Opinion
Civil Action No. 99-3707 Section "R" (1)
October 23, 2000
ORDER AND REASONS
Before the Court are cross-motions by Prudential Insurance Company and USFG Insurance Company for declaratory judgment pursuant to Federal Rule of Federal Procedure 57. Prudential moves the Court to find that Mississippi law governs the automobile liability policy issued by USFG. USFG moves the Court to find that Louisiana law governs the policy. For the following reasons, the Court grants Prudential's motion for declaratory judgment, and denies USFG's motion for declaratory judgment.
I. BACKGROUND
This case arises from an automobile accident that occurred in Louisiana on April 13, 1999 between two Louisiana residents, plaintiff John Gonzalez and defendant Neil Kaplan. At the time of the accident, John Gonzalez was driving an automobile owned by his father, Sergio Gonzalez, a Mississippi resident. This vehicle and two others were covered by an automobile liability policy issued by USFG in Mississippi. The policy provided an uninsured motorist limit of $300,000 for each vehicle, each of which was garaged in Mississippi.
Prudential argues that under Louisiana choice-of-law rules, Mississippi law governs the interpretation of the automobile policy issued to Sergio Gonzalez. USFG counters that Louisiana Revised Statute 22:1406(D)(1)(a)(iii) mandates the application of Louisiana law. It further argues that even under a conflict-of-laws analysis, Louisiana law applies because Louisiana is the state that "would bear the most serious legal, social, economic, and other consequences if its laws were not applied." (USFG's Mem. Supp. Opp'n Mot. Declaratory J. at 10 (quoting LA. C.C. art. 3537 cmt. (c)).)
II. DISCUSSION
A. Declaratory Judgment Standard
The Declaratory Judgment Act, 28 U.S.C. § 2201, allows a federal court to issue declaratory relief solely" [i]n a case of actual controversy within its jurisdiction." 28 U.S.C. § 2201 (a). The Act's restriction of federal court jurisdiction to actual controversies extends to the constitutional limit of "cases and controversies" set forth in Article III. See U.S. CONST. art. III, § 2. See also Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 239, 57 S.Ct. 461, 463 (1937); Middle S. Energy, Inc. v. City of New Orleans, 800 F.2d 488, 490 (5th Cir. 1986) As the Supreme Court has explained: "[T]he difference between an abstract question and a `controversy' contemplated by the Declaratory Judgment Act is necessarily one of degree," and a precise test to identify the existence of a "controversy" is difficult to establish. Maryland Cas. Co. v. Pacific Coal Oil Co., 312 U.S. 270, 273, 61 S. Ct. 510, 512 (1941). Nevertheless, the Supreme Court has held that declaratory relief is appropriate under the Declaratory Judgment Act when a substantial controversy of sufficient immediacy and reality exists between parties having adverse legal interests. See id. (citing Aetna, 300 U.S. at 239-42, 57 S.Ct. at 463); Louisiana Nev. Transit Co. v. Marathon Oil Co., 770 F. Supp. 325, 327 (W.D. La. 1991), aff'd, 985 F.2d 797 (5th Cir. 1993). The controversy must be "real and substantial . . . admitting of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts." Aetna, 300 U.S. at 240-41, 57 S. Ct. at 464. For "[a] controversy, to be justiciable, [it] must be such that it can presently be litigated and decided and not hypothetical, conjectural, conditional or based upon the possibility of a factual situation that may never develop." Rowan Cos. v. Griffin, 876 F.2d 26, 28 (5th Cir. 1989) (quoting Brown Root, Inc. v. Big Rock Corp., 383 F.2d 662, 665 (5th Cir. 1967)). Consistent with these principles, it is well-settled that the Court may exercise its declaratory judgment jurisdiction to determine which state's law governs the interpretation of provisions in an insurance policy. See, e.g., Albany Ins. Co. v. Anh Thi Kieu, 927 F.2d 882 (5th Cir. 1991).
B. Conflict of Laws
1. Louisiana Revised Statute 22:1406(D)(1)(a)(iii)
As a threshold matter, USFG argues that Louisiana Revised Statute 22:1406(D)(1)(a)(iii) mandates the application of Louisiana law because it is a specific rule that controls the conflict-of-laws issue, rather than the general rules of Book IV concerning conflict of laws. See LA. R.S. § 22:1406(D)(1)(a)(iii) ("This Subparagraph and its requirement for uninsured motorist coverage shall apply to any liability insurance covering any accident which occurs in this state and involves a resident of this state."). While USFG acknowledges that in Woodfield v. Bowman the Fifth Circuit rejected the suggestion that the uninsured motorist statute includes a choice-of-law presumption, it contends that a recent opinion issued by the Louisiana Fourth Circuit Court of Appeal calls into the question the basis for Fifth Circuit's holding. See Woodfield v. Bowman, 193 F.3d 354, 361 (5th Cir. 1999); Austin v. Western World Ins. Co., 2000 WL 722564, *2-3 (La.App. 4th Cir. May 17, 2000). In Woodland, the Fifth Circuit relied upon Anderson v. Oliver — an opinion issued by the Louisiana Third Circuit Court of Appeal and the only opinion then considering this precise question. See Woodfield, 193 F.3d at 361. USFG asserts that the Woodfield decision is no longer instructive because the Louisiana Fourth Circuit subsequently held that Louisiana Revised Statute 22:1406(D)(1)(a)(iii) "provided a specific rule governing the question of underinsured motorists insurance coverage." Austin, 2000 WL 722564, at *3.
