Roper v Team Fleet Fin. Corp.

[*1] Roper v Team Fleet Fin. Corp. 2006 NY Slip Op 50161(U) [10 Misc 3d 1080(A)] Decided on February 7, 2006 Supreme Court, Bronx County Renwick, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on February 7, 2006
Supreme Court, Bronx County

Tahani Margaret Roper a/k/a TAHANI M. ROPER a/k/a TAHANI ROPER, Deceased, TRACY BROWN, THAIS MITCHELL, individually, and THAIS MITCHELL, as Administratrix of the Estate of TAHANI MARGARET ROPER, Plaintiffs,

against

Team Fleet Financing Corporation, TEAM FLEET FINANCING CORPORATION d/b/a BUDGET RENT A CAR CORPORATION, BUDGET RENT A CAR CORPORATION and KEVIN MITCHELL, Defendants. TEAM FLEET FINANCING CORPORATION, Third-Party Plaintiff, KEVIN MITCHELL, Third-Party Defendant.



26591/2001

Dianne T. Renwick, J.

This personal injury and wrongful death action, which arises from a single-car accident in the State of Pennsylvania, involving a vehicle rented in Connecticut by a New York resident, presents a choice of law issue. Defendants, corporations with domiciles in Illinois, and owners/lessors of the rental car involved in the fatal accident, now move for summary judgment dismissing the action on the ground that choice of law principles compel the application of Pennsylvania Law, which does not hold an owner or lessor accountable for the negligence of a driver.

Factual Background

The facts in this case are essentially undisputed unless otherwise stated. On May 26, 2000, defendant Kevin Mitchell rented a 2000 Dodge Durango registered in Connecticut and owned by defendant Team Fleet Financing Corporation. The vehicle was rented from a Budget-Rent-A-Car facility in Hartford, Connecticut. Budget-Rent-A-Car Corporation and Team Fleet Financing Corporation are both Delaware Corporations with principal places of business in Illinois.

On May 27, 2000, defendant Kevin Mitchell, a resident of New York, was operating the aforementioned vehicle when it was involved in a one-car accident on Route I-81 in Ryan Township, Pennsylvania. Plaintiffs, Tahani Roper, Tracy Brown and Thais Mitchell, all residents of New York, were passengers in the vehicle being operated by defendant Kevin Mitchell. Defendant Mitchell lost control of his vehicle while attempting to pass another vehicle. The vehicle veered off the road, hit a guardrail and went down an embarkment. It then flipped several times, causing plaintiffs passengers, who were unfettered, to be evicted from the vehicle. The infant plaintiff, Tahani Roper, was killed instantly and her mother Tracy Brown and Thais Mitchell allegedly suffered serious injuries.

Following the one-car accident, plaintiffs commenced this action in New York State Supreme Court, Bronx County, against defendant Kevin Mitchell, Team Fleet Financing Corporation and Budget Rent-A-Car Corporation. Plaintiffs claim that defendants Team Fleet Financing Corporation and Budget Rent-A-Car Corporation are vicariously liable for defendant-driver's (Kevin Mitchell) negligent driving of the rental vehicle.[FN1] Defendants Team Fleet Financing Corporation and Budget Rent-A-Car Corporation now move for summary judgment on the ground that choice of law principles compel application of Pennsylvania law and that under Pennsylvania law defendants are not liable for the adult plaintiffs' injuries and the infant plaintiff's demise.

Discussion

Summary judgment is appropriate when there is no genuine issue as to any material fact, [*2]and the moving party is entitled to a judgment as a matter of law. See C.P.L.R. §3212[b]; Bush v. St. Clare's Hospital, 82 NY2d 738, 739 (1993); Winegrad v. New York University Medical Center, 64 NY2d 851, 853 (1985) Because the parties are in agreement as to the material facts that is, the domiciles of the relevant parties and the location of the car accident this Court must decide whether, as a matter of law, Pennsylvania law governs, and, if so, whether the application of Pennsylvania law compels entry of summary judgment in favor of defendants.

