Opinion ID: 2621198
Heading Depth: 4
Heading Rank: 1

Heading: Alaska law is applicable.

Text: The first issue is whether the trial court correctly applied Washington law, as specified by the contract's choice-of-law provision. When deciding choice of law issues, we have in the past turned to the Restatement (Second) of Conflict of Laws (Restatement) for guidance. [4] Where, as here, the parties' contract includes a choice-of-law provision, Restatement § 187 applies. Section 187 provides, in relevant part: (1) The law of the state chosen by the parties to govern their contractual rights and duties will be applied if the particular issue is one which the parties could have resolved by an explicit provision in their agreement directed to that issue. (2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either (a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or (b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of § 188, would be the state of the applicable law in the absence of an effective choice of law by the parties. [5] The point in dispute here concerns the validity of the contractual limitations provision. Since parties cannot determine contractual validity by explicit agreement, [6] the superior court was correct in determining that subsection (1) does not apply; neither party contests this decision. Similarly, subsection (2)(a) does not affect the analysis here. The superior court correctly concluded that Holland America had a substantial relationship with the state of Washington because it was headquartered there and that was the location from which the contract was issued. [7] Long does not dispute this. Therefore, under Restatement § 187(2)(b) we should apply Alaska law only if three conditions are met: (1) Alaska's law would apply under Restatement § 188 in the absence of an effective choice of law; (2) Alaska has a materially greater interest in the issue; and (3) the application of Washington law would offend a fundamental policy of Alaska. Here, all three conditions are met. The first condition is that Alaska's law would apply in the absence of an effective choice of law. It would. Under Restatement § 188, and in the absence of an effective choice of law by the parties, we must apply the principles of Restatement § 6 to determine which state has the most significant relationship. [8] In doing so, we must consider the relevant policies of Alaska and Washington, giving special deliberation to the following: (a) the place of contracting, (b) the place of negotiation of the contract, (c) the place of performance, [and] .... (e) the domicil, residence, nationality, place of incorporation and place of business of the parties. [9] The place of performance has so close a relationship to the transaction and the parties that it will often be the state of the applicable laws; [10] in this case, the place of performance is Alaska. The place of negotiation has little impact where, as here, the parties conduct negotiations from separate states by mail and telephone. [11] Similarly, the place of contract has little impact on the events at hand. Subsection (e), however, carries greater weight than either subsection (a) or (b). Nonetheless, we feel that the parties' domicile, residence, place of incorporation, or place of business, as listed in subsection (e), deserves less consideration than the place of contract performance. [12] Because statutes of limitations are procedural, Alaska law, as law of the forum, governs in the absence of an effective choice of law. [13] Additionally, there is a presumption that the law of the state where the [personal] injury occurred governs in the absence of an effective choice of law. [14] The second requirement is that Alaska have a materially greater interest in the issue than Washington. Alaska has three interests that are materially greater than Washington's: (1) establishing uniform filing deadlines; (2) ensuring that fair compensation is available for personal injuries occurring in Alaska; and (3) deterring negligent future conduct in the state. Alaska has an undeniably strong interest in establishing uniform filing deadlines. [15] Uniform deadlines promote predictability for plaintiffs, defendants, and other interested parties alike. [16] Equally strong is Alaska's interest in providing victims of negligence who sustain personal injuries within the state access to a legal system that affords them a fair opportunity to seek redress from the negligent party. [17] So too is Alaska's interest in promoting public safety by deterring future negligent conduct within the state. [18] In contrast, the State of Washington's only interest in the issue at hand is in protecting resident corporations' contract rights relating to torts that they commit in other states. While this interest is certainly not insubstantial, we find it decidedly weaker than Alaska's interests. We hold, then, that Alaska's interests are materially greater than Washington's. [19] The choice of law in this case thus turns on whether the third condition of Restatement § 187(2)(b) is metwhether enforcing Washington law would offend a fundamental policy of the State of Alaska. In our view, enforcing Washington law would offend the fundamental policies underlying the three Alaska interests that we have just identified as being materially greater than Washington's interest in the issue at handenforcing uniform standards for commencing litigation in Alaska's courts, ensuring Alaska personal injury victims reasonable access to the Alaska legal system, and promoting public safety. Uniform application of our statutes of limitations involves fundamental policy concerns. [20] Statutes of limitations serve dual policies: to protect against prejudice from stale claims [21] and to ensure an adequate opportunity for filing a claim prior to the statutory bar. [22] For cases involving personal injury, the legislature struck a balance between these competing policies by adopting a two-year statute of limitations. [23] Since contract provisions altering this statutory period necessarily run the risk of unbalancing the legislature's carefully measured policy choice, upholding such provisions through an uncritical application of another state's contract law would violate public policy. [24] In analogous settings, we have recognized the need to preserve the policy balance of our time bar statutes against unlimited contractual revision. For example, in Johnson v. City of Fairbanks we invalidated a municipal ordinance that established a four month notice-of-claim requirement for tort suits, holding that it violated the statewide legislative policy of providing uniform limitation periods. [25] And in Alaska Energy Authority v. Fairmont Insurance Co., we held that a filing limit imposed in an insurance policy was unenforceable absent an affirmative showing of prejudice to the insurer. [26] The reasoning of these cases encompasses the present circumstances. [27] Different, but similarly fundamental, policies underlie Alaska's laws governing compensation for personal injury. Our tort system serves multiple purposes. It strives to ensure fair compensation for victims of negligently inflicted harm. [28] It seeks to treat all responsible parties fairly by allocating damages in proportion to each party's fault. [29] And more generally, it promotes the safety and welfare of all Alaskans by deterring negligent conduct and minimizing social costs of negligence such as unpaid medical expenses, lost wages, and diminished productivity. [30] Hence, a contractual provision that alters the effect of the tort statute of limitations between contracting parties presents a matter of fundamental concern. Moreover, such a provision may have significant and far-reaching impacts beyond its effect on the rights and interests of contracting parties. To the extent that Washington contract law would routinely allow contracting parties to alter their own rights and interests and the rights and interests of non-contracting parties in matters concerning compensation for personal injuries that occur in Alaska, enforcing that law would subvert the basic purpose of Alaska's system of negligence laws. [31] For example, in adopting a comprehensive regime of comparative negligence as part of Alaska's 1997 tort reform legislation, the Alaska Legislature explained that it is the intent of this legislature as a matter of public policy to .... (9) ensure that in actions involving the fault of more than one person, the fault of each claimant, defendant, ... or other person responsible for the damages and available as a litigant be determined and awards be allocated in accordance with the fault of each. [32] As this statement exemplifies, Alaska's standard of pure comparative negligence embodies a fundamental public policy choice made by the legislature. [33] A rule that mechanistically upheld all contract provisions shortening the tort statute of limitations would offend this policy by subjecting various claims arising from the same negligent act, and various involved parties, to differing time limits. For these reasons, we conclude that contractual provisions like the one at issue here involve matters of fundamental policy that demand scrutiny under Alaska law.