Pounders v. Enserch E&C, Inc., 667 Ariz. Adv. Rep. 29 (August 21,l2013) (J. Brutinel)
CHOICE OF LAW—SUBSTANTIVE LAW OF STATE WITH MOST SIGNIFICANT RELATIONSHIP TO "OCCURRENCE" AND "PARTIES" CONTROLS
Plaintiffs' decedent died of cancer in Arizona 30 years after being exposed to asbestos in New Mexico. The exposure occurred in the Four Corners area in New Mexico from 1969-74 and 1979-83. Plaintiffs' decedent moved to Arizona in the late 1980s and was diagnosed with mesothelioma in May 2008. Plaintiff sued the architect, construction manager, designer and manufacturer involved in the decision to use and place asbestos in the area plaintiffs' decedent worked. Suit filed in Maricopa County Superior Court. The trial court granted defendants' motion to apply New Mexico substantive law to the claim and the Arizona Court of Appeals and Arizona Supreme Court both affirmed. This ruling is dispositive of the case because N.M. Stat. Ann. §37-1-27,
bars personal injury claims arising out of construction of improvements on real property when such claims are brought more than ten years after the completion of the improvement. This bar applies even if the injury has not yet been discovered. Arizona has no such statute of repose, only a two year statute of limitations barring claims two years after the cause of action is discoverable.
It has long been held that statutes of limitations and statutes of repose are substantive and not procedural. So while Arizona will always apply its procedural law, the applicability of New Mexico's statute of repose is substantive and requires choice of law analysis. Arizona follows the Second Restatement of Choice of Law and as such applies the substantive law of the state with the "most significant relationship to the occurrence and the parties." While the Court agreed with the plaintiffs that the place (Arizona) where the injury "manifests itself" is the place of injury (until manifestation there is no actionable claim and no injury), it found under these facts that the place of injury had an insignificant relationship to the "occurrence" and "parties" as compared to New Mexico. Under the Restatement the "place of injury" is the default for choice of law unless another state bears a more substantial relationship to the occurrence and parties.
Here while Arizona has an interest in seeing its residents fairly compensated for injury and death, New Mexico's interest is more significant. "New Mexico seeks to protect businesses engaging in the improvement of real property from liability after a fixed number of years. New Mexico enacted §37-1-27 as a response to judicial expansion of liability for contractors doing business in New Mexico. The statute was intended ''to provide a measure of protection against claims arising years after' substantial completion of construction projects,' because the lapse in time may have made
asserting reasonable defenses seemingly impossible." New Mexico's substantive law applies and the action is time barred.