The Austin holding, however, is an opinion of an intermediate state appellate court. In Woodfield, the Fifth Circuit made an Erie guess and adopted the holding in Anderson, which explicitly rejected the proposition that section 22:1406(D)(1)(a)(iii) was applicable without first considering conflicts-of-laws principles. See Woodfield, 193 F.3d at 361; Anderson v. Oliver, 705 So.2d 301, 305 (La.App. 3d Cir. 1998) See also Howe v. Scottsdale Ins. Co., 204 F.3d 624, 627 (5th Cir. 2000) ("If the Louisiana Supreme Court has not ruled on this issue, then this Court must make an `Erie guess' and `determine as best it can' what the Louisiana Supreme Court would decide." (quoting Krieser v. Hobbs, 166 F.3d 736, 738 (5th Cir. 1999))). Accordingly, as the Woodfield holding binds this Court, the Court finds that it must apply Louisiana's choice-of-law provisions.
2. Choice of Law Provisions
Louisiana Civil Code article 3515 provides the general rule to determine which state's law applies to a conflicts situation. It reads:
[A]n issue in a case having contacts with other states is governed by the laws of the state whose policies would be most seriously impaired if its law were not applied to that issue.
That state is determined by evaluating the strength and pertinence of the relevant policies of all involved states in the light of: (1) the relationship of each state to the parties and the dispute; and (2) the policies and needs of the interstate and international systems, including the policies of upholding the justified expectations of parties and of minimizing the adverse consequences that might follow from subjecting a party to the law of more than one state.
LA. C.C. art. 3515.
When a contract is at issue, Louisiana Civil Code article 3537 provides the rule to determine which state's laws would be most seriously impaired:
by evaluating the strength and pertinence of the relevant policies of the involved states in the light of: (1) the pertinent contacts of each state to the parties and the transaction, including the place of negotiation, formation, and performance of the contract, the location of the object of the contract, and the place of domicile, habitual residence, or business of the parties; (2) the nature, type, and purpose of the contract; and (3) the policies referred to in Article 3515, as well as the policies of facilitating the orderly planning of transactions, of promoting multistate commercial intercourse, and of protecting one party from undue imposition by the other.
LA. C.C. art. 3537. The associated commentary states:
[T]he search for the applicable law should not be a mechanical, quantitative process, but should be based on an objective and impartial evaluation of the consequences of the choice-of-law decision on each of the involved states with a view towards accommodating their respective interests rather than selfishly promoting the interests of one state at the expense of the others."Id. cmt. (c)
Accordingly, the first step is to identify "the relevant policies of the involved states." Id. cmt. (d). The second step is to evaluate "the strength and pertinence of [these] policies" in light of "(1) the factual contacts of each involved state to the parties and the transaction, (2) the `nature, type and purpose of the contract," and (3) the policies listed in clause (3)." Id. cmt. (d).
Applying this analytical framework, the Court finds that Mississippi's relevant policy is to see that insurance policies issued to its residents provide the full coverage for which a Mississippi resident contracted. See, e.g., Anderson, 705 So.2d at 306 ("The application of Louisiana law in this particular case would impinge on [Mississippi's] right to regulate its insurance industry. [Mississippi] has a compelling interest in regulating insurance policies issued to its residents and in seeing that the expectations to the policies issued are upheld."). Louisiana's relevant policy is that individuals involved in accidents in Louisiana should be afforded the full protection of the policy available to them. See, e.g., Adams v. Thomason, 753 So.2d 416, 427 (La.App. 2d Cir. 2000) ("Louisiana has a substantial interest in regulating awards to victims injured on its highways and in protecting those persons from uninsured and underinsured motorists."); Anderson, 705 So.2d at 306 ("The object of the [uninsured motorist] legislation is to promote full recovery for innocent automobile accident victims by making uninsured motorist coverage available for their benefit.").
In evaluating the strength and pertinence of these policies, the Court notes that both states' laws provide for uninsured motorist coverage. Indeed, Mississippi provides more coverage because it would stack the uninsured motorist coverage for the three insured vehicles. Accordingly, Louisiana's policy interest in "full recovery" would favor, if anything, application of Mississippi's stacking provision. In contrast, application of Louisiana law would "seriously impair" Mississippi's policy interest because it would impinge on Mississippi's right to regulate insurance policies issued to its residents. See Anderson, 705 So.2d at 306 ("The policies and needs of interstate insurance systems involving policies issued under terms satisfactory under one state's laws must be considered as a principal factor in evaluating conflict-of-law situations."). Moreover, as the Fifth Circuit observed in Woodfield, "Louisiana courts generally choose the law of the state in which the insurance policy in question was issued to govern the interpretation of its terms." Woodfield, 193 F.3d at 360 (citing Anderson, 705 So.2d at 305-06; Holcomb v. Universal Ins. Co., 640 So.2d 718, 722 (La.App. 3d Cir. 1994)). Here, USFG issued the policy in Mississippi. Therefore, the Court finds that Mississippi law governs the interpretation of the automobile policy issued to Sergio Gonzalez.
III. CONCLUSION
For the foregoing reasons, the Court grants Prudential Insurance Company's motion for declaratory judgment, and denies USFG Insurance Company's motion for declaratory judgment.