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Auto Equity Loans of Delaware, LLC v. Baird

Court of Common Pleas of Delaware, New Castle

May 2, 2018

AUTO EQUITY LOANS OF DELAWARE, LLC, and DAVID LEVI, Petitioners/Counter-Respondents, & Respondents-below,
v.
JOSEPH BAIRD, ALTON GRIFFIN, and JEANNINE MEDORA, Respondents/Counter-Petitioners, & Claimants-below.

          Submitted: March 15, 2018

          Douglas D. Herrmann, Esq., Christopher B. Chuff, Esq., Pepper Hamilton LLP, Alexander L. Harris, Esq. Pepper Hamilton LLP Attorneys for Petitioners

          Vivian A. Houghton, Esq., Law Office of Vivian A. Houghton, Inc., Robert F. Salvin, Esq. Attorneys for Respondents

          MEMORANDUM OPINION ON CROSS-MOTIONS FOR SUMMARY JUDGMENT

          ALEX J. SMALLS, CHIEF JUDGE

          This case was originally filed in the Delaware Court of Chancery and arises out of three consumer credit contracts. On August 15, 2017, the Chancery Court transferred the case to the Court of Common Pleas pursuant to 10 Del. C. § 5702.[1] Presently before the Court are Cross-Motions for Summary Judgment. On December 15, 2017, Petitioners filed their Opening Brief in Support of Vacating Arbitration Awards[2] On December 22, 2017, a joint stipulation regarding supplemental briefing was filed. On January 15, 2018, Respondents filed their Response in Opposition to Summary Judgment and Cross-Motion for Summary Judgment[3] On February 15, 2018, Petitioners filed their Reply Brief in Further Support of Vacating Arbitration Awards.[4] And, on March 15, 2018, pursuant to the scheduling order, Respondents notified the Court that they would not be filing a reply brief.

         Petitioners request that this Court vacate the arbitration awards. Respondents request that this Court confirm the arbitrator's awards, enter judgment, and reassess attorneys' fees and costs in light of the current actions. The Court's determination of the dispute is limited to whether the Arbitration Awards should be confirmed or vacated.[5] This is the Court's Memorandum Opinion after consideration of the pleadings and supplemental briefing.

         I. Facts & Procedure

         Petitioner Auto Equity Loans of Delaware, LLC ("AEL") and Petitioner David Levi ("Levi") (collectively "Petitioners") entered into a "series" of nearly identical loan agreements with Respondent Joseph Baird ("Respondent Baird")-the final being the Secondary Motor Vehicle Finance Contract Loan and Security Agreement. Petitioners entered into a Secondary Motor Vehicle Finance Contract Loan and Security Agreement with Respondent Alton Griffin ("Respondent Griffin"). Petitioners also entered into a Secondary Motor Vehicle Finance Contract Loan and Security Agreement with Respondent Jeannine Medora ("Respondent Medora") (collectively "Respondents"). Both loan agreements were signed at an AEL office in Delaware. The parties agreed that the loan agreements "shall be governed by the laws of the State of Delaware."[6] The signatories also agreed to resolve certain disputes by arbitration and that the "arbitration shall take place in the State of Delaware."[7]

         After the loan agreements were executed, and prior to leaving AEL's Delaware office, Respondents received their respective loan amounts under the agreements. At some point during the repayment period (without any apparent triggering dispute), Respondents filed separate Demands for Arbitration with the American Arbitration Association ("AAA"), requesting that Pennsylvania law apply to the loan agreements instead of the contractual provisions applying Delaware law. On January 24, 2017, the AAA appointed arbitrator held an evidentiary hearing for Respondent Medora. And on March 19, 2017, the arbitrator issued an award in favor of Respondent Medora. On February 2, 2017, the AAA appointed arbitrator held an evidentiary hearing for Respondent Griffin. And on March 23, 2017, the arbitrator issued an award in favor of Respondent Griffin. On March 8, 2017, the same AAA appointed arbitrator held an evidentiary hearing for Respondent Baird. And on March 21, 2017, the arbitrator issued an award in favor of Respondent Baird.