Preliminarily, in any case presenting a potential choice of law issue, the court must first determine "whether there is an actual conflict between the laws of the jurisdictions involved." Allstate Corp. v. Solarz, 81 NY2d 219, 223. (1993). Elson v. Defren, 283 AD2d 109, 114 (1st Dept. 2001). If there is no conflict between the legal principles of the various jurisdictions, then the Court need not engage in a choice of law analysis. Allstate Ins. Co. v. Solarz, 81 NY2d 219, 223 (1993); Portanova v. Trump Taj Mahal Associates, 270 AD2d 757 (3rd Dept. 2000). The relevant jurisdictions are New York (Plaintiffs' domicile), Pennsylvania (the situs of the accident), and Illinois (Team Fleet Financing and Budget Rent-A-Car's domicile). See People by Vacco v. Alamo Rent A Car., 89 NY2d 560, 563 (1997) ("[T]he domicile of a corporation for choice-of-law purposes is the state where it maintains its principal place of business.").

Here, there is a clear conflict between the law of New York and that of the other two jurisdictions. With respect to Team Fleet Financing and Budget Rent-A-Car's liability, New York Vehicle and Traffic Law §388 provides for vicarious liability of vehicle owners for the negligence of drivers who operate the vehicles with the owner's permission, even if the accident occurs outside of New York. See Farber v. Smolack, 20 NY2d 198, 203-04 (1967). In Illinois, however, vicarious liability is not imposed on vehicle owners unless there is an agency relationship or negligent entrustment. See Coats v. Hertz Corp., 296 Ill. App. 3d 697, 699 (Ill. App. Ct. 5th Dist. 1998). Similarly, Pennsylvania follows the common law rule that, absent an employer-employee relationship, an owner is not vicariously liable for the negligence of the driver. Shuman Estates v. Weber, 276 PA Super 209 (1980); Solomon v. Commonwealth Trust Co., 256 PA 55 (1971); Accordingly, if Pennsylvania or Illinois law applies, then defendants, Team Fleet Financing Budget Rent-A-Car, cannot be found liable and must prevail as a matter of law.

Historically, choice-of-law conflicts in tort actions have been resolved by applying the law of the place of the wrong. In Babcock v. Jackson, 12 NY2d 473 (1963), the Court of Appeals abandoned the inflexible rule of lex loci delicti, holding that "controlling effect" must be given "to the law of the jurisdiction which, because of its relationship or contact with the occurrence or the parties, has the greatest concern with the specific issue raised in the litigation." Babcock v. Jackson, supra , at 481. In recognition of the uncertainty created by Babcock and its progeny, Neumeier v. Kuehner, 31 NY2d 121 (1972); Tooker v. Lopez, 24 NY2d 569 (1969); Miller v. Miller, 22 NY2d 12 (1968); Dym v. Gordon, 16 NY2d 120 (1965), the Court of Appeals, in Schultz v. Boy Scouts of America, Inc., 65 NY2d 189 (1985), refined the "interest analysis" approach in an attempt to bring to it some predictability. Reiterating that "interest analysis" entails a substantive determination of which jurisdiction has the greatest interest in the litigation, the court emphasized that "'the [only] facts or contacts which obtain significance in defining state interests are those which relate to the purpose of the particular law in conflict'" Schultz v Boy Scouts of America, Inc.., supra , at 197, quoting from Miller v. Miller, supra , at 1516. "Under this formulation, the significant contacts are, almost exclusively, the parties' domiciles [*3]and the locus of the tort." Schultz v Boy Scouts of Am., supra , at 197.

In weighing the various interests, New York courts distinguish between "conduct regulating" and "loss allocating" rules. " An immediate distinction was drawn between laws that regulate primary conduct (such as standards of care) and those that allocate losses after the tort occurs (such as vicarious liability rules.)" Cooney v. Osgood Mach., Inc.,81 NY2d 66, 72. If conduct regulating rules conflict, New York courts usually apply the law of the place where the tort occurred because that jurisdiction has the greatest interest in regulating behavior that takes place within its borders. Id., at 74. If loss allocating rules conflict, the three so-called Neumeier rules adopted in Neumeier v. Kuehner, 31 NY2d 121 govern the choice of law analysis.

Babcock and Neumeier addressed choice of law only with respect to automobile guest statutes. Subsequent New York decisions, however, make clear that the principles of Neumeier apply to all post-accident loss distribution rules, including rules of vicarious liability. See Jansen v. Ryder Truck Rental, 246 AD2d 364 (1st Dept. 1998) (vicarious liability of automobile owners under VTL §388 of the New York Vehicle and Traffic Law); Schultz v. Boy Scouts of America, Inc., 65 NY2d 189, 198-199 (1985) (charitable immunity law); Cooney v. Osgood Machinery, Inc., 81 NY2d 66, 76-77 (1993) (product liability contribution claim). Accordingly, Neumeier must be applied in this case to determine the governing law with respect to defendants' liability as owners of the automobile involved in the accident. Under the first Neumeier rule, if the parties are domiciled in the same state, the law of that state controls. If the tort takes place in the state where one party is domiciled and the law of that state favors the domiciliary, the second Neumeier rule mandates the application of the law of the situs of the tort. In other situations, when the parties are domiciled in different states with conflicting laws, the third Neumeier rule states that "[t]he law to be applied is that of the jurisdiction where the accident happened unless it appears that 'displacing [the] normally applicable rule will advance the relevant substantive law purposes' of the jurisdictions involved." Id. at 128 (citations omitted).

