Appellate Division Affirms Granting of Summary Judgment based on NY's Choice of Law Rules
Court's decision affirms New York's Choice of Law rule.
December 7, 2006

APPELLATE DISMISSAL OF PLAINTIFF'S
COMPLAINT AND THE APPLICATION OF NEW JERSEY
LAW ON VICARIOUS LIABILITY

On December 7, 2006, in Stanley v. Punch, 2006 NY Slip Op 09110, the Appellate Division, First Department affirmed the lower Court's Order entered May 31, 2005 which granted Ohrenstein & Brown's motion for summary judgment dismissing all claims against its client on the ground that New Jersey law relating to vicarious liability of vehicle owners rather than New York law should govern in a case involving an accident that occurred on the New Jersey side of the George Washington Bridge. The Court's decision therefore solidified that under New York's Choice of Law, when the passenger and the driver are domiciled in different states and the defendants have no significant ties in New York in relation to the accident, New York's Choice of Law Rules require the application of the law of the location of the accident.

Ohrenstein & Brown represented Citicapital Commercial Corporation, a National Vehicle Leasing Company. Citicapital was the title holder and lessor of a truck involved in a two-vehicle collision, that had no involvement in its operation. An employee of the company that leased the vehicle from Citicapital was operating the truck. Plaintiff was a passenger in the other vehicle. At the time of the accident, plaintiff-appellant and the driver of that vehicle resided in New York state. Citicapital is an Indiana corporation, while the other defendant-driver resided in Georgia.

O&B moved for dismissal in the lower Court arguing that, under New Jersey law, it cannot be held liable for any damages. New Jersey does not impose vicarious liability upon the owner of a vehicle unless the operator of the vehicle is acting as the owner's agent. By contrast, New York's Vehicle & Traffic Law holds an owner of the vehicle "vicariously liable" for accidents even if the owner is not the operator. We successfully argued that under New York's Choice of Law, when the passenger and the driver are domiciled in different states and the defendants have no significant ties in New York in relation to the accident, New York's Choice of Law Rules require the application of the law of the location of the accident. In appealing the decision, plaintiff-appellant raised several issues regarding the domicile of Citicapital and its contacts to New York in furtherance of the application of New York law to the accident.

On appeal, the Appellate Division, First Department affirmed the lower Court's decision holding that "in light of the split domicile of the parties and the situs of the accident in the third state, the situs state's law controls. [D]isplacing that normally applicable rule will [not] advance the relevant substantive law purposes without impairing the smooth workings of the multi-state system or producing great uncertainty for litigants." The Court found that Vehicle & Traffic Law §388 and the doctrine of vicarious liability "does not apply to a vehicle that was neither registered or ever operated or used in New York." Lastly, the Court found plaintiff's argument as the domicile of Citicapital unpersuasive and based on factual evidence offered for the first time on appeal. Click here for decision.

Partner Bennett R. Katz, Bennett.katz@oandb.com (212) 699-4549 and Associate Eleftherios Stefas, eleftherios.stefas@oandb.com (212) 699-4548 represented defendant Citicapital.

(Prior results do not guarantee a similar outcome.)