Truck Ins. Exchange v. Tetzlaff

• Decision Date: 17 February 1988
• Docket Number: No. CV-N-87-541-ECR.,CV-N-87-541-ECR.
• Parties: TRUCK INSURANCE EXCHANGE, a California reciprocal or interinsurance exchange, and St. Francis Medical Center, a California corporation, Plaintiffs, v. Thomas Ross TETZLAFF, M.D., Thomas Ross Tetzlaff, M.D., Inc., a Nevada corporation, Defendants.
• Court: U.S. District Court — District of Nevada

683 F. Supp. 223

TRUCK INSURANCE EXCHANGE, a California reciprocal or interinsurance exchange, and St. Francis Medical Center, a California corporation, Plaintiffs, v. Thomas Ross TETZLAFF, M.D., Thomas Ross Tetzlaff, M.D., Inc., a Nevada corporation, Defendants.

No. CV-N-87-541-ECR.

United States District Court, D. Nevada.

February 17, 1988.

Randall L. Shelley and Linda C. Miller, Sherman Oaks, Cal. and Margo Piscevich, Reno, Nev., for plaintiffs.

Charles T. Durante, and George W. Swainston, Reno, Nev., for defendants.

ORDER

EDWARD C. REED, Jr., Chief Judge.

INTRODUCTION

Two matters are before the Court in this case. First is a Motion to Dismiss Complaint (docket # 11) filed by defendants. The second matter before the Court is a Demand for Security (docket # 12) filed by defendants. A choice of law issue is the crux of both matters.

This case was filed on May 5, 1987, (received and returned on May 1, 1987) in the United States District Court for the Central District of California. Truck Insurance Exchange ("Truck") and St. Francis Medical Center ("St. Francis") bring action against Dr. Thomas Ross Tetzlaff and Thomas Ross Tetzlaff, M.D., Inc. (collectively "Dr. Tetzlaff") for indemnification.

Truck, at the times relevant to this case, was an insurer of St. Francis. On December 22, 1983, St. Francis was sued by Jamie Liston and others (collectively "Listons") for negligence. Apparently, Dr. Tetzlaff was named as a third-party defendant in that case but was later dismissed for lack of personal jurisdiction. On May 9, 1986, St. Francis and its insurer, Truck, settled the 1983 action. St. Francis and Truck paid $375,000 to the Listons pursuant to the settlement. In the present case St. Francis and Truck allege that the injuries for which the Listons recovered $375,000 were caused by the negligence of Dr. Tetzlaff in treating Jamie Liston.

There was a motion in this case in the Central District of California for dismissal based on lack of personal jurisdiction or, in the alternative, for transfer pursuant to 28 U.S.C. § 1404; that motion was opposed by the plaintiffs on October 5, 1987 (see docket # 7 and # 8). On October 22, 1987, the Central District of California court entered an order approving a stipulation that the present case be transferred to the District of Nevada (docket # 9). The stipulation stated that the transfer was pursuant to 28 U.S.C. § 1404, but stated no specific reasons for the transfer.

THE MOTION TO DISMISS COMPLAINT

On November 10, 1987, defendants filed the Motion to Dismiss Complaint (docket # 11) which is before the Court. The plaintiffs opposed the motion on November 25, 1987 (docket # 17). Defendants replied on December 21, 1987 (docket # 22).

The defendants assert in their motion that NRS § 41A.016 requires that the present case be submitted to a screening panel before it may proceed in this Court. Defendants cite the case of Feinstein v. Massachusetts General Hospital, 643 F.2d 880 (1st Cir.1981), for the proposition that a federal district court with diversity jurisdiction should apply a state medical malpractice screening provision such as NRS § 41A.016.

In response, the plaintiffs argue that NRS § 41A.016 does not apply, as the laws of the forum state of the transferor court apply in cases transferred for the convenience of parties and witnesses pursuant to 28 U.S.C. § 1404; that defendants waived any rights they may have had under NRS § 41A.016 by stipulating to the transfer; that NRS § 41A.016 is inapplicable in cases transferred under 28 U.S.C. § 1404; that the present action is one for indemnity and not medical malpractice, and, therefore, NRS § 41A.016 is inapplicable; that NRS § 41A.016 is discretionary and not mandatory, and, in this case, should not be applied. In the alternative, plaintiffs argue that, if the Court determines that NRS § 41A.016 applies, this action should be stayed while they proceed before the screening panel. This request is made by plaintiffs in light of the statute of limitations.

