Court Opinion

ID: 9704325
Source: CourtListenerOpinion
Date Created: 2023-08-26 00:30:51.563566+00
Date Added: 2024-06-11T18:22:00.398760
License: Public Domain

POLLOCK, J.,
dissenting
This appeal concerns a choice between the law of New York and that of New Jersey. In a well-reasoned opinion, the Appellate Division held “that New Jersey’s contacts with this matter, both in quality and in quantity, outweigh New York’s and that, in consequence, the matter is governed by New Jersey’s common law.” 309 N.J.Super. 443, 442-43, 707 A.2d 477 (1998). The majority reverses. I would affirm.
*140Plaintiff, Li Fu, was injured in a single-car accident while a passenger in a car rented in New Jersey by her husband, plaintiff Xiao Kang Su, and her brother-in-law, Kuide Chen. Fu, her husband, and her brother-in-law were all New Jersey domiciliar-ies. They rented the car from a New Jersey lessor, defendant Freedom River, Inc., doing business as Budget Rent-A-Car of Philadelphia (Freedom River). The lessees intended to travel to several states and return the car to New Jersey. The operator of the car, Li Fu’s sister Hong Fu, another New Jersey domiciliary, drove off the road in Hamburg, New York, seriously injuring Li Fu. Following admission to a New York hospital, Li Fu was transferred to JFK Medical Center in New Jersey, where she received most of her hospital care.
Under the law of New York, plaintiffs may recover against Freedom River; under the law of New Jersey, they may not. Finding that New York has a more significant interest than New Jersey in the determination of Freedom River’s liability to plaintiffs, the majority reverses. I respectfully dissent. New Jersey’s interest so far exceeds New York’s that the majority opinion can be understood only as an attempt to reach Freedom River’s insurance policy, a consideration that until now has not been dispositive with respect to a choice of law.
I.
On July 18,1993, Xiao Kang Su and Kuide Chen rented a car in Lawrenceville, New Jersey, from defendant Freedom River. Su and Chen planned to drive the car to a seminar at Cornell University in Ithaca, New York, continue to Wisconsin, and then return the car to Freedom River in New Jersey on July 27. Freedom River authorized them to drive outside of New Jersey, but did not specifically authorize them to drive to New York or any other state. Accompanying Su and Chen on the trip were their families, including Su’s wife, Li Fu, and son, Daniel Su; and Chen’s wife, defendant Hong Fu, and daughter, Michelle Chen. All six are New Jersey residents. Although the rental contract *141identified Xiao Kang Su and Kuide Chen as the authorized drivers, a Freedom River agent assured them that their wives also could drive the car. Therefore, Hong Fu and Li Fu were permissive users of the rental vehicle.
As part of its standard rental agreement, Freedom River provided the lessees with a “Basic Automobile Liability Insurance Policy,” which protects authorized drivers of the rental car against liability for causing bodily injury, death or property damage to third-parties. The policy limit is the minimum coverage mandated by the law of the state where the rental takes place, in this case New Jersey. See N.J.S.A. 45:21-2, -3 (requiring commercial automobile lessor to maintain split-liability coverage of at least $10,000/$20,000 for bodily injury and $5000 for property damage). Plaintiffs and their joint lessees could have purchased extra insurance from Freedom River. Optional policies included a “Personal Accident Insurance” policy, which would have provided the authorized drivers and their passengers for bodily injury suffered in an accident, and an additional liability policy that would have increased the limits on coverage for bodily injury or property damage caused to others. A Freedom River agent informed the lessees that their own personal automobile insurance would cover an accident involving the rental car. The lessees declined the optional coverage.
On July 19,1993, Hong Fu was driving through Hamburg, New York, during a rainstorm. She lost control of the vehicle while trying to find the windshield-wiper switch. The car slid off the road, crossed two lanes of traffic, rolled over and landed in an embankment. It was a one-car accident. Li Fu suffered severe injuries and was hospitalized in New York for thirty days. She then was transferred to JFK Medical Center in New Jersey, where she received extensive medical treatment until April 1994.
