Judge Bruce G. Iwasaki, Case Number: 19STCV28457, Date: 2023-09-28 Tentative Ruling

This action arises out of injuries sustained by Plaintiff Magna Angel (Plaintiff) during the 2018 Baja 1000 Race in Ensenada, Mexico (Race). The Race was owned and operated by Defendant Promote Mexico, LLC dba Score International (Promote Mexico). On October 30, 2018, Plaintiff entered into an agreement as an independent contractor with Defendant Monster Energy Company (Monster Energy) to attend the Race. At the Race, a vehicle driven by Defendant Morgan Langley (Langley) and owned by COPS Racing, LLC (COPS Racing) and Langley Productions, Inc. (Langley Productions) struck and injured Plaintiff. On August 12, 2019, Plaintiff filed her original Complaint against Defendants Monster Energy, Langley Productions, COPS Racing, and Langley based on claims of negligence. On August 29, 2022, Plaintiff filed a First Amended Complaint adding claims of Negligence, and Negligent Hiring, Supervision, and Retention against Promote Mexico (as Score International), Roger Norman (Norman), Score International, S de RL de CV (Score-Mexico), COPS Racing, Langley, and Monster Energy.

On October 28, 2019, Defendant/Cross-Complainant Monster Energy filed a Cross-Complaint against Cross-Defendants Promote Mexico (as Score International), Morgan Langley, Langley Productions, Inc., and COPS Racing, LLC, alleging causes of action for (1) express indemnity; (2) breach of contract; (3) implied equitable indemnity; (4) comparative indemnity; (5) contribution; (6) apportionment; and (7) declaratory relief. On April 21, 2021, Monster Energy filed a First Amended Cross-Complaint adding two new parties, Roger Norman and Score International, S de RL de CV (Score-Mexico).

On January 7, 2020, Defendant/Cross-Defendant/Cross-Complainant Promote Mexico filed a Cross-Complaint against Cross-Defendant Tempt Media, LLC alleging causes of action for (1) implied equitable indemnity, (2) contribution and indemnity; (3) declaratory relief, (4) express indemnity, (5) breach of contract, and (6) breach of contract. On April 9, 2020, Promote Mexico filed a First Amended Cross-Complaint that added Cross-Defendants Monster Energy, Langley, Langley Productions, and COPS Racing as cross-defendants.

On January 13, 2020, Defendant/Cross-Complaints COPS Racing and Langley filed a Cross-Complaint against Cross-Defendants Promote Mexico, Norman, and Monster Energy for (1) express indemnity; (2) breach of contract; (3) implied indemnity; (4) comparative indemnity; (5) contribution; (6) apportionment; and (7) declaratory relief. On September 21, 2021, COPS Racing filed a First-Amened Cross-Complaint adding alter ego allegations.

On January 5, 2023, Monster Energy filed a motion for summary adjudication of the duty to defend against Promote Mexico. On March 21, 2023, the Court granted this motion, finding that Promote Mexico owed Monster Energy a duty to defend based on Section 6.01(a) of the Television Sponsorship Agreement between the parties.

On July 18, 2023, Defendant/Cross-Defendant/Cross-Complainant Promote Mexico and Roger Norman (Moving Party or Promote Mexico) moved for summary adjudication of the first through sixth causes of action on COPS Racing Team and Morgan Langley’s First Amended Cross-Complaint, and the first and second causes of action in Promote Mexico’s First Amended Cross-Complaint. COPS Racing, LLC (COPS Racing), Morgan Langley, and Langley Productions, Inc. (Langley Productions) (collectively, COPS Defendants) opposed the motion for summary judgment/summary adjudication. On October 30, 2023, Promote Mexico’s motion for summary judgment was denied; the motion for summary adjudication was granted as to Morgan Langley on Issues 1- 4, 8, and 9, and otherwise denied.

SCORE International, S. de R,L. de C.V. (Score-Mexico) now moves for an order finding that Mexican law, not California law, applies to Plaintiff's claims.

