law-choice-of-law in the absence of contractual choice of law provision | Texas law applies by default |
I. Choice of Law
Determining which state's law governs is a question of law for the court to decide. Torrington Co. v. Stutzman,
46 S.W.3d 829, 848 (Tex. 2000). Therefore, we review de novo the district court's decision to apply the
Minnesota useful life statute instead of the Texas statute of repose. Minnesota Mining & Mfg. Co. v. Nishika
Ltd., 955 S.W.2d 853, 856 (Tex. 1996).
When the parties have not otherwise agreed by contract to a valid choice of law clause, the law of the state with
the most significant relationship to the particular substantive issue will be applied. Duncan v. Cessna Aircraft
Co., 665 S.W.2d 414, 421 (Tex. 1984). Texas has adopted the standards and factors set forth in sections 6
and 145 of the Restatement (Second) of Conflict of Laws (1971) to determine choice of law in tort cases. See
Gutierrez v. Collins, 583 S.W.2d 312, 318 (Tex. 1979).
“Section 6 sets out the general principles by which the more specific rules are to be applied." Gutierrez, 583 S.
W.2d at 318. In turn, “Section 145 lists factual matters to be considered when applying the principles of Section
6 to a tort case . . . ." Id. at 319. On appeal, Sico invokes these provisions to argue that Texas's statute of
repose governs this case because a statutory directive requires the application of Texas law under section 6
(1). Alternatively, Sico argues that the factors under sections 6(2) and 145 point to the application of Texas
law. We address each contention in turn.
A. Statutory Directive
Section 6(1) states that “[a] court, subject to constitutional restrictions, will follow a statutory directive of its own
state on choice of law." Restatement § 6(1). Sico argues on appeal that section 71.031 of the Texas Civil
Practice and Remedies Code establishes a statutory directive to apply Texas law here.
Sico did not raise this statutory directive argument in the district court. To the contrary, Sico affirmatively and
repeatedly disclaimed the existence of a statutory directive to apply Texas law. Sico told the district court that “[t]
here is no statutory directive, so choice of law must be determined by applying the 'most significant relationship'
analysis." We decline to address an argument that was not asserted - and was affirmatively disclaimed - in the
district court. See, e.g., Holland v. Hayden, 901 S.W.2d 763, 765 (Tex. App. - Houston [14th Dist.] 1995, writ
denied); Tex. R. App. P. 33.1(a).
B. Most Significant Relationship
In applying the most significant relationship test, this court first must identify the relevant factors.
Under section 6(2), the following factors are relevant to the choice of law determination:
(a) the needs of the interstate and international systems,
(b) the relevant policies of the forum,
(c) the relevant policies of other interested states and the relative interests of those states in the
determination of the particular issue,
(d) the protection of justified expectations,
(e) the basic policies underlying the particular field of law,
(f) certainty, predictability and uniformity of result, and
(g) ease in the determination and application of the law to be applied.
Restatement § 6(2)(a)B(g).
Section 145 lists the factual matters to be considered when applying section 6 to a tort case. “The rights and
liabilities of the parties with respect to an issue in tort are determined by the local law of the state which, with
respect to that issue, has the most significant relationship to the occurrence and the parties under the principles
states in § 6." Restatement § 145(1). “These contacts are to be evaluated according to their relative
importance with respect to the particular issue." Id. § 145(2). In that regard, the court should consider the
(a) the place where the injury occurred,
(b) the place where the conduct causing the injury occurred,
(c) the domicile, residence, nationality, place of incorporation, and place of business of the parties, and
(d) the place where the relationship, if any, between the parties is centered.
Restatement § 145(2). The number of contacts is not determinative; rather, the contacts must be evaluated in
light of state policies underlying the particular substantive issue. Duncan, 665 S.W.2d at 421.
Beginning with the section 145 factors, we note the injury occurred in Texas to Willis, a Texas resident. Sico is a
Minnesota corporation with its principal place of business in Minnesota. It is undisputed that the Pacer table at
issue was designed, manufactured, and introduced into the stream of commerce in Minnesota. As discussed
more fully below, there is no “relationship" between Willis and Sico.