All five passengers received personal injury protection (PIP) from their personal insurance policies. Their insurance companies paid for all of the passengers’ medical bills, except for those of Li Fu. The cost of Li Fu’s medical treatment has exceeded her *142personal injury protection cap of $250,000. She has incurred medical bills of approximately $150,000 arising from her treatment in the New York hospital and $250,000 arising from her treatment in New Jersey. She continues to receive outpatient care with concomitant medical expenses.
In July 1994, all five passengers filed a complaint for personal injury damages against Hong Fu, the driver, and Freedom River, the owner of the car. Freedom River, a Delaware corporation with its principal place of business in Philadelphia, is a sub-franchisee of Freedom River, Inc., a Delaware corporation with its principal place of business in Illinois. Freedom River maintains offices in Philadelphia and Lawrenceville. It does not conduct business in New York.
In May 1997, the passengers’ claims were arbitrated pursuant to Rule 4:21A-1. The arbitrators awarded $15,000 to Kuide Chen, $7500 to Michelle Chen, $100,000 to Xiao Kang Su, $25,000 to Daniel Su, and $3,750,000 to Li Fu. The arbitrators also found Freedom River vicariously liable for Hong Fu’s negligence pursuant to New York law, which provides:
Every owner of a vehicle used or operated in this state shall be liable and responsible for death or injuries to person or property resulting from negligence in the use or operation of such vehicle, in the business of such owner or otherwise, by any person using or operating the same with the permission, expressed or implied, of such owner.
[N.Y.Veh. & Traf. Law § 388(1) (McKinney 1996) (Section 388).]
The award to Li Fu, however, exceeded the individual limit of the $100,000/$300,000 split-limit coverage afforded Hong Fu by her personal insurance policy with the Market Transition Facility (MTF). Hong Fu therefore moved for a trial de novo pursuant to Rule 4:21A-6(b)(l). Michelle Chen, Xiao Kang Su and Daniel Su settled their claims against Hong Fu for the amount awarded by the arbitrator. Kuide Chen settled his claim for $12,500. Only Li Fu’s personal injury claim and Xiao Kang Su’s derivative claim for loss of consortium remain outstanding. MTF, on behalf of its insured Hong Fu, has offered its individual policy limit of $100,000 to plaintiffs as settlement. Plaintiffs have rejected this offer. In *143August 1997, the trial court entered an order allowing MTF to deposit its policy into court pursuant to Rule 4:47-1.
In April 1997, Freedom River moved for summary judgment, arguing that New Jersey law, not New York law, governed its liability as owner of the rental car. Under New Jersey law, the owner of a motor vehicle is not liable for the negligence arising out of the permissive operation of the vehicle, unless the operator was the owner’s agent or employee. Doran v. Thomsen, 76 N.J.L. 754, 756-57, 71 A. 296 (E. & A.1908). Although an owner may be directly liable for negligently permitting an operator to use the vehicle, id. at 760, 71 A. 296, plaintiffs do not contend that Freedom River was negligent in permitting Hong Fu to drive the car.
Initially, the Law Division concluded that all significant relationships were with New Jersey, and the accident’s occurrence in New York was a mere “happenstance.” The court then reversed itself and held that New York law applied. The Appellate Division reversed. 309 N.J.Super. 435, 707 A.2d 473 (App.Div.1998). It reasoned that “New York has no interest in the application of § 388 to this matter, which does not involve New York residents, New York vehicles, New York owners, or a New York rental agreement. Nor does the statute implicate a standard of care for drivers using New York roadways.” Id. at 442, 707 A.2d 473.
II.
A.
