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Carrick v. Zurich-American Ins. Group

filed: January 25, 1994.


On Appeal from the United States District Court for the Western District of Pennsylvania. (D.C. Civ. No. 92-00298E).

Before: Greenberg and Roth, Circuit Judges, and Fullam, District Judge*fn*

Author: Greenberg


GREENBERG, Circuit Judge.


This case is before this court on appeal from an order entered on May 24, 1993, in this declaratory judgment diversity action. We will affirm.

The appellee Sandra Carrick filed this action, individually, and as executrix of the Estate of Michael J. Carrick, in the Court of Common Pleas of Crawford County, Pennsylvania, against the defendant-appellant Zurich-American Insurance Group, an Illinois corporation. Zurich removed the case to the district court pursuant to 28 U.S.C. § 1441. In her complaint, Carrick sought a declaratory judgment "adjudicating the respective rights and duties of [Carrick] and [Zurich] as to the subrogation claim of [Zurich] as against any settlement and/or verdict obtained against one or more third party defendants in . . . wrongful death and/or survival actions pending in the State of Vermont."

The facts underlying this controversy are not in dispute. Carrick had been married to Michael J. Carrick until his death on January 16, 1991. Carrick and her husband were Pennsylvania citizens and residents when he died, and she continues to be a Pennsylvania citizen and resident. Siemens Stromberg-Carlson Corporation employed Michael J. Carrick until his death, and he did most of his work for Siemens in Pennsylvania. On January 16, 1991, while working for Siemens, Michael J. Carrick was killed in a motor vehicle accident in Vermont.

Carrick thereafter filed a workers' compensation claim in Pennsylvania against Siemens. A referee awarded Carrick workers' compensation benefits pursuant to Pennsylvania law, and neither Siemens nor Zurich, its workers' compensation insurance carrier, appealed from the award. Accordingly, Zurich has made workers' compensation payments to Carrick. Carrick also filed actions in Vermont against various defendants, alleging they were responsible for her husband's injury and death, but the defendants in the Vermont cases are not parties to this declaratory judgment case. While Zurich seeks to subrogate to the potential recoveries in those actions, Carrick contends that Zurich is not entitled to share in any recovery she may make in the Vermont actions.*fn1

The dispute between Zurich and Carrick has generated a choice of law question because of the differing treatment of subrogation claims derived from motor vehicle accidents for workers' compensation payments in Pennsylvania and Vermont at the time of Michael J. Carrick's death. Under 75 Pa. Cons. Stat. Ann. § 1720 (Supp. 1993), a workers' compensation insurance carrier had no right of subrogation or reimbursement for workers' compensation benefits from a claimant's tort recovery in an action arising out of the maintenance or use of a motor vehicle. On the other hand, under Vt. Stat. Ann. tit. 21 § 624 (1992), subrogation was and continues to be authorized in the same situation. Not surprisingly, Carrick points to Pennsylvania law to bar Zurich's subrogation claim but Zurich contends that it should be allowed to assert a subrogation claim under Vermont law. The district court accepted Carrick's argument and thus entered a summary judgment declaring that Pennsylvania law governs the subrogation claim. Zurich appeals and we have jurisdiction under 28 U.S.C. § 1291.


In a diversity action, "the choice of law rules of the forum state [determines] which state's law will be applied." Shuder v. McDonald's Corp., 859 F.2d 266, 269 (3d Cir. 1988) (citing Klaxon v. Stentor Electric Mfg. Co., 313 U.S. 487, 496, 61 S. Ct. 1020, 1021, 85 L. Ed. 1477 (1941)). Accordingly, we apply Pennsylvania's choice of law rules. Our scope of review is plenary, as the district court decided this matter on a motion for summary judgment and we decide this case through the application of legal precepts.

The Pennsylvania Supreme Court's leading choice of law decision is Griffith v. United Air Lines, Inc., 416 Pa. 1, 203 A.2d 796 (Pa. 1964). See Lacey v. Cessna Aircraft Co., 932 F.2d 170, 187 (3d Cir. 1991). In Griffith the court abandoned the traditional lex loci delicti conflicts rule for "a more flexible rule which permits analysis of the policies and interests underlying the particular issue before the court." Griffith, 203 A.2d at 805. In commenting on the development of Pennsylvania's flexible rule, we have indicated:

this new conflicts methodology has evolved into a hybrid approach that 'combines the approaches of both Restatement II (contacts establishing significant relationships) and "interest analysis" (qualitative appraisal of the ...

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