Veasley v. CRST Intern., Inc.

• Citation: 553 N.W.2d 896
• Decision Date: 18 September 1996
• Docket Number: No. 95-925,95-925
• Parties: Calvin VEASLEY and Sharon Veasley, Appellants, v. CRST INTERNATIONAL, INC., CRST, Inc., Rapids Leasing, Inc., and Lincoln Sales And Services, Inc., Appellees.
• Court: United States State Supreme Court of Iowa

Page 896

553 N.W.2d 896

Calvin VEASLEY and Sharon Veasley, Appellants, v. CRST INTERNATIONAL, INC., CRST, Inc., Rapids Leasing, Inc., and Lincoln Sales And Services, Inc., Appellees.

No. 95-925.

Supreme Court of Iowa.

Sept. 18, 1996.

John Riccolo and David L. Baker of Riccolo & Baker, P.C., Cedar Rapids, for appellants.

James E. Shipman, James M. Peters, and Webb L. Wassmer of Simmons, Perrine, Albright & Ellwood, P.L.C., Cedar Rapids, for appellees.

Considered by McGIVERIN, C.J., and CARTER, LAVORATO, SNELL, and ANDREASEN, JJ.

CARTER, Justice.

Plaintiff, Calvin Veasley, and his wife, Sharon Veasley, (the Veasleys) appeal from an adverse summary judgment in their action against defendant Rapid Leasing, Inc. (Rapid Leasing). Calvin Veasley was a relief driver for a commercial trucking venture and was seriously injured when a truck, owned by Rapid Leasing and driven by Veasley's coemployee Richard Powlistha, overturned in Arizona. The Veasleys commenced an action against Rapid Leasing based on the theory that, under Iowa Code section 321.493 (1993), as the vehicle's owner, it was liable for the negligence of Powlistha. Rapid Leasing urged that this theory of recovery was subject to the coemployee gross negligence standard of Iowa Code section 85.20 (1993). The district court agreed with this contention, concluded that it could not be established that Powlistha was grossly negligent, and dismissed the Veasleys' claims against Rapid Leasing.

In Smith v. CRST International, Inc., 553 N.W.2d 890 (Iowa 1996), decided this same date, we hold that a coemployee defense, personal to a consent driver, may not be utilized by a motor vehicle owner in an action based on section 321.493. The district court's theory in dismissing the claims against Rapid Leasing was thus erroneous. We must consider, however, whether Rapid Leasing may nevertheless preserve its favorable judgment on other legal theories urged. These are its alternative claims that (1) Arizona law, which does not recognize the vicarious liability of a vehicle owner, should control; (2) because of the substantial relationship between the affiliated corporations, Rapid Leasing should be considered to be Calvin Veasley's employer; and (3) a 1995 amendment to section 321.493 should be applied retroactively to defeat the Veasleys' claim. We find no merit in any of these contentions and conclude that, under the authority of the Smith case, the judgment must be reversed.

In addition to Rapid Leasing, three other defendants were named in this action. The Veasleys' claims against the other three were denied on grounds not at issue on this appeal. The four corporate entities involved were CRST International, Inc., an Iowa corporation with its principal place of business in Cedar Rapids; CRST, Inc., an Iowa corporation with its principal place of business in Cedar Rapids; Lincoln Sales and Service, Inc., an Iowa corporation with its principal place of business in Cedar Rapids; and Rapid Leasing, a Montana corporation with its principal place of business in Cedar Rapids. Lincoln Sales and Service, Inc. hires truck drivers and contracts with CRST, Inc. for their services. Lincoln hired both Calvin Veasley and Richard Powlistha. Rapid Leasing owns trucks and leases them to CRST, Inc. The truck involved in the present case was titled in the name of Rapid Leasing, registered in the State of Iowa and bore Iowa license plates. Other facts relevant to deciding this appeal will be discussed in connection with the legal issues presented.

I. The Choice of Law Issue.

Rapid Leasing argues that Arizona law should apply in this case. That state has no owner liability statute and does not otherwise recognize vicarious liability based on vehicle ownership. Iowa has abandoned the lex loci delicti rule in which the law of the place of injury governs every issue in a tort action. We now follow the Restatement's "most significant relationship" methodology for choice of law issues. Cameron v. Hardisty, 407 N.W.2d 595, 597 (Iowa 1987); Berghammer v. Smith, 185 N.W.2d 226, 231 (Iowa 1971). The theory behind this approach is that rather than focusing on a single factor, "the court of the forum should apply the policy of the state with the most interest in the litigants and the outcome of the litigation." Fuerste v. Bemis, 156 N.W.2d 831, 834 (Iowa 1968).