As the forum state, New Jersey’s choice-of-law rules apply to determine whether New York or New Jersey law governs this controversy. Gantes v. Kason Corp., 145 N.J. 478, 484, 679 A.2d 106 (1996). At one time, the law of the place where the accident occurred was dispositive. Mellk v. Sarahson, 49 N.J. 226, 228, 229 A.2d 625 (1967). More recently, courts have recognized that so simplistic an approach does not always achieve a just result. State Farm Mut. Auto. Ins. Co. v. Estate of Simmons, 84 N.J. 28, 36, *144417 A.2d 488 (1980). “[W]here a foreign state has no real interest in having its law applied to a particular right or liability of parties [or] to an event which occurred within its borders, a mechanical application of a disability or immunity imposed by lex loci delicti may work an unjust result having no relation to the purposes and policies behind the foreign law.” Mellk, supra, 49 N.J. at 229, 229 A.2d 625. Thus, New Jersey abandoned the rigid common-law approach, see ibid, and now follows “the more flexible governmental-interest analysis in choice-of-law decisions,” according to which “the determinative law is that of the state with the greatest interest in governing the particular issue.” Veazey v. Doremus, 103 N.J. 244, 247-48, 510 A.2d 1187 (1986).
New Jersey’s governmental-interest test is substantially similar to the most-significant-relationship test adopted by the American Law Institute in Restatement (Second) of Conflict of Laws (the “Restatement”) (1971). Thus, New Jersey now adheres to the method of analysis set forth in Restatement sections 6 (Section 6) and 145 (Section 145). See, e.g., State Farm, supra, 84 N.J. at 34, 417 A.2d 488. According to Section 6, a court should consider several general factors when determining which state has the most significant relationship to a dispute, including:
(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 this 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 determination and application of the law to be applied.
Section 145 focuses the test primarily on the competing policies of:
(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.
*145As the Appellate Division recognized, New Jersey is the jurisdiction with the predominant contacts. 309 N.J.Super. at 442, 707 A.2d 473. New Jersey is the place where the relevant conduct, the renting of the car from Freedom River, occurred. New Jersey is the place where plaintiff and defendant driver are domiciled. It is the place where Freedom River does business, and where the relationship between plaintiff and Freedom River is centered. The parties signed the rental contract in New Jersey. Plaintiffs accepted the car in New Jersey and intended to return it to New Jersey. New York’s sole contact is as the place where the injury occurred. Although Delaware and Pennsylvania could be considered interested states, as Freedom River’s place of incorporation and principal place of business, respectively, the parties do not claim that either of these states has the most significant relationship to the parties or events. The only comparison is between the interests of New York and those of New Jersey.
The next step is to “identify the governmental policies underlying the law of each state and how those policies are affected by each state’s contacts to the litigation and to the parties. If a state’s contacts are not related to the policies underlying its law, then that state does not possess an interest in having its law apply.” Veazey, supra, 103 N.J. at 248, 510 A.2d 1187 (internal citations omitted). A state’s law applies only if it “will advance the policies that the law was intended to promote.” Pfizer, Inc. v. Employers Ins. of Wausau, 154 N.J. 187, 198, 712 A.2d 634 (1998).
B.
According to the majority, Section 388 is intended (1) to “ensure access by injured persons to a financially responsible insured person against whom to recover for injuries,” ante at 119, 733 A.2d at 1139 (quoting Morris v. Snappy Car Rental, Inc., 84 N.Y.2d 21, 614 N.Y.S.2d 362, 637 N.E.2d 253, 255 (1994)); and (2) to “discourage owners from lending their vehicles to incompetent or irresponsible drivers,” ante at 119, 733 A.2d at 1139 (quoting Haggerty v. Cedeno, 279 N.J.Super. 607, 609, 653 A.2d 1166 (App.Div.), certif. *146denied, 141 N.J. 98, 660 A.2d 1197 (1995)). In selecting New York law, the majority contends that New York’s interest in furthering those two policies predominates. On close analysis, however, the application of Section 388 does not advance New York’s interests either in compensation or in deterrence.
