Toyota Motor Co. v. Cook

581 S.W.3d 278

TOYOTA MOTOR COMPANY, Appellant

v.Linda COOK, Sanford Jones, James Thomas Lyle, Gary Gray, East Texas Educational Insurance Association, New York Marine and General Insurance Company, Appellees

NO. 09-17-00334-CV

Court of Appeals of Texas, Beaumont.

Submitted on March 1, 2018

Opinion Delivered August 8, 2019

Michael W. Eady, Sara Berkeley Churchin, Thompson, Coe, Cousins and Irons, LLP, Austin, TX, for Appellant.

Curtis W. Leister, John Werner, Reaud, Morgan and Quinn, LLP, Beaumont, TX, for Appellees.

Before McKeithen, C.J., Kreger and Johnson, JJ.

CHARLES KREGER, Justice

In this agreed permissive interlocutory appeal, Toyota Motor Corporation (Toyota) appeals the trial court's grant of Plaintiffs' Linda Cook, Sandford Jones, James Thomas Lyle, Gary Gray, East Texas Educational Insurance Association, and New York Marine and General Insurance Company Motion to Apply Texas Law. See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(d) (West Supp. 2017). In a single issue, Toyota asks whether the trial court should apply Texas or Mexico's law to Appellees' claims against Toyota.

I. Background

This is a case arising out of an automobile accident that occurred in Mexico. Appellees are either teachers or family members of teachers, who are all residents of Texas. Appellees and some of their family members traveled to Mexico as part of a Spanish immersion program. After arriving, Plaintiffs arranged on their own, through the Mexican-owned hotel where they stayed, a tour of caves outside Tolantongo, State of Hidalgo, Mexico. A licensed Mexican national provided transportation and operated a Toyota Hiace van, licensed and registered in Mexico. In Japan, Toyota designed and manufactured the Hiace model for the Mexican market, and Toyota imported the van directly to Mexico where it was sold and placed into the stream of commerce. There are no records indicating the Hiace van involved in the accident had ever been in Texas or the United States. The Hiace model, in fact, was never intended for use in or marketed by Toyota in the United States.

While en route to the caves, the driver was negotiating an unpaved descending switchback mountain roadway when the van suddenly veered off the roadway, flipped and rolled down the mountainside, ejecting several passengers. The accident killed three teachers and injured other occupants of the van, some seriously. Several Appellees received medical treatment in Mexico and later in Texas. The Mexican government—the Attorney General for the State of Hidalgo—extensively investigated the accident. Following the investigation, they held the driver of the van criminally responsible for the accident.

On appeal, Appellees assert this is a product liability case wherein they allege that Beaumont ISD "teachers and family members were injured or killed as a result of a product (a van) which was defectively designed, manufactured and marketed by Toyota Motor Co." A review of the record reveals claims for negligence, strict product liability, and wrongful death. Appellees allege that teachers Dorothy Gray, Denise Wenzel and Mary Jones died as a result of the crash, and survivors Gary Gray, Paul Gray, and Chris Gray (collectively "Gray Survivors") suffered significant injuries in the accident. After receiving initial treatment in Mexico, the Gray Survivors received medical treatment in Texas. In addition to claims of negligent design, marketing, and manufacturing, Appellees assert that Toyota is "strictly liable to plaintiffs for designing, manufacturing and/or placing into the stream of commerce the Hiace motor vehicle, which was unreasonably dangerous and defective as designed, manufactured and marketed by defendant for its reasonably foreseeable uses at the time it left the control of [Toyota]."

Multiple lawsuits were filed in the District Courts of Jefferson County, Texas, seeking to recover damages incurred as a result of the accident.¹ All have been consolidated in this appeal. After nonsuiting the Mexican van driver and the Mexican hotel owner, Plaintiffs are proceeding solely against Toyota. Plaintiffs moved for application of Texas law to their claims, while Toyota opposed the motion and requested the application of Mexico's law. The trial court granted the Appellees' motions to apply Texas law.

All parties agree that (1) the trial court's choice of law ruling involves a controlling question of law, (2) there exists a substantial difference of opinion on the trial court's ruling, and (3) an immediate appeal will materially advance the ultimate termination of the litigation. The trial court authorized a permissive interlocutory appeal, and we granted the petition for permissive appeal.

II. Standard of Review

Determining which state's law governs an issue is a question of law for the courts.

Enter. Prods. Partners, L.P. v. Mitchell , 340 S.W.3d 476, 479–480 (Tex. App.—Houston [1st Dist.] 2011, pet. granted) (citing Torrington Co. v. Stutzman , 46 S.W.3d 829, 848 (Tex. 2000) ). Therefore, we review a trial court's decision to apply Texas law de novo. See Minn. Mining & Mfg. Co. v. Nishika Ltd. , 955 S.W.2d 853, 856 (Tex. 1996) ; Mitchell , 340 S.W.3d at 480.

III. Choice of Law Generally

Texas applies the most significant relationship test outlined in the Restatement (Second) of Conflict of Laws to determine choice of law issues. Gutierrez v. Collins , 583 S.W.2d 312, 318 (Tex. 1979) (holding that "in the future[,] all conflicts cases sounding in tort will be governed by the ‘most significant relationship’ test as enunciated in Sections 6 and 145 of the Restatement (Second) of Conflicts"); see also Torrington , 46 S.W.3d at 848 ; Hughes Wood Prods., Inc. v. Wagner , 18 S.W.3d 202, 205 (Tex. 2000) ; RESTATEMENT (SECOND) OF CONFLICT OF LAWS §§ 6, 145 ( AM. LAW INST. 1971). Under this approach, the laws of a single state do not necessarily govern all substantive issues; accordingly, we consider each issue separately and apply the state law having the most significant relationship to the issue.² See Bain v. Honeywell Int'l, Inc. , 257 F.Supp.2d 872, 875 (E.D. Tex. 2002). We only undertake a choice of law analysis if a conflict of law exists that affects the outcome of an issue. See Duncan v. Cessna Aircraft Co. , 665 S.W.2d 414, 419 (Tex. 1984). The parties agree that an actual conflict exists between the laws of Mexico and the laws of Texas, but they do not identify the separate substantive issues involved. See Ford Motor Co. v. Aguiniga , 9 S.W.3d 252, 259 (Tex. App.—San Antonio 1999, pet. denied) (holding that the first step of our analysis is to "[i]nitially ... identify the conflict of law which would necessitate the trial court to decide a choice of law issue"). Accordingly, we look to the allegations contained in Appellees' live pleadings to determine the substantive issues and analyze the choice of law issues applying the "most significant relationship" test outlined in the Restatement (Second) of Conflict of Laws. See Torrington , 46 S.W.3d at 848 ; Gutierrez , 583 S.W.2d at 318 ; RESTATEMENT (SECOND) OF CONFLICT OF LAWS §§ 6, 145.

Section 6 of the Restatement (Second) outlines the general choice of law factors courts should consider, including:

(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 determination and application of the law to be applied.

Torrington , 46 S.W.3d at 848 (quoting RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 6(2) ); see also Hughes , 18 S.W.3d at 205. Additionally, in tort cases we consider the section 145 contacts, which include: "(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 (SECOND) OF CONFLICT OF LAWS § 145(2) ; see also Torrington , 46 S.W.3d at 848. In deciding choice of law issues, the number of contacts is not determinative, rather courts must examine the contacts in light of state policies underlying the specific substantive issue. Torrington , 46 S.W.3d at 848 ; Duncan , 665 S.W.2d at 421.

In Gutierrez , the Texas Supreme Court explained that certain dissimilarities in Mexican law, including damages, limitation statutes, indexing a plaintiff's recovery to the prevailing wage rates set by Mexican labor law, absence of pain and suffering damages, and the allowance of moral reparations damages capped at one third of the other damages awarded, did not necessarily render them violative of public policy. Gutierrez , 583 S.W.2d at 321–22. These are some of the differences that Appellees complain of in the case before us. The Court specifically noted that "there is nothing in the substance of these laws inimical to good morals, natural justice or the general interests of the citizens of this state." Id. at 322.³

We cannot make a blanket determination that the law of Texas or Mexico applies to the entire case; rather, we must determine which state has the most significant relationship to each substantive issue in our choice of law analysis. See Torrington , 46 S.W.3d at 848 (citations omitted) ("[W]e must evaluate the contacts in light of the state policies underlying the particular substantive issue."); Hughes , 18 S.W.3d at 205 ("[T]he court of appeals determined that Texas has the most significant relationship to the case and that therefore Texas law should apply to all issues. But the Restatement requires the court to consider which state's law has the most significant relationship to the particular substantive issue to be resolved. "); see also Bain , ...