Opinion ID: 1924955
Heading Depth: 1
Heading Rank: 7

Heading: Depecage [6]

Text: Our decision in this case embraces the concept of depecage. Discussing depecage, the Supreme Court of Virginia noted that `[i]t has always been understood . . . that different substantive issues could be properly decided under the laws of different states, when the choice-influencing considerations differ as they apply to the different issues.' Buchanan v. Doe, 246 Va. 67, 431 S.E.2d 289 (1993) (internal citations omitted). See generally, Berg Chilling Sys. v. Hull Corp., 435 F.3d 455 (3rd Cir.2006); Reese, Depecage: A Common Phenomenon in Choice of Law, 73 Column. L.Rev. 58 (1973). Erie warns against this Court's adoption of depecage. According to Erie, the depecage framework is inappropriate in this case because it would act to legitimize a smorgasbord approach which inures only to the benefit of the Heffernans. [7] To the contrary, our holding today presents a clear framework for resolving choice of law issues such as the one presented in the instant case. This determination will allow insurers and insureds to predict with reasonable certainty the law that will apply in a breach of contract action against the insurer on the basis of an uninsured/underinsured motorist claim. Specifically, all parties to a contract which provides uninsured/underinsured motorist benefits can anticipate that, absent a contractual choice of law provision, any dispute as to the validity of the policy or the meaning of its terms will be resolved based on the law of where the contract was made, but that the substantive tort law of the place where the automobile collision occurred will control what the claimants are entitled to recover. This is not the first time that this Court has embraced the principles of depecage. In Hauch v. Connor, 295 Md. 120, 453 A.2d 1207 (1983), we adopted a similar framework, applying the tort law of a foreign jurisdiction to certain issues while applying Maryland law to other issues. In Hauch the issue before the Court was whether Maryland residents, who were injured in an automobile collision in Delaware could maintain a personal injury action in Maryland against their co-employee, who was the driver when such an action was not allowed by Delaware law. In that case, we held that all questions concerning substantive tort law [should] be governed by the law of Delaware, as it is the state where the collision occurred. Hauch, 295 Md. at 125, 453 A.2d at 1210. Although the law of Delaware applied to all questions concerning substantive tort law, we also applied Maryland's worker's compensation law because, even though the injury did not occur in Maryland, there were greater Maryland interests. Specifically, we acknowledged that the worker's compensation statute is analogous to a statute of limitations in that both matters implicate the public policy of the forum rather than the public policy of another jurisdiction. We concluded, therefore, as we do in the case sub judice, that Delaware law should apply to certain aspects and Maryland law to other aspects, depending upon the issues raised in the proceedings. See also Bishop v. Twiford, 317 Md. 170, 175, 562 A.2d 1238, 1241 (1989) (relying on Hauch, holding that Delaware law controlled questions of substantive tort law but that the choice of law principles, relevant to whether a co-employee suit was allowable, were not those of tort law but those of worker's compensation law and, thus, Maryland's worker's compensation statute applied to an employee's action against a negligent co-employee (citations omitted)). Other jurisdictions that have decided whether an action for uninsured motorist benefits by an insured against his or her insurer raises questions of tort law, and therefore application of tort choice of law principles, or in the alternative, raises only questions of contract law, are consistent with this approach. In Lee v. Saliga, 179 W.Va. 762, 373 S.E.2d 345 (1988), one of the certified questions presented to the court, involved a question of coverage under uninsured motorist policies. As to the nature and scope of uninsured motorist insurance, the court noted that [t]here is in any uninsured motorist case a related tort aspect and that [t]he determination of the uninsured motorist's liability is to be made by reference to the general rules of tort law . . . [but] the insured `must allege and prove the same elements of fault and damages that are required to be proved in common law tort actions against tortfeasors.' Saliga, 373 S.E.2d at 348 (internal citations omitted). Erie argues that the court in Saliga engaged in a two part choice of law analysis because, under the particular uninsured motorist law, the insured is required to establish the actual liability of the