New York’s interest in compensating domiciliaries of another state, such as New Jersey, is so minimal as to be virtually nonexistent. See Schum v. Bailey, 578 F.2d 493, 496 (3d Cir.1978) (finding that although New York has strong interest in compensation of own domiciliary, it has no interest in compensating non-domiciliary); Smith v. Bell Sports, Inc., 934 F.Supp. 70, 77 (W.D.N.Y.1996) (stating that New York’s interest in seeing that “non-domiciliary is compensated for any harm caused by the allegedly wrongful conduct is minimal at best”); Marinelli v. K-Mart Corp., 318 N.J.Super. 554, 566, 724 A.2d 806 (App.Div.1999) (finding that Pennsylvania has strong interest in compensation of own domiciliaries, but has no interest in compensating non-domiciliaries); Deemer v. Silk City Textile Mach. Co., 193 N.J.Super. 643, 649, 475 A.2d 648 (App.Div.1984) (“New Jersey has no interest in protecting the compensation rights of a non-domiciliary resident.”). As New Jersey domiciliaries, plaintiffs’ claim to recover under New York law, despite executing the rental contract in New Jersey, is insubstantial. “It would indeed be anomalous to apply foreign law solely to gain access to a deep pocket when local law denies that access.” Haggerty v. Cedeno, supra, 279 N.J.Super. at 612, 653 A.2d 1166.
Recourse to Section 388 is unnecessary to ameliorate the hardship that an injured person experiences by not having access to a “financially responsible insured person against whom to recover for injuries.” Supra at 119, 733 A.2d at 1139. Li Fu, as a lessee, already has been afforded access to such a financially responsible entity. Freedom River offered plaintiffs an insurance policy that would have compensated them for their injuries. Unfortunately, neither they nor the other lessees decided to purchase that insurance. Plaintiffs made the choice, as was their right, not to *147pay additional premiums for additional coverage. Thus, the existence of the rental contract distinguishes the situation in which a permissive user herself is injured in a single-ear accident from the situation in which a third-party, with no prior relationship with the owner, is injured by a permissive user.
Finally, application of Section 388 is not necessary to ensure that “New York vendors who furnish medical and hospital care to injured parties are compensated.” Ante at 119, 733 A.2d at 1139 (quoting Bray v. Cox, 39 A.D.2d 299, 333 N.Y.S.2d 783, 785 (1972)). Here, plaintiff returned to New Jersey after receiving treatment in a New York hospital for one month. She has received most of her hospital care and all of her outpatient care in New Jersey, her home state. Although plaintiff claims that she remains indebted in an unspecified amount for some of the care she received in New York, she has already received payments from her own insurance policy that exceed the total amount of her New York medical bills.
Based on the facts of this case, New York is likewise not interested in the application of Section 388 to deter negligent driving on its roads. Contrary to the majority’s characterization, New York courts consistently have described Section 388 as a rule that allocates loss, not one that regulates conduct. See Padula v. Lilarn Properties Corp., 84 N.Y.2d 519, 620 N.Y.S.2d 310, 644 N.E.2d 1001, 1002-03 (1994) (describing loss-allocating, rules, as distinguished from conduct-regulating rules, “as those which prohibit, assign, or limit liability after the tort occurs,” such as vicarious liability statutes); Schultz v. Boy Scouts of Am., Inc., 65 N.Y.2d 189, 491 N.Y.S.2d 90, 480 N.E.2d 679, 685-86 (1985) (same); Janssen v. Ryder Truck Rental, Inc., 246 A.D.2d 364, 667 N.Y.S.2d 369 (1998) (finding that Section 388 is loss-allocating rule and thus “the jurisdiction of the parties’ domiciles has paramount interest”); see also Heisler v. Toyota Motor Credit Corp., 884 F.Supp. 128, 131 (S.D.N.Y.1995) (stating, in case involving choice between New York and New Jersey’s rule regarding owner liability, that “[t]he New York Court of Appeals regards rales governing vicarious liability as loss allocating, not conduct regulating”); *148Buglioli v. Enterprise Rent-A-Car, 811 F.Supp. 105, 108 (E.D.N.Y.1993) (identifying Section 388 as “loss-distribution” rule).