The motion to apply Mexican law is granted in part as to Plaintiff’s claims against Defendant Score-Mexico only.

Score-Mexico’s unopposed request for judicial notice of Exhibits 16, 18, 26, and 28-40 is granted. (Evid. Code, § 452, subd. (c), (d), (f), (g), (h).)

California courts decide choice of law questions by means of the “governmental interests” analysis.

This choice of law analysis embodies the presumption that California law applies unless the proponent of foreign law can show otherwise.

“The party arguing that foreign law governs has the burden to identify the applicable foreign law, show that it materially differs from California law, and show that the foreign law furthers an interest of the foreign state.” (Frontier Oil Corp. v. RLI Ins. Co. (2007) 153 Cal.App.4th 1436, 1465; accord, Washington Mutual, supra, 24 Cal.4th at p. 919 [the movant “ ‘ “must demonstrate that the latter rule of decision will further the interest of the foreign state and therefore that it is an appropriate one for the forum to apply to the case before it” ’ ”].)

Defendant Score-Mexico argues that the Court should issue an “order finding Mexican law applies to the claims Plaintiff asserted, which are all claims of negligence, against all defendants.” (Reply 5:19-20.)

In response, Plaintiff argues that as a preliminary matter Score-Mexico’s request is “drastically overbroad” in that it seeks to determine the choice of law for Plaintiff’s claim against all parties –including non-moving parties, such Monster Energy, a California company, and Promote Mexico, LLC, a Nevada company.

Plaintiff’s criticism is well-taken. Where the presumption is in favor of applying California law, Score-Mexico provides no argument as to its standing to seek a different choice of law as to non-moving parties and cites no authority for doing so. The opposition further argues Score-Mexico’s analysis “has no application to defendants that aren’t Mexican residents” which none of the remaining Defendants are. (Opp. 8:16-17.) The reply suggests that “all defendants have significant connections to tourism and commercial activity in Mexico related to these races.” (Reply, 5:8-9.) However, Score-Mexico offers no analysis as to how this factors into the governmental interest analysis as to non-moving Defendants and an opposing Plaintiff. Thus, on this motion, the Court will only consider the choice of law as to Plaintiff’s claims against Defendant Score-Mexico.

Second, the Court will address the procedural posture of this motion. As Plaintiff notes “there is no such thing in the California Code of Civil Procedure as a “Motion for the Application of Foreign Law,” and instead such issues are generally raised by way of a motion to dismiss for forum non conveniens or a motion for summary adjudication.” (Opp. 1:23-26; see e.g. Chen v. Los Angeles Truck Centers, LLC (2019) 7 Cal.5th 862.) There is no legal authority requiring an issue like the choice on law to be decided on any specific type of motion. Moreover, where there are factual issues that must be resolved in order to resolve the choice of law issue, this type of motion is insufficient to resolve those necessary factual issues.

The analysis below will address whether there is a factual issue that must be resolved before the choice of law analysis can be decided.

1. Whether the relevant law of each of the potentially affected jurisdictions with regard to the particular issue in question is the same or different:

The Court first examines the substantive law of each jurisdiction to determine whether the laws differ as applied to the relevant claims.[1]

Defendant Score-Mexico argues that there are substantive differences in the appliable laws at issue here. Specifically, there is a difference between State of Baja California, Mexico and the State of California as the law pertains to liability and damages for non-contractual liabilities in the vent of vehicular accident resulting in injury.

Under California law, courts apply a comparative fault system that reduces plaintiff’s recovery in proportion to their share of fault. (Diaz v. Carcamo (2011) 51 Cal.4th 1148, 1156 [“Under comparative fault principles, a plaintiff's negligence no longer bars recovery, but reduces “the damages awarded ... in proportion to the amount of negligence attributable to the [plaintiff].”].) California's system of ‘comparative fault’ seeks to distribute tort damages proportionately among all who caused the harm – among multiple tortfeasor defendants and plaintiffs alike.

