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Johnson v. United States Fidelity and Guaranty Co.5/6/2005
n a contract entered into in Nebraska, this state would also have the most significant interest in applying its law when such law specifically prohibits the enforcement of a contract provision. See Restatement, supra, § 205, comment c. at 662 (explaining that even if application of rule defeats expectations of parties to contract, state with "a local law rule which requires that the contract give rise to certain rights and duties or which provides that the parties may not limit the extent of their obligations by a certain provision" is likely to represent strongly felt policy under the principles stated in § 6). Compare Mertz v. Pharmacists Mut. Ins. Co., 261 Neb. 704, 710, 625 N.W.2d 197, 204 (2001) ("Iowa's interest in protecting the expectations of the parties is outweighed by Nebraska's strong public policy considerations").
In 1990, the Nebraska Legislature amended its statutory formula for determining an insurer's maximum liability for UIM coverage to permit benefits to an insured when the tort-feasor is underinsured relative to the insured's actual damages. See 1990 Neb. Laws, L.B. 1136, § 124. The insurance contracts in this case were negotiated and issued after that amendment was enacted. Nebraska therefore has a significant interest not only in ensuring that its residents with UIM coverage are compensated for their injuries to the extent required by the governing statutes, but also in ensuring that policies issued in this state conform to those statutes.
We reject USF&G and EMC's arguments that the application of contract conflict-of-law principles leads to the determination that Colorado law would apply. We conclude that Colorado would not have a more significant relationship to this issue under the interests stated in the Restatement, supra, § 6, because the determination of a Nebraska resident's right to recover UIM benefits from a Nebraska insurer does not, under the record before us, impact Colorado residents or insurers, or the application of its no-fault rules, as they then existed. Finally, the application of Nebraska's laws to resolve the enforceability of contract coverage provisions between Nebraska insurers and insureds enhances the predictability of the parties' contractual rights and obligations by removing the constant variable of different states in which insureds travel. See Vaughan v. Nationwide Mut. Ins. Co., 702 A.2d 198 (D.C. App. 1997).
PIP Benefits
In contrast to the setoff provisions for UIM coverage, we determine that there is no conflict of law presented by the PIP issue. The out-of-state coverage provisions of both the USF&G and EMC policies specified that the insurer would provide any coverage "required of out-of-state vehicles by the jurisdiction where the covered 'auto' is being used." (Emphasis supplied.) UIM coverage was required by both Nebraska and Colorado, and the coverage was provided in both policies. PIP coverage, however, was required only by Colorado law and was provided only as a result of the out-of-state coverage provisions. Thus, there is no conflict between Nebraska and Colorado laws regarding this coverage, and the coverage provided was entirely dependent upon the requirements of Colorado law. As such, the issue is simply an application of Colorado law as provided by the insurance contracts.
In applying Colorado law to Johnson's claim for PIP coverage, the district court determined that Johnson was not entitled to PIP benefits from EMC under the Colorado Auto Accident Reparations Act, see Colo. Rev. Stat. Ann. § 10-4-701 et seq. (West 1990 & Supp. 1999), as construed in State Farm Mut. Auto. Ins. Co. v. Ketcham, 849 P.2d 871 (Colo. App. 1994). Although the Colorado Legislature repealed the
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