Any interest New York has in deterrence is diminished in this case because its contact as the situs of the accident was fortuitous. The occupants of the vehicle were passing through New York on their way from New Jersey to the Midwest. This single-car accident could have occurred in any of the states through which the plaintiffs intended to drive. See Veazey, supra, 103 N.J. at 250, 510 A.2d 1187 (finding that New Jersey’s connection to car accident as situs of injury is “fortuitous fact”); Wilson v. Faull, 27 N.J. 105, 124, 141 A.2d 768 (1958) (“Choice of law ... should not be governed by wholly fortuitous circumstances such as where the injury occurred.”); see also Thompson v. Yue, 426 F.Supp. 853, 855 (D.N.J.1977) (“The New Jersey courts have taken the position that the mere fact that an accident occurs within the borders of a foreign jurisdiction is insufficient to classify that jurisdiction’s interest as strong enough to warrant the application of its law.”). Furthermore, the possible application of New York law would not have deterred Freedom River from permitting Hong Fu to drive the rental vehicle. The aim of Section 388 is not to deter the negligent operation of motor vehicles, but to deter loaning vehicles to incompetent drivers. Plaintiff, however, does not claim that the operator was incompetent. Freedom River had no reason to bar Hong Fu from driving. She had a valid New Jersey driver’s license and no prior record of unsafe driving. If anything, Li Fu, as Hong Fu’s sister and joint lessee, was in a better position than Freedom River to judge Hong Fu’s competence. In fact, Li Fu specifically made sure that her sister could drive the rental car before agreeing to take the trip. Thus, an expectation that New York law would be applied could not have prevented this accident.
Lastly, New Jersey law is as much a deterrent as is that of New York. Even under New Jersey law, an owner of a vehicle is *149directly liable for negligently permitting an individual to drive the owner’s ear. See Doran, supra, 76 N.J.L. at 756-57, 71 A. 296.
The majority relies on two other considerations to support the application of New York law. First, the majority finds that “there is a reasonable relationship between the defendant and the state whose local law is to be applied.” Ante at 127, 733 A.2d at 1143. Although New York has a reasonable relationship to Freedom River, the existence of such a relationship is not dispositive. For choice-of-law purposes, the question is not whether one of several competing jurisdictions has a relationship that is reasonable, but which one has the relationship that is most significant. Section 174 of the Restatement states that, just as with any choice-of-law determination in a tort action, “the local law of the state which has the most significant relationship to the occurrence and the parties with respect to the issue of vicarious liability should be applied in determining whether one person is liable for the tort of another person.” Restatement, supra, § 174 comment a. Unlike other choice-of-law determinations, Section 174 establishes a second requirement that there must be a reasonable relationship between the defendant and the state imposing vicarious liability. Ibid. This second prong of Section 174 is intended as an additional safeguard for a defendant who may not have foreseen the imposition of vicarious liability. The majority, however, uses this safeguard as a means for imposing such liability in the first place. In short, the majority has stood Section 174 on its head.
Second, the Court asserts that “[i]n the context of a New York accident, New York courts have unwaveringly applied Section 388, notwithstanding the absence of any additional ‘contacts’ with the transaction.” Ante at 128, 733 A.2d at 1144 (citing Kell v. Henderson, 47 Misc.2d 992, 263 N.Y.S.2d 647 (Sup.Ct.1965), aff'd 26 A.D.2d 595, 270 N.Y.S.2d 552 (1966); Bray v. Cox, supra, 333 N.Y.S.2d at 783; Himes v. Stalker, 99 Misc.2d 610, 416 N.Y.S.2d 986 (Sup.Ct.1979)). Carefully read, however, the New York decisions merely reflect the application of New York’s unique choice-of-law rules to the facts of specific cases. The resolution of this *150case turns not on the choice-of-law rules of New York, but of New Jersey.
