc. ("Budget"), Ms. Gilmartin (who had rented the car involved in the accident from Budget), and Mr. Mercado. Surkelis Arias, wife of the plaintiff, also filed claims for loss of services, financial support, affection and companionship. See Complaint ¶ 23. Defendants Budget and Mr. Mercado subsequently made the motions now before the court to apply New Jersey law to all issues in the case, and Mr. Arias cross-moves to apply New York law to all of the claims against Budget and Mr. Mercado.
Mr. Arias is a resident of New York, while Mr. Mercado resides in Connecticut, and Ms. Gilmartin resides in Michigan. At oral argument, the Court took judicial notice of the fact that Budget maintains offices in all fifty states in the U.S., including New Jersey.
Additionally, there is a criminal action currently pending against Mr. Arias for driving while intoxicated ("DWI"), in violation of N.J. Stat. §39:4-50, at the time of the accident in question. See Arias Br. at 3. The Court was advised at oral argument that the criminal matter is set for trial on September 28, 2000.
Budget contends that they are entitled to summary judgment. The standard governing a summary judgment motion is set forth in Fed. R. Civ. P. 56(c), which provides, in pertinent part, that:
[t]he judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
Fed. R. Civ. P. 56(c). A fact is material if it might affect the outcome of the suit under the governing substantive law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).
Procedurally, the movant has the initial burden of identifying evidence that it believes shows an absence of genuine issues of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). If the movant establishes the absence of a genuine issue of material fact, the burden shifts to the non-movant to do more than "simply show that there is some metaphysical doubt as to material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).
With respect to Budget, Mr. Arias does not assert that there are material facts in dispute; there are none. The sole issue remaining is one of law—namely, which state's law should this Court apply. Accordingly, the Court will address that question to determine if Budget is entitled to summary judgment.
A federal court in New Jersey must apply New Jersey's choice of law rules in diversity actions. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941); see also Scuorzo v. Spinazzola, 1991 WL 5741 at *1 (D.N.J.). New Jersey employs a "flexible" governmental interest analysis when deciding a choice of law question. See Gantes v. Kason Corp., 145 N.J. 478, 484 (1996); Slater v. Skyhawk Transp., Inc., 77 F. Supp.2d 580, 590 (D.N.J. 1999). Under the governmental interest analysis, the law of the state with the greatest interest in governing the particular issue controls. See Scuorzo, 1991 WL 5741 at *1; Gantes v. Kason Corp., 145 N.J. 478, 484 (1996).
In making this determination, there must first exist an actual conflict between the laws of the potentially interested states. Whether an actual conflict exists is decided on an issue by issue basis. See id. Where there is an actual conflict as to the particular issue, the Court must then identify the underlying governmental policies of each state's law and determine how those policies are affected by that state's contacts to the litigation and to the parties. See Veazy v. Doremus, 103 N.J. 244, 248 (1986). If the state's contacts with the litigation are unrelated to the policies underlying that state's laws, then that state does not have the requisite interest in having its law apply. See Greenfeder v. Jarvis, 302 N.J. Super. 153, 160 (Ct. App. Div. 1997).
The first issue is whether Budget may be held vicariously liable for the allegedly negligent acts of a permissive driver of its car. New Jersey law provides that the owner of an automobile is not vicariously liable for injuries caused by a permissive driver unless that driver is an agent or employee of the owner. See Haggerty v. Cedeno, 279 N.J. Super. 607, 609, cert. denied, 141 N.J. 98 (1995); Fu v. Fu, 160 N.J. 108, 118 (1999).
New York law, however, provides for vicarious liability where a car owner expressly or impliedly allows another to drive his or her car, and that permissive driver negligently causes injury to another while driving the car. See N.Y. Vehicle & Traffic Law §388. Clearly, New York and New Jersey law regarding vicarious liability actually conflicts.
Budget argued alternatively that Michigan law should govern if the Court found that New Jersey law did not. Michigan law provides for vicarious liability where a lessee negligently causes an accident while driving a leased vehicle under the terms of a lease agreement. See Mich. Stat. §257.401(3). The statute limits the amount of recovery from a lessor to $ 20,000 where one person is injured. See id. As such, Michigan law regarding vicarious liability also actually conflicts with New Jersey law. Mr. Mercado also moves to apply New Jersey law, and to dismiss the complaint against him. See Mercado Brief at 3. The issue is whether Mr. Arias has a valid cause of action against Mr. Mercado for alleged negligence where Mr. Arias may be guilty of violating the New Jersey DWI statute.
If Mr. Arias pleads or is found to have violated New Jersey Statute §39:4-50 ("the DWI statute"), then he does not have a valid cause of action against Mr. Mercado in New Jersey:
Any person who is convicted of, or pleads guilty to [DWI] . . .in connection with an accident, shall have no cause of action for recovery of economic or noneconomic loss sustained as a result of the accident.
N.J. Stat. § 39:6A-4.5(b). New York law imposes no such limitation on potential plaintiffs. Here again, there is a conflict in New York and New Jersey law.
The Court must next look to the policies underlying the three states' laws. See Veazy, 103 N.J. at 248. The policy rationale behind New Jersey's law against vicarious liability is, in part, to shield non-negligent car owners from liability where the driver bears no relation to the owner. See Haggerty, 279 N.J. Super. at 609. Stated otherwise, New Jersey is interested in protecting car owners who have only a tenuous connection to an accident.
Justice Pollack of the New Jersey Supreme Court has stressed that there are other policy considerations underlying New Jersey's law against vicarious liability. See Fu v. Fu, 160 N.J. 108, 154 (1999)(dissenting). He noted that the law is intended to encourage companies to do business in this state, thereby providing employment to New Jersey residents, and increased tax revenue for the state. See id. He further stressed that another purpose for the common law rule is to reduce the notoriously high cost of automobile insurance in this state. By limiting the liability of owners, liability costs that would ultimately be passed on to consumers are avoided. See id.
Additionally, there is a strong public policy behind the New Jersey DWI statute barring suit by an individual in violation of this statute. This state has a great interest in protecting people within its boundaries from drunk drivers. The statute serves as a deterrence to potential drunk drivers, warning that should they choose to drive drunk, they will be stripped of their right to sue another driver who causes them injury. See § 39:6A-4.5(b). Such an interest generally outweighs "the interest of the plaintiff's residence in providing its citizens with recovery." Amoroso v. Burdette Tomlin Memorial Hosp., 901 F. Supp. 900, 905 (D.N.J. 1995).
The policy rationale behind New York's vicarious liability law is to protect injured plaintiffs against uncompensated injuries, to increase the responsibility of automobile owners for the operation of their vehicles, and to discourage owners from lending their vehicles to incompetent or irresponsible drivers. See White v. Smith, 398 F. Supp. 130 (D.N.J. 1975). The majority in Fu, however, noted that New York's interest in applying its vicarious liability law is limited to applying it "within...
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