In contrast, under Mexican law (which is based on a civil code system) Article 1788 and Article 1791 of the Civil Code for the State of Baja California (CCBC) provide that a plaintiff’s own fault or inexcusable negligence operates as an absolute bar to recovery. (Walther Decl., ¶¶ 20-22, Exs. 30-31.)

Further, the law of intervening liability in Mexico is different. Under Mexican law, “Mexican law requires proof that a defendant's conduct was the immediate and direct cause of a plaintiff’s injury and resulting damages.” (Walther Decl., ¶¶ 25, 27.) In contrast, California law recognizes concurrent causes of an injury. (See Yanez v. Plummer (2013) 221 Cal.App.4th 180, 187 [“[A] defendant cannot avoid responsibility just because some other person, condition, or event was also a substantial factor in causing the plaintiff's harm; but conduct is not a substantial factor in causing harm if the same harm would have occurred without that conduct.”].)

Defendant Score-Mexico also argues that the amount of recoverable damages differs between the two jurisdictions.

Under California law, Civil Code section 3333 permits recovery of “the amount which will compensate for all the detriment proximately caused thereby....” (Civ. Code, § 3333.) Again, in contrast, Mexican law calculates recoverable damages based upon the minimum wage of the geographic area at issue multiplied by a maximum number of days. (Walther Decl., ¶¶ 29-48; see Hernandez v. Burger (1980) 102 Cal.App.3d 795, 799 [“There is no question but that the laws of California and Mexico governing the damages recoverable in a case such as this [automobile accident] are different.”].)

In opposition, Plaintiff disputes Defendant Score-Mexico’s description and assessment of Mexican law as it applies to liability and damages at issue here. First, Plaintiff notes that the CCBC suggests that “The concurrent negligence of the injured party does not exempt them from liability but entails a reduction in compensation.” However, this question turns on whether the Plaintiff’s conduct constitutes “inexcusable fault” or not.

In any case, the first step in the governmental interest test is to determine whether the relevant laws of the affected jurisdictions are “the same or different.” (Chen, supra, at 867-68.) While a plaintiff’s own conduct may not operate as an absolute bar to all liability in all cases under Mexican law, it does in some cases – which is contrary to California law. Moreover, Plaintiff offers no authority for the proposition that Plaintiff’s “fault or inexcusable negligence” must be established prior to making a conflicts of law determination.

Plaintiff concedes there is differences in damage awards but that this difference is not significant. Notably, Plaintiff explains that the Mexican law does allows for “Moral Damages” which are damages that a party receives for the “impairment that a person suffers in his feelings, affections, beliefs, decorum, honor, reputation, private life, configuration and physical aspects, or in the consideration that others have of himself.” (Walther Decl., ¶ 46.)

The Reply acknowledges the existence of moral damages under Mexican law, but notes that “in no case” will they “exceed the equivalent to that provided for in this Code in the event of injury that produces the total permanent disability of the victim.” (Walther Decl., ¶¶ 42-48, Ex. 34.) Defendant Score-Mexico also notes that moral damages must still be proportional to the plaintiff's monetary damages to ensure no excessive recovery by the plaintiff. (Walther Decl., ¶ 48.)

Based on Defendant Score-Mexico’s thorough legal analysis based on expert testimony, the Court finds the liability and damages laws of Mexico and California are different as it pertains to the claims in this case. Thus, the first prong of the governmental interest test is satisfied.

Plaintiff challenges the relative interests of Mexico and California in having their law applied to the facts here.

On this prong, courts must consider the governmental policies underlying the laws in assessing whether either or both states have an interest in applying their law to the case. Only if each of the states involved has a ‘legitimate but conflicting interest in applying its own law’ will we be confronted with a ‘true’ conflicts case.” (Offshore Rental Co. v. Continental Oil Co. (1978) 22 Cal.3d 157, 163.)

As preliminary matter, Defendant Score-Mexico argues that Mexico has a broad and significant interest in applying its law here, but also concedes that California has an interest in applying California law here, albeit a limited one. (Mot., 10:11-18.)

Defendant Score-Mexico acknowledges that California has an interest in ensuring residents injured in traffic accidents in other states are adequately compensated for their injuries such that they do not become dependent on the resources of California for necessary medical, disability, and unemployment benefits. (Castro v. Budget Rent-A-Car System, Inc. (2007) 154 Cal.App.4th 1162, 1182.)

In contrast, according to Defendant, Mexico has a significant interest in protecting negligent resident tortfeasors acting within its borders from the financial hardships caused by the assessment of excessive legal liability or exaggerated claims. (Offshore Rental Co. v. Continental Oil Co., supra, 22 Cal.3d at 163.) Further, Score-Mexico argues that “Mexico has a significant interest in applying its substantive laws that preclude a finding of liability, as well as limiting damages, and that equally applies to Mexican and foreign defendants,” which encourages investment and tourism. (Mot., 10:22-11:4.) The Court can assume that Mexico may wish to encourage investment and tourism, but does not assume that it wishes to countenance or insulate reckless conduct.

In opposition, Plaintiff argues that Mexico has no interest in applying its laws to non-Mexican defendants. In making this argument, Plaintiff contends Defendant Score-Mexico is not truly a Mexican defendant based on Plaintiff’s alter ego and joint venture arguments. (Opp., 8:8-9:6 [citing Hurtado v. Superior Court (1974) 11 Cal.3d 574].)

Even assuming Score-Mexico is not a Mexican Defendant, Plaintiff’s reliance on Hurtado v. Superior Court (1974) 11 Cal.3d 574 is misplaced. In Hurtado, a Mexican national was killed in an automobile accident in California by a California defendant. The Mexican national’s heirs, who were also Mexican nationals, sought to apply Californian law whereas the California defendant sought to apply Mexican law. (Id. at 578.) In applying the government interest analysis, the court first found that Mexico imposed a monetary limitation on recoverable damages in wrongful death cases that conflicted with California's law, which had no such limitation. (Id. at 578-579.) The court found that “[t]he interest of a state in a tort rule limiting damages for wrongful death is to protect defendants from excessive financial burdens or exaggerated claims.” (Id. at 580–581.) Thus, since there was no such limitation in California law, the court determined that California law should apply since it allowed greater recovery of damages. (Id. at 586–587.) The court found that “Mexico has no interest in applying its limitation of damages in wrongful death actions to nonresident defendants or in denying full recovery to its resident plaintiffs.” (Id. at 586–587.)

Hurtado shows that California courts are reluctant to impose foreign laws that restrict a plaintiff's ability to recover damages unless the defendants are residents of, or connected to, the foreign state where such limitations apply. (Hurtado v. Superior Court (1974) 11 Cal.3d 574, 583 (Mexico’s interest in “protecting resident defendants … is inapplicable to this case, because defendants are not Mexican residents”].)

In contrast here, the underlying conduct occurred during a professional race held in Mexico. The facts in Hernandez v. Burger (1980) 102 Cal.App.3d 795 are more analogous to the facts here. In Hernandez v. Burger (1980) 102 Cal.App.3d 795, a Mexican plaintiff was injured in Mexico by a California defendant driver. The court explained “It is true that the place of the wrong is no longer treated as a controlling factor where application of the law of another jurisdiction having a connection with the accident will serve a legitimate interest or policy of the other jurisdiction. However, the situs of the injury remains a relevant consideration.” (Hernandez v. Burger (1980) 102 Cal.App.3d 795, 801–802.) Ultimately, in ruling that Mexican law should apply, the court held that Mexico had an interest in applying its limitation of damages rule to non-residents and that California had no interest in applying its more liberal recovery rules to an accident that occurred outside of California. (Hernandez, 102 Cal.App.3d at 804.)