Despite New York courts’ apparent preference for applying Section 388, the New York Court of Appeals has demonstrated that New York’s interest, as the place where the accident occurred, should yield to New Jersey’s interest, as the place where the parties reside and as the center of their relationship. See Schultz, supra, 491 N.Y.S.2d 90, 480 N.E.2d at 679. In Schultz, a Franciscan brother allegedly sexually abused several New Jersey boy scouts on a camping trip in New York. The boys’ parents sued the Boy Scouts of America and the Franciscan Brothers for negligent hiring and supervision. The injured boys, their parents, the troop leader, the local scout troop, and the Boy Scouts of America were domiciled in New Jersey. The Franciscan order was domiciled in Ohio. Defendants asserted that New Jersey’s charitable immunity statute, N.J.S.A. 2A:53A-7, barred the action. Adopting the defendants’ argument, the Court of Appeals held that New Jersey law governed the claims against both defendants. The court found that New York did not have an interest in compensating the plaintiffs because the injured boys were not wards of New York and there were no New York medical creditors. Additionally, the court observed that the rule at issue, that of charitable immunity, was a loss-allocating rule. Because the parties did not reside in New York, New York’s interest in deterrence was weak. Conversely, the court found that New Jersey, as the place where the parties resided and where their relationship was centered, had a strong connection to the dispute.
Although New York’s interest in applying its vicarious liability statute is minimal, New Jersey’s multiple interests are substantial. First, New Jersey has the greater interest in allocating the loss between its residents according to its own law. New Jersey, not New York, will bear the consequences of the loss allocation. The Restatement recognizes the qualitative importance of this contact:
[ T]he fact that the domicil and the place of business of all parties are grouped in a single state is an important factor to be considered in determining the state of the applicable law. The state where these contacts are grouped is particularly likely to *151be the state of the applicable law if either the defendant’s conduct or the plaintiff’s injury occurred there. This state may also be the state of the applicable law when conduct and injury occurred in a place that is fortuitous and bears little relation to the occurrence and the parties.
[Restatement, supra, § 145 comment e.]
Here, plaintiffs’ domicile and Freedom River’s place of business are grouped in New Jersey. Additionally, Freedom River’s conduct, the rental transaction, occurred in New Jersey. For the purpose of this action, the place of the injury is a mere fortuity that bears no other connection to the parties.
The Restatement further recognizes the importance of a state’s contact as the parties’ domicile when a court must decide whether to apply a law shielding one party from liability:
The local law of the state where the parties are domiciled, rather than the local law of the state of conduct and injury, may be applied to determine whether one party is immune from tort liability to the other____ [For example,] the circumstances under which a guest passenger has a right of action against the driver of an automobile for injuries suffered as a result of the latter’s negligence may be determined by the local law of their common domicil, if at least this is the state from which they departed on their trip and that to which they intended to return, rather than by the local law of the state where the injury occurred.
[Restatement, supra, § 145 comment d.]
Rules that regulate the host’s liability to his guest are similar to those that relate to an owner’s liability for the negligence of a permissive user. Both are loss-allocating rules. Here, plaintiffs and Freedom River share a common residence in New Jersey.
The Restatement’s preference for the application of the law of the state where the parties reside reflects that state’s “interest in enforcing the decision of its domieiliaries to accept the burdens as well as the benefits of [its] loss-distribution tort rules.” Schultz, supra, 491 N.Y.S.2d 90, 480 N.E.2d at 687. Applying New Jersey’s common-law rule ensures that the loss in a dispute between New Jersey residents will be governed in accordance with New Jersey’s sense of fairness and justice. See Joseph William Singer, A Pragmatic Guide to Conflicts, 70 B.U. L.Rev. 731, 749 (1990) (identifying “a state’s sense of justice or fairness in particular social relationships” as one type of substantive policy underlying law); ante at 132, 733 A.2d at 1146 (citing Aboud v. Budget Rent A *152Car Corp., 29 F.Supp.2d 178, 182 (S.D.N.Y.1998)) (“New Jersey has an interest in ... assuring] that victims of automobile accidents ‘are treated fairly and that some of those victims not be granted extraordinary rights and preferences.’”) (citation omitted). Until today, New Jersey has deemed it unfair to burden financially an innocent automobile owner:
New Jersey’s common law rale regarding owner liability is ... designed to shield an owner from liability in cases in which the owner has not been negligent and in which the culpable driver is not related to the owner in a way that will justify the imposition of vicarious liability under traditional principles of the law of agency or master servant. That shield is consistent with the principle that tort liability in the context of automobile-related injuries is based on fault.