         A. Respondent Medora

         On March 19, 2017, the arbitrator made findings of fact and law in the arbitration award for Respondent Medora.[8] The arbitrator found that Respondent Medora, a Pennsylvania resident, viewed an internet advertisement while in Pennsylvania for title loans by AEL.[9] AEL has offices in Delaware and is licensed and regulated by the Delaware State Bank Commissioner.[10] Respondent Medora traveled from Philadelphia, Pennsylvania to AEL's office in Wilmington, completed a loan application in which she pledged her Pennsylvania titled vehicle as collateral and signed a loan agreement for $390.00.[11] She made no payments on the loan.[12] The arbitrator preliminarily noted that Respondent had withdrawn Counts I (Unconscionability), III (Pennsylvania Unfair Trade Practices and Consumer Protection Law), and V (Racketeer Influenced and Corrupt Organizations Act); thus, only Count II (Pennsylvania Loan Interest and Protection Law) and Count IV (Truth in Lending) were at issue.[13]

         Regarding Count II, the arbitrator analyzed the cases "cited in the parties' legal memoranda and oral arguments."[14] The arbitrator focused particularly on Kaneff v. Delaware Title ljoans, Inc., '[15] Georgia v. Total Asset Recovery, Inc., [16] Jaibur v. Auto Equity Loans of Delaware, LLC & David Tevi, and Salvatico v. Carbucks of Delaware, Inc. Applying all four cases, the arbitrator found that Pennsylvania substantive law applied to the parties' loan transaction.[17] Accordingly, the arbitrator stated:

Pursuant to the Federal Truth-in-Lending Act ("TILA") said loan agreement accurately disclosed a Finance Charge of $367.40 and an Annual Percentage Rate ("APR") of 243.35%, a finance charge and interest rate permitted by Delaware law but prohibited by Pennsylvania law. . . . Such a high interest rate loan is prohibited by Pennsylvania public policy and the Pennsylvania Loan Interest and Protection Law ("Act 6").[18]

         In applying Pennsylvania law, the arbitrator found that Petitioners were liable pursuant to the Pennsylvania Loan Interest and Protection Law ("PLIPL") as well as the Truth-in-Lending Act ("TILA").[19] Respondent Medora was awarded TILA statutory damages of $734.80, which equaled twice the unlawful finance charge of $367.40.[20] However, pursuant to PLIPL, Respondent Medora was required to pay Petitioners $407.87 in loan principal and lawful interest.[21] The arbitrator also awarded $4, 400.00 for Respondent Medora's attorney fees pursuant to TILA and PLIPL.[22]

         B. Respondent Baird

         On March 21, 2017, the arbitrator made findings of fact and law in the arbitration award for Respondent Baird.[23] The arbitrator found that Respondent Baird, a Pennsylvania resident, viewed an internet advertisement while in Pennsylvania for title loans by AEL.[24] AEL has offices in Delaware and is licensed and regulated by the Delaware State Bank Commissioner.[25] From May 2014 through August 2016, Respondent Baird traveled from Philadelphia, Pennsylvania to AEL's office in Wilmington nine times, completing various loan applications in which he pledged his Pennsylvania titled vehicle as collateral and signed nine loan agreements totaling $2, 025.00.[26] "Each subsequent agreement incorporated the balance due on the previous loan and in some instances extended new credit" to Respondent Baird.[27]He made payments totaling $4, 628.00 toward his balance.[28] Respondent Baird did not default on his loan.[29]

          In addressing Count I (Unconscionability), the arbitrator found in favor of Petitioners and against Respondent Baird regarding his claim of unconscionability.[30] And after addressing Respondent Baird's arguments against loan accounting procedure under the UCC, [31] the arbitrator addressed Count II (applicability of Pennsylvania Loan Interest and Protection Law), Count III (Pennsylvania Unfair Trade Practices and Consumer Protection Law), Count IV (Truth-in-Lending Act), and Count VI (Racketeer Influenced and Corrupt Organizations Act).

