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HOME INS. CO. v. MCGOVERN

September 7, 1993

THE HOME INSURANCE CO., Plaintiff,
v.
RACQUEL McGOVERN, CARL W. NOTTER, NATIONAL SURETY COMPANY, and NEW JERSEY AUTO SALES, Defendants



The opinion of the court was delivered by: MARVIN KATZ

 AND NOW, this 7th day of September, 1993, upon consideration of Motion for Summary Judgment of Defendant, National Surety Company, plaintiff's Motion for Summary Judgment and Motion of Defendant, Carl W. Notter, for Summary Judgment for a Declaration of Coverage for Racquel McGovern and New Jersey Auto Sales in the Amount of $ 300,000.00, it is hereby ORDERED that the Plaintiff's and Defendant Notter's Motions are GRANTED and Defendant National Surety Company's Motion is DENIED.

 FACTS

 On October 2, 1989, defendant Racquel McGovern was driving a Chevrolet Corvette with dealer tags issued to defendant New Jersey Auto Sales. The Corvette collided with defendant Carl W. Notter's car. As a result, Mr. Notter was seriously injured. Mr. Notter filed suit against Ms. McGovern in the Philadelphia Court of Common Pleas in December 1989. Defendant National Surety Company, defendant New Jersey Auto Sales' insurer, is defending Ms. McGovern in the state action.

 The plaintiff, The Home Insurance Company, insured Mr. Notter under a policy that provides uninsured motorist and underinsured motorist coverage. The plaintiff seeks a declaration that 1) Ms. McGovern was covered by the New Jersey Auto Sales policy issued by National Surety Company, and 2) that it has no obligation to pay Mr. Notter under its policy for uninsured or underinsured motorists until National Surety Company pays their policy limits on behalf of Ms. McGovern. *fn1"

 DISCUSSION

 Jurisdiction

 National Surety asserts that this court lacks subject matter jurisdiction over this case because it is not ripe. Specifically, it asserts that because the plaintiff has not paid uninsured motorist benefits to Mr. Notter, there is not a true case or controversy before the court. Def. National Surety Mem. p. 8. National Surety maintains that the plaintiff does not seek to assert its own rights, but rather seeks a declaration of the legal rights and obligations that National Surety owes to Ms. McGovern. Id. p. 8-9.

 In response, National Surety argues that it does not owe Mr. Notter anything, or alternatively, only the first $ 15,000 of damages. Because the exact dollar value on Mr. Notter's injuries is presently unknown, *fn2" the plaintiff may have no obligation to pay Mr. Notter anything. If Mr. Notter receives a judgment in the ongoing state litigation of $ 300,000 or less damages, and if the plaintiff is successful in this litigation, then the plaintiff may recover only from National Surety, and not the plaintiff. Additionally, the resolution of the liability issues in the underlying state court action will not resolve the coverage issues presented in this federal action. Therefore, an actual, and not merely hypothetical controversy, exists as to the plaintiff's liability.

 The case at bar is distinguishable from Metropolitan Property & Liab. Ins. Co. v. Longenecker, Civ. No. 81-2867, U.S. Dist. LEXIS (E.D. Pa. Oct. 7, 1983), aff'd, 738 F.2d 423 (3d Cir. 1984), cert. denied, 469 U.S. 1019 (1984). In Metropolitan, the plaintiff insurance company conceded that it would have to pay its insured on their claim. The issue in Metropolitan centered around a future claim for indemnification against two other insurance companies. The issue in the case at bar is whether the plaintiff has a present obligation to pay Mr. Notter.

 Choice of Law

 The question arises in this case whether Pennsylvania or New Jersey substantive law should apply to the issues in this case. In answering this question, this court must apply Pennsylvania choice of law principles, since this suit was filed in Pennsylvania. Blakesley v. Wolford, 789 F.2d 236, 238 (3d Cir. 1986). Pennsylvania's choice of law approach combines both the Restatement (Second) of Conflicts of Law (contacts establishing significant relationships) and "interest analysis" (qualitative appraisal of the relevant States' policies with respect to the controversy). Id. at 239.

 National Surety asserts that New Jersey substantive law governs the issues in this case since the National Surety insurance policy was issued to a New Jersey resident. Def. Mem. p. 12. National Surety, however, does not undertake an analysis of how a Pennsylvania state court would answer the choice of law issue. Moreover, in the only case cited by National Surety for their assertion that New Jersey law governs, the parties agreed that Pennsylvania law governed the issues in that case. Nationwide Mut. Ins. Co. v. Hampton, 935 F.2d 578, 580 (3d Cir. 1991). Additionally, National Surety asserts Pennsylvania substantive law controls the question of whether Ms. McGovern was an owner of the Corvette and whether the uninsured or underinsured motorist claims require arbitration. *fn3" See Def. Mem. p. II.C., p. 11 n.2.

 The plaintiff asserts that it is entitled to summary judgment regardless of which state's law is applies. See Pl. Mem. p.14 n.1.

 Characterization

 The Restatement (Second) of Conflict of Laws establishes the following general principles to be applied in tort actions:

 
§ 145. The General Principle
 
(1) The rights and liabilities of the parties with respect to an issue in tort are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the occurrence and the parties under the principles stated in § 6.
 
(2) Contacts to be taken into account in applying the principles of § 6 to determine the law ...

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