[Haggerty, supra, 279 N.J.Super. at 611-12, 653 A.2d 1166.]
The majority attempts to undercut New Jersey’s interest in applying its common-law rule on owner liability by stating that the rule “has lost some of its vitality as a statement of public policy.” Ante at 121, 733 A.2d at 1140. Adoption of a “no-fault” approach in other areas of tort law, however, should not undermine the strength of the owner-liability rule, which the Legislature has left in place.
Similarly, New Jersey has a significant interest, as the place where the rental transaction was executed, in protecting the parties’ justifiable expectations. Those expectations are based on New Jersey regulations that define the parameters of a lessor-lessee relationship established and centered in New Jersey. See, e.g., N.J.S.A. 45:21-3. “Courts often apply the law of ... the place where the parties center their relationship if the law defines the fair contours of their relationship, and if the law of the place of the conduct or injury is not mainly geared to deterrence or regulation of conduct, but to loss-allocation.” Singer, supra, 70 B.U. L.Rev. at 746.
Only the application of New Jersey law can vindicate the parties’ justifiable expectations. Freedom River’s own policy and the additional coverage it offered to the New Jersey lessees reasonably were based on an understanding that New Jersey law would govern Freedom River’s obligations to those lessees. Pre*153sumably, if Freedom River had expected to be liable under the law of another state, such as New York, for injuries to its lessees that a lessee herself caused, it would have incorporated the cost of that policy in the price of the car rental. On the other hand, plaintiffs had no expectation that New York law would allow them to recover from Freedom River if they were injured as a result of their own negligence.
To justify reaching Freedom River’s insurance policy, the majority argues that Freedom River anticipated its liability under New York law. In support of the argument, the majority states that, in addition to carrying insurance mandated by statute in New Jersey, Freedom River was insured under a policy with personal liability coverage of $500,000 for a single accident, and an excess policy of $2,000,000. Ante at 136, 733 A.2d at 1148. The majority’s analysis begins with the understandable proposition that from the operation of its leased vehicles in other states, including New York, Freedom River should have expected potential liability to third parties in those states. That expectation, however, does not justify the conclusion that Freedom River should anticipate increased liability to the lessees themselves. Freedom River’s excess policies reflect expected liability for injuries resulting from its own negligence, such as negligent maintenance of a vehicle, or injuries to third-parties resulting from the negligence of a permissive user.
New Jersey has a demonstrable interest in furthering the specific policies underlying its own rules on the liability of car owners. A more compassionate rule, such as New York’s, is an understandable alternative. That alternative, however, is not the only choice. New Jersey remains free to choose, as it has, a rule more favorable to owners. As the Restatement states: “A rule which exempts the actor from liability for harmful conduct is entitled to the same consideration in the choice-of-law process as is a rule which imposes liability.” Restatement, supra, § 145 comment c.
