## Facts

- Syed Ali rented a car in New Jersey from Car Rentals, Inc., a New Jersey corporation operating only in New Jersey as an Avis licensee; Avis had substantial business activity in New York.
- Ali had recently lived in Manhattan, temporarily stayed with his parents in New Jersey, and testified he intended to return to New York City for permanent employment; he moved back to Manhattan a few months after the accident.
- Jody King worked in Connecticut but maintained a permanent residence in New York and held a New York driver’s license.
- Ali picked up King in Connecticut, and they drove to Quebec for a holiday trip.
- In Quebec, the vehicle left the roadway and overturned, allegedly injuring King.
- King sued in New York for negligence against Ali and sought to impose owner vicarious liability on Car Rentals/Avis.
- Defendants sought summary judgment based on applying Quebec or New Jersey law; King sought summary judgment on liability under New York law.
- The trial court applied Quebec law, granted Ali summary judgment, and denied the other motions; King appealed.

## Issues

1. Which jurisdiction’s law (New York, New Jersey, or Quebec) governs loss-allocation issues in a New York action arising from an automobile accident in Quebec.
2. Whether New York’s owner vicarious liability rule (Vehicle and Traffic Law § 388) applies to the rental company/brand defendants.
3. Whether New York’s serious-injury threshold for noneconomic damages (Insurance Law § 5104[a]) governs the plaintiff’s damages claim rather than Quebec’s no-fault limitations.

## Decision

- The Appellate Division, Second Department reversed the order applying Quebec law.
- The court held that New York substantive law governs the action’s loss-allocation issues.
- The court ruled that New York Insurance Law § 5104(a) and Vehicle and Traffic Law § 388 apply, permitting potential owner vicarious liability and applying New York’s serious-injury threshold.
- The matter was remitted for further proceedings consistent with application of New York law.

## Legal Principles

- New York applies interest analysis, rather than a rigid place-of-injury rule, to resolve tort conflicts and selects the law of the jurisdiction with the greatest interest in the litigation.
- For loss-allocation conflicts in automobile cases, New York applies the Neumeier rules, focusing on the parties’ domiciles and the accident locus.
- Statutes governing owner vicarious liability and thresholds for noneconomic damages are treated as loss-allocation rules, not conduct-regulating rules.
- When the dispute primarily concerns allocation of losses among nonresident parties, a foreign accident location may have limited interest compared to the parties’ domiciles and the forum’s compensatory policies.

## Conclusion

Because the litigation centered on loss allocation among parties with strong New York domiciliary ties and New York’s policies favoring compensation and owner responsibility, New York law—not Quebec’s no-fault regime or New Jersey’s agency-based owner-liability rule—governed the claims, and the case proceeded under Vehicle and Traffic Law § 388 and Insurance Law § 5104(a).


King v. Car Rentals, Inc., 29 A.D.3d 205 (N.Y. App. Div. 2d Dep’t 2006)