Premium Financing Specialist, Inc. v. Mid-Continent Casualty Company
MEMORANDUM AND OPINION re: choice of law. Signed on 10/24/2011 by Magistrate Judge Robert E. Larsen. (Wilson, Carol)
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
PREMIUM FINANCING SPECIALISTS,
MID-CONTINENT CASUALTY COMPANY,
Criminal Action No.
MEMORANDUM TO COUNSEL
Defendant Mid-Continent Casualty Company is an insurance
carrier with its principal place of business in Oklahoma.
According to the petition, Rubicon Insurance and Risk Management
in Gainsville, Florida (not a party to this lawsuit), was the
“duly authorized and acting agent of defendant with authority to
solicit applications for insurance policies of defendant, to
receive premiums payable on such policies, and generally act for
defendant in the production, sale and issuance of policies of
Plaintiff Premium Financing Specialists, Inc. --
incorporated in Missouri and with its principal place of business
in Missouri -- is in the business of financing premiums on
insurance by paying a portion of the premium and reserving the
right to cancel the insurance contract and receive all unearned
premiums in the event the insured defaults on the loan of
Rubicon financed multiple insurance
contracts (purported to be contracts of insurance with defendant
Mid-Continent) with plaintiff, and plaintiff delivered the
premiums to Rubicon believing they would then be turned over to
Instead, James Sirmans of Rubicon had
submitted false insurance policies to plaintiff and Sirmans kept
the insurance premiums paid by plaintiff.
Plaintiff claims in
its petition that Rubicon was acting as defendant’s agent and
that defendant is therefore liable to plaintiff and must return
all unearned premiums despite the conversion of those premiums by
In defendant’s trial brief, it argues that Missouri law
should apply in this case because the injury occurred in Missouri
(the injured party is plaintiff whose principal place of business
is Missouri), the conduct causing the injury took place in
Missouri (loan paperwork caused money to be released from
Missouri bank accounts), and plaintiff is incorporated in
In support of its argument, defendant relies on the
most-significant-contacts test as outlined in the Restatement
(Second) on Conflict of Laws.
In its response, plaintiff does
not address the most-significant-contacts test used by Missouri.
Instead, plaintiff quotes one case from 1949 which states:
It is the law of Missouri that where the agent of a foreign
corporation, while acting in the course of his employment,
commits a tort, the law of the state where the act was done
determines whether his corporation is liable for the tort
and the extent to which it is liable therefore.
Plaintiff has submitted proposed jury instructions using Florida
In a diversity case, the court applies Missouri’s choice of
Heacker v. American Family Mut. Inc. Co., 2011
WL 124301 (W.D. Mo. Jan. 14, 2011); John T. Jones Constr. Co. v.
Hoot Gen. Constr. Co., 613 F.3d 778, 782 (8th Cir. 2010) (citing
Cicle v. Chase Bank USA, 583 F.3d 549, 553 (8th Cir. 2009));
Stricker v. Union Planters Bank, 436 F.3d 875, 877 (8th Cir.
2006) (“In a diversity action, a district court sitting in
Missouri follows Missouri’s choice-of-law rules to determine
applicable state law.”); Highwoods Props., Inc. v. Executive Risk
Indem., Co., 407 F.3d 917 (8th Cir. 2005).
To determine a choice-of-law question, Missouri applies the
“most significant relationship” test.
Ameristar Jet Charter,
Inc. v. Dodson Intern. parts, Inc., 155 S.W.3d 50, 58 (Mo. 2005).
Section 292 of the Restatement (Second) of Conflict of Laws
determines the choice of law that governs agency and in
particular, the contractual liability of a principal to a third
Egnatic v. Nguyen, 113 S.W.3d 659, 670 (Mo. App. 2003)
Whether a principal is bound by action taken on his
behalf by an agent in dealing with a third person is
determined by the local law of the state which, with respect
to the particular issue, has the most significant
relationship to the parties . . . .
155 S.W.3d 50, 58 (Mo. 2005).
Section 145 of the Restatement (Second) of Conflict of Laws
lists four contacts to be taken into account to determine which
state has the “most significant relationship”:
the place where the injury occurred;
the place where the conduct causing the injury
the domicile, residence, nationality, place of
incorporation and place of business of the parties; and
the place where the relationship, if any, between the
parties is centered.
Restatement (Second) of Conflict of Laws § 145 (1971).
When evaluating the contacts of each state, the court is to
consider the relative importance of the contact to the particular
issue, i.e., the significance of each contact is more important
than the number of contacts.
Livingston v. Baxter Health Care
Corp., 313 S.W.3d 717, 721 (Mo. App. 2010).
In a situation where
the place of conduct and the place of injury occur in different
states, Missouri choice-of-law rules dictate that the place where
the act takes harmful effect or produces the result complained of
is the more significant contact.
Birnstill v. Home Sav. of
America, 907 F.2d 795 797 (8th Cir. 1990).
In this case, the place where the act took harmful effect or
produced the result complained of was Missouri:
The injured party is plaintiff, plaintiff’s principal place
of business is Kansas City, Missouri
Plaintiff’s only injury is financial - plaintiff’s bank
accounts are held in Missouri and all money loaned by
plaintiff comes out of accounts in Missouri
Plaintiff’s petition alleges that “Defendant’s failure and
refusal to refund the unearned premiums to PFS were, and
are, intentional acts performed with knowledge and with the
intent that PFS would suffer the results of the conversion
at its offices in Missouri. Defendant’s intentional conduct
as calculated to cause and has caused injury to plaintiff in
Plaintiff previously filed a lawsuit against James Sirmans
(the alleged agent) and Rubicon in Jackson County, Missouri,
regarding the same facts as in this action. In that case,
plaintiff alleged, “At all times pertinent hereto defendants
knew that PFS was a Missouri corporation and that any losses
resulting to PFS from the acts and conduct of defendants
alleged herein would result to PFS in Missouri and the
defendants so intended.”
The second contact -- the place where the conduct causing
the injury occurred -- is not entirely clear at this time.
Defendant argues in its trial brief that “the money loaned out
was paid out of Missouri.
All loan paperwork was sent through
PFS’s Kansas City headquarters.
The conversion took place when
the money was loaned from Missouri.
It was the loan paperwork
that caused PFS to release money from its Missouri bank accounts.
No conversion had yet taken place when the loan applications were
generated or sent to PFS.”
I expected to hear, in plaintiff’s
response, more about the conduct of James Sirmans and where that
conduct took place.
However, plaintiff did not address any of
this in its response to defendant’s trial brief on the choice of
Therefore, although this is not the most important
contact, see Birnstill v. Home Sav. of America, 907 F.2d at 797,
at this time it appears that this contact also favors application
of Missouri law.
The third contact -- the domicile, residence, nationality,
place of incorporation and place of business of the parties -- is
equal between Missouri and Oklahoma.
Plaintiff is incorporated
in Missouri and defendant is incorporated in Oklahoma.
no other contacts occurred in Oklahoma.
No party to this action
is domiciled in, is a resident of, is incorporated in, or has its
principal place of business in Florida.
The final contact is the place where the relationship, if
any, between the parties is centered.
There was no relationship
between plaintiff and defendant.
Because Missouri uses the most-significant-contacts tests
and because the most significant contacts in this case are with
Missouri, I find that Missouri law applies in this case.
ROBERT E. LARSEN
United States Magistrate Judge
Kansas City, Missouri
October 24, 2011
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