Simpson v. Liberty Mut. Ins. Co.

Citation28 F.3d 763
Decision Date24 June 1994
Docket NumberNo. 93-2274,93-2274
PartiesDavid A. SIMPSON; Karen L. Simpson, Appellants, v. LIBERTY MUTUAL INSURANCE COMPANY, a Massachusetts Corporation, Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)

Job Serebrov, Fayetteville, AR, argued, for appellants.

William M. Griffin, III, Little Rock, AR, argued (David D. Wilson, appeared on the brief), for appellee.

Before BOWMAN, HANSEN, and MORRIS SHEPPARD ARNOLD, Circuit Judges.

PER CURIAM.

David and Karen Simpson, Arkansas citizens, appeal from the district court's 1 entry of summary judgment and the order denying a motion for new trial in their declaratory judgment suit 148 F.R.D. 621.

The Simpsons were employed by Scheduled Truckways as truck drivers when they were involved in a vehicular collision in Massachusetts with another tractor-trailer truck, driven by Richard P. Kochanowski, a citizen of Massachusetts, who was employed by Recycling Enterprises, Inc., a Massachusetts corporation. Liberty Mutual Insurance Company (Liberty), a Massachusetts insurance corporation, was the workers' compensation carrier for Scheduled Truckways, and the liability insurance carrier for Recycling Enterprises, Inc. Liberty paid workers' compensation benefits on behalf of Scheduled Truckways to the Simpsons. David received $19,610.61 and Karen received $47,801.25.

The Simpsons sued the driver, Kochanowski, and his employer, Recycling, in state court in Massachusetts. The Simpsons settled for a total of $225,000 after a bench trial but before the court issued a decision. Liberty issued four settlement checks, two of which were issued both to the Simpsons and Liberty. These checks totalled the proceeds received by the Simpsons for their workers' compensation benefits. Liberty, as the workers' compensation insurer, did not attempt to intervene in the Massachusetts action while the action was pending. Two months after the stipulation of dismissal was filed, Liberty filed a motion to intervene in that case, but the motion was denied because the case had been resolved.

The Simpsons then filed this action for a declaratory judgment, arguing that Liberty had waived any lien created by section 40 of the Arkansas Workers' Compensation Act because Liberty had failed to intervene in the Massachusetts lawsuit. The Simpsons sought to require Liberty to remove its name from the two settlement checks. The court granted Liberty's motion for summary judgment without determining whether Massachusetts law or Arkansas law applied, reasoning that the result would be the same, and held the insurance carrier was entitled to the proceeds of the two checks. The Simpsons appeal and argue that the correct application of Arkansas law requires a reversal.

"Federal district courts must apply the choice-of-law rules of the state in which they sit when jurisdiction is based on diversity of citizenship." Whirlpool Corp. v. Ritter, 929 F.2d 1318, 1320 (8th Cir.1991). As jurisdiction in this case is based on diversity, 28 U.S.C. Sec. 1332, this court must apply the choice-of-law rules of Arkansas, the situs of the district court.

Arkansas has adopted the "most significant relationship" test as its choice-of-law rule. Williams v. Carr, 263 Ark. 326, 565 S.W.2d 400, 404 (1978) (en banc). To determine which state has the most significant relationship, an Arkansas court will weigh the following choice-influencing considerations: "(1) Predictability of results. (2) Maintenance of interstate and international order. (3) Simplification of the judicial task. (4) Advancement of the forum's governmental interests. (5) Application of the better rule of law." Id.

Acceptance of workers' compensation payments pursuant to Arkansas's workers' compensation law does not mean that Arkansas automatically has the most significant relationship in determining the procedures of third-party tort settlement. In Orintas v. Meadows, 17 Ark.App. 214, 706 S.W.2d 199 (1986), an Arkansas appellate court applied the most significant relationship test and held that acceptance of workers' compensation payments from a state does not mean that the parties made an election to accept the procedures of third-party settlement pursuant to that state's law. Id. 706 S.W.2d at 201 (citing Wallis v. Mrs. Smith's Pie Co., 261 Ark. 622, 550 S.W.2d 453 (1977) (listing five factors of most significant relationship test, emphasizing forum's governmental interest and better rule of law)).

Examining this case in light of the five choice-influencing considerations, we believe that Massachusetts law should be applied. The first two considerations seem to us to have only marginal relevance to this case. On the other hand, application of Massachusetts law would simplify the judicial task. The applicable Massachusetts statute provides:

Where the injury for which compensation is payable was caused under circumstances creating a legal liability in some person other than the insured to pay damages in respect thereof, the employee shall be entitled, without election, to the compensation and other benefits provided...

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    • United States District Courts. 8th Circuit. United States State District Court of Eastern District of Arkansas
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    ...resolving conflict-of-laws issues. Wallis v. Mrs. Smith's Pie Co., 261 Ark. 622, 550 S.W.2d 453 (1977); accord Simpson v. Liberty Mut. Ins. Co., 28 F.3d 763, 764 (8th Cir. 1994). However, since the prima facie elements of a fraud claim — (1) a false misrepresentation; (2) of a material fact......
  • Hanjy v. Arvest Bank, Case No. 4:14–cv–00006–KGB.
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    • United States District Courts. 8th Circuit. United States State District Court of Eastern District of Arkansas
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    ...issue in a diversity action, a federal court looks to the choice-of-law principles of the forum state. Simpson v. Liberty Mut. Ins. Co., 28 F.3d 763, 764 (8th Cir.1994). Thus, Arkansas's choice-of-law principles govern what state's substantive law applies. Arkansas courts will enforce a con......
  • Jackson v. Travelers Ins. Co., 4-98-CV-90151.
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    ...bound to apply the choice of law rules of the forum state. See Klaxon, 313 U.S. at 496-97, 61 S.Ct. at 1021-22; Simpson v. Liberty Mut. Ins. Co., 28 F.3d 763, 764 (8th Cir.1994) (citing Whirlpool Corp. v. Ritter, 929 F.2d 1318, 1320 (8th Cir.1991)). This Court thus takes the third step in d......
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    • March 16, 1998
    ...citizenship, a federal district court is bound to apply the choice-of-law rules of the state in which it sits. Simpson v. Liberty Mut. Ins. Co., 28 F.3d 763, 764 (8th Cir.1994) (citing Whirlpool Corp. v. Ritter, 929 F.2d 1318, 1320 (8th Cir.1991)). As jurisdiction in this case is based on d......
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