         Regarding Count II, the arbitrator analyzed the cases "cited in the parties' legal memoranda and oral arguments."[32] The arbitrator focused particularly on Kaneff v. Delaware Title Toans, Inc., Georgia v. Total Asset Recovery, Inc., Jaibur v. Auto Equity Loans of Delaware, LLC. & David Levi, and Salvatico v. Carbucks of Delaware, Inc. Applying all four cases, the arbitrator found that Pennsylvania substantive law applied to the parties' loan transaction.[33] Accordingly, the arbitrator stated:

Pursuant to the Federal Truth-in-Lending Act ("TILA") said loan agreements accurately disclosed the various Finance Charges and an Annual Percentage Rate[] ("APR") of approximately 180.00%, finance charges and interest rates permitted by Delaware law but prohibited by Pennsylvania law. The Finance Charge on the final current loan is $794.00. Such a high interest rate loan is prohibited by Pennsylvania public policy and the Pennsylvania Loan Interest and Protection Law ("Act 6").[34]

         In applying Pennsylvania law, he found that Petitioners had violated the Unfair Trade Practices and Consumer Protection Law ("UTPCPL"), which "prohibits making certain misrepresentations that are fraudulent or deceptive."[35] Because the arbitrator found that Pennsylvania law applied, he also found Petitioners liable under the Truth-in-Lending Act ("TILA") for "misstating the correct rate chargeable, " and under the Racketeer Influenced and Corrupt Organizations Act ("RICO") for the "collection of unlawful debt through an enterprise."[36] The arbitrator awarded Respondent $7, 269.00 for PLIPL statutory damages, $500.00 for UCC statutory damages, $1, 588.00 for TILA statutory damages, and $6, 600.00 in attorney fees.[37] Respondent Baird was required to pay Petitioners $604.00 in loan principal and lawful interest.[38]

         C. Respondent Griffin

         On March 23, 2017, the arbitrator made findings of fact and law in the arbitration award for Respondent Griffin.[39] The arbitrator found that Respondent Griffin, a Pennsylvania resident, viewed an internet advertisement while in Pennsylvania for title loans by AEL.[40] AEL has offices in Delaware and is licensed and regulated by the Delaware State Bank Commissioner.[41] Respondent Griffin traveled from Norristown, Pennsylvania to AEL's office in Wilmington, completed a loan application in which he pledged his Pennsylvania titled vehicle as collateral and signed a loan agreement for $3, 590.00.[42] He made only one payment of $437.73 towards the loan.[43] Because of Respondent Griffin's failure to pay, his vehicle was lawfully repossessed at his place of employment in Pennsylvania.[44]

         After addressing Respondent Griffin's arguments against the vehicle sale procedure under the UCC, [45] the arbitrator addressed Count II (applicability of Pennsylvania Loan Interest and Protection Law), Count III (Pennsylvania Unfair Trade Practices and Consumer Protection Law), and Count VI (Racketeer Influenced and Corrupt Organizations Act).[46]

         Regarding Count II, the arbitrator analyzed the cases "cited in the parties' legal memoranda and oral arguments."[47] The arbitrator again focused on Kaneff v. Delaware Title Loans, Inc., Georgia v. Total Asset Recovery, Inc., ]aibur v. Auto Equity Toans of Delaware, JLLC & David Levi, and Salvatico v. Carbucks of Delaware, Inc. The arbitrator found that Pennsylvania substantive law applied to the parties' loan transaction.[48] The arbitrator stated:

Pursuant to the Federal Truth-in-Lending Act ("TILA") said loan agreement accurately disclosed a Finance Charge of $4289.14 and an Annual Percentage Rate ("APR") of 121.67%, a finance charge and interest rate permitted by Delaware law but prohibited by Pennsylvania law. Such a high interest rate loan is prohibited by Pennsylvania public policy and the Pennsylvania Loan Interest and Protection Law ("Act 6").[49]

         Accordingly, he found that Petitioners had violated the Unfair Trade Practices and Consumer Protection Law ("UTPCPL"), which "prohibits making certain misrepresentations that are fraudulent or deceptive."[50] The arbitrator also found Petitioners liable under the Racketeer Influenced and Corrupt Organizations Act ("RICO") for the "collection of unlawful debt through an enterprise."[51] The arbitrator awarded Respondent $1, 221.00 for PLIPL statutory damages, $4, 648.00 for UCC statutory damages, $12, 000.00 for UTPCPL statutory damages, and $8, 000.00 in attorney fees.[52] Respondent Griffin was required to pay Petitioners $3, 475.00 in loan principal and lawful interest.[53]

         II. Standard of Review

         This Court recently outlined the standard applicable to cross-motions for summary judgment:

"When opposing parties make Cross Motions for Summary Judgment, neither party will be granted summary judgment unless no genuine issue of material fact exists and one of the parties is entitled to judgment as a matter of law." Court of Common Pleas Civil Rule 56(c) provides that "[t]he judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Diverging from the Superior Court's Civil Rule 56(h), Court of Common Pleas' Civil Rule 56 adheres to the original approach of addressing cross-motions for summary judgment. The original approach to cross-motions for summary judgment, as previously articulated by the Superior Court and currently followed by the Court of Common Pleas is as follows:
[T]he Court notes that where the parties have filed cross-motions for summary judgment, as here, "the standard for summary judgment 'is not altered." "Moreover, the existence of cross motions for summary judgment does not act per se as a concession that there is an absence of factual issues." "Rather, a party moving for summary judgment concedes the absence of a factual issue and the truth of the nonmoving party's allegations only for the purposes of its own motion, and does not waive its right to assert that there are disputed facts that preclude summary judgment in favor of the other party." "Thus, the mere filing of a cross motion for summary judgment does not serve as a waiver of the movant's right to assert the existence of a factual dispute as to the other party's motion."[54]

         III. LAW

         Delaware's Uniform Arbitration Act ("UAA")[55] sets forth five exclusive allowances for the vacation of an arbitration award:

(1)The award was procured by corruption, fraud or other undue means;
(2) There was evident partiality by an arbitrator appointed as a neutral except where the award was by confession, or corruption in any of the arbitrators or misconduct prejudicing the rights of any party;
(3) The arbitrators exceeded their powers, or so imperfectly executed them that a final and definite award upon the subject matter submitted was not made;
(4)The arbitrators refused to postpone the hearing upon sufficient cause being shown therefor, or refused to hear evidence material to the controversy, or otherwise so conducted the hearing, contrary to the provisions of § 5706 of this tide, or failed to follow the procedures set forth in this chapter, so as to prejudice substantially the rights of a party, unless the party applying to vacate the award continued with the arbitration with notice of the defect and without objection; or
(5) There was no valid arbitration agreement, or the agreement to arbitrate had not been complied with, or the arbitrated claim was barred by limitation and the party applying to vacate the award did not participate in the arbitration hearing without raising the objection. . . .[56]

         Petitioners have asserted that the arbitrator "exceeded [his] powers" by applying Pennsylvania law to the arbitration proceeding and finding them liable for violations of the UTPCPL, TILA, and RICO.[57]

         The applicable standard for vacating an award under both the Federal Arbitration Act and the UAA is "manifest disregard."[58] That is, "[arbitrators who act in 'manifest disregard of the law' are deemed to have exceeded their authority under Section 5714(a)(3) . . . [and] the Court may vacate the arbitration award."[59] The Delaware Supreme Court has defined this standard as applied under § 5714(a)(3):

The manifest disregard standard requires a party seeking vacatur to prove that the arbitrator was "fully aware of the existence of a clearly defined governing legal principle but refused to apply it, in effect, ignoring it." To meet this standard, the evidence must establish "that the arbitrator (1) knew of the relevant legal principle, (2) appreciated that this principle controlled the outcome of the disputed issue, and (3) nonetheless willfully flouted the governing law by refusing to apply it."
An arbitrator's awareness of the contract language, however, does not prove that the arbitrator "knew of the relevant legal principle" or "appreciated that this principle controlled the outcome of the dispute." Knowledge of the operative legal principle and its proper application can be inferred only "if the court finds 'an error that is so obvious that it would be instantly perceived as such by the average person qualified to serve as an arbitrator.' " "[A]s long as the arbitrator is even arguably construing or applying the contract and acting within the scope of his authority, that a court is convinced that he committed serious error does not suffice to overturn his decision."[60]

         With respect to errors of fact or law, Delaware courts have stated:

To successfully convince the Court to vacate the award of an arbitration panel, the movant must show "something beyond and different from a mere error in the law or failure on the part of the arbitrators to understand or apply the law." This Court has noted that an arbitration panel's decision may be vacated if the panel, "in manifest disregard of the law, [was] cognizant of the controlling law but clearly chose to ignore it in reaching [its] decision" This Court has also noted, however, that "[m]ere error of law or fact is ... not sufficient grounds to vacate an[] award, " and that "[i]t is recognized that inaccuracies as to the law or facts are possible and their existence is accepted implicitly [in] an agreement to submit the dispute to arbitration." In sum, "the Court is not to pass an independent judgment on the evidence or applicable law, " and "[i]f any grounds for the award can be inferred from the facts on the record, the Court must presume that the arbitrator did not exceed his authority and the award must be upheld."[61]

