Amica Mutual Insurance Company v. Fogel, No. 10-3611 (3d Cir. September 8, 2011)
While living in New Jersey, the Fogels purchased car insurance from Amica Mutual Insurance Company. The Fogels moved to Pennsylvania and notified Amica of their permanent relocation, but before Amica issued a new policy, the Fogels were involved in a fatal car accident.
In a New Jersey state court, Amica sought a declaration that New Jersey substantive law, which would limit the amount owed to the Fogels, applied to the insurance policy. The case was removed to the federal court in New Jersey, which on its own motion transferred the case to the District Court for the Middle District of Pennsylvania.
The district court granted Amica’s motion for summary judgment after using Pennsylvania’s choice-of-law rules to conclude that New Jersey substantive law applied. The Fogels appealed to the Third Circuit.
The Third Circuit exercised a de novo standard of review over the grant of summary judgment and the choice-of-law issue.
Initially, the Court found an actual conflict between the two states — only Pennsylvania allows stacking (combining the policy limits of all covered vehicles even though a collision involved just one), and unlike New Jersey, it does not permit insurers to offset underinsured motorist benefits.
The Court explained that in diversity of citizenship cases, a federal court generally applies choice-of-law rules from the state in which it sits. But when a case is transferred, either on motion from a defendant or plaintiff, the choice-of-law rules from the transferor state are used instead. Having found that the 1990 United States Supreme Court case of Ferens v. John Deere also requires that choice-of-law rules from the prior state be used in sua sponte transfers, the Court concluded that New Jersey’s choice-of-law rules should be applied in this case.
The Court then proceeded to its analysis based on New Jersey’s choice-of-law rules focusing on the principal location of the insured risk and governmental interest. The Court determined that Pennsylvania substantive law should be applied to the Fogels’ insurance policy because once Amica was notified of the Fogels’ move, the parties’ justified expectations were that the insured risk was located in Pennsylania, and Pennsylania’s underlying policy interest outweighs that of New Jersey.
The Court reversed and remanded the case for the district court to enter summary judgment on behalf of the Fogels on the choice-of-law issue.