Opinion
22567
May 29, 2002
Sharyn J. Gallatin, New York City, for Reliance National Insurance Company, third-party defendant.
Teresa M. Spina, Woodbury (Jeanne M. Salmon of counsel), for GEICO Insurance Company, third-party defendant.
Harry Organek, Roslyn (David M. Freeman of counsel), for defendants and third-party plaintiffs.
DECISION/ORDER
Third-party defendant Reliance National Insurance Company moves this court for an order directing that New Jersey law be applied to the claims pending against it. Third-party defendant Geico Insurance Company and defendants and third-party plaintiffs Damaris Garcia and Atila O. Dalmasi oppose this motion and assert that New York law should apply to all claims in this case. Plaintiff Talron Enterprises has not appeared in regard to the motion. For the following reasons, the motion is denied.
Damaris Garcia, a New York State resident, rented a car from Talron Enterprises, a corporation also domiciled in New York State. According to the rental agreement, executed in New York State, Ms. Garcia was to be the only authorized driver. Atila O. Dalmasi, Garcia's son, was involved in a one car accident in New Jersey while driving the car.
Plaintiff Talron Enterprises commenced this action against defendant's Garcia and Dalmasi for property damage. Defendant's Garcia and Dalmasi in turn commenced this third party action against third party defendants Geico Insurance Co., defendant Dalmasi's insurer, and Reliance Insurance Company, plaintiff Talron's insurer, claiming that they are obligated to pay for all no-fault benefits to which defendants Garcia and Dalmasi are entitled for medical and other expenses. Reliance notified defendants that it would not be affording them personal injury benefits because the car was operated by an unauthorized driver, in violation of both the rental agreement and New Jersey law. Reliance advised defendants Garcia and Dalmasi that both were entitled to such benefits through third party defendant Geico.
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 (Matter of Allstate v. Stolarz, 81 N.Y.2d 219, 223)." Elson v. Defren, 283 A.D.2d 109 at 114(1st Dept 2001). Here the issue presented is a narrow one, i.e. whether third party defendant Reliance's duty to pay a portion of the claims made by defendants Garcia and Dalmasi would be different should New Jersey law or New York law be applied?
Reliance asserts it would have the right to disclaim on the benefits sought here under New Jersey's no fault automobile insurance law, based on Dalmasi's status as an "unauthorized driver," although it offers no support for this proposition. In New Jersey, an insurance provider may deny coverage on the assertion that the driver of a rented car who caused the accident is an unauthorized driver, even though there is a liability insurance policy in existence. See, Schechter v. Selective Ins. Co., 264 N.J. Super. 229 (1993); N.J.S.A. 17-28-1.1e(2)(b). In such circumstances, New Jersey law considers the rented car as an "uninsured motor vehicle". Id. In that circumstance, uninsured motorist coverage is available. New Jersey law defines uninsured motorist coverage in such a situation as the coverage held by the injured person. Third party defendant Geico therefore would have sole responsibility as the insurer of defendants Dalmasi and Garcia. Reliance would have no obligation to pay. It should also be noted that no one associated with the subject accident — insured, driver, passenger — would be able to seek benefits through New Jersey's no fault law because they are New York State residents. "Under the [New Jersey] statute a nonresident in a non-New Jersey registered or insured vehicle, injured in an accident in New Jersey. . .is not covered by or subject to the New Jersey no-fault law". Santiago v. Prudential Property and Casualty Insurance Company, 112 A.D.2d 928 (2d Dept. 1985); Bisorni v. Morgan, 100 A.D.2d 956 (2d Dept. 1984); Government Employees Ins. Co. v. Halfpenny, 103 Misc.2d 128, 133, affd 82 A.D.2d 1023, lv. to app den 55 N.Y.2d 603 (1981); N.J. Stat. Ann 39:6A-3
According to New Jersey law, an `uninsured motor vehicle' is defined, in relevant part as
"(b) a motor vehicle with respect to the ownership, operation, maintenance, or use of which there is bodily injury liability insurance in existence but the liability insurer denies coverage or is unable to make payment with respect to the legal liability of its insured because the insurer has become insolvent or bankrupt or the Commissioner of Banking and Insurance has undertaken control of the insurer for the purpose of liquidation;"
N.J.S.A. 17-28-1.1e(2)(b)
The Court notes that Reliance does not specify whether it seeks to deny benefits under New Jersey law solely on the basis of defendant Garcia's alleged status as an "unauthorized driver," or also due to its own status in receivership as a consequence of its filing for bankruptcy.