Thus, irrespective of whether Score-Mexico is a Mexican Defendant, Mexico has an interest based on the location of the incident. Accordingly, both California and Mexico have an interest in applying their respective laws. Based on the second prong, a true conflict exists between each jurisdiction's interest in the application of its own law under the circumstances.

3. Where there is a true conflict, the Court must evaluate and compare the nature and strength of the interest of each jurisdiction in the application of its own law “to determine which state's interest would be more impaired if its policy were subordinated to the policy of the other state” and then ultimately apply “the law of the state whose interest would be more impaired if its law were not applied:

“Once a true conflict is identified, the “comparative impairment” approach is used to determine which state's interest would be more impaired if its policy were subordinated to the policy of the other state.” (Denham v. Farmers Ins. Co. (1989) 213 Cal.App.3d 1061, 1066.)

Defendant Score-Mexico argues Mexico’s interest in applying its own law is greater than California’s interest. Score-Mexico argues that the place of injury is highly significant, relying on Offshore Rental Co. v. Continental Oil Co. (1978) 22 Cal.3d 157 and McCann v. Foster Wheeler LLC (2010) 48 Cal.4th 68. In both cases, the courts applied the law of the foreign jurisdiction where the accident occurred, recognizing the foreign jurisdictions interest in providing individuals and commercial entities with certainty of the applicable laws where business is conducted. (McCann v. Foster Wheeler LLC¸ supra, 48 Cal.4th at 98-99.)

In response, Plaintiff relies on her argument that Score-Mexico is not truly a Mexican defendant based on the alter ego and joint venture arguments, and that accordingly the significance of the place of injury to the impairment analysis is reduced.

As noted above, while both jurisdictions have an interest in the litigation, the impairment analysis turns on whether Score-Mexico is truly a Mexican corporation or merely an alter ego of the Nevada defendants.

The location of the incident is ordinarily an important factor weighing in favor of applying Mexican law. (McCann v. Foster Wheeler LLC (2010) 48 Cal.4th 68, 97–98 [“California choice-of-law cases nonetheless continue to recognize that a jurisdiction ordinarily has “the predominant interest” in regulating conduct that occurs within its borders.”].) Further, as discussed in Denham v. Farmers Ins. Co. (1989) 213 Cal.App.3d 1061, an important factor for consideration under the comparative impairment approach is where the injury occurred. (Denham v. Farmers Ins. Co. (1989) 213 Cal.App.3d 1061, 1067.) In Denham, where the injury occurred in Nevada and the only tie to the California forum was the plaintiff’s residency, the court explained:

“In these circumstances, applying California law would “abrogate the interest of a jurisdiction such as [Nevada] in the application of its law to a situation arising out of an insurance policy written in [Nevada], insuring [a Nevada] resident for an accident that occurred in that state, and where the complained of conduct of the insurer occurred, although its effect was upon a third party residing in California. We are satisfied that [Nevada] has the greater interest in regulating the conduct of the insurer, as well as in protecting the insurer, and through it the insured, against third party bad faith claims.” [Citation.]” (Denham v. Farmers Ins. Co. (1989) 213 Cal.App.3d 1061, 1067.)

Here, Mexico has an interest in controlling the liability and damages for conduct – especially business-related conduct – that occurs within its borders. Such an interest furthers reliance on and manages the expectations of liability and damage exposure pertaining to the conduct that occurs within its own borders. By creating this reliability, it encourages investment and development in reliance on these liability and damage limits. (Abogados v. AT&T, Inc. (9th Cir. 2000) 223 F.3d 932, 936 [“[B]oth to protect potential defendants—including foreign defendants who might otherwise avoid doing business in Mexico—from liability for conduct that Mexico does not consider wrongful, and to limit plaintiffs from recovering even if such conduct damages them.”].)

Additionally, there are also four California defendants involved in this case in addition to Plaintiff; there is no evidence or argument that these California ties are not legitimate. This fact strengths California’s interest in this litigation.

