Opinion ID: 2582415
Heading Depth: 1
Heading Rank: 3

Heading: The Most Significant Relationship to the Occurrence and Parties Test

Text: Three sections of the Second Restatement embody the rule Colorado follows: sections 6, 145, and 171. Section 6 sets forth, in general terms, principles for courts to consider in determining choice of law, including: the needs of the interstate and international systems, the relevant policies of the forum and other interested states, protection of justified expectations, the basic policies underlying the particular field of law, predictability and uniformity of result, and ease of determination and application of the law to be applied. [2] See Restatement (Second) of Conflict of Laws  6 (1971). Section 145 of the Second Restatement provides that the most significant relationship to the occurrence and parties test shall be applied to a cause of action sounding in tort: (1) The rights and liabilities of the parties with respect to an issue in tort are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the occurrence and the parties under the principles stated in  6. (2) Contacts to be taken into account in applying the principles of  6 to determine the law applicable to an issue include: (a) the place where the injury occurred, (b) the place where the conduct causing the injury occurred, (c) the domicil, residence, nationality, place of incorporation and place of business of the parties, and (d) the place where the relationship, if any, between the parties is centered. These contacts are to be evaluated according to their relative importance with respect to the particular issue. Id.  145. Finally, section 171 states the rule for determining the measure of damages: The law selected by application of the rule of section 145 determines the measure of damages. Id.  171. Comment c to section 171 makes clear that damages include prejudgment interest on the damages: c. Interest. The law selected by application of the rule of  145 determines whether the plaintiff can recover interest and, if so, at what rate for a period prior to the rendition of judgment as part of the damages for a tort. Id.  171 cmt. c. In a jurisdiction that follows the rule expressed in the Second Restatement, the issue of prejudgment interest is determined by application of the law governing the underlying suit ÔÇö the law of the state with the most significant relationship to the occurrence and the parties. A majority of jurisdictions hold that the same law that governs the underlying cause of action in a tort case also governs the award of prejudgment interest. [3] We agree that there is no convincing reason to engage in a different choice of law analysis to determine the law applicable to a claim for prejudgment interest. On the contrary, there are compelling reasons to apply the law of the state with the most significant relationship to the occurrence and the parties to the determination of prejudgment interest as well as the underlying tort action. In 1938, the United States Supreme Court held that federal courts exercising diversity jurisdiction must apply state law. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). An important reason for this shift away from the general law previously applied by federal courts was to promote uniformity of results and discourage forum shopping. Id. at 75, 58 S.Ct. 817. The Court observed that, under the previous system, a plaintiff bringing suit against a defendant from another state could select a preferred forum with the purpose of choosing the most advantageous body of law. Id. To avoid this maneuvering, the Court ruled that the substantive law governing the controversy should be the same whether the plaintiff elected to bring suit in federal court or in state court. Id. Identical concerns compel us to rule that the same body of law that governs a tort action also applies to a claim for prejudgment interest on a damages award. Were a claim for prejudgment interest to be governed by the law of the forum, a plaintiff would have the opportunity to choose the forum with the most advantageous prejudgment interest law. [4] Consistent with Erie, Colorado's policy is to discourage such forum shopping. A rule that mandates application of the forum's law on prejudgment interest would result in a piecemeal approach to a judgment for damages. For example, in Johnson v. Continental Airlines Corp ., the Tenth Circuit noted that to apply the law of the forum regarding prejudgment interest would result in a total damage award greater than would have been possible under either Idaho or Colorado law. [5] 964 F.2d at 1064. As the court observed, this outcome would not serve the policies of either state, as set forth in their respective legislation governing damages in tort cases. Id. In order to promote uniformity of outcome, discourage forum shopping, and ensure outcomes in accordance with the policy of the state with the most significant relationship to the occurrence and parties, we agree with the majority of jurisdictions that the choice of law governing the cause of action in a tort case also governs the determination of prejudgment interest.