Borges v. The Heldrich Hotel and Spa et al

Filing 83

MEMORANDUM AND ORDER: Federal trial courts sitting in diversity must apply the choice of law principles of the forum state to determine which law to apply. In this action, Plaintiff is a New York domiciliary, Defendant Heidrich is a New Jersey domic iliary, and Defendant BMC is a Texas domiciliary. Under the principles set forth by the Court of Appeals of New York in Neumeier, New Jersey law applies as between Plaintiff and both Defendants to all loss-allocating issues. Plaintiff has not demon strated why this Court should contemplate applying anything but New Jersey law, the location to which all parties purposely availed themselves and in which the alleged tort occurred. Further, Plaintiff has not provided any convincing reason why New Jersey law should not apply to all conduct-regulating issues. New Jersey has a paramount interest in regulating behavior within its borders. Therefore, this Court holds that New Jersey law applies to all loss-allocation and conduct-regulating issues. Ordered by Judge William F. Kuntz, II on 8/29/2012. (Brucella, Michelle)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

-----------------------------------------------------------------------J(
ISRAEL BORGES,
MEMORANDUM AND ORDER
Plaintiff,
09-cv-4830 (WFK) (VVP)
-againstHELDRICH ASSOCIATES LLC DIB/A THE
HELDRICH HOTEL AND SPA, and BMC-THE
BENCHMARK MANAGEMENT COMPANY,
Defendants.

-----------------------------------------------------------------------J(
KUNTZ, United States District Judge

Plaintiff Israel Borges ("Plaintiff') brings this action against Defendants HeIdrich
Associates LLC d/b/a The HeIdrich Hotel and Spa ("Defendant HeIdrich"), BMC-The
Benchmark Management Company ("Defendant BMC"), and Sani Systems, Ltd. for injuries he
allegedly sustained while cleaning a kitchen stove at The HeIdrich Hotel. Plaintiff and Sani
Systems, Ltd. filed a Stipulation of Discontinuance, with prejudice, as to Sani Systems, Ltd. only
on April 15, 2010. Stipulation of Discontinuance as to Defendant Sani Systems, Ltd. Only,
Docket Entry 21. The remaining Defendants filed a Choice of Law motion, arguing New Jersey
law applies to both conduct-regulating and loss-allocating issues. Plaintiff opposes the motion,
arguing New York law should apply. For the reasons below, this Court grants Defendants'
motion.

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INTRODUCTION

Plaintiff is a twenty-seven-year-old male domiciled in New York. Defendant HeIdrich is
a New Jersey limited liability company, which retained Defendant BMC to manage The HeIdrich
Hotel in New Jersey. Defendant BMC is a domiciliary of Texas. Plaintiff was working as a
commercial kitchen cleaner for former Defendant Sani Systems, a New York corporation, at the
time of the alleged accident.

Defendant HeIdrich contracted with Sani Systems in 2007 to

perform quarterly cleaning and maintenance of the exhaust and ventilation systems in The
HeIdrich Hotel's two kitchens.
On June 13, 2008, Plaintiff alleges he sustained injuries when he fell into a deep fryer
while cleaning an oven hood at The HeIdrich Hotel. Plaintiff originally filed this action in New
York Supreme Court, Kings County, and Defendants removed the case to this Court on
November 5, 2009. Plaintiff filed an amended complaint on June 7, 2010, and Defendants filed
an answer on June 22, 2010. The parties dispute whether New Jersey or New York law should
apply to this action.
DISCUSSION

The laws of three jurisdictions are potentially applicable to this action. Plaintiff is a New
York domiciliary who allegedly injured himself at a hotel owned by Defendant HeIdrich, a New
Jersey domiciliary.

Defendant HeIdrich retained Defendant BMC, a Texas domiciliary, to

manage the hotel at which the injury occurred. Thus, the inquiry is whether New Jersey, New
York, or Texas law should apply to conduct-regulating and loss-allocating issues.
"A federal trial court sitting in diversity jurisdiction must apply the law of the forum state
to determine the choice-of-Iaw." Fieger v. Pitney Bowes Credit Corp., 251 F.3d 386, 393 (2d
Cir. 2001) (citing Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 497 (1941)). New

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York courts must first determine if there is an "actual conflict of laws" before "determining
whether to undertake a choice of law analysis." Curley v. AMR Corp., 153 F.3d 5, 12 (2d Cir.
1998). "Where the applicable law from each jurisdiction provides different substantive rules, a
conflict of laws analysis is required." Id.

