Marks v. West Side Unlimited Corp.
| Decision Date | 13 August 1999 |
| Docket Number | No. Civ.A. 97-40384.,Civ.A. 97-40384. |
| Parties | Charlotte MARKS, Personal Representative of the Estate of Charles Edwin Marks, Sr., and Charlotte Marks, Plaintiffs, v. WEST SIDE UNLIMITED CORP. and Gene V. Douglas, Defendants. and Gene V. Douglas, Counter-Plaintiff, v. The Estate of Charles Edwin Marks, Sr., Counter-Defendant. |
| Court | U.S. District Court — Eastern District of Michigan |
Howard R. Grossman, Flint, MI, L. Graham Ward, Ward, Anderson, Bloomfield Hills, MI, for Charles Edward Marks, Charlotte Marks, plaintiffs.
Jonathan M. Jaffa, Sullivan, Ward, Southfield, MI, for West Side Unlimited Corporation, Gene V. Douglas, defendants.
ORDER GRANTING MOTION OF DEFENDANTS WEST SIDE UNLIMITED CORP. AND GENE V. DOUGLAS TO ESTABLISH APPLICABLE LAW
Before the court is a motion by defendants, West Side Unlimited Corp. and Gene V. Douglas, to establish applicable law. This motion was originally filed on May 18, 1998. On July 21, 1998, this court entered an order denying the motion without prejudice, preferring to decide which substantive law would apply in this action in the context of a motion seeking some more definitive form of relief, e.g. a motion for summary judgment. As of April 12, 1999, however, the time set for the final pre-trial conference in this matter, no such motion had been filed. Accordingly, this court informed that parties at the final pretrial conference that it would consider the merits of defendants' motion in advance of trial. This court has reviewed the relevant pleadings filed in this matter, as well as all appropriate authority, and the court is now prepared to rule on defendants' motion. For the reasons set forth below, this court will grant defendants' motion to establish applicable law, hold that Michigan law governs this dispute, and hold that the threshold requirement of the Michigan No Fault Act, as provided at Mich.Comp.Laws § 500.3135(1), which requires that plaintiff must establish death, serious impairment of bodily function or permanent serious disfigurement, does apply to this case.
The instant action arises out of an automobile accident that occurred in the state of Arizona on March 28, 1997. Plaintiff, Charlotte Marks, alleges that she and her late husband, Charles Marks, were attempting to pass a truck driven by defendant, Gene Douglas, when Douglas swerved into their lane without warning. Plaintiff alleges that the Marks' automobile was forced off of the highway, at which point the automobile overturned. Plaintiff alleges that both she and her husband suffered various serious injuries as a result of the accident. Plaintiff suffered a heart attack subsequent to the accident, and her husband, as a result of various medical complications, died on October 1, 1997. Plaintiff contends that these injuries were proximately caused by the negligence of Mr. Douglas.
Accordingly, plaintiff filed suit in Genesee County Circuit Court on behalf of herself and the estate of her husband. Plaintiff's complaint asserts claims against Douglas and West Side Unlimited Corp., the owner of the trailer operated by Douglas. On September 19, 1997, defendants removed the action to this court on the basis of this court's diversity jurisdiction. It is undisputed that plaintiff and her husband were residents of the State of Michigan at all times relevant to the instant dispute. Defendant, Gene V. Douglas, is a resident of Ohio. Defendant, West Side Unlimited Corp., is incorporated under the laws of the state of Iowa and has its principal place of business in Iowa.
The parties are currently before the court seeking to establish: (1) whether the substantive law of Michigan or Arizona will apply to this dispute; and (2) if Michigan law applies, whether the threshold requirements of Mich.Comp.Laws § 500.3135(1) apply on the facts of this case.
Plaintiff contends that Arizona law should govern this dispute, while defendants contend that Michigan law applies.1 There are two principal differences between Michigan law and Arizona law that are relevant in this case. First, Arizona law provides for recovery of punitive damages under certain circumstances in cases involving personal injury. Punitive damages for tortious conduct are not cognizable under Michigan law. Second, the Michigan No Fault Insurance Act imposes a threshold burden upon plaintiffs to establish death, serious impairment of bodily function or permanent serious disfigurement to recover noneconomic damages incurred as a result of injuries sustained in an automobile accident.2 Arizona law has no such threshold requirement.
