Jackson v. State Farm: Enforcing Contractual Choice-of-Law Clauses that Import a Foreign Statute of Limitations into Alabama Litigation

Introduction

Court & Date: Supreme Court of Alabama, 20 June 2025 (Shaw, J.)

Parties: Eric Jackson (Appellant/Plaintiff); State Farm Mutual Automobile Insurance Company (Appellee/Defendant).

Procedural Posture: Appeal from a Rule 12(c) judgment on the pleadings entered by the Morgan Circuit Court dismissing Jackson’s claim for uninsured/under-insured motorist (UIM) benefits. The dismissal turned on a two-year contractual limitations period derived from Kentucky law and expressly incorporated into Jackson’s Kentucky-issued policies.

Key Issue: Whether Alabama courts will enforce a contractual choice-of-law clause that explicitly adopts a foreign statute of limitations—here, Kentucky’s two-year period under the Kentucky Motor Vehicle Reparations Act (KMVRA)—where doing so shortens the time otherwise allowed under Alabama’s six-year statute (§ 6-2-34, Ala. Code 1975) and appears, at first glance, to clash with Alabama’s anti-shortening statute (§ 6-2-15).

Summary of the Judgment

The Supreme Court of Alabama affirmed the trial court’s dismissal. It held that:

Jackson and State Farm, both Kentucky residents for contract purposes, contracted for Kentucky law—including Kentucky’s two-year statute of limitations—to govern UIM claims; and
Because the policies’ language unambiguously incorporated the KMVRA’s filing period, Alabama’s public-policy objections (chiefly § 6-2-15) did not override that contractual commitment.

Thus, Jackson’s UIM action, filed more than two years after the collision, was time-barred, even though Alabama’s own statute would have afforded six years.

Analysis

A. Precedents Cited and Their Influence

1. Galliher v. State Mutual Life Ins. Co. (1907)

Often invoked for the proposition that contractual clauses shortening Alabama’s statutory limitations are void under § 6-2-15. Jackson leaned heavily on Galliher. The Court distinguished it on two grounds:

No choice-of-law provision in Galliher: The contract was simply “made in Georgia,” leaving Alabama to apply lex loci contractus principles.
Galliher did not involve incorporation of a foreign limitation period by agreement; the defendant merely “pled the contract,” not Georgia’s statute.

2. Archie v. SoFi Lending Corp. (Ala. Civ. App. 2024)

Archie held that a generic “governed by X-state law” clause does not import procedural rules—like statutes of limitation—absent explicit reference. Jackson cited Archie’s “prevailing view” that limitations are procedural. The Court embraced Archie’s framework but emphasized its own critical distinction: the State Farm policies contain explicit language making the KMVRA period part of the contract.

3. Cherokee Ins. Co. v. Sanches (Ala. 2007)

Cited by State Farm to show Alabama’s deference to sister-state UIM policy choices and the enforceability of out-of-state contract terms.

4. State Farm Mut. Auto. Ins. Co. v. Riggs (Ky. 2016)

Key Kentucky precedent upholding the reasonableness of inserting the KMVRA’s two-year tort statute into UIM provisions. The Alabama Court borrowed Riggs’s policy rationale—efficiency, cohesion, and parity with tort actions—to deem the clause “reasonable” and thus not violative of public policy.

5. Federal District Court Decisions (e.g., AFC Franchising, LLC v. Fabbro, N.D. Ala. 2019)

Jackson pointed to these for persuasive authority. The Supreme Court implicitly rejected them as non-binding and factually distinguishable due to the absence of explicit incorporation language or because they involved Alabama-centric contracts.

B. The Court’s Legal Reasoning

Contractual Autonomy: Alabama honors parties’ express choice of law unless it “contravenes Alabama public policy in a substantial way.”
Specific vs. Generic Choice-of-Law Language: Generic language (“governed by Kentucky law”) would not import Kentucky’s limitations period, but the policies went further—“Legal action … may only be brought … within the period of time required by Kentucky law….” This moved the limitations period from to an .
Public-Policy Analysis:
- § 6-2-15 voids intra-Alabama contracts that shorten limitations; but Alabama has no overriding policy against parties contracting for their home state’s procedures.
- The KMVRA’s period serves legitimate policy goals (prompt litigation, unified tort and UIM processing).
Distinguishing Lex Loci Contractus & Forum Procedural Law: The Court reiterated that the forum’s procedural law normally governs, but parties can convert a procedural rule into a substantive contractual promise. Once so converted, the forum respects it.

C. Potential Impact

Insurance Litigation: Out-of-state insurers may rely on explicit policy language incorporating their home state’s shorter limitations period, thereby narrowing the window for Alabama-filed UIM suits on non-Alabama policies.
Contract Drafting: Drafters aiming to apply foreign procedural rules must insert language—as State Farm did—thereby avoiding Archie-style pitfalls.
Conflict-of-Laws Doctrine: The decision refines Alabama law by clarifying when a foreign limitