Garcia v. Plaza Oldsmobile, Ltd.

Opinions of the United
2005 Decisions States Court of Appeals
for the Third Circuit
9-2-2005
Garcia v. Plaza Oldsmobile
Precedential or Non-Precedential: Precedential
Docket No. 04-4332
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 04-4332
RUDOLFO GARCIA;
MARITZA A. ESPINAL-GARCIA
v.
PLAZA OLDSMOBILE LTD., d/b/a PLAZA TOYOTA; TOYOTA
MOTOR NORTH AMERICA, INC.; TOYOTA MOTOR SALES,
U.S.A., INC.; TOYOTA MOTOR CREDIT CORPORATION;
TIMOTHY GLADNEY
Plaza Oldsmobile, LTD, d/b/a
Plaza Toyota,
Appellant
On Appeal from the United States District Court
for the Middle District of Pennsylvania
(D.C. Civ. No. 03-2404)
Honorable Richard P. Conaboy, District Judge
Argued July 12, 2005
Before: ALITO, BECKER, and GREENBERG, Circuit Judges.
(Filed: September 2, 2005)
OPINION OF THE COURT
Andre D. Bigda (argued)
Rosenn, Jenkins and Greenwald
15 South Franklin Street
Wilkes-Barre, PA 18711
Attorneys for Appellees
John J. McGrath (argued)
McKissock & Hoffman
25 Chestnut Street
Suite 108
Haddonfield, N.J. 08033
Attorneys for Appellant
OPINION OF THE COURT
GREENBERG, Circuit Judge.
I. FACTUAL AND PROCEDURAL HISTORY
This appeal requires us to answer a conflicts-of-laws question.
The case arises from a motor vehicle accident in Pennsylvania on
February 25, 2002, involving plaintiff-appellee Rodolfo Garcia
(hereinafter “Garcia”), a Pennsylvania citizen, and defendant Timothy
Gladney (hereinafter “Gladney”), a New York citizen and New York
licensed driver. Garcia was driving a Dodge truck registered and
insured in Pennsylvania. Gladney was driving a Toyota automobile
that he had rented earlier that day in Brooklyn, New York, from
defendant-appellant Plaza Oldsmobile (hereinafter “Plaza”), a New
York corporation with its principal place of business in that state.
Garcia alleged that he suffered permanent and disabling injuries as a
result of the accident and that Plaza, as owner of the vehicle, was
liable to him for his injuries. Consequently, he brought this diversity
of citizenship action, in which the district court had jurisdiction under
28 U.S.C. § 1332, against Gladney and Plaza as well as certain other
defendants not involved in this appeal.1 Garcia’s wife, plaintiff-
appellee Maritza Espinal-Garcia, has joined in the action asserting a
claim for loss of consortium but as a matter of convenience we will
refer to Garcia as the plaintiff-appellee in the singular. As of the time
that Plaza filed this appeal, there had not been a trial on liability for
the accident, even as between Garcia and Gladney, and damages had
not been determined, and, as far as we are aware, there still has not
been a trial in the district court.
In the district court, Plaza and Garcia filed cross motions for
1
Pursuant to a stipulation among the parties, the claims against
all defendants except Plaza and Gladney were dismissed voluntarily.
2
partial summary judgment seeking a determination of whether the
court should ascertain Plaza’s potential liability by application of
Pennsylvania’s common law or section 388(1) of New York’s Vehicle
and Traffic Law. The distinction is likely to be critical because under
Pennsylvania common law, which is predicated on traditional agency
principles, regardless of Gladney’s culpability Plaza could not be
liable to Garcia whereas, under New York law, if Gladney is
determined to be liable to Garcia, Plaza also would be liable to him as
New York imposes vicarious liability on a vehicle owner for injuries
arising from the negligence of anyone using or operating its vehicle
with permission.2 Compare Fried v. Seippel, 599 N.E.2d 651 (N.Y.
1992), with Ferry v. Fisher, 709 A.2d 399 (Pa. Super. Ct. 1998).3 As
2
Actually we are assuming in this opinion that Plaza would be
liable to Garcia for Gladney’s negligence under New York law but not
under Pennsylvania law. Of course, in view of our result we will never
know if this assumption is correct as Garcia will have no reason to
attempt to establish that Plaza would be liable under Pennsylvania law
which, from a plaintiff’s point of view, is more onerous than New York
law.
3
Section 10208 of the Safe, Accountable, Flexible, Efficient
Transportation Equity Act of 2005, a provision of the recently enacted
2005 federal Transportation Equity Act, provides as follows:
(a) In General – An owner of a motor vehicle that rents
or leases the vehicle to a person (or an affiliate of the
owner) shall not be liable under the law of any State or
political subdivision thereof, by reason of being the
owner of the vehicle (or an affiliate of the owner), for
harm to persons or property that results or arises out of
the use, operation, or possession of the vehicle during the
period of the rental or lease, if –
(1) the owner (or an affiliate of
the owner) is engaged in the trade or
business of renting or leasing motor
vehicles; and
(2) there is no negligence or
criminal wrongdoing on the part of the
owner (or an affiliate of the owner).
With respect to the effective date the act provides that:
3
would be expected, Garcia asserted that New York statutory law
applied whereas Plaza contended that Pennsylvania common law
applied. Surprisingly, the parties have not been able to direct our
attention to any published opinion of any state or federal court in
Pennsylvania directly addressing the conflicts-of-laws issue here.4
The district court concluded that there was a false conflict between
New York and Pennsylvania law, and that New York law applied and
thus on June 4, 2004, granted Garcia’s motion insofar as he requested
the court to apply New York law. We will explain below what
circumstances give rise to a false conflict.
Plaza then moved for certification of the June 4, 2004 order
pursuant to 28 U.S.C. § 1292(b) so that it could seek leave from this
court to appeal from that order and it moved, in the alternative, for
reconsideration of the order. By order dated August 17, 2004, the
district court granted Plaza’s motion for certification under 28 U.S.C.
§ 1292(b) but denied its motion for reconsideration. We granted
Plaza’s petition for permission to appeal on November 4, 2004.
II. DISCUSSION
As we have indicated the sole question presented on appeal is
a narrow conflicts-of-law issue: whether the court should use
Pennsylvania common law or New York’s statutory law to determine
if Plaza can be liable. We exercise plenary review over the choice of
(c) Applicablility and Effective Date --
Notwithstanding any other provision of law, this section
shall apply with respect to any action commenced on or
after the date of enactment of this section without regard
to whether the harm that is the subject of the action, or
the conduct that caused the harm, occurred before such
date of enactment.
In view of the circumstance that the act does not have retroactive
affect with respect to pending litigation it is not material on this appeal
though undoubtedly the act prospectively largely will eliminate the
circumstances in which section 388(1) will be applied.
4
The district court noted that the “precise issue [in this case] has
not been addressed by any state or federal court sitting in Pennsylvania.”
Op. at 1.
4
law question raised by this appeal. See Simon v. United States, 341
F.3d 193, 199 (3d Cir. 2003); Shuder v. McDonald’s Corp., 859 F.2d
266, 269 (3d Cir. 1988).
In a diversity of citizenship action, we determine which state’s
substantive law governs by applying the choice-of-law rules of the
jurisdiction in which the district court sits, here Pennsylvania.
Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct.
1020, 1021 (1941); Petrella v. Kashlan, 826 F.2d 1340, 1343 (3d Cir.
1987); Melville v. American Home Assur. Co., 584 F.2d 1306, 1308
(3d Cir. 1978). Griffith v. United Air Lines, Inc., 203 A.2d 796 (Pa.
1964), is Pennsylvania’s leading conflicts-of-laws case. In that case,
the Pennsylvania Supreme Court abandoned the traditional lex loci
delicti conflicts rule in which the law of the place of the wrong
governed the substantive rights and liabilities of the parties and
substituted "a more flexible rule which permits analysis of the policies
and interests underlying the particular issue before the court." Id. at
805. We have indicated that this methodology has evolved into a
hybrid approach that "combines the approaches of both Restatement
[(Second) of Conflict of Laws] (contacts establishing significant
relationships) and 'interest analysis' (qualitative appraisal of the
relevant States' policies with respect to the controversy)." Melville,
584 F.2d at 1311.
Under Pennsylvania law, before assessing the governmental
interests of the jurisdictions whose law may control and examining
their contacts with the dispute, we must determine what type of
“conflict,” if any, exists between the purported competing bodies of
law. See Kuchinic v. McCrory, 222 A.2d 897, 899-900 (Pa. 1966).
We begin with an "interest analysis" of the policies of all interested
states and then – based on the result of that analysis – determine
whether the case involves a true or false conflict or whether it is
unprovided for. Budget Rent-A-Car Sys., Inc. v. Chappell, 407 F.3d
166, 169-70 (3d Cir. 2005); see also LeJeune v. Bliss-Salem, Inc., 85
F.3d 1069, 1071 (3d Cir. 1996).
There is a true conflict "when the governmental interests of
both jurisdictions would be impaired if their law were not applied."
Lacey v. Cessna Aircraft Co., 932 F.2d 170, 187 & n.15 (3d Cir.
1991) (emphasis in original). If a case presents a true conflict,
Pennsylvania choice-of-law rules "call for the application of the law
of the state having the most significant contacts or relationships with
the particular issue." In re Estate of Agostini, 457 A.2d 861, 871 (Pa.
Super. Ct. 1983). But there is a false conflict “if only one
jurisdiction's governmental interests would be impaired by the
5
application of the other jurisdiction's law." Lacey, 932 F.2d at 187. If
there is a false conflict, we apply the law of the only interested
jurisdiction. See, e.g., Kuchinic v. McCrory, 222 A.2d at 899-900.
Finally, there are unprovided-for cases in which neither jurisdiction's
interests would be impaired if its laws are not applied.5 The principle
of lex loci delicti, the law of the place of the wrong, supplies the
substantive law to be applied in unprovided-for cases. See Miller v.
Gay, 470 A.2d 1353, 1355-56 (Pa. Super. Ct. 1983).6
In our conflicts-of-law analysis the first issue that we must
address is whether New York’s Vehicle and Traffic Law with respect
to the issue at hand has extraterritorial application, and, accordingly,
whether that law by its terms can be applied to determine liability for
the Pennsylvania accident underlying this appeal. Section 388(1) of
New York’s Vehicle and Traffic Law provides that "[e]very owner of
a vehicle used or operated in this state shall be liable and responsible
for death or injuries . . . resulting from negligence in the use or
operation of such vehicle . . . by any person using or operating the
same with the permission, express or implied, of such owner." N.Y.
Veh. & Traf. Law § 388(1) (McKinney 2002). As we noted above,
the statute imposes vicarious liability on vehicle owners for the
negligence of anyone using or operating their vehicles with their
permission, without regard to whether the owner by its negligence
contributed to the accident.
Even though the wording of section 388(1) suggests that it
could not apply to an accident without New York State as the section
refers to vehicles “used or operated in this state,” meaning New York,
the New York Court of Appeals, the court of last resort in New York
State, consistently has interpreted section 388(1) as having
5
While we use the term “neither” thus suggesting that, as here,
only two jurisdictions can be involved, we are well aware that in some
cases a court must choose among the law of multiple jurisdictions.
6
Actually there is no conflict at all in cases of false conflict or in
unprovided-for cases so that to be precise a court probably should refer
to a “conflicts” question only when there is a true conflict and should
refer to the other two situations as raising “choice” questions. We
notice, however, that the courts do not seem to draw this distinction in
their language usage and thus we, too, will not be concerned with this
semantic distinction.
6
extraterritorial application.7 See e.g., Sentry Ins. Co. v. Amsel, 327
N.E.2d 635, 637 (N.Y. 1975); Farber v. Smolack, 229 N.E.2d 36, 38-
39 (N.Y. 1967). Obviously those decisions settle that issue for us.
Moreover, the extraterritorial reach of the statute becomes
evident when one looks to the manner in which the New York
Legislature has meshed section 388 to its insurance laws. All owners
of motor vehicles registered in New York State are required to carry at
least the minimum insurance laid down by statute. N.Y. Veh. & Traf.
Law §§ 311, 312 (McKinney 1996). Furthermore, that insurance must
extend to claims arising out of the ownership, use, or operation of a
vehicle “within the state of New York, or elsewhere in the United
States in North America or the Dominion of Canada.” N.Y. Veh. &
Traf. Law § 311.4(a). The New York courts have interpreted this
section to show a “commendable concern not only for residents of
[New York], but residents of other States who may be injured as a
result of the activities of New York residents.” Tooker v. Lopez, 249
N.E.2d 394, 399 (N.Y. 1969).
The court in Fried, 599 N.E.2d 651, specifically addressed the
7
The Court of Appeals in Farber v. Smolack, 229 N.E.2d 36, 39
(N.Y. 1967), addressed the rationale behind the phrase’s inclusion:
Nor should we place undue emphasis on
the term to which reference has been
made ‘in this state’ in the statute. It is
clear that in adding the words ‘in this
state’ to the predecessor of subdivision 1
of section 388 (§ 59) in 1958 (L. 1958,
ch. 577), the Legislature was not
concerned with extraterritorial effect. It
was substituting ‘in this state’ for the
former words ‘upon a public highway’ in
order to cover the situation of an accident
on private roadways and parking lots
(1958 Report of N. Y. Law Rev. Comm.
[N. Y. Legis. Doc., 1958, No. 65], pp.
589-590).
We recognized the extraterritorial application of the provision in Budget
Rent-A-Car Sys., 407 F.3d at 170 (“[I]t is beyond dispute that § 388(1)
has extraterritorial scope, that is, it can apply to accidents occurring
beyond New York's borders.”).
7
scope of section 388 and held that “the provision applies unless the
accident vehicle ‘ha[s] never been registered, used, operated or
intended for use within [New York.]’” Budget Rent-A-Car Sys., 407
F.3d at 174 (quoting Fried) (emphasis in Budget Rent-A-Car Sys.).
There is no dispute that the vehicle in the present matter was rented
and driven in New York. See appellant’s br. at 3. We recognize,
therefore, that as a matter of New York law, section 388(1) can be
applicable in this case and thus consider it in our choice-of-law
analysis.
After having reached that conclusion, we agree with the
district court that this case presents a “false conflict” and therefore the
district court correctly determined that the law of the only interested
jurisdiction, New York, must be applied. In our analysis we first
examine New York’s interest in having its law applied. The New
York legislature in enacting section 388 furthered its dual policy of
(1) providing injured plaintiffs with a financially responsible
defendant, and (2) imposing a high degree of responsibility on owners
who allow others to operate their vehicles, by enacting an
all-embracing mandatory insurance scheme. See N.Y. Veh. & Traf.
Law § 310(2) (McKinney 1996). In Budget Rent-A-Car Sys. we
noted that section 388(1) "was enacted to ensure access by injured
persons to a financially responsible [party] against whom to recover
for injuries and to change th[e] common-law rule and to impose
liability upon the owner of a vehicle for the negligence of a person
legally operating the car with the permission, express or implied, of
the owner.” 407 F.3d at 177 (quoting Hassan v. Montuori, 786
N.E.2d 25, 27 (N.Y. 2003)).
It is clear that New York’s interest in protecting persons
injured by New York vehicles, whether injured or harmed within or
without New York State, would be impaired by the application of
Pennsylvania’s less expansive liability law which in this case would
free Plaza from liability. Moreover, it is difficult to conceive of any
case in which a person injured in Pennsylvania or, indeed, in any
common law state, would be better off by the application of local as
opposed to New York law.8 In short, a failure to apply section 388
8
While we will not discuss the possible approach of New York
courts if for some reason section 388(1) did not apply when the owner
was not the driver at the time of an accident as, for example, if the owner
of the vehicle negligently had allowed the vehicle to be stolen, but
nevertheless might be liable for damages attributable to the ensuing
accident, it is possible that in such a situation they would apply common
8
would impair New York’s interest in ensuring that entities such as
Plaza share in New York’s goal of protecting the victims of
tortfeasors, as well as demanding responsibility of owners who allow
others to operate their vehicles.9 Furthermore, New York’s interest in
having its law applied to an owner in the position of Plaza clearly
would be undermined by the application of Pennsylvania common law
in a case such as this, in which the vehicle’s operator and owner did
not have an agency relationship, so that vicarious liability would not
be imposed on the owner.