The parties agree that, in this diversity case, this court must apply the choice of law rules of the state in which it sits, that is Michigan. See Mahne v. Ford Motor Co., 900 F.2d 83, 85 (6th Cir.1990) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941)). Moreover, the parties also agree that the choice of law rules of the state of Michigan are provided in the cases of Olmstead v. Anderson, 428 Mich. 1, 400 N.W.2d 292 (1987), and Sutherland v. Kennington Truck Serv., Ltd., 454 Mich. 274, 562 N.W.2d 466 (1997). As the Michigan Supreme Court noted in Sutherland, Michigan courts:
will apply Michigan law unless a "rational reason" to do otherwise exists. In determining whether a rational reason to displace Michigan law exists, [courts] undertake a two-step analysis. First, [courts] must determine if any foreign state has an interest in having its law applied. If no state has such an interest, the presumption that Michigan law will apply cannot be overcome. If a foreign state does have an interest in having its law applied, we must then determine if Michigan's interests mandate that Michigan law be applied, despite the foreign interests.
Sutherland, 454 Mich. at 286, 562 N.W.2d 466 (citing Olmstead, 428 Mich. at 24, 29-30, 400 N.W.2d 292).
Defendants contend that Arizona does not have any interest in having its law applied in this case because all of the parties to this action are non-residents. Defendants argue that the fact that this accident occurred in Arizona is merely fortuitous, and not a basis for applying Arizona law. Defendant cites Olmstead, in which the court declined to apply the law of the state of Wisconsin, the situs of the injury in that case. The court specifically noted:
[t]he operative fact is that neither party is a citizen of the state in which the wrong occurred. Since neither party in this case is a citizen of Wisconsin, that state has no interest in seeing its limitation of damage provision applied.
Olmstead, 428 Mich. at 28, 400 N.W.2d 292. Defendant's contention that Arizona does not have an interest in this litigation also has support in Arizona law. In Bryant v. Silverman, 146 Ariz. 41, 45, 703 P.2d 1190 (1985), the Arizona Supreme Court noted that, "[a]lthough Colorado is the state of injury, the state where the injury occurs does not have a strong interest in compensation if the injured plaintiff is a non-resident." Accordingly, defendant argues that, because none of the parties in this case are residents of Arizona, that state does not have an interest in having its law applied in this case.
Plaintiff responds that one of the conflicts between Michigan law and Arizona law in this case relates to punitive damages, and that those damages are not directed towards compensation of plaintiff, but rather punishment of the defendant and deterrence of future wrongful conduct. Plaintiff cites State Farm Mut. Ins. Co. v. Wilson, 162 Ariz. 251, 782 P.2d 727 (1989), in which the Arizona Supreme Court noted:
Tort law has adopted the idea of punishment that underlies criminal law in its imposition of punitive damages for a defendant's wrongdoing. Thus, courts permit such awards to punish the defendant and to deter others from following the defendant's example.... To the plaintiff, punitive damages are therefore a non-compensatory award based on public policy concerns irrelevant to compensation. In appropriate cases, assessment of punitive damages to be paid by the tortfeasor fulfills the social policy of deterrence that underlies such awards.
Id. at 255, 782 P.2d 727 (emphasis added) (citations omitted). Accordingly, plaintiff argues that the fact that Arizona may not have an interest in compensating plaintiff does not necessarily indicate that Arizona does not have an interest in having its law applied. Indeed, as the plaintiff points out, the Olmstead court specifically limited its holding by indicating that it did not mean to indicate that:
the state in which the injury takes place will never have an interest in litigation arising out of the injury if none of its citizens are involved. The injury state always has an interest in conduct within its borders, whether or not its citizens are involved.
Olmstead, 428 Mich. at 28, 400 N.W.2d 292 (emphasis added). Here, plaintiff contends that any award of punitive damages would be designed to deter similar conduct (that is, the allegedly grossly negligent operation of an automobile on an Arizona highway) in the future. Plaintiff argues that Arizona has an interest in preventing such conduct within its borders.
Upon review, this court accepts plaintiff's argument on this point. A number of courts have noted that the state in which misconduct has occurred has an interest in deterrence of future misconduct. See, e.g., Lewis-DeBoer v. Mooney Aircraft Corp., 728 F.Supp. 642, 645-46 (D.Colo.1990); In re Air Crash Disaster at Stapleton Int'l Airport, 720 F.Supp. 1445, 1453 (D.Colo. 1988); Bryant, 146 Ariz. at 45, 703 P.2d 1190. Here, the alleged misconduct which potentially gives rise to an award of punitive damages occurred within Arizona. Because Arizona was the place of this alleged misconduct,...
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