Myers v. Government Employees Ins. Co., 43965

• Decision Date: 27 December 1974
• Docket Number: No. 43965,43965
• Citation: 225 N.W.2d 238,302 Minn. 359
• Parties: , 83 A.L.R.3d 328 Celia S. MYERS, et al., Respondents, v. GOVERNMENT EMPLOYEES INSURANCE COMPANY, Appellant, Clara Chatterton and W. S. Chatterton, Defendants.
• Court: Minnesota Supreme Court

Page 238

225 N.W.2d 238

302 Minn. 359, 83 A.L.R.3d 328

Celia S. MYERS, et al., Respondents, v. GOVERNMENT EMPLOYEES INSURANCE COMPANY, Appellant Clara Chatterton and W. S. Chatterton, Defendants.

No. 43965.

Supreme Court of Minnesota.

Dec. 27, 1974.

Syllabus by the Court

1. In determining conflict of law questions, Minnesota follows the concept of choice-influencing considerations as adopted in Milkovich v. Saari, 295 Minn. 155, 203 N.W.2d 408 (1973).

2. The standards adopted in Milkovich are to be applied only if there exists a conflict of laws question.

3. The first three tests of Milkovich, i.e., (1) predictability of results, (2) maintenance of interstate order, and (3) simplification of the judicial task, present no significant problem in this case involving a tort question.

4. In considering the advancement of the forum's governmental interest, we hold that the public policy of Louisiana as expressed in its statute is to create a vested right in plaintiffs to proceed directly against defendant insurance company. Further, we find a minimal interest in Louisiana as to nonresident plaintiffs' ability to proceed in their own forum under statute of limitations providing a longer term.

5. Minnesota advances its governmental interest by providing access to its courts for its citizens to enforce their vested rights and also by considering its socioeconomic policies as expressed by its legislature and courts. The prodominant interest in this case is plaintiffs' access to the courts, which supersedes our conflicting policy of prohibiting direct actions against insurers.

6. Determination of the remaining test under Milkovich--application of the better rule of law--is not necessary in this case since the conflict can be resolved without resort to this consideration.

Peterson & Holtze and Paul M. Heim, Minneapolis, for appellant.

Thompson, Hessian, Fletcher, McKasy & Soderberg and David B. Morse, Minneapolis, for respondents.

Heard before KNUTSON, C.J., and ROGOSHESKE, PETERSON, and KELLY, JJ., and reconsidered and decided by the court en banc.

TODD, Justice.

Defendant Government Employees Insurance Company (hereinafter referred to as GEICO) appeals from an order denying its motion to dismiss the complaints of plaintiffs on the grounds that the court lacks jurisdiction over the subject matter and that plaintiffs have failed to state a cause of action upon which relief can be granted. Discretionary review was granted by this court under Rule 105, Rules of Civil Appellate Procedure. The trial court determined that plaintiffs, residents of Minnesota, could bring direct action against defendant insurance company as provided by the Louisiana Direct Action Statute, the accident having occurred in that state. The trial court permitted the action to proceed under the Minnesota statute of limitations although the Louisiana statute of limitations governing the tort had expired. The trial court further held that the complaints of plaintiffs stated a cause of action in fraud. We affirm.

A two-car collision occurred on February 20, 1969, near Berwick, Louisiana. One automobile, driven by plaintiff Celia S. Myers and in which plaintiffs Ernest Gahlbeck and his wife, Virginia M. Gahlbeck, were passenger, was owned by plaintiff Ernest Gahlbeck. The other vehicle was being operated by defendant Clara Chatterton and was owned by her husband, defendant W. S. Chatterton. The Chatterton vehicle was insured by GEICO, a District of Columbia corporation licensed to do business in both Louisiana and Minnesota. The Chattertons were residents and citizens of Louisiana. Plaintiffs, residents and citizens of Minnesota, were on a trip which originated and was to terminate in Minnesota.

After the accident, settlement negotiations between plaintiffs and GEICO were conducted in both Louisiana and Minnesota. Within 1 year of the accident, some payments were made to plaintiffs, but no settlement was reached and no release given. In response to plaintiffs' inquiry made about 15 months after the accident, GEICO responded that it was unable to further consider the claims because the Louisiana statute of limitations had run. ¹

On April 14, 1972, plaintiffs commenced actions in the District Court of Hennepin County against GEICO and the Chattertons, seeking relief against all defendants for personal injuries and against GEICO based on fraud. Service was made on GEICO in Minnesota by serving the commissioner of insurance as provided by statute. ² No service has been made in Minnesota upon the Chattertons and there is no claim that personal jurisdiction over those defendants has been acquired by the Minnesota court.