The most significant relationship test is that which is stated as follows in the Restatement (Second) Conflict of Laws:

(1) The rights and liabilities of the parties with respect to an issue in tort are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the occurrence and the parties under the principles stated in § 6.

(2) Contacts to be taken into account in applying the principles of § 6 to determine the law applicable to an issue include:

(a) the place where the injury occurred,

(b) the place where the conduct causing the injury occurred,

(c) the domicile, residence, nationality, place of incorporation, and place of business of the parties, and

(d) the place where the relationship, if any, between the parties is centered.

These contacts are to be evaluated according to their relative importance with respect to the particular issue.

Restatement (Second) Conflict of Laws § 145 (1971).

We recognized in Joseph L. Wilmotte & Co. v. Rosenman Brothers, 258 N.W.2d 317, 326 (Iowa 1977), that the situation-specific sections of the Restatement, such as section 145, incorporate the provisions set forth in section 6 thereof. These principles are as follows:

(1) A court, subject to constitutional restrictions, will follow a statutory directive of its own state on choice of law.

(2) Where there is no such directive, the factors relevant to the choice of the applicable rule of law include

(a) the needs of the interstate and international systems,

(b) the relevant policies of the forum,

(c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue,

(d) the protection of justified expectations,

(e) the basic policies underlying the particular field of law,

(f) certainty, predictability, and uniformity of result, and

(g) ease in the determination and application of the rule to be applied.

Restatement (Second) Conflict of Laws § 6 (1971). The issue in the present case is whether the owner's liability provisions of section 321.493 govern the Veasleys' claims against Rapid Leasing. We are convinced that in applying the most significant relationship test in accordance with the provisions of section 6 and section 145 of the Restatement the Iowa statute should be applied.

The factor involving ease of determination of the conflicting rules of law is of little importance in the present case. Either Rapid Leasing may be held liable or it may not. No esoteric or complex substantive laws are involved. Cf. Reisch v. McGuigan, 745 F.Supp. 56, 62 n. 5 (D.Mass.1990); Breskman v. BCB, Inc., 708 F.Supp. 655, 659 (E.D.Pa.1988); Milkovich v. Saari, 295 Minn. 155, 203 N.W.2d 408, 414 (1973).

"Certainty, predictability, and uniformity of result" are also less important in automobile tort cases. Conflicting laws are a result of the combination of "a mobile society," Cooney v. Osgood Machinery, Inc., 81 N.Y.2d 66, 595 N.Y.S.2d 919, 612 N.E.2d 277, 279 (1993), and America's federal system in which the states have primary control over the regulation of these matters will always work against uniformity.

The protection of justified expectations is, according to several modern authorities, of scant relevance in automobile accident cases. Reisch, 745 F.Supp. at 61; Milkovich, 203 N.W.2d at 412; Gordon v. Gordon, 118 N.H. 356, 387 A.2d 339, 340 (1978). According to the Milkovich court, "no one plans to have an accident." 203 N.W.2d at 412. Furthermore, Rapid Leasing is a nationwide trucking firm. The trip involved in this case commenced in California. California has an owner liability statute. Since twelve states have owner liability statutes, it would be reasonable for Rapid Leasing to expect liability and to protect itself accordingly. Cf. Bryant v. Silverman, 146 Ariz. 41, 703 P.2d 1190, 1195 (1985) (air carrier that flew over states that did not limit wrongful death damages could have protected itself). Rapid Leasing chose to register the truck involved in Iowa, and it chose to make Iowa its principal place of business. It could reasonably have foreseen that Iowa law would apply in situations such as this.

Respect for interstate and international systems is maintained when the forum state, when choosing to apply its own law, has a "substantial connection" with the issue. Milkovich, 203 N.W.2d at 417. We believe, based on the deterrence policy underlying section 321.493, that Iowa has a substantial connection regarding the responsibility of all persons or corporations with a local nexus that loan or lease motor vehicles to other entities. Moreover, Iowa's owner liability law is not so abnormal that an application of Iowa law would greatly disrupt interstate order. At least twelve states have owner liability laws.

Regarding the policy factors recognized in Restatement section 6(2)(b), Iowa's statute was passed to recognize the dangers posed by the common use of automobiles. See Note, Liability of Owner for Torts of Renter or Borrower of Automobile, 13 Iowa L.Rev. 336, 338 (1928). This court has recognized that one of the purposes of section 321.493 is to make vehicle owners responsible for the actions of others to whom they have entrusted their motor vehicles. Briner v. Hyslop, 337 N.W.2d 858, 870 (Iowa 1983). Regarding the deterrent purpose of a similar statute, the Michigan Supreme Court has stated:

In order to successfully modify conduct, the regulating force, whether it be criminal or civil, must be quickly, consistently and assuredly applied to the undesirable conduct. To enforce the owners' liability sta...