*154According to the majority, New Jersey’s rule simply adheres “to the well-established, common-law principle that liability for automobile negligence should be allocated solely on the basis of fault.” Ante at 120, 733 A.2d at 1139. In fact, New Jersey’s rule also reflects other considerations. The New Jersey rule encourages entities such as Freedom River to conduct business in New Jersey, thus employing New Jersey residents and providing tax revenue to the State. Ignoring the New Jersey rule will impose additional costs, initially on Freedom River and ultimately on New Jersey lessees. Presumably, the New Jersey rule reduces the cost of automobile insurance. The cost of that insurance, already high, must now reflect the added cost of liability under the laws of other states, such as New York. Ultimately, the imposition of liability will increase the cost of renting a car in New Jersey. The rule applies not only to automobile lessors, but also to ordinary automobile owners. Thus, the imposition of liability "will increase the cost of owning a car for everyone.
In addition to advancing New Jersey’s interests, the application of New Jersey law would advance the interest in maintaining certainty, predictability, and uniformity. See Restatement, supra, § 6(f). Those interests would be served only if the ability of a lessee to recover damages for personal injuries from a lessor did not change as the lessee travels across state lines. See Veazey, supra, 103 N.J. at 251, 510 A.2d 1187. Lessors and lessees need to know at the time of contracting which state’s law will determine their liability to each other so they can make informed decisions about such matters as the type and amount of insurance to carry. Obviously, it was impossible for the parties here to predict that an accident would occur in New York, rather than in another state.
Lastly, the application of New Jersey law would comport with our prior decisions in choice-of-law cases involving liability for automobile accidents. Those decisions have favored the interests of the state where the parties were domiciled and where the parties’ relationship was centered as qualitatively stronger than the interests of the state where the injury occurred.
*155In Veazey, supra, 103 N.J. at 244, 510 A.2d 1187, this Court applied Florida’s interspousal immunity to bar a husband from suing his wife for injuries arising out of a car accident in New Jersey. We found that Florida’s interest in governing the parties’ marital relationship, which was centered in Florida, was more important than New Jersey’s contact as the situs of the injury, which was merely a “fortuitous fact that ... does not compel the conclusion that our rule on interspousal immunity should apply.” Id. at 250, 510 A.2d 1187. The Court also emphasized that uniformity would be established only if “the capacity of one family member to sue another, ... [did] not change as a husband and wife cross state lines on a motor trip.” Id. at 251, 510 A.2d 1187.
In State Farm, supra, 84 N.J. at 28, 417 A.2d 488, we examined whether an Alabama automobile insurance policy covered several passengers who were killed while driving in the insured’s automobile without permission. Although the accident occurred in New Jersey, the insurance policy was issued in Alabama by an Alabama insurance company to an insured who was domiciled in Alabama and who purchased and registered the car in Alabama. At the time of the accident, the insured was serving in the armed forces and was stationed in New Jersey. Under Alabama law, the injured passengers were not covered since they did not have express or implied consent to use the car. Nevertheless, we applied Alabama law because “it will protect the reasonable expectations of the parties as to their insured risks and will serve the needs of certainty, predictability and uniformity.” Id. at 43, 417 A.2d 488.
In Pfau v. Trent Aluminum Co., 55 N.J. 511, 263 A.2d 129 (1970), we applied the identical law of New Jersey and Connecticut to permit a guest to sue his host for negligence, even though the automobile accident occurred in Iowa and the guest-host relationship began in Iowa. We found that the states that were the permanent domiciles of the guest and host had the paramount interests. Our decision in Pfau followed our holding in Melik, supra, in which we applied New Jersey law to a guest’s negligence *156action against his host for injuries arising out of an automobile accident in Ohio. New Jersey had the strongest connection to the dispute because the guest and host were domiciled in New Jersey and their guest-host relationship was centered there. The majority, however, disregards these precedents and gives undue weight to the fact that Li Fu’s injury occurred in New York.
For these reasons, I believe that New Jersey has the most significant relationship to these parties and the accident, and would apply New Jersey’s owner-liability rule in this case. I therefore dissent.
Justice GARIBALDI joins in this dissent.
For reversal and remandment — Chief Justice PORITZ and Justices HANDLER, O’HERN, STEIN, and COLEMAN — 5.
For affirmance — Justices POLLOCK and GARIBALDI — 2.