Opinion ID: 1857771
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Heading: The Choice of Law Issue.

Text: Rapid Leasing argues that Arizona law should apply in this case. That state has no owner liability statute and does not otherwise recognize vicarious liability based on vehicle ownership. Iowa has abandoned the lex loci delicti rule in which the law of the place of injury governs every issue in a tort action. We now follow the Restatement's most significant relationship methodology for choice of law issues. Cameron v. Hardisty, 407 N.W.2d 595, 597 (Iowa 1987); Berghammer v. Smith, 185 N.W.2d 226, 231 (Iowa 1971). The theory behind this approach is that rather than focusing on a single factor, the court of the forum should apply the policy of the state with the most interest in the litigants and the outcome of the litigation. Fuerste v. Bemis, 156 N.W.2d 831, 834 (Iowa 1968). The most significant relationship test is that which is stated as follows in the Restatement (Second) Conflict of Laws: (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 domicile, 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. Restatement (Second) Conflict of Laws § 145 (1971). We recognized in Joseph L. Wilmotte & Co. v. Rosenman Brothers, 258 N.W.2d 317, 326 (Iowa 1977), that the situation-specific sections of the Restatement, such as section 145, incorporate the provisions set forth in section 6 thereof. These principles are as follows: (1) A court, subject to constitutional restrictions, will follow a statutory directive of its own state on choice of law. (2) Where there is no such directive, the factors relevant to the choice of the applicable rule of law include (a) the needs of the interstate and international systems, (b) the relevant policies of the forum, (c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue, (d) the protection of justified expectations, (e) the basic policies underlying the particular field of law, (f) certainty, predictability, and uniformity of result, and (g) ease in the determination and application of the rule to be applied. Restatement (Second) Conflict of Laws § 6 (1971). The issue in the present case is whether the owner's liability provisions of section 321.493 govern the Veasleys' claims against Rapid Leasing. We are convinced that in applying the most significant relationship test in accordance with the provisions of section 6 and section 145 of the Restatement the Iowa statute should be applied. The factor involving ease of determination of the conflicting rules of law is of little importance in the present case. Either Rapid Leasing may be held liable or it may not. No esoteric or complex substantive laws are involved. Cf. Reisch v. McGuigan, 745 F.Supp. 56, 62 n. 5 (D.Mass.1990); Breskman v. BCB, Inc., 708 F.Supp. 655, 659 (E.D.Pa. 1988); Milkovich v. Saari, 295 Minn. 155, 203 N.W.2d 408, 414 (1973). Certainty, predictability, and uniformity of result are also less important in automobile tort cases. Conflicting laws are a result of the combination of a mobile society, Cooney v. Osgood Machinery, Inc., 81 N.Y.2d 66, 595 N.Y.S.2d 919, 612 N.E.2d 277, 279 (1993), and America's federal system in which the states have primary control over the regulation of these matters will always work against uniformity. The protection of justified expectations is, according to several modern authorities, of scant relevance in automobile accident cases. Reisch, 745 F.Supp. at 61; Milkovich, 203 N.W.2d at 412; Gordon v. Gordon, 118 N.H. 356, 387 A.2d 339, 340 (1978). According to the Milkovich court, no one plans to have an accident. 203 N.W.2d at 412. Furthermore, Rapid Leasing is a nationwide trucking firm. The trip involved in this case commenced in California. California has an owner liability statute. Since twelve states have owner liability statutes, it would be reasonable for Rapid Leasing to expect liability and to protect itself accordingly. Cf. Bryant v. Silverman, 146 Ariz. 41, 703 P.2d 1190, 1195 (1985) (air carrier that flew over states that did not limit wrongful death damages could have protected itself). Rapid Leasing chose to register the truck involved in Iowa, and it chose to make Iowa its principal place of business. It could reasonably have foreseen that Iowa law would apply in situations such as this. Respect for interstate and international systems is maintained when the forum state, when choosing to apply its own law, has a substantial connection with the issue. Milkovich, 203 N.W.2d at 417. We believe, based on the deterrence policy underlying section 321.493, that Iowa has a substantial connection regarding the responsibility of all persons or corporations with a local nexus that loan or lease motor vehicles to other entities. Moreover, Iowa's owner liability law is not so abnormal that an application of Iowa law would greatly disrupt interstate order. At least twelve states have owner liability laws. Regarding the policy factors recognized in Restatement section 6(2)(b), Iowa's statute was passed to recognize the dangers posed by the common use of automobiles. See Note, Liability of Owner for Torts of Renter or Borrower of Automobile, 13 Iowa L.Rev. 336, 338 (1928). This court has recognized that one of the purposes of section 321.493 is to make vehicle owners responsible for the actions of others to whom they have entrusted their motor vehicles. Briner v. Hyslop, 337 N.W.2d 858, 870 (Iowa 1983). Regarding the deterrent purpose of a similar statute, the Michigan Supreme Court has stated: In order to successfully modify conduct, the regulating force, whether it be criminal or civil, must be quickly, consistently and assuredly applied to the undesirable conduct. To enforce the owners' liability statute on the basis of where the accident occurred would undermine the effectiveness of these important statutes. Sexton v. Ryder Truck Rental, Inc., 413 Mich. 406, 320 N.W.2d 843, 856 (1982) (emphasis added). In Haggerty v. Cedeno, 279 N.J.Super. 607, 653 A.2d 1166 (1995), a plaintiff from New Jersey was injured in New Jersey by a Florida resident driving a car that was registered in New York and rented from a Delaware corporation with its principal place of business in New York. New York had an owner-liability statute, and New Jersey did not. The New Jersey court noted that there were two policies underlying New York's owner liability statute: first, to assure that victims of automobile accidents have adequate compensation for their injuries, and second, to deter vehicle owners from making their motor vehicles available to those who might negligently operate them. It balanced the competing interests by concluding that New York's statute had a deterrent purpose, and there was no New Jersey defendant which needed to be protected by that state's fault-based scheme of owners' liability. Consequently, it held that New York law controlled. Id. 653 A.2d at 1169. Similar considerations cause us to conclude that section 321.493 is determinative of the Veasleys' rights in the present case. Rapid Leasing contends that if the Veasleys' arguments are accepted an Iowa resident injured in Iowa by a truck registered in Arizona and owned by an Arizona trucking company would be unable to recover. Conversely, it argues, adoption of the Veasleys' choice of law contentions would lead to nationwide liability for Iowa trucking companies, even in the majority of states that do not have such a statute. This argument is premised on a misconception of how the most significant relationship rule operates. The Veasleys' argument is predicated upon a supposed outcome of the Restatement analysis to the facts of this particular controversy. The hypotheticals posed by Rapid Leasing would not necessarily have the outcomes that it suggests in other cases in which the several factors involved in the Restatement analysis might weigh differently.