In reply, the defendants argue first that this case was transferred for jurisdictional purposes rather than for the convenience of parties and witnesses, and, therefore, the laws of the forum state of the transferee court apply. Alternatively, defendants assert that, even if the laws of the forum state of the transferor court apply, Nevada law should be applied since the United States District Court for the Central District of California would have applied Nevada law under the California choice of law analysis. Defendants also contest the plaintiffs' position that a stay is a possibility in this case, arguing that NRS § 41A.016 requires immediate dismissal.

The choice of law in this case is the crucial issue. The first question in resolving the issue is whether the choice of law rules of California or Nevada apply. In analyzing this question, the Court must distinguish between cases transferred for convenience and cases transferred to cure a lack of personal jurisdiction. If this case was transferred under 28 U.S.C. § 1404 for the convenience of parties and witnesses, the choice of law rules of the forum state of the transferor court, California, would apply. See Nelson v. International Paint Co., 716 F.2d 640, 643 (9th Cir.1983). If, on the other hand, this case was transferred under 28 U.S.C. § 1404 to cure a lack of personal jurisdiction, the choice of law rules of the forum state of the transferee court, Nevada, would apply. Id.

The stipulation does not disclose the reasons for the transfer; it states only that the transfer was pursuant to 28 U.S.C. § 1404. At the time of the transfer, a motion addressing the possible absence of personal jurisdiction was pending. The district court, however, made no findings with regard to personal jurisdiction prior to the transfer. The record is unclear as to the reason for the transfer.

This Court finds that it need not decide whether the transfer was for convenience or to cure a lack of personal jurisdiction. The choice of law to be applied in this case is the same under either the Nevada or California analysis.

The choice of law rule in the Nevada state courts in tort cases is the First Restatement's vested rights theory (also known as the lex loci rule). Laxalt v. McClatchy, 116 F.R.D. 438, 447 (D.Nev. 1987). Under the First Restatement, the law of the place of the wrong controls all substantive issues in the lawsuit. Id. The place of the wrong is recognized as the place where the injury is incurred. Id. The alleged wrong in this case was negligent treatment of Jamie Liston by Dr. Tetzlaff. The treatment occurred in Nevada; the parties agree as to this fact. The place of the wrong in this case is Nevada, and, therefore, under Nevada's choice of law rule, Nevada substantive law applies.

The California state courts apply a "governmental interest" analysis in resolving choice of law issues. Ledesma v. Jack Stewart Produce, Inc., 816 F.2d 482, 484 (9th Cir.1987); In re Yagman, 796 F.2d 1165, 1170 (9th Cir.1986); Wong v. Tenneco, Inc., 39 Cal.3d 126, 702 P.2d 570, 216 Cal.Rptr. 412 (1985); Offshore Rental Co. v. Continental Oil Co., 22 Cal.3d 157, 583 P.2d 721, 148 Cal.Rptr. 867 (1978); Hurtado v. Superior Court, 11 Cal.3d 574, 522 P.2d 666, 114 Cal.Rptr. 106 (1974). Under the governmental interest approach the court must first determine if the laws of the two states differ. If they do, the court next determines whether each state has an interest in the application of its law. If only one state has an interest, there is no "true conflict" of laws and the court applies the law of the interested state. If both states have an interest in having their law applied, a true conflict exists; if this is so, the court applies the law of the state which has the interest which would be most impaired if its law were not applied. Ledesma, 816 F.2d at 484.

The Court is certainly faced with a situation where the laws of the two possible jurisdictions, California and Nevada, differ. Nevada law would require the present case to be submitted to a screening panel before it may be pursued in court; California law apparently imposes no such requirement.

The Court further determines that both California and Nevada have an interest in application of their respective laws in the present case. California's interest involves the speedy and efficient resolution of medical malpractice actions; it involves, moreover, the efficacious placement of liability with the party legally responsible for injury caused to California citizens through medical malpractice. Nevada's interest involves the protection of its health care providers from frivolous medical malpractice claims. This interest is tied closely to the interest of controlling malpractice insurance rates and ultimately the cost of health care. A true conflict exists.

The Court determines that the interests of Nevada are in more danger of being impaired than the interests of California. The Nevada legislation is a response to a problem of insurance costs which has an effect on the cost of health care. If chapter 41A of the Nevada Revised Statutes is not applied in this case, the state's scheme of protection of health care providers is circumvented by the mere fact that this diversity case was first filed in a California federal court. On the other hand, California's interests are not severely undermined by the application of NRS, chapter 41A, in this case. The Listons have been compensated in California court; no California interest pertaining to them is implicated. Furthermore, California's interest in seeing that liability is fairly allocated is set back only to the extent that application of Nevada's laws causes delay. That delay will be slight. The plaintiffs herein will not be denied a forum to resolve this case. Because Nevada's interests are in more danger of being undermined than California's, the California choice of law analysis leads to Nevada substantive law.

Under both...