Sico argues for the application of the Texas statute of repose based in large part on Willis's Texas residency
and the location of the accident in Texas. Texas no longer uses the common law doctrine of lex loci delicti,
under which the place of injury determined choice of law. Gutierrez, 583 S.W.2d at 318. Place of injury now is
just one of multiple factors to be considered. More importantly, place of injury is not an important contact when -
as in this case - the place of injury is fortuitous. See Torrington Co., 46 S.W.3d at 849 (citing Restatement §
145 cmt. e).
Sico has sold more than 220,000 Pacer tables since 1969. Sico does not sell directly to end-users in the
educational market; instead, Sico sells its products to merchandise dealers who in turn sell to individual buyers
and school districts within their regions. Customers who call Sico's 800 telephone number are directed to a
dealer. This evidence establishes both (1) the lack of any relationship between Sico and Willis that could be
“centered" in Texas; and (2) the fortuity of the place of injury in this case. Under these circumstances, the place
of injury has little bearing on the analysis. See Torrington Co., 46 S.W.3d at 849. Similarly, Willis's Texas
residency is not dispositive. See Doctor v. Pardue, 186 S.W.3d 4, 12 (Tex. App.- Houston [1st Dist.] 2005, pet.
denied) (applying Wisconsin law governing charitable immunity in connection with injuries sustained by Texas
resident; “[t]he record indicates that volunteers from all over the country participated in the [defendant's] . . .
convention and air show, and any expectation by [the defendant] . . . that it might be immune from liability for
injuries sustained to participants, depending upon the residence of the participants who were injured, would be
A more significant factor in this case is the place where Sico's injury-causing conduct occurred. See
Restatement § 145(2)(b). “In applying the factual matters to be considered under section 145 . . . 'the rights
and liabilities of the parties with respect to an issue in tort are determined by the local law of the state which, with
respect to that issue, has the most significant relationship to the occurrence and the parties.'" Crisman v.
Cooper Indus., 748 S.W.2d 273, 277 (Tex. App.- Dallas 1988, writ denied) (original emphasis) (quoting
Restatement § 145(1)). As the Dallas Court of Appeals concluded, “[T]he 'issue in tort' between appellant and
appellee in the present case is the design, manufacture, and placing in the stream of commerce" of a product
alleged to have caused injury. Crisman, 748 S.W.2d at 277B78; see also Greenberg Traurig of New York v.
Moody, 161 S.W.3d 56, 73 (Tex. App.- Houston [14th Dist.] 2004, no pet.) (“Generally, the state where the act
or omission occurs has a real interest in applying its law in order to implement the state's regulatory policy as
reflected in that law."). The court's conclusion in Crisman applies with equal force here.
The Pacer table was designed and manufactured in Minnesota by a Minnesota corporation having its principal
place of business in Minnesota. While Sico vigorously disputes that its table is defective, Sico does not dispute
that the table entered the stream of commerce when it was shipped from Minnesota after being manufactured
there; according to Sico, its product “was not defective upon its entry into the Minnesota stream of commerce."
There is no contention and no evidence that the Pacer table was substantially changed after Sico shipped it
from Minnesota. Therefore, this factor supports the application of Minnesota law. Cf. Perry v. Aggregate Plant
Prods. Co., 786 S.W.2d 21, 24 (Tex. App.- San Antonio 1990, writ denied) (defendant's action in placing
cement silo into stream of commerce in Texas where it was designed and manufactured was a factor supporting
application of Texas law).
Taken as a whole, the section 145 factors point to the application of Minnesota's useful life statute. The Texas
situs of injury is fortuitous. Willis and Sico had no relationship centered in Texas or anywhere else. The “issue
in tort” is a Minnesota corporation's conduct in designing, manufacturing, and placing into the stream of
commerce a Pacer table that injured a student. See Crisman, 748 S.W.2d at 277B78. All of Sico's conduct
germane to this “issue in tort" occurred in Minnesota.
The Minnesota focus of Sico's conduct pertaining to the “issue in tort" dovetails with analysis of the policy
factors identified in section 6. Minnesota has a policy interest in promoting the responsibility of Minnesota
companies that operate in Minnesota to design, make and distribute products. See Danielson v. National
Supply Co., 670 N.W.2d 1, 8-9 (Minn. App. 2003); Fluck v. Jacobson Mach. Works, Inc., No. CX-98-1899, 1999
WL 153789 at *4 (Minn. App. March 23, 1999) (not released for publication). This point is illustrated by Fluck, in
which the Minnesota Court of Appeals refused to apply the Colorado statute of repose to a claim against a
Minnesota corporation that designed, manufactured and placed its product into the stream of commerce in
Minnesota. Fluck, 1999 WL 153789 at *1. The product injured a Colorado resident in an accident that occurred
in Colorado. Id. In Fluck, as in this case, applying the Minnesota useful life statute allowed the case to proceed;
applying Colorado's seven-year statute of repose would have barred the claim. The Minnesota Court of
Appeals concluded as follows: “[W]e can find no basis for a Minnesota corporation manufacturing a product in
Minnesota to have the benefit of the protections of a statue of repose promulgated in Colorado." Id. at *4.
Sico points to Texas's policy interest in establishing a measure of repose for product manufacturers and sellers,
and posits that the statute serves as an inducement to conduct business in Texas. See Burleson v. Liggett
Group Inc., 111 F. Supp. 2d 825, 829 (E.D. Tex. 2000). This contention does not go as far as Sico would
suggest. Although the Minnesota useful life statute's approach differs from a statute of repose establishing a
definite cut-off date beyond which litigation cannot be pursued, the underlying concept is similar in that the
defense is not tied to accrual of a particular litigant's cause of action. Cf. Trinity River Auth. v. URS Consultants,
Inc.-Tex., 889 S.W.2d 259, 261, 263 (Tex. 1994) (“Unlike traditional limitations provisions, which begin running
upon accrual of a cause of action, a statute of repose runs from a specified date without regard to accrual of
any cause of action" and may “potentially cut off a right of action before it accrues").
The differences identified in the operation of the Texas statute of repose and the Minnesota useful life statute
do not mean that Texas's policy goals are being subordinated or thwarted. “Generally speaking, application of
another jurisdiction's laws is not contrary to the forum state's fundamental public policy merely because
application of the other state's law leads to a different result from the result that would be obtained if the forum
state's law were applied." Nexen Inc. v. Gulf Interstate Eng'g Co., 224 S.W.3d 412, 421 (Tex. App.-Houston [1st
Dist.] 2006, no pet.) (applying Alberta statute of repose rather than Texas statute of repose pursuant to
contractual choice of law provision). “[I]f the public policies in the forum state and [another state] . . . 'are the
same, different approaches do not contravene [the policies] just because one [approach] is somewhat stricter
than the other.'" Id. at 421 (quoting Chesapeake Oper., Inc. v. Nabors Drilling USA, Inc., 94 S.W.3d 163, 178
(Tex. App.-Houston [14th Dist.] 2002, no pet.)).
“[T]he fact that the other state's law differs materially from that of the forum state does not itself show that
application of the other state's law would offend Texas public policy." Nexen, Inc., 224 S.W.3d at 421. Sico
cannot be surprised or unfairly prejudiced by the application of a statute enacted by the state in which Sico is
incorporated and manufactures its products. See Doctor, 186 S.W.3d at 12 (not-for-profit charitable corporation
incorporated under Wisconsin law “could have no justified expectation” that it would be governed by Texas
charitable immunity statute in connection with liability arising from corporation's activities in Wisconsin).
Upon review of the pertinent contacts and the respective interests of Minnesota and Texas, we conclude that
Minnesota and Minnesota law have the most significant relationship to the particular substantive issue here.
Therefore, the district court did not err by applying the Minnesota useful life statute in this case. Sico's first
issue is overruled.
Sico North America, Inc. v. Willis (Tex.App.- Houston [14th Dist] Sep. 10, 2009)(Boyce)
(choice of law when not agreed to in contract, statute of repose, products liability, defective folding table used in
schools, amputation of finger caught between panels)
AFFIRMED: Opinion by Justice Boyce
Before Justices Anderson, Guzman and Boyce
14-08-00158-CV Sico North America, Inc v. James R. Willis Individually, and as Next Friend of John Willis
Appeal from 334th District Court of Harris County
Trial Court Judge: Sharon McCally
HOUSTON APPELLATE COURT CASES | TEXAS CASE LAW |