Opinion ID: 196153
Heading Depth: 3
Heading Rank: 1

Heading: The needs of the interstate system.

Text: 29 Neither party has suggested that choosing one state's law over the other would impede the workings of the interstate system. Although the impact of various states' negligence rules on interstate banking and the availability of interstate mortgage transactions might raise concern in some cases, we find no reason to address such issues on the record presented here. 30 2. The relevant policies and relative interest § of Massachusetts and Virginia in the negligence claims. 31 Virginia plainly has a significant interest in litigation involving a Virginia plaintiff. Virginia has chosen not to recognize tort claims to recover purely economic loss for negligently supplied misinformation absent privity between the parties. Ward, 435 S.E.2d at 631-32. Instead, under Virginia law, a plaintiff may recover economic losses caused by the failure of contractual duties only in a contract action. Id. The purpose of Virginia's economic loss rule is to preserve the bedrock principle that contract damages be limited to those 'within the contemplation and control of the parties in framing their agreement.'  Richmond v. Madison Management Group, Inc., 918 F.2d 438, 446 (4th Cir. 1990) (quoting Kamlar Corp. v. Haley, 299 S.E.2d 514, 517 (Va. 1983)). 32 Massachusetts, on the other hand, has little interest in this case. Although Massachusetts' policy would favor compensating Massachusetts plaintiffs and holding Massachusetts defendants accountable under its own law, see Cosme, 632 N.E.2d at 836, none of the parties are Massachusetts citizens or corporations. Further, although the appraised property is located in Massachusetts, the transaction did not directly affect the property, and the parties no longer own or have any connection with the property. Thus, Massachusetts has minimal interest in the parties and the outcome of this case. 33 3. Protection of justified expectations. 34 This factor is insignificant in negligence actions where the parties probably acted without considering the significance of the applicable rule of law. Restatement (Second) of Conflict of Laws Sec. 6 cmt. g. Tidemark contends, however, that it expected that Massachusetts law would apply to all actions related to the loan because the mortgage document contained a choice-of-law clause specifying that the mortgage would be governed by Massachusetts law. Marshall and Stevens was not a party to the mortgage, and Tidemark's claims are not based on the mortgage agreement. If Tidemark expected Massachusetts law to apply to potential negligence claims against an appraiser based on the mortgage agreement, its expectation was unjustified. 35 4. Basic policies underlying the field of law. 36 The policy supporting tort recovery for negligently supplied information is to encourage honesty and competence in the undertaking. See Restatement (Second) of Torts Sec. 552 cmt. a (1977). Section 552 of the Restatement (Second) of Torts, pertaining to negligent misrepresentation claims, however, also recognizes the importance of a countervailing policy to limit the scope of liability in light of the potentially broad circulation of misinformation. Id.; see, e.g., Berschauer/Phillips Constr. Co. v. Seattle Sch. Dist. No. 1, 881 P.2d 986, 989-90 (Wash. 1994); Matthew S. Steffey, Negligence, Contract and Architects' Liability for Economic Loss, 82 Ky. L.J. 659, 701 (1994); William C. Way, The Problem of Economic Damages: Reconceptualizing the Moorman Doctrine, 1991 U. Ill. L. Rev. 1169, 1186-87 (1991). In light of this countervailing policy, a solid minority of states, including Virginia, require privity in order to maintain a misrepresentation claim. See Bily v. Arthur Young & Co., 834 P.2d 745, 755-59 (Cal. 1992) (finding that approximately nine states require privity while at least seventeen do not). Consequently, the policies underlying this area of law are in conflict and support both states' interpretations. 37 5. Predictability and uniformity of result. 38 Predictability and uniformity of results are of limited significance in negligence actions because parties do not plan their activities in light of the potential legal consequences. Restatement (Second) of Conflict of Laws Sec. 6 cmt. i. However, the Restatement also notes that a choice of law that would further the predictability and uniformity of results would discourage forum shopping. Id. Because Massachusetts joins a majority of states in allowing economic loss suits without privity, application of Massachusetts law arguably might further a uniform legal standard. There is little benefit, however, in encouraging a majority rule over a significant minority view. Thus, this consideration is also inconclusive. 39 6. Ease in determination and application of the law. 40 Because a federal court was the forum here, we give less weight to the ease of applying Massachusetts law over Virginia law. See Allstate Ins. Co. v. Hague, 449 U.S. 302, 326 (1981) (Stevens, J., concurring). Moreover, Virginia law relating to claims for economic loss without privity is well-developed. Thus, we find no obstacles to applying Virginia law in a Massachusetts federal court in this case. Indeed, Tidemark faults the district court's choice but not its application of Virginia law. 41 In summary, the predominance and significance of Virginia's contacts with the parties and relevant occurrences in this case weighs in favor of applying Virginia law. Based on the balance of the appropriate choice-influencing considerations, we hold that the district court's selection of Virginia law was correct.