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Hoosier v. Interinsurance Exch. of the Auto. Club

Supreme Court of Arkansas

December 11, 2014

JOEY HOOSIER, CYRENA HOOSIER, AND MIKE AND ANNETTE HOOSIER, AS GUARDIANS OF REBECKA HOOSIER APPELLANTS
v.
INTERINSURANCE EXCHANGE OF THE AUTOMOBILE CLUB APPELLEE

APPEAL FROM THE GARLAND COUNTY CIRCUIT COURT. [NO. 26CV-10-952]. HONORABLE MARCIA R. HEARNSBERGER, JUDGE.

REVERSED AND REMANDED; COURT OF APPEALS OPINION VACATED.

Paul Pfeifer, for appellants.

Laser Law Firm, P.A., by: James M. Duckett, for appellee.

JOSEPHINE LINKER HART, Associate Justice. HANNAH, C.J., and CORBIN and DANIELSON, JJ., dissent. CORBIN and DANIELSON, JJ., join.

OPINION

Page 207

JOSEPHINE LINKER HART, Associate Justice

This appeal presents a choice-of-law question concerning whether California or Texas law applies to an automobile-insurance policy and what analysis we should use to reach our decision. In their complaint, the Hoosiers alleged that on September 10, 2009, a vehicle driven by Jerry Adams entered a westbound lane of I-30 in Arkansas and collided with a vehicle occupied by Joey Hoosier, Cyrena Hoosier, and Rebecka Hoosier. The collision pushed the Hoosier vehicle across the median into oncoming eastbound traffic, where the Hoosier vehicle collided with another vehicle. The Hoosiers sought recovery against Adams for the damages they sustained and pursued underinsured-motorist-coverage benefits provided for in

Page 208

an automobile-insurance policy issued to Joey and Cyrena Hoosier by appellee Interinsurance Exchange of the Automobile Club (IEAC). Adams settled, and IEAC sought summary judgment, arguing that California law applied, and that based on California law, the Hoosiers were not entitled to recovery. The circuit court agreed and granted IEAC's summary-judgment motion. The Hoosiers appealed, and the Arkansas Court of Appeals affirmed the circuit court's decision. Hoosier v. Interinsurance Exch. of Auto. Club, 2014 Ark.App. 120, 433 S.W.3d 259. On review to this court, the Hoosiers argue that the circuit court should have conducted a significant-relationship analysis, concluded that Texas law applied to the policy, and awarded underinsured-motorist benefits. After considering this argument, we reverse and remand the circuit court's decision and vacate the decision of the Arkansas Court of Appeals.

In determining this choice-of-law question, the essential facts are that on March 21, 2009, Joey and Cyrena Hoosier held an automobile-insurance policy issued by IEAC that provided underinsured-motorist coverage. At that time, Joey and Cyrena Hoosier were residents of California. On June 4, 2009, however, a policy-change declaration was issued by IEAC. According to the declaration, the subject of the policy change was a " RESIDENCE CHANGE" to an address in Houston, Texas. The declaration noted that there was no change to the premium.

In their motion for summary judgment, IEAC argued that the circuit court should apply the choice-of-law rule of lex loci contractus, which provides that questions regarding insurance coverage are resolved by applying the law of the state where the insurance contract was made. See generally Cross v. State Farm Mut. Auto. Ins. Co., 2011 Ark.App. 62; S. Farm Bureau Cas. Ins. Co. v. Craven, 79 Ark.App. 423, 89 S.W.3d 369 (2002). IEAC contended that under that rule, California law applied to the interpretation of the underinsured-motorist provision in the insurance policy. Further, IEAC contended that under California law, the loss would not meet the qualifications for an underinsured-motorist claim because the bodily-injury limits in Adams's insurance policy were equal to and not less than the amount of underinsured-motorist coverage available under Joey and Cyrena Hoosier's IEAC policy.

In reply, the Hoosiers argued that Texas law applied under the lex loci contractus rule, or, alternatively, a significant-relationship analysis in which the court applies to a particular issue the law of the state with the more significant relationship to the transaction and the parties. See generally Restatement (Second) of Conflict of Laws § § 188(2), 193 (1971). The Hoosiers asserted it was undisputed that Joey and Cyrena Hoosier resided in Texas and that they had notified IEAC of their change in residence from California to Texas. The Hoosiers further asserted that Texas law applied and that under Texas law, they were entitled to underinsured-motorist benefits because, in Texas, a motorist is considered underinsured whenever his liability insurance is insufficient to cover the injured party's damages.

In its written order, the circuit court concluded that the rights and liabilities of the parties to an insurance contract should be determined by the law of the state where the contract was made. The circuit court found that California law applied to the underinsured-motorist-coverage provision and that the move to Texas and the change of residence " did not change this ...


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