tortfeasor. Further, Erie argues that, pursuant to Popa, this is not the case in Maryland, because the insured is required to prove fault on the part of the uninsured motorist and damages, and not prove the uninsured motorist's actual liability. We agree insofar as Popa stands for the principle that in Maryland the insured need not first prove all the elements of a tort cause of action and obtain a judgment against the tortfeasor in order to pursue a claim against the insurer for uninsured/underinsured motorist benefits. In the breach of contract action, however, the insured, nonetheless, must prove his or her tort claim in order to establish that the contract was breached. Proof of the underlying tort claim is an element of the insured's contractual right to recover. See Popa, 352 Md. at 464, 723 A.2d at 5; Reese, 285 Md. at 553, 403 A.2d at 1232; Fass, 243 So.2d at 224. We acknowledge that the application of tort choice of law principles in Saliga resulted in the court's application of the tort law of the forum state even though the tort occurred in another state. We agree, however, with the Heffernans that the court in Saliga applied the tort law of the forum state only after engaging in a tort choice of law analysis. The application of the forum state's tort law rather than the application of the law of the situs of the collision, contrary to Erie's urging, is not consequential. In our view, Saliga is instructive insofar as it provides the proper framework for analysis of a breach of contract action against the insurer on the basis of an uninsured/underinsured motorist claim, not because of that court's disposition. Further, we are persuaded by Saliga that a breach of contract action against the insurer on the basis of an uninsured/underinsured motorist claim may involve issues of coverage as to the contract and issues of liability as to the underlying tort. See Johnson v. United States Fidelity and Guaranty Co., 269 Neb. 731, 696 N.W.2d 431, 437 (2005) (noting that [a]ctions for uninsured (UM) and underinsured (UIM) coverage can involve both tort and contract liability); Buchanan v. Doe, 246 Va. 67, 431 S.E.2d 289, 291 (1993) (`forum state applies its own law to ascertain whether the issue is one of tort or contract'). Erie urges this Court to abandon the lex loci delicti approach, arguing that the most significant relationship test is the most appropriate choice of law analysis for uninsured motorist claims. We disagree. The rule of lex loci delicti is well established in Maryland. When its rationale has been put into question, `this Court has consistently followed the rule.' Hauch, 295 Md. at 123-24, 453 A.2d at 1209 ( quoting White v. King, 244 Md. 348, 352, 223 A.2d 763 (1966)). Since White, we have continued to adhere to the rule of lex loci delicti. Hood, 395 Md. at 615, 911 A.2d at 845, is a recent reaffirmation of that rule. In Hood, Judge Wilner, writing for the Court, noted that unlike most other States, which have abandoned the lex loci delicti approach espoused in §§ 6, 145 and 146 of the RESTATEMENT (SECOND) OF CONFLICT OF LAWS, Maryland continues to adhere generally to the lex loci delicti principle in tort cases. Id. (citations omitted). Erie states that adopting the most significant relationship test would allow for proper consideration of the importance of applying the law of the state where the risk is located. Erie cites our decision in Hauch as supporting its position. We agree that Hauch is instructive on this point. That case, however, dictates a result different than that urged by Erie. In Hauch we said that [a] virtue of the rule, for the courts and all parties concerned, is the predictability and certainty as to which state's tort law will govern. Furthermore, lex loci delicti recognizes the legitimate interests which the foreign state has in the incidents of the act giving rise to the injury. The foreign state's resources in the form of police protection, medical assistance and highway maintenance, to mention a few, are expended whenever an automobile collision occurs within its boarders. Also, when wrongful conduct occurs in a foreign state, it poses a direct threat to persons and property in that state. It follows that the citizens of the foreign state should be the ones to determine, through their tort law, whether particular conduct is tortious and the extent of the monetary sanction. Hauch, 295 Md. at 125, 453 A.2d at 1210 (citations omitted). We see no reason to discontinue our adherence to the principles of lex loci delicti. Our application of the principles of lex loci delicti in this case leads to a consistent, predictable approach. Consistent with these principles, the insured must establish the tortfeasor's fault and damages pursuant to the substantive tort law of the situs of the accident. [8]