Two rules are at issue in the present case: loss

allocating and conduct regulating.
A. Loss Allocating
Loss-allocating rules "are laws that prohibit, aSSIgn, or limit liability after the tort
occurs." Licci ex rei. Licci v. Lebanese Canadian Bank, SAL, 672 F.3d 155, 158 (2d Cir. 2012)
(citing DeMasi v. Rogers, 34 A.D.3d 770, 721, 826 N.Y.S.2d 106 (2d Dep't 2006)). The parties
agree comparative negligence laws are loss allocating. Defs.' Supp. Mem., at 3; Pl.'s Opp'n
Mem., at 6; see also Levy v. Marriott Int'l., Inc., No. 08-cv-4795, 2011 WL 1542082, at *2
(E.D.N.Y. Apr. 21,2011) (Carter, Mag. J.) ("Comparative negligence is a loss allocation law.").
The parties also agree there is an actual conflict between New Jersey and New York lossallocating laws. l Defs.' Supp. Mem., at 4; Pl.'s Opp'n Mem., at 6. Under New Jersey law, a
plaintiff may only recover damages if his negligence does not exceed that of the defendant, with
such damages reduced proportionally to his negligence. NJ.S.A. § 2A:15-5.1. Under New York
law, a plaintiff may recover damages even if his own negligence exceeds that of the defendant,
with such damages reduced proportionally to his negligence. N.Y.C.P.L.R. § 1411. Therefore,
there is an actual conflict between New Jersey and New York laws, and this Court must
undertake a choice of law analysis considering Plaintiff vis-a.-vis each Defendant. Edwards v.
Erie Coach Lines Co., 17 N.y'3d 306, 329, 929 N.Y.S.2d 31 (2011).

1 Neither party advocates for application of Texas law. This does not change the Court's analysis, however,
because, as detailed in this decision, New Jersey law applies pursuant to New York choice of law principles.

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(i) Plaintiff v. Defendant Heidrich

"Cases involving loss allocation conflict of laws are guided by the framework set forth in
Neumeier v. Kuehner, 31 N.Y.2d 121, 128,335 N.Y.S.2d 64 (1972)." Levy, 2011 WL 1542082,

at *2. Plaintiff advances no argument under Neumeier that New York law should govern as
between himself and Defendant HeIdrich. According to the second Neumeier principle, "[w]hen
the [tortfeasor's] conduct occurred in the state of his domicile and that state does not cast him in
liability for that conduct, he should not be held liable by reason of the fact that liability would be
imposed upon him under the tort law of the state of the victim's domicile." Id. "In essence,
then, the second Neumeier principle adopts a 'place of injury' test for true conflict guest statute
cases." Cooney v. Osgood Mach., 81 N.Y.2d 66, 73, 595 N.Y.S.2d 919 (1993). Plaintiff is a
New York domiciliary, Defendant Heidrich is a New Jersey domiciliary, and the tort occurred in
New Jersey. Thus, because the parties are domiciled in different states and the tort occurred in
the state of Defendant HeIdrich's domicile, the second Neumeier principle mandates application
of New Jersey law.
Instead of advocating for New York law under Neumeier, Plaintiff argues Defendant is
precluded from claiming New Jersey law applies because Defendant referenced New York
Workers' Compensation Law in their Notice of Removal and cited New York Civil Practice Law
and Rules in its Answer. Plaintiffs argument is unpersuasive.
The Notice of Removal states that Sani Systems, Plaintiffs former employer at the time
of the accident, was an improperly named party because "any direct action against Sani Systems
is barred pursuant to the Workers' Compensation Law of the State of New York." Notice of
Removal, at 2, Docket Entry #1. Plaintiff does not appear to dispute the merits of this claim;
rather, Plaintiff argues it equates to an admission that New York law would govern this entire