1. The first issue to be considered is whether plaintiffs can properly maintain a direct action against GEICO on the negligence issue when such actions are not permitted under Minnesota statutes. Plaintiffs based their claim on La.Rev.Stat. Title 22, § 655, ³ which allows a direct action against the tortfeasor's liability insurance carrier and Minn.St. 541.14, which provides:

'When a cause of action has arisen outside of this state and, by the laws of the place where it arose, an action thereon is there barred by lapse of time, no such action shall be maintained in this state unless the plaintiff be a citizen of the state who has owned the cause of action ever since it accrued.'

The trial court determined that the Louisiana statute permitting direct actions conferred substantive rights upon plaintiffs which could be brought in Minnesota against GEICO under the provisions of § 541.14. The trial court's decision and appellant's brief were filed prior to our decision in Milkovich v. Saari, 295 Minn. 155, 203 N.W.2d 408 (1973). In that case, our court abandoned the 'series of rules' test and replaced it with 'choice-influencing considerations' in conflict situations. The latter, if a conflict of law exists, must now be applied to determine the issue.

2. Before applying the Milkovich standards, it must first be determined that a conflict exists, i.e., will the choice of one law as compared to another determine the outcome? Plaintiffs vigorously assert that no such conflict exists. This claim is based on the allegation that plaintiffs acquired a vested, substantive right against GEICO under La.Rev.Stat. Title 22, § 655, the direct action statute, which is enforceable under Minn.St. 541.14. GEICO contends that the rights conferred by the Louisiana statute are procedural and not substantive, relying on a decision of the Louisiana Court of Appeals, Second Circuit, which indicated that it regarded the statute as remedial in character rather than substantive. Finn v. Employers' Liability Assurance Corp., 141 So.2d 852, 864 (La.App.1962). The same court 7 years later, with a three-judge panel, two of whom had sat on the Finn case, indicated that the statute was basically substantive. Johnson v. St. Paul Mercury Insurance Company, 218 So.2d 375 (La.App.1969). However, this court regards the decision of the Louisiana Supreme Court in West v. Monroe Bakery, 217 La. 189, 46 So.2d 122 (1950), as determinative of the issue. The Supreme Court of Louisiana there said (217 La. 191, 46 So.2d 123):

'An analysis of our jurisprudence considered by the Appellate Court in reaching its conclusion discloses that with two exceptions Act 55 of 1930 (the forerunner of Title 22, Section 655) has been treated consistently as conferring Substantive rights on third parties to contracts of public liability insurance, which become vested at the moment of the accident in which they are injured, Subject only to such defenses as the tortfeasor himself may legally interpose.'

See, also, Lumbermen's Mutual Casualty Company v. Elbert, 348 U.S. 48, 75 S.Ct. 151, 99 L.Ed. 59 (1954); Collins v. American Automobile Insurance Company, 230 F.2d 416 (2 Cir. 1956).

Having resolved that plaintiffs acquired substantive rights does not determine the absence of a conflict question. Professor Robert A. Leflar, whose choice-influencing considerations we adopted in Milkovich, commenting on Restatement, Conflict of Laws (2d), has addressed this question:

'* * * It has been said that when two states with differing relevant laws have contacts with a set of facts but the 'interest' of one of the states in the issues presented by the facts is negligible or substantially less than the 'interest' of the other state, there is a 'false conflict,' which again seems equivalent to saying that there is 'no conflict.' This language is used even though the laws of the two states are contradictory and a choice has to be made between them. The conclusion is that the law of the state with the greater 'interest' will prevail. That is an understandable conclusion and one supported by interest analysis. But it represents a situation in which there is a real conflict of laws, even though it may be a fairly easy conflict to resolve.

'The term 'false conflict' is a useful one provided we make clear which conflict is false. In the last illustration, the laws of the two states do conflict, but their governmental interests may not. In that situation we are not talking about a 'false conflict of laws,' which can exist only when the relevant laws of the two states are entirely consonant. Rather we are referring to a 'false conflict of governmental interests,' in which the relevant laws differ but only one state has a real or significant interest in the facts and issues of the particular case. Insofar as governmental interest is the test (or part of the test) for choice of law, 'false conflict' in this latter sense is a legitimate concept. 'False conflict' is not, however, a test in itself; it is merely a statement of the court's conclusion after the governmental interest analysis has been applied to show that there is no conflict of governmental interests.' Leflar, The Torts Provisions of the Restatement (Second), 72 Col.L.Rev. 267, 275.

Thus, we conclude that there is a conflict of laws question...