Here, the third Neumeier rule applies since plaintiff and defendants have domiciles in different states that had conflicting loss-allocation rules and the tort occurred in a third jurisdiction. See Schultz, supra , at 195 (applying third Neumeier rule where plaintiff and defendant were domiciled in different states that had conflicting loss-allocation rules and tort occurred in third jurisdiction); Heisler v. Toyota Motor Credit Corp., 884 F. Supp. 128, 131 (S.D.N.Y.1995). Under this rule, the law of Pennsylvania would govern unless plaintiffs can show that applying a different state's law "will advance the relevant substantive law purposes without impairing the smooth working of the multi-state system or producing great uncertainty for litigants." Neumeier, 31 NY2d 121.

Plaintiffs, however, claim that, because they have also sued defendant Kevin Mitchell, whose domicile is in New York, rule three of Neumeier is inapplicable to this conflict. This Court finds plaintiffs' argument untenable as a matter of law. Defendant driver's inclusion in this action should play no role in determining what law applies to plaintiffs' vicarious liability claim against defendants, since defendant Mitchell is not a party to the vicarious liability claim. See, e.g. Aboud v. Budget Rent A Car, 29 F.Supp.2d, 178, 180 (S.D.NY 1998) (ignoring domicile of unrelated defendant in choice of law analysis); Restatement (Second) Conflict of Laws § 145 (1971) (in determining choice of law, the domicile of defendants is to be evaluated "according to their relative importance with respect to the particular issue"). Therefore, defendant Mitchell has [*4]no true substantive interest in whether New York or Pennsylvania law applies to the vicarious liability claim.

This Court has failed to find any New York State case that has had the opportunity to address the exact issue presented here whether a departure from the third Neumeier rule is warranted on the basis of the facts presented by this action (namely that New York passengers were injured in an accident in Pennsylvania involving a vehicle rented and registered in Connecticut and owned by corporations domiciled in Illinois). However, two judges from the United States District Court for the Southern District have decided, under circumstances strikingly similar to this case, that New York Choice of Law principles do not require that the law of the situs of the tort should be displaced by New York Law.

For instance, in Aboud v. Budget Rent A Car Corp., 29 F. Supp. 2d 178, 183 (S.D.N.Y.1998), the court refused to displace the locus law with VTL §388. In Aboud v. Budget Rent A Car Corp., supra , a diversity personal injury action was brought by a passenger against a car rental company that leased an automobile involved in a one-car accident in New Jersey. The District Court held that under New York's choice of law principles, New Jersey law governed potential vicarious liability of the car rental company, which was domiciled in the District of Columbia, to a passenger, who was a New York resident. While acknowledging that displacement of New Jersey law may advance the relevant substantive law purposes of the New York law by giving a New York domiciliary a right of recovery against the owner of the automobile, the court reasoned that "such displacement, however, would impair the smooth working of the multi-state system." Specifically, the court finds that "application of New York law would create the appearance of favoritism toward the local litigant, whereas the application of New Jersey law would not. Favoritism encourages forum shopping, which interferes with the smooth operation of the multi-state judicial system." Accordingly, the court found that special circumstances do not exist warranting an exception from the presumption of lex loci delicti established in the third Neumeier rule.

Similarly, in Heiseler v. Toyota Motor Credit Corp., 884 F. Supp. 128 (S.D.NY 1995), another federal judge refused to displace the locus law, with VTL §388. In Heiseler v. Toyota Motor Credit Corp., supra , the issue arose out of a New Jersey accident injuring a New York plaintiff, and caused by a New Jersey driver who had rented the car from a California corporation. The court characterized the conflict between the New York and New Jersey rules as a conflict between loss-distribution rules and applied New Jersey law under the third Neumeier rule. The court specifically rejected plaintiff's attempt to invoke the escape clause of the third Neumeier rule, finding that the plaintiff had "not demonstrated that the substitution of New York law would advance the purposes underlying [the New York statute] without simultaneously undermining multi-state litigation (by, for instance, encouraging forum shopping, or by appearing to favor the local party) or producing uncertainty for litigants." Id.

These federal decisions are, of course, not binding on this Court. Nevertheless, they are analogous in their presentation of a true split-domicile situation within the context of an owner's vicarious liability for the negligent driving that took place outside the territorial boundaries of New York State. This Court adopts the reasoning of Aboud, supra , and Heiseler, supra , and applies it to the circumstances of this case, and finds that, because the displacement of the law of the situs of the accident would create an appearance of favoritism toward local litigants, thereby encouraging forum shopping, it cannot be said that applying New York Law would advance the [*5]purposes underlying VTL §388 without simultaneously undermining "the smooth working of the multi-state system or producing great uncertainty for litigants." Neumeier, 335 NYS2d at 70. Indeed, while this Court has found no New York case law directly on point, New York case law supports the notion that favoritism should be avoided in choice of law analysis. For example, in Cooney, 81 NY2d 66, 74, a New York resident sought contribution from a Missouri defendant in connection with a product liability tort that occurred in Missouri. New York law permitted the contribution suit, whereas Missouri law did not. Despite the fact that New York law was in favor of the New York plaintiff, the Court of Appeals applied the law of Missouri (where the underlying tort took place) in part because "locus is a neutral factor, rebutting an inference that the forum state is merely protecting its own domiciliary or favoring its own law. Cooney v. Osgood Machinery Co., 81 NY2d 66, 74 (1993); see also Schultz v. Boy Scouts of America,Inc., 65 NY2d 189, 201 (1985).

Moreover, most New York State cases which have extended the applicability of VTL §388 to accidents occurring outside the New York State borders are cases in which the contacts with New York were significantly greater than in this case. See e.g., Vasquez v. Christian Herald Ass'n, Inc., 186 AD2d 467(1st Dept. 1992) (Applying VTL § 388 to accident that occurred in Pennsylvania because plaintiff and defendant shared a common New York domicile); Royal Jansen v. Ryder Truck Rental, Inc., 246 AD2d 364 (1st Dept. 1998) (same); Thomas v. Hanmer, 109 AD2d 80 (4th Dept. 1985) (plaintiff and defendant were New York domiciliaries and both automobiles were registered and insured in New York).

Finally, plaintiffs' reliance upon Royal Jansen v. Ryder Truck Rental, Inc., 246 AD2d 364 (1st Dept. 1998), is misplaced. The facts in this case are distinguishable from those in Royal Jansen v. Ryder Truck Rental, Inc, supra , where the Court held that, since Vehicle and Traffic Law 388 was consistent with the law of all the parties' domiciles, the New York Law, rather than that of New Jersey, the locus of the accident, should govern. Of course, in such a scenario where Vehicle and Traffic Law 388 was consistent with the law of all the parties' domiciles, displacing locus law with domiciliary law neither encourages forum shopping nor causes the appearance of favoring local litigants. See Cooney, supra , (explaining that forum-shopping is minimized when the law of a common domicile is applied "because the same law will apply whether the suit is brought in the locus jurisdiction or in the common one). In this case, however, the parties were domiciled in different states with conflicting laws.

Conclusion

In short, the Neumeier rules and the cases previously cited require the application of Pennsylvania Law to the issue of vicarious liability of automobile owners and lessors for the driver's negligent operation of the automobile. Because defendants Budget-Rent-A-Car and Team Fleet Financing Corporation cannot be held vicariously liable under the laws of Pennsylvania, the motion by defendants Budget-Rent-A-Car and Team Fleet Financing Corporation, seeking summary judgment, dismissing the claims asserted against them, is granted. Accordingly, the Clerk is directed to sever and dismiss the claims asserted against defendants Budget-Rent-A-Car Corporation and Team Fleet Financing Corporation.

This constitutes the Decision and Order of the Court.

Dated: February 7, 2006 __________________________ [*6]

Bronx, New York Hon. Dianne T. Renwick, J.S.C. Footnotes

Footnote 1: On August 10, 2005, Congress enacted H.R.3, the Transportation Equity Act, which contains a provision that eliminates vicarious liability, as it applies to rental car and leasing companies. The law takes effect the day it was signed and applies to law suits filed on or after that date. It has no application to this case, which was commenced before the effective date.