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action. Plaintiff cites no legal authority for his position, nor does he adequately explain how this
assertion of New York law precludes the remaining Defendants from seeking the application of
New Jersey law. As Plaintiff explicitly recognizes, the Court must conduct a choice of law
analysis considering Plaintiff vis-a.-vis each Defendant. "Under the first Neumeier rule, when
[the plaintiff and the defendant] share a common domicile, that law should control." Edwards,
17 N.Y.3d at 329. Thus, because both Plaintiff and Sani Systems are New York domiciliaries,
New York law would have applied as between them. Defendants are not trying to "have it both
ways," as Plaintiff argues. Dismissing Sani Systems under New York law does not impact this
Court's analysis of which law applies to the remaining Defendants.
The fact that Defendants pleaded certain affirmative defenses under the C.P.L.R. does not
serve as an agreement that New York law would apply to the entire action. "Rule 8(c) of the
Federal Rules of Civil Procedure requires that a responsive pleading must set forth certain
enumerated affirmative defenses .... " Saks v. Franklin Covey Co., 316 F.3d 337, 350 (2d Cir.
2003) (citing Fed. R. Civ. P. 8(c)). Failure to plead an affirmative defense may constitute a
waiver, though district courts have the power to entertain affirmative defenses at a later stage of
litigation in certain circumstances. Id

Thus, Defendants ensured they did not risk waiving

defenses based on the C.P .L.R. at the responsive pleading stage. It is disingenuous, at best, for
Plaintiff to feign surprise that neither Defendant conceded to the application of New York law.
Plaintiff has not shown any prejudice or that the course of pre-trial litigation was impacted by
these affirmative defenses, which address trial and potential post-judgment issues. This Court,
sitting in diversity jurisdiction in New York, is obligated to apply New York choice-of-Iaw
principles to determine the appropriate law to apply.

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"
(iiJ Plaintif.fv. BMC

The parties agree that the third Neumeier principle controls the choice of law analysis as
between Plaintiff and Defendant BMC. Under the third Neumeier principle, "the law of the
place of the tort will nonnally apply, unless displacing it will advance the relevant substantive
law purposes without impairing the smooth working of the multi-state system or producing great
uncertainty for litigants." Schultz v. Boy Scouts of Am., 65 N.Y.2d 189, 201, 491 N.Y.S.2d 90
(1985) (citing Neumeier, 31 N.Y.2d at 128) (internal citations omitted). Plaintiff is a New York
domiciliary, Defendant BMC is a Texas domiciliary, and the tort occurred in New Jersey.
Therefore, because the tort occurred in New Jersey, New Jersey law will typically apply.
Plaintiffs contend New York law should apply under the third Neumeier principle
because New York has an interest in ensuring the protection of its domiciliaries injured in
foreign jurisdictions, and applying New York law would neither produce uncertainty for litigants
nor impair the smooth working of the multi-state system. Defendant BMC does not argue for the
law of Texas, its state of domicile, to apply, but rather that New Jersey law should apply because
there is no adequate justification for displacing the nonnally applicable law of the situs. The
Court agrees with Defendant BMC.
The Court of Appeals of New York recently stated in Edwards v. Erie Coach Lines Co.
that, "[w]hile New York employs 'interest analysis' rather than 'grouping of contacts,' the
number and intensity of contacts is relevant when considering whether to deviate from lex loci

delicti under the third Neumeier rule-i.e., whether even to analyze if displacing this 'nonnally
applicable' choice would 'advance the relevant substantive law purposes without impairing the
smooth working of the multi-state system or producing uncertainty for litigants.''' 17 N.y'3d
306,331,929 N.Y.S.2d 31 (2011) (emphasis added) (citing Neumeier, 31 N.Y.2d at 128). Thus,

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the Court of Appeals emphasized that courts must look to the number and intensity of contacts
when determining whether even to reach the issues of advancing relevant substantive law
provisions, impairing the smooth working of the multi-state system, and uncertainty for litigants.
In Edwards, Ontario plaintiffs brought an action against defendants from both
Pennsylvania and Ontario for an accident occurring in New York. The Pennsylvania defendants
did not advocate for Pennsylvania law to apply, instead arguing for Ontario law to apply because
Ontario law caps noneconomic damages when negligence causes catastrophic personal injury.
Id. at 325, 330.