         Delaware courts have warned that '"review of an arbitration award is one of the narrowest standards of judicial review in all of American jurisprudence.'"[62] The Court is to presume that the arbitrator acted "within the scope of [his] authority, " and "resolve all doubts in favor of the arbitrator."[63]

          IV. Parties' Contentions

         A. Petitioners' Arguments

         Petitioners assert that the arbitration award should be vacated because the arbitrator manifestly disregarded the law when he: (1) ignored the plain terms of the loan agreements and/or failed to perform a choice of law analysis, (2) ignored controlling precedent that he previously relied upon when ruling in prior arbitrations and based his decision on claims withdrawn or abandoned by Respondents, (3) disregarded the commerce clause of the United States Constitution, and (4) applied the UTPCPL, RICO and TILA retroactively without analysis.[64] Petitioners' arguments (1) and (2) are moored in the arbitrator's choice-of-law analysis. Hence, the Court will mainly focus on this facet of the arbitration awards.

         1. The Arbitrator Ignored the Choice of Law Provision In the Loan Agreements

         Petitioners argue that manifest disregard occurred when the arbitrator failed to follow the terms of the contracts.[65] Petitioners assert that the arbitrator cannot find each contract's plain language to apply Delaware law and then, in the same award, apply Pennsylvania law to the transaction.[66] In fact, Petitioners argue that Respondents carried the burden of raising the issue of Pennsylvania law's applicability, citing to Carlyle Investment Management L.L.C. v. Moonmouth Company.[67] They argue that this application "defies both logic and law" because Petitioners presented the arbitrator with numerous precedents on the enforceability of a choice-of-law provision that applies Delaware law.[68] Likewise, in February 2011, the arbitrator applied Delaware law in a similar arbitration.[69]

         Alternatively, Petitioners assert that even if the arbitrator had ignored the plain language and engaged in a choice-of-law analysis, he would have found Delaware law applicable.[70] Petitioners argue that Delaware would prevail as the appropriate forum because-when determining the appropriate choice-Restatement (Second) of Conflict of haws § 188 focuses on the place of contract, place of negotiation, place of performance, location of the subject matter, and the domicile or place of incorporation of the parties.[71]

         2. The Arbitrator Relied On Improper Case Law

         Petitioners assert that the arbitrator relied on "four inapposite Pennsylvania cases" for his analyses.[72] Petitioners assert that Kaneff, Gregoria, Jaibur and Salvatico provide no guidance for the current circumstances.[73] Petitioners take issue with the arbitrator's reliance on Kaneff because they argue Kaneff did not address the substantive question at issue here, i.e. whether Delaware law applies to a loan agreement with a strong connection to Delaware.[74] Petitioners read Kaneff as addressing only whether arbitration should be enforced or the case remain in federal court.[75] Further, Petitioners read the case as only involving a plaintiffs claim of unconscionability.[76]

         Petitioners distinguish Gregoria because it concerned a motion to dismiss, which carries a lenient review standard, and focused on repossession concerns.[77] Petitioners also argue that the Court was at a disadvantage when it discussed unconscionability because it did not possess sufficient evidence on the record.[78] Finally, Petitioners argue that the Gregoria court never made a final choice-of-law decision because the case was dismissed with prejudice, as the plaintiffs failed to join an appropriate party and arbitrate the claims.[79]

         Regarding Jaibur, Petitioners argue that the Court's Order in that case concerned a ruling on preliminary objections, and provided no legal analysis for its decision.[80] Petitioners similarly raise issue with the arbitrator's reliance on Salvatico since the case is not analogous and lacks any rationale to aid the arbitrator in making a decision.[81] Further, the factual history before the Salvatico court concerned one connection with Delaware, and the claims brought focused on unconscionability.[82]

         B. Respondents' Arguments

         Respondents focus on Pennsylvania's fundamental policy against usury contracts, and the narrow standard of review for arbitration awards. Specifically, Respondents assert that: (1) the arbitrator properly determined that the Delaware choice-of-law clauses in the contracts were not applicable, (2) the arbitrator did not exceed his authority, (3) whether the arbitrator performed a reasonable choice-of-law analysis is beyond the standard of review, (4) applying Pennsylvania law in this case does not violate the United States Constitution, and (5) the arbitrator did not retroactively impose a new rules of law.[83] Respondents also move for summary judgment.[84]