We realize that New York’s interest in having its law applied
here is somewhat diminished by the circumstance that Garcia is a
Pennsylvania citizen. After all, in Budget Rent-A-Car Sys., in
applying section 388(1) to a Pennsylvania accident, we emphasized
that the injured plaintiff was a “New York resident receiving
treatment and care from medical providers in New York with the aid
of New York-administered welfare programs.” 407 F.3d at 177. But
that determination is offset by the circumstances that Gladney rented
the vehicle in New York and is a resident of New York. Moreover,
the New York Court of Appeals in Tooker pointed out that the New
York legislature has shown a “commendable concern” for residents of
other states injured as a result of the activities of New York residents.
That situation is involved here and we think that the legislature also
has such concern for residents of other states injured by a vehicle
leased in New York. In view of Tooker we reject Plaza’s contention
that Garcia offers “no authority to support a proposition that New
York has a state interest in ensuring compensation to non-residents
who are injured outside its border.” Appellant’s reply br. at 2.
We next analyze Pennsylvania’s interest in the application of
its common law. As the state of Garcia’s domicile, Pennsylvania has
an interest in providing for his recovery if Gladney is liable in order to
make him whole. Yet it is clear that the application of New York’s
vicarious liability law cannot undermine the advancement of that
interest. Simply put Plaza is unable to demonstrate how the
application of New York’s more plaintiff friendly provision would
undermine Pennsylvania’s interest in ensuring that its injured
residents are compensated fully. We therefore agree with the district
law principles in ascertaining the owner’s liability.
9
New York law, at least in theory, should require diligence on the
owner of a vehicle with respect to the driver of its vehicle beyond the
duty imposed by negligent entrustment principles.
9
court that, “[e]ven if we were to consider Pennsylvania’s adherence to
the common law on the issue of owner liability as expressing an
interest in establishing the scope of a vehicle owner’s liability, this
interest is not diminished where another state has statutorily imposed
greater liability on its own citizens.” Op. at 13.
In fact, we believe that the application of Pennsylvania law on
the liability issue here, which would preclude Garcia from recovering
from Plaza, does not further Pennsylvania’s interest in protecting its
residents and providing adequate recovery for its injured citizens.
Moreover, as we explained above, we cannot conceive how the
application of the common law as opposed to the New York statute to
determine an owner’s liability ever can be advantageous to a plaintiff
and thus further the goal of providing full compensation for a
plaintiff’s injuries. Thus, we do not reach our result on a fact-specific
basis to aid a single litigant. See Allwein v. Donegal Mut. Ins. Co.,
671 A.2d 744, 750 (Pa. Super. Ct. 1996).
We also point out that while Pennsylvania law protects the
owner of the vehicle from liability in a way that New York law does
not, we cannot understand why Pennsylvania would have an interest
in an owner of a vehicle from another state being shielded from
vicarious liability imposed under the law of that state attributable to
the negligence of a driver operating the vehicle with the owner’s
consent. This conclusion has particular force in a situation such as
that here in which the entrustment of the vehicle was in the foreign
state rather than in Pennsylvania.10 We conclude, therefore, that no
matter how we view this case Pennsylvania does not have a policy or
interest that the application of New York law in this case would
impair.
In summary, applying New York Law to impose liability on
10
Obviously our result might be different if Gladney’s lease had
been executed in Pennsylvania and the vehicle had been delivered to him
in Pennsylvania and if Gladney had not used the vehicle in New York,
but Garcia nevertheless attempted to have the court apply New York law
on a theory that prior to the accident the vehicle had been used or
operated in New York State in a way completely unrelated to the
accident involved here by a prior lessee with no connection to Gladney.
In fact, notwithstanding rather broad language in some opinions, see
Budget Rent-A-Car Sys., it might be that as a matter of New York law
section 388 would not be applicable in such a situation. We however,
do not need to explore this point and thus do not do so.
10
Plaza does not impair the interests of Pennsylvania, while on the
contrary, the application of Pennsylvania law would impair New
York’s interest in providing injured plaintiffs with a financially
responsible defendant, and imposing a high degree of responsibility
on the owners of vehicles. See Lacey, 932 F.2d at 187. Therefore,
this case presents a false conflict, and the district court should apply
the law of the only interested jurisdiction, New York. Accordingly,
the district court correctly granted summary judgment inasmuch as the
judgment provided for the application of New York’s Vehicle and
Traffic Law § 388(1) in this case.
III. CONCLUSION
For the foregoing reasons, we will affirm the order of June 4,
2004, and remand the case to the district court for further proceedings.
11