In addressing this alter ego argument, Score-Mexico is correct that Plaintiff cites no case authority to support the effect an alter ego determination has on the choice of law analysis. However, this legal theory seems relevant in assessing the governmental interests on a choice of law analysis for Plaintiff’s claims against Score-Mexico. (CF Ameritec Corp. v. Ameritech Corp. (C.D. Cal., Apr. 29, 1986, No. CV-86-0951 CBM) 1986 WL 10702, at *3 [“Under the theory of general jurisdiction, a nonresident's agency or alter ego relationship with resident corporation would give rise to the court's general jurisdiction over the nonresident defendant.”].)

Moreover, case law indicates that courts consider – at least to some extent – the quality of a party’s relationship to the competing jurisdictions to determine relative interest. For example, in McCann v. Foster Wheeler LLC (2010) 48 Cal.4th 68, the court considered the fact that the plaintiff did not become a resident of California until sometime following the accident precipitating the conduct of defendant which is the subject of this lawsuit. (Id. at 98; see also Zimmerman v. Allstate Ins. Co. (1986) 179 Cal.App.3d 840, 847; Reich v. Purcell (1967) 67 Cal.2d 551.) This authority further supports finding that the analysis of the alter ego/joint venture question is critical because if Score-Mexico is found to be an alter ego, its status as a Mexican defendant is significantly undermined in a similar way as to party who forum shops for a litigation forum.

Finally, contrary to the reply, Plaintiff does not suggest that all factual disputes must be resolved before a determination of applicable law can be decided; however, factual matters critical to determining the choice of law ruling logically must be decided first. Here, the true nature of the Defendant Score-Mexico is key to this analysis and the alter ego argument has implications as to whether Defendant Score-Mexico is truly a Mexican defendant.

If Score-Mexico is found to be the alter ego of Nevada residents, and thus no party is a Mexican resident, Mexico’s interest in the litigation is considerably diminished. Thus, resolving these competing intertest turns on Score-Mexico’s identity as Mexican defendant. That is, Mexico’s interest in applying its law only outweighs California’s interest where there is legitimate Mexican defendant. Adjudication of this issue must be determined first before the remaining choice of law claims can be decided.

The Court cannot resolve the factual questions underlying the alter ego/joint venture issue on this procedurally ambiguous motion. (See Misik v. D'Arco (2011) 197 Cal.App.4th 1065, 1072 [noting that existence of alter ego is “ ‘ordinarily a question of fact’ “]; Alexander v. Abbey of the Chimes (1980) 104 Cal.App.3d 39, 47 [because determination of alter ego status “is primarily one for the trial court and is not a question of law, the conclusion of the trier of fact will not be disturbed if it is supported by substantial evidence”]; Leek v. Cooper (2011) 194 Cal.App.4th 399, 418 [“Whether a party is liable under an alter ego theory is a question of fact.”].) It is doubtful that the alter ego issue can be determined in a motion for summary adjudication either, because it would not dispose of a cause of action, affirmative defense, or issue of duty.

The motion to apply Mexican law to Plaintiff’s claims is denied without prejudice.

[1] Generally, “a separate conflict of laws inquiry must be made with respect to each issue in the case ....” (Washington Mutual Bank v. Superior Court (2001) 24 Cal.4th 906, 920 (Washington Mutual); accord, Kearney v. Salomon Smith Barney, Inc. (2006) 39 Cal.4th 95, 110 (Kearney) [“distinct state interests ... may underlie separate aspects of the issue in question”]; Smith v. Cimmet (2011) 199 Cal.App.4th 1381, 1395 [the governmental interest analysis must be performed separately “with regard to the particular issue in question”]; Beech Aircraft Corp. v. Superior Court (1976) 61 Cal.App.3d 501, 518 [“Each choice of law issue requires separate consideration.”].) Here, the operative pleading, the First Amended Complaint, alleges two causes of action against Defendant Score-Mexico: (1.) negligence, and (2.) Negligent Hiring, Supervision, and Retention. Defendant Score-Mexico and Plaintiff treat these claims as substantively the same.