New York law would yield a contrary result. New York State's Vehicle and Traffic Law, states, in relevant part, that "Every owner of a vehicle used or operated in this state shall be liable and responsible for death or injuries to person or property resulting from negligence in the use or operation of such vehicle, in the business of such owner or otherwise, by any person using or operating the same with the permission, express or implied, of such owner." VTL § 388(1). As such plaintiff Talron, may be vicariously liable for the alleged negligence of the driver defendant Garcia, even though he was not an authorized driver, and third party defendant Reliance would therefore be obliged to pay. Dorsey v. Yantambwe, 276 A.D.2d 108, 109 [4th Dept 2000]; Motor Veh. v. Continental Nat. Amer. Group, 35 N.Y.2d 260 (1974). Third party defendant Reliance does not challenge its liability under New York State law or question the obvious legislative intent of the enactment of the relevant Vehicle and Traffic Law section. Reliance merely argues that New York State law does not apply to this circumstance.
"Justice, fairness and `the best practical result' may best be achieved by giving controlling effect 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, 12 N.Y.2d 473, 481 (1963). "Interest analysis is the relevant analytical approach to choice of law in tort actions in New York. `[T]he law of the jurisdiction having the greatest interest in the litigation will be applied and . . .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' (Miller v. Miller, [ 22 N.Y.2d 12]at pp. 15-16. . .)" Schultz v. Boy Scouts of America, Inc., 65 N.Y.2d 189, 197 (1985).
The court must discern the purpose of the law; does it seek to regulate conduct or allocate loss? Bodea v. Trans Nat Express, Inc., 286 A.D.2d 5, 9 (4th Dept. 2001) (citations omitted). The instant claims relate to loss allocation resulting from allegedly tortious conduct. The court should then apply one of the "three rules set forth in Neumeier v. Kuehner, 31 N.Y.2d 121, 289 (1972) (citations omitted)." Id. Where the parties both reside in the same state, a proper analysis favors the jurisdiction of common domicile because of its interest in enforcing the decisions of both parties to accept both the benefits and the burdens of identifying themselves with that jurisdiction and submitting themselves to its authority. Neumeier v. Kuehner , 31 N.Y.2d 121 at 12 . Schultz, supra, at 197; 19A N.Y. Jur.2d Conflicts of Laws. See , also , Dorsey v. Yantambwe, supra, at 111 (found New York law does not apply where unauthorized driver of rental car has accident in New York State and both driver and rental company are domiciled out of state). Here both parties reside in New York State. The rental contract was entered into by the parties in New York State according to New York State law. New York's legislative no-fault scheme was enacted to ensure prompt and full compensation for an injured party's basic economic loss, without regard to fault, while reducing litigation costs and insurance premiums. Montgomery v. Daniels, 38 N.Y.2d 41; see , also , Bodea v. Trans Nat Express, Inc., supra at p. 8 (citations omitted).
Movant argues that New Jersey has an interest in regulating the conduct of drivers on its roads and limiting claims to those who are authorized to drive on its roadways. However, it should be noted that the issue here is not whether Mr. Dalmasi offended a rule of the road prescribed by New Jersey for motorists generally or some standard of conduct imposed by that jurisdiction. Rather, the competing interests are really between the two no fault schemes of New Jersey and New York. That New York and New Jersey both have `no fault' insurance laws leads to the obvious conclusion that both jurisdictions have determined that loss allocation is a more compelling need than determining fault.
It is the order of the court that third party defendant Reliance's motion is denied and that the law of the State of New York be applied to this matter.
This constitutes the decision and order of the court.