United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT September 21, 2006
Charles R. Fulbruge III
Clerk
No. 05-31043
NOSERY MARK ABRAHAM,
Plaintiff-Appellee,
VERSUS
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY,
Defendant-Appellant.
Appeal from the United States District Court
For the Middle District of Louisiana
Before DAVIS, BARKSDALE, and DeMOSS, Circuit Judges.
DeMOSS, Circuit Judge:
Defendant-Appellant State Farm Mutual Automobile Insurance
Company (“State Farm”) appeals the district court’s entry of
judgment and award of a statutory penalty, attorney’s fees, and
interest in a dispute arising out of an automobile accident
involving an uninsured motorist. After conducting a choice-of-law
analysis, the district court applied the substantive law of the
State of Louisiana in reaching its conclusion. See LA. REV. STAT.
ANN. § 22:680 (discussing uninsured motorist coverage). State Farm
challenges the district court’s application of Louisiana
substantive law, arguing that under Louisiana’s choice-of-law
provisions, Mississippi substantive law must apply instead. We
agree with State Farm and accordingly reverse the district court’s
order and render judgment for State Farm.
I.
Nosery Abraham is retired, is under ongoing medical care, and
spends part of the year at his residence in Mississippi and part of
the year living with his daughter in Louisiana. He holds a
Louisiana driver’s license but is domiciled in Mississippi. The
district court concluded that Abraham was a resident of both
Louisiana and Mississippi. Abraham maintains he is solely a
Louisiana resident, but he has not cross-appealed.
On January 8, 2002, Abraham was driving his vehicle in Baton
Rouge, Louisiana when he was “negligently rear-ended”1 by a vehicle
driven by an uninsured driver, Jeremy K. Barden. Barden carried a
Georgia driver’s license, and his vehicle was licensed in Georgia.2
Abraham’s vehicle was insured by a State Farm policy issued in
Mississippi by a Mississippi agent. Following the accident,
Abraham submitted a claim to State Farm in Mississippi for
uninsured/underinsured motorist (“UM”) benefits under his policy.
State Farm transferred the processing of the claim multiple times,
1
This is the term used by the district court in its orders.
2
The district court suggested in its June 19, 2003 order on
Abraham’s motion for declaratory judgment that Barden was a
Georgia resident. Later in its May 26, 2005 order, and without
explanation or discussion of additional facts, the court declared
Barden a resident of Louisiana.
2
but it ultimately landed in a Louisiana State Farm office after
Abraham filed suit in Louisiana state court in October 2002.
Believing Barden to be at fault, and believing that State Farm
acted with bad faith in connection with its handling of the claim,
Abraham sought recovery of damages resulting from the accident and
also statutory penalties and attorney’s fees. State Farm timely
removed the action to federal court on the basis of diversity
jurisdiction.
Abraham moved for declaratory judgment, requesting the court
to determine whether the substantive law of Louisiana or
Mississippi governed his claims. After analyzing the parties’
choice-of-law arguments, the district court concluded that the
substantive law of Louisiana applied. State Farm subsequently
moved for partial summary judgment on Abraham’s bad faith claim as
well as on all claims made under Mississippi law (as a result of
the court’s ruling that Louisiana law applied). The court
dismissed the Mississippi claims, but denied summary judgment on
the bad faith claim.
Prior to trial, State Farm paid Abraham the policy limits of
his UM policy plus interest (totaling over $100,000). As a result,
only the bad faith claim remained and proceeded to a bench trial.
Following trial, and while the matter was under advisement, the
Louisiana Supreme Court issued its decision in Champagne v. Ward,
893 So. 2d 773 (La. 2005), which addressed conflicts of law in the
3
context of an uninsured/underinsured motorist coverage dispute. In
light of that decision, the court requested supplemental briefing
on the issue of applicable law.
The district court then entered its Findings of Fact and
Conclusions of Law After Trial, concluding that Louisiana
substantive law applied and awarding Abraham $40,000 in statutory
penalties on the bad faith claim. The court also awarded Abraham
prejudgment interest and $23,000 in attorney’s fees. On September
13, 2005, the court entered judgment, and State Farm timely
appealed. The court granted State Farm’s motion to stay the
execution of judgment pending this appeal.
II.
State Farm challenges the district court’s conclusion that
Louisiana law applies to this dispute and argues that because
Mississippi law should apply, the court’s rulings and judgment must
be vacated. This Court reviews questions of law, including
conflicts of law questions, de novo and district court factual
determinations for clear error. Woodfield v. Bowman, 193 F.3d 354,
358 (5th Cir. 1999). This Court will reverse a finding of fact
only if it is left with a “definite and firm conviction” that a
mistake has been made. Justiss Oil Co. v. Kerr-McGee Ref. Corp.,
75 F.3d 1057, 1062 (5th Cir. 1996).
III.
