The opinion of the court was delivered by: LEONARD B. SAND
This case arises out of an automobile accident occurring on November 2, 1990, in Montreal, Quebec. Plaintiffs Paul and Christina Reach, residents of New Jersey, filed a complaint in this Court against defendants Paul Pearson, a resident of New York, and 25/45 Publishing Corp. and Jakel Corp., both of which are New York corporations. The jurisdiction of this Court is based upon an amount in controversy exceeding fifty thousand dollars, exclusive of interest and costs, and diversity of citizenship. 28 U.S.C. 1332.
Plaintiffs allege that due to defendant Pearson's negligent operation of a motor vehicle, they have sustained injuries for which the defendants are responsible. Defendants Pearson and 25/45 Publishing Corp. move to dismiss the complaint on three grounds: (1) that there is another action pending in a foreign jurisdiction which has exclusive jurisdiction and is the sole remedy that the plaintiffs can pursue; (2) for lack of an indispensable party under Federal Rule of Civil Procedure 19(b); and (3) under the doctrine of forum non conveniens. Defendant Jakel Corp. cross-moves on the same grounds. For the reasons stated below, the defendants' motions to dismiss are denied.
The relevant facts alleged in plaintiffs' Complaint are as follows.
Plaintiffs Paul V. Reach and Christina Reach are husband and wife and reside in the State of New Jersey. While Paul Reach was in Montreal on business, he received a ride from defendant Paul F. Pearson, a New York resident, in a rental car owned by Hertz of Canada, Ltd., a Canadian corporation. As Pearson and Reach were travelling through Montreal, they became involved in a three-car collision. Paul Reach alleges that as a result of this accident, he has sustained serious injuries and suffered economic loss. Christina Reach alleges she has been deprived of the society, support, services and consortium of her husband.
The Reaches filed a claim in Quebec for compensation under Quebec's no-fault system of recovery, described in greater detail infra. Because Paul Reach was injured in an on-the-job automobile accident, his claim has been transferred to the New Jersey worker's compensation system and is pending decision.
In this Court, the Reaches have sued the driver, Paul Pearson, for negligence and his employers, 25/45 Publishing Corp. and Jakel Corporation, under the doctrine of respondeat superior. The two other drivers who were involved in the accident are both Quebec residents who are not subject to this Court's jurisdiction. Similarly, Hertz of Canada, Ltd. is not joined in this action because it is outside the jurisdiction of this Court.
The issues which are raised by these motions revolve around the conflicting laws of New York and Quebec and the differing remedies which are available in each forum. Whereas New York allows for common law negligence actions of unlimited recovery in cases of serious injury arising out motor vehicle accidents, see Insurance Law § 5104 (McKinney 1985), CPLR § 1602 (McKinney Supp. 1994), Quebec does not recognize such suits. See Quebec Automobile Insurance Act of 1977 ("QAIA"), as amended, Revised Statutes of Quebec, ch. A-25. Instead, Quebec provides a comprehensive no-fault system of recovery for both residents and nonresidents injured in accidents within the province. Id. Compensation is provided through an administrative agency known as the Societe de l'assurance automobile du Quebec ("Societe") and is subject to a statutory cap. Id. Defendants contend that the Quebec system of recovery provides the plaintiffs' sole remedy, whereas plaintiffs seek to maintain an action under New York law. Thus, the threshold issue facing this Court is which law to apply.
A federal court must look to the choice-of-law rules of the forum state to determine the controlling law. Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 85 L. Ed. 1477, 61 S. Ct. 1020 (1941). New York, the forum state in this action, has primarily followed the choice-of-law rules established in the landmark decision of Babcock v. Jackson, 12 N.Y.2d 473, 240 N.Y.S.2d 743, 191 N.E.2d 279 (Ct. App. 1963). In Babcock, New York abandoned strict adherence to the doctrine of lex loci delicti and adopted a more flexible approach for resolving choice-of-law issues. Instead of strictly applying the law of the place of the tort, the Court of Appeals decided that the ends of justice and fairness would best be served by applying the law of the jurisdiction with the most significant contacts and the greatest interest in the litigation. Id. at 749.
Babcock concerned an automobile accident in Ontario in which a New York passenger was injured through the negligent driving of another New York resident. The court saw no reason for departing from New York's policy of requiring a tortfeasor to compensate his guest for injuries caused by his negligence just because the accident causing the injury occurred outside New York's borders. Id. New York was the place where the parties resided, where the guest-host relationship was formed, and where the trip started and was intended to finish. Ontario, on the other hand, was connected to the action only as "the place of the fortuitous occurrence of the accident." Id. at 751. Because New York had the more ...