After noting it would be unjust for the Pennsylvania defendants "to take

advantage of the Ontario cap" by declining to advocate for the Pennsylvania law, the court held
"there was no cause to contemplate a jurisdiction other than New York, the place where the
conduct causing injuries and the injuries themselves occurred." Id. at 330-31. Importantly, the
court noted not only did the Pennsylvania defendants not advocate for the law of their domicile,
they had no contacts with Ontario "other than the happenstance that plaintiffs and the bus
defendants were domiciled there." Id. at 331.
The instant case is analogous to Edwards. Defendant BMC does not advocate for Texas
law to apply, similar to the Pennsylvania defendants from Edwards.

However, unlike the

Pennsylvania defendants attempting to "take advantage of the Ontario cap," here Defendant
BMC advocates for New Jersey law, which comports with Texas law-both allow a plaintiff to
recover only if his negligence is not greater than defendants' negligence. Thus, New Jersey law
offers no special protection when compared to Texas law. Whereas the Pennsylvania defendants
in Edwards had no contacts with Ontario, Defendant BMC contracted with Defendant HeIdrich,
a New Jersey company, to manage a hotel in New Jersey. Plaintiff was injured while performing
work entirely in New Jersey. Plaintiff explicitly states his employer contracted with Defendant

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HeIdrich, a New Jersey company, not with Defendant BMC, a Texas company. Pl.'s Opp'n
Mem., at 14. But for Plaintiff traveling into New Jersey, he would not have had contact with
Defendant BMC.

This Court finds Plaintiff has not demonstrated why this Court should

contemplate a jurisdiction other than New Jersey, the place where the conduct causing the
injuries and the injuries themselves occurred, and the place to which all parties voluntarily
associated themselves, as required under Edwards.
B. Conduct Regulating

"Conduct-regulating rules are those that 'people use as a guide to governing their primary
conduct .... " Licci ex reI. Licci v. Lebanese Canadian Bank, SAL, 672 F.3d 155, 158 (2d Cir.
2012) (citing K. T v. Dash, 37 A.D.3d 107, 112, 827 N.Y.S.2d 112 (1st Dep't 2006)).

If

conduct-regulating laws of different jurisdictions conflict, "the law of the place of the tort 'will
usually have a predominant, if not exclusive, concern' ...." Padula v. Lilarn Props. Corp., 84
N.Y.2d 519,522, 620 N.Y.S.2d 310 (1994) (citing Schultz, 84 N.Y.2d at 198). This is because
the situs 'jurisdiction has the greatest interest in regulating behavior within its borders."
Vumbaca v. Terminal One Grp. Assoc. L.P., No. ll-cv-5535, 2012 WL 1377074, at *10

(E.D.N.Y. Apr. 20,2012) (Weinstein, J.) (citing Padula, 84 N.Y.2d at 522).
Defendants argue for application of New Jersey law as to all conduct-regulating issues.
Defs.' Mem., at 11-13. Plaintiff seemingly fails to put forth any substantive argument that New
York law should apply to conduct-regulating issues, other than his argument that Defendants are
precluded from asserting New Jersey law because they referenced New York law in their Notice
of Removal and answer.

As detailed above, this argument fails.

Because Plaintiff has

demonstrated no compelling reason why New Jersey law, as the situs of the alleged tort, does not
have a predominant interest regarding conduct-regulating issues, New Jersey law shall apply.

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CONCLUSION

Federal trial courts sitting in diversity must apply the choice of law principles of the
forum state to determine which law to apply. In this action, Plaintiff is a New York domiciliary,
Defendant HeIdrich is a New Jersey domiciliary, and Defendant BMC is a Texas domiciliary.
Under the principles set forth by the Court of Appeals of New York in Neumeier, New Jersey
law applies as between Plaintiff and both Defendants to all loss-allocating issues. Plaintiff has
not demonstrated why this Court should contemplate applying anything but New Jersey law, the
location to which all parties purposely availed themselves and in which the alleged tort occurred.
Further, Plaintiff has not provided any convincing reason why New Jersey law should not apply
to all conduct-regulating issues. New Jersey has a paramount interest in regulating behavior
within its borders. Therefore, this Court holds that New Jersey law applies to all loss-allocation
and conduct-regulating issues.

SO ORDERED
Dated: Brooklyn, New York
August 29,2012

s/WFK
,II

United States Dis

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