In a diversity action, this Court applies state substantive
4
law. Erie R. Co. v. Tompkins, 304 U.S. 64, 78-80 (1938). In
deciding which state’s substantive law governs a dispute, we apply
the choice-of-law rules of the state in which the action was filed,
in this case, Louisiana. See Klaxon Co. v. Stentor Elec. Mfg. Co.,
313 U.S. 487, 496 (1941); Smith v. Waste Mgmt., Inc., 407 F.3d 381,
384 (5th Cir. 2005).
In Champagne v. Ward, 893 So. 2d 773 (La. 2005), the Louisiana
Supreme Court announced the appropriate choice-of-law analysis for
automobile accident litigation involving parties and insurance
policies from other states. At the outset, Champagne instructs us
to consider the language of the UM laws from each involved state to
determine if the relevant provisions differ. Id. at 786. If the
respective laws are different, then we must conduct a choice-of-law
analysis as codified by Louisiana statute. Id. (rejecting the
argument that Louisiana law should automatically apply if the
accident occurs in Louisiana and involves a Louisiana resident).
In this case the district court found, and the parties
implicitly agree, that there is a true conflict between the
relevant provisions of the two states’ laws: Louisiana law provides
uninsured motorist protection that requires an insurer’s tender
(and permits penalties in the absence of tender)3 while Mississippi
3
See LA. REV. STAT. ANN. § 22:658(A)(1) (2006) (“[I]insurers
. . . shall pay the amount of any claim due any insured within
thirty days after receipt of satisfactory proofs of loss from the
insured or any party in interest.”); see also id. § 22:658(B)(1)
(authorizing penalties for certain failures to make timely
5
law does not require tender. Because the two states’ laws differ,
a statutory choice-of-law analysis is required to identify which
state’s policies would be most seriously impaired if its law were
not applied to this dispute. See id.
The Louisiana choice-of-law rules applicable here are found in
Louisiana Civil Code Annotated articles 3515 and 3537. Article
3515 states that when a case involves contacts with other states,
the applicable law is that “of the state whose policies would be
most seriously impaired if its law were not applied to that issue.”
LA. CIV. CODE ANN. art. 3515. The factors used to determine the
state whose policies would be most impaired are:
(1) the relationship of each state to the parties and the
dispute; and
(2) the policies and needs of the interstate and
international systems, including the policies of
upholding the justified expectations of parties and of
minimizing the adverse consequences that might follow
from subjecting a party to the law of more than one
state.
Id.; see also Dunlap v. Hartford Ins. Co., 907 So. 2d 122, 124 (La.
Ct. App. 1st Cir. 2005).
Article 3537, intended to be read in conjunction with article
3515, provides “an illustrative list of the factual contacts that
are usually pertinent” in determining which state’s policies would
be most impaired by the failure to apply its law. LA. CIV. CODE ANN.
art. 3537 cmt. c. Article 3537 additionally requires us to
payments).
6
evaluat[e] the strength and pertinence of the relevant
policies . . . in the light of:
(1) the pertinent contacts of each state to the parties
and the transaction, including the place of negotiation,
formation, and performance of the contract, the location
of the object of the contract, and the place of domicile,
habitual residence, or business of the parties;
(2) the nature, type, and purpose of the contract; and
(3) the policies referred to in Article 3515, as well as
the policies of facilitating the orderly planning of
transactions, of promoting multistate commercial
intercourse, and of protecting one party from undue
imposition by the other.
Id. art. 3537.
The first step in determinating which state’s law applies
under these sections is to identify the policies involved for each
state. Id. cmt. d. State Farm maintains Mississippi law should
apply because of that state’s policy in upholding Mississippi
contracts. See Champagne, 893 So. 2d at 788; see also Zuviceh v.
Nationwide Ins. Co., 786 So. 2d 340, 346 (La. Ct. App. 1st Cir.
2001) (“The fact that Congress has allowed fifty states to have
their own uniform system of regulations governing insurance
strongly suggests this is a legitimate public purpose.”).
Conversely, Abraham points to Louisiana’s strong interest in
ensuring full recovery of damages by accident victims injured on
its roads. See Zuviceh, 786 So. 2d at 345; see also Malbreaugh v.
CNA Reinsurance Co., 887 So. 2d 494, 496 (La. Ct. App. 1st Cir.
2004) (noting that the legislative aim of Louisiana’s UM statute is
to promote full recovery of damages incurred by innocent accident
7
victims). As Champagne recognized, the competing public policy
interests of the states in this situation are “profound.”
Champagne, 893 So. 2d at 788. To determine which state’s interests
control in this case we next evaluate them in light of each state’s
relationship to the parties and the dispute. LA. CIV. CODE ANN.
arts. 3515, 3537, & 3537 cmt. d.
Pointing out Mississippi’s connections to this dispute, State
Farm emphasizes that Abraham’s insurance policy was issued in
Mississippi, his car was registered and garaged there, the initial
contacts between Abraham and State Farm regarding this claim
originated there, and he was a dual resident of both states.