         1. The Arbitrator's Choice-of-law Analysis Was Proper

         Respondents argue that the arbitrator was well within his rights to disregard the contracts' choice-of-law provisions and follow Kaneff, Gregoria, and Salvatico.[85] Respondents assert that these cases determined that Pennsylvania would prevail in a choice-of-law analysis because it had the greater interest in the harmful effects of the transactions.[86] Mainly, that Pennsylvania has a fundamental policy against usury contracts and the Respondents are Pennsylvania consumers.[87] Concurrently, Respondents argue that Delaware's interest is simply to "protect[] one of its license lenders."[88] Respondents argue that, in the end, the arbitrator was presented with arguments from both sides regarding the appropriate choice-of-law conclusion and he sided with Respondents.[89]

         2. The Arbitrator Did Not Exceed His Authority

         Respondents disagree with Petitioners' assertion that the arbitrator's decisions were based in unconscionability.[90] Further, Respondents argue that the appropriate standard for reviewing arbitration awards prevents the Petitioners from dissecting the case law.[91]Nevertheless, Respondents engage in a similar analysis. They argue that each case involved a substantive ruling that arrived at the heart of the issue in these cases. According to Respondents, Kaneff found Pennsylvania law to apply to a loan agreement with a high interest rate, enforcing the arbitration clause as not unconscionable under Pennsylvania law.[92]Respondents read Gregoria to apply Pennsylvania law to a loan agreement pursuant to Kaneff.[93]Likewise, Salvatico and Jaibur applied Pennsylvania law over Delaware law when high interest loans and Pennsylvania borrowers were involved.[94] Because of these similarities, Respondents assert that the arbitrator's decisions were rationally based.[95]

          3. The Arbitrator's Choice-of-law Analysis Is Beyond the Standard of Review

         Respondents argue that the arbitrator's analysis is beyond the scope of review because it had a "rational basis."[96] Respondents note that the Pennsylvania contacts were sufficient for the arbitrator's choice-of-law analysis to balance in Pennsylvania's favor.[97] These contacts involved Pennsylvania borrowers, Pennsylvania collateral, and Pennsylvania repossession.[98]In Respondents' view, Delaware's connection was only the execution of the loans.[99]

         V. Discussion

         The Petitioners' agitation with the arbitration awards stem from their belief that the arbitrator exceeded, or so imperfectly executed, his authority as arbitrator when he refused to follow the contracts' choice-of-law provisions. Contrarily, Respondents rely on 10 Del. C. § 5701 and the manifest disregard standard in tandem, arguing that the arbitrator possessed rational reasons for his decisions. Thus, he did not exceed, or imperfectly execute, his authority under 10 Del. C. § 5714. For the reasons discussed below, I find that the arbitrator exceeded his authority and manifestly disregarded the law in applying Pennsylvania law to the loan agreements of Respondent Medora and Respondent Griffin. Therefore, these two arbitration awards are vacated.

          This Court will apply Delaware's choice of law rules as Petitioners commenced this action in a Delaware court based on the belief that Delaware law applies.[100] Delaware's choice of law analysis begins with the question whether the "parties made an effective choice of law through their contract."[101] To find the contractual provision effective, the Court applies the "most significant relationship" test which is found in the Restatement (Second) of Conflict of Laws § 187.[102] Section 187 states:

(2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either
(a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or
(b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of § 188, would be the state of the applicable law in the absence of an effective choice of law by the parties.[103]

         In determining which state has a materially greater interest under § 187, the Court refers to Restatement (Second) of Conflict of Laws § 188. Section 188 states in relevant part:

(2) In the absence of an effective choice of law by the parties (see § 187), the contacts to be taken into account in applying the principles of § 6 to determine the law applicable to an issue include:
(a) the place of contracting,
(b) the place of negotiation of the contract,
(c) the place of performance,
(d) the location of the subject matter of the contract, and
(e) the domicil, residence, nationality, place of incorporation and place of business of the parties.
These contacts are to be evaluated according to their relative importance with respect to ...

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