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Arias v. Figueroa

August 23, 2007


On appeal from the Superior Court of New Jersey, Law Division, Civil Part, Passaic County, PAS-L-4334-03.

The opinion of the court was delivered by: Kestin, P.J.A.D. (retired and temporarily assigned on recall).



Argued: January 9, 2007

Before Judges Kestin, Weissbard and Lihotz.

Defendant Avis Rent-A-Car System, Inc. (Avis) appeals from a judgment in favor of intervenor/defendant National General Insurance Co. (NGIC) on their respective cross-claims. The dispute between Avis and NGIC has its roots in a complaint in which plaintiff, Danilo Arias, sought damages in a cause of action arising from a motor vehicle collision in Passaic on October 21, 2001.

Plaintiff's vehicle was struck by a mini-van owned by Avis. The mini-van, driven by defendant Freddy Figueroa, had been rented from Avis by defendant Francisco Ramirez. Plaintiff was a resident of New Jersey at the time of the collision; Figueroa and Ramirez were residents of New York. The vehicle rental transaction had occurred in New York through an Avis office there. The vehicle itself was registered in California and carried a California license plate. Avis's principal place of business is in New Jersey. NGIC, plaintiff's automobile insurer, which is nominally liable for under-insured motorist (UIM) coverage, intervened as a defendant, and filed a cross-claim against Avis seeking a declaratory judgment holding Avis vicariously liable for the negligence of the driver of its vehicle. Avis responded with cross-claims for contribution and indemnification.

If Avis is not vicariously liable for the negligence of Figueroa or Ramirez, it contends its exposure is limited to $15,000 of insurance coverage provided under the vehicle rental contract, thus bringing into play plaintiff's own UIM coverage with NGIC. On the other hand, because Avis is self-insured, if it is vicariously liable, its exposure is relatively unlimited, at least to the extent of the $100,000/$300,000 UIM insurance coverage provided by NGIC, i.e., there would be no under-insurance in the matter for which NGIC would be answerable.

The matter came before the trial court initially on Avis's motion for summary judgment seeking dismissal of NGIC's cross-claim on the basis that, in New Jersey, under the long-standing common law rule applicable here, Avis is not vicariously liable for the actions of Figueroa and Ramirez because neither of them were agents of Avis. See Kim v. Paccar Financial Corp., 385 N.J. Super. 142, 145 (App. Div.), certif. denied, 188 N.J. 219 (2006). NGIC contends that New York law applies, specifically N.Y. Vehicle and Traffic Law, § 388(1) (McKinney 1996), under which, NGIC argues, Avis would be vicariously liable for the negligence of its vehicle's operator. See Fu v. Fu, 160 N.J. 108, 118 (1999); Haggerty v. Cedeno, 279 N.J. Super. 607, 609 (App. Div. 1995). That provision imposes liability on "[e]very owner of a vehicle used or operated in [New York] for death or injuries to person or property resulting from negligence in the use or operation of such vehicle[,]" where such use is permissive. N.Y. Vehicle and Traffic Law, § 388(1).

Following argument on the motion for summary judgment, the motion judge, for reasons stated on the record, held that New York law applied. A conforming order was entered the same day, January 7, 2005. As far as we can determine from the record on appeal, the court did not rule on a cross-motion by NGIC dealing with the liability of Figueroa and Ramirez, who have, apparently, defaulted. After oral argument on Avis's motion for reconsideration, the motion judge adhered to his initial ruling, again expressing his reasons on the record, and confirming the ruling in an order entered the same day, February 4, 2005.

Avis once again applied for reconsideration on the ground that California law should govern because the vehicle was registered in that State. Another judge denied that motion for reasons stated on the record, ruling essentially that Avis, having twice previously presented the issue as primarily a choice between New Jersey law and New York law, could not, in a third application, freshly stress that California law controlled, especially since the parties had known of the California connection from the beginning. The judge entered a conforming order on the same day, August 5, 2005.

Thereafter, finality was achieved with the entry of a consent judgment against Avis for $93,000 in favor of plaintiff on November 7, 2005. The settlement agreement at the basis of the consent judgment reserved to Avis the opportunity to "appeal[] the issue of vicarious liability." Accordingly, Avis appeals from the orders of January 7, February 4, and August 5, 2005.

In reviewing a trial court's determination on a question of law, we are to consider the matter de novo, with no deference to the trial court's views. See Manalapan Realty v. Township Committee of Manalapan Twp., 140 N.J. 366, 378 (1995). Choice of law is, manifestly, a legal determination. See Mastondrea v. Occidental Hotels Mgmt. S.A., 391 N.J. Super. 261, 283 (App. Div. 2007).

The modern mode of making choice of law determinations requires a court to engage in a "governmental interest" analysis, which is designed to result in application of the law of the state with the most significant interest in resolving the issue presented. See Veazey v. Doremus, 103 N.J. 244, 247 (1986). The basic choice of law standards as set out in the Restatement (Second) of Conflict of Laws § 6 (1971), have been recognized in New Jersey, see Fu v. Fu, 160 N.J. 108, 122-25 (1999), as have the tort principles of § 145 incorporating those standards, see id. at 125-27, and the approaches of § 174 for resolving choice of law questions bearing upon issues of vicarious liability, see id. at 127-28. The older rule of lex loci delecti, i.e., employing, as the decisive standard for all substantive issues, the law of the state where the wrong occurred, is no longer dispositive; however, considerations of that type remain significant, ...

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