Further, State Farm contends that contacts with Louisiana were
minimal, including only the location of the accident and the
location of some of Abraham’s post-accident medical treatment.
Accordingly, it argues that Mississippi’s connection with this
dispute is stronger and its policies would be most impaired if
Mississippi law were not applied.
Abraham argues that Louisiana has a stronger relationship to
the dispute because its Department of Public Safety responded to
the accident, the case involved courts (both state and federal) in
Louisiana, and Abraham received medical treatment in Louisiana.
In determining which state has the stronger relationship to
the parties and the transaction, we are guided by Champagne. In
Champagne, the Court found virtually the same contacts with
8
Mississippi that are present in this case: (1) the plaintiff was a
Mississippi resident (although in this case the plaintiff was a
dual resident), (2) the insurance contract was formed in
Mississippi, (3) the vehicle was garaged and presumably registered
in Mississippi, and (4) the insurance policy was a Mississippi
contract. Champagne, 893 So. 2d at 789. Based on these contacts,
the Court held that “application of Louisiana law to the insurance
policy would result in the abrogation of a Mississippi contract.”
Id.
In considering Louisiana’s countervailing interests, the Court
found that “Mississippi has a more substantial interest in the
uniform application of its laws governing insurance contracts than
Louisiana has in providing an insurance remedy to an out-of-state
resident . . . .” Id. As a result, the Court held that
“Mississippi’s policies will be most seriously impaired if its law
is not applied” and it applied Mississippi law. Id.
Similarly, this Circuit’s opinion in Woodfield v. Bowman, 193
F.3d 354, 361 (5th Cir. 1999), addresses the choice-of-law issue in
the context of a UM claim where the accident occurred in Louisiana,
and coverage arose out of an insurance policy issued in Mississippi
to a Mississippi resident, and that covered a car principally
garaged in Mississippi. This Court concluded on those facts that
Mississippi’s “interest in uniform application of its laws
governing insurance contracts” was more substantial than
9
Louisiana’s interest in “providing an insurance remedy to an out-
of-state resident who happens to sustain injury while transitorily
within the state’s borders.” Id.
The facts of this case parallel Champagne and Woodfield in
material respects except that Abraham is a dual resident of
Louisiana and Mississippi, and he received his medical treatment
primarily in Louisiana. Abraham argues that because he is a dual
resident and the plaintiffs in Champagne and Woodfield were out-of-
state residents, Louisiana has a closer connection to this case,
and its policy interests are more significant.
The district court agreed that Abraham’s dual residency weighs
in favor of finding that Louisiana has the greater connection with
this case. The court cited with approval Baker v. Lazarus, 1992
U.S. Dist. LEXIS 7083 (E.D. La. May 14, 1992) (unpublished). In
Baker, the court conducted a choice-of-law analysis and concluded
that Louisiana law applied because Louisiana’s interest in
protecting insured victims outweighed the foreign state’s
(Mississippi’s) interest in protecting insurance rates. Id. at
*25-26. After a cursory review of the unpublished decade-old
opinion in Baker and contrary authority in Woodfield and Zuviceh,
the district court concluded that Abraham, as a dual resident of
Louisiana and Mississippi, had an expectation of protection by the
laws of Louisiana while in Louisiana, and it held that Louisiana
law applied.
10
While we agree that Abraham’s residence is a factor to be
considered in making the choice-of-law determination, it is not
determinative. Champagne, 893 So. 2d at 789; Boutte v. Fireman’s
Fund County Mut. Ins. Co., 930 So. 2d 305, 319 (La. Ct. App. 3d
Cir. 2006). Abraham’s dual residency does strengthen Louisiana’s
relationship to the dispute to a certain degree, as compared to
Champagne and Woodfield. However, Louisiana’s policy interest in
tort victims recovering damages is not affected in this case to the
degree that it was in Champagne. While the decision in Champagne
left the plaintiff with no redress for his injuries, application
of Mississippi law in this case only forecloses Abraham’s ability
to recover a statutory penalty and attorney’s fees for bad faith
(since State Farm has already paid him the UM policy limit).
Additionally, Mississippi’s relationship to this dispute and
its policy interest in upholding the justified expectations of
parties to Mississippi insurance contracts is no less significant
here than it was in Champagne and Woodfield.
Based on consideration of the factors listed in Louisiana
Civil Code Annotated articles 3515 and 3537, we hold that
Mississippi--the state where the insurance policy was negotiated
and formed, where the insured vehicle was licensed and garaged, and
where Abraham had dual citizenship--bears the closer relationship
to the parties and the dispute. Further, its public policy
interest in the uniform application of its insurance laws,
11
considered in light of those factors, is more substantial than
Louisiana’s competing interests as applied in this case. See
Champagne, 893 So. 2d at 789; Woodfield, 193 F.3d at 361.
IV.
We REVERSE the district court’s determination to apply
Louisiana law, and because the parties concede that Mississippi law
does not require a tender payment by an insurance provider, we
RENDER JUDGMENT for State Farm.
12