Foundations
The First Restatement of Conflicts proved be leave several considerations out of contention. As such, new theories developed, interest analysis being one of the first. The analysis appears straightforward: Interpret the statutes to determine the policy interests of the conflicting states. This will determine whether there is a true conflict, apparent conflict, or no interest. If there is a true conflict or no other interest, it is best to apply the rule of the forum state. However, if there is an apparent conflict, it is best to apply the law of the state (being only one state) that has an interest.
In other words:
- The initial premise is that the forum law governs and the person choosing otherwise has the burden of proof that another jurisdiction should apply.
- Determine the domestic policies of the forum law (what is the law meant to accomplish)
- Does the forum have an interest in having its law applied?
- Repeat steps 2 and 3 for other potentially interested states.
Application in True Conflicts
When both states have an interest in applying the local laws, apply the law of the forum.
Lilienthal v. Kaufman
395 P.2d 543 (Or. 1964).
Plaintiff Lilienthal lost and appealed.
Question
Whether California or Oregon law will apply.
Conflict: In California, a plaintiff can recover because contracts made by a spendthrift are still enforceable. In Oregon, however, a spendthrift’s contracts are voidable by the guardianship.
Rule
When one state has a prevailing interest, the law of that state will apply. However, if both states have equally strong interests, then the law of the forum should be the governing rule.
Holding
Each state has an equal interest, thus Oregon law will apply and the plaintiff has no recovery.
Facts
The defendant, Kaufman, was very poor at managing finances. As a result, a guardian was placed over him to protect himself from careless spending. He was a domiciliary of Oregon. Eventually the defendant and plaintiff entered into a contract in California where the plaintiff loaned the defendant money and wished to be paid back on the notes. This loan was made without knowledge that the defendant was in a guardianship. When the defendant was unable to pay back the plaintiff, the plaintiff sued for the balance. Now, the defendant is saying the contract was voidable because he was in a guardianship.
Analysis
Had this analysis been conducted under the First Restatement, California law would apply because that is where the contract was formed (this is a capacity to contract question rather than performance).
Had this analysis been conducted under the groupings of contacts, California law would apply. This is because the contract was formed in California, payments were to be made in California, etc. In other words, significant parts of the transaction were centered around California.
Here, though, Oregon applies the interest analysis. Thus, we examine the interests of each state. Oregon has an interest in protecting an individual in a guardianship from themselves. However, there is a counter interest that one should not engage in fraud (this interest is further mitigated by the legislature enacting the guardianship statute). California has an interest that its creditors be repaid. Both these states thus have compelling interests. Because Oregon was the forum, Oregon law will apply to preserve its interests.
Application in Apparent Conflicts
When only one state has an interest in applying the local laws, we apply the law of the state that has an interest.
Bernkrant v. Fowler
360 P.2d 906 (Cal. 1961).
The plaintiffs lost and appealed.
Question
Does California or Nevada law apply?
Conflict: If California law applies, the plaintiff can have no recovery due to the statute of frauds. However, in Nevada, the statute of frauds provision does not apply and there could be a recovery.
Rule
When only one state has an interest, the law of that state will govern.
Holding
Here, only Nevada has an interest, so Nevada law will apply. Reversed.
Facts
The plaintiffs purchased a hotel in Nevada and were making payments on it. When they had about $24,000 left to pay, the creditor sought a substantial amount of the debt. If the plaintiffs paid the amount, then the creditor promised that he would put a provision in his will that the remaining balance would be cancelled when he died. With this promise, the plaintiff took out another loan, made a substantial payment, and still owed about $9,000. They continued to make payments when the creditor died, having about $6,000 left of the debt. However, the creditor’s will made no mention about the forgiveness. Thus, this lawsuit was created against the executor of the estate requesting forgiveness of the loan.
The problem? The promise was oral and there was no written indication in the will or otherwise of the promise.
Analysis
It appears that there is a conflict, but there really isn’t. California has minimal interest in this case. Although California has an interest in protecting estates from fraud (hence requiring the statute of frauds), this is inapplicable because the creditor could have moved anywhere during his life. Thus, when the contract was made in Nevada, the plaintiff would have to be aware that they could be subject to anywhere the creditor moved. This is a burden the court is unwilling to place on the plaintiff. Instead, because every other aspect of the contract was formed in Nevada, Nevada’s interest in upholding the validity of contracts (also a California interest) is the only interest that matters.
Unprovided-for Cases
When neither state has an interest in applying the local laws, the law of the forum will apply.
Hurtado v. Superior Court
522 P.2d 666 (Cal. 1974).
Question
Will California or Mexico govern? California does not provide a cap for damages in a wrongful death claim while Mexico would cap the damages.
Rule
When the other state has no interest, the law of the forum will apply.
Holding
Here, Mexico has no interest. Thus, California law, being the forum, will apply.
Facts
An accident occurred in California which caused the death of the decedent. This action is being brought by the widow. The plaintiffs and the decedent were domiciled in Mexico. The defendants, the accident, and the forum are all in California.
Analysis
Mexico’s cap on damages is not to limit the recovery of plaintiffs but to protect resident defendants from excessive damages. Because the defendants here are in California, Mexico has no interest. Thus, California law, being the forum, will apply.
Despite the simple answer, the court goes into the analysis further. There is a distinction between creating a cause of action and limiting the damages associated with that cause of action. Additionally, California has an interest in deterring drivers from driving negligently. Because the defendants acted negligently in California, the policy directly creates an interest in applying the forum laws.
Disclaimer
The content contained in this article may contain inaccuracies and is not intended to reflect the opinions, views, beliefs, or practices of any academic professor or publication. Instead, this content is a reflection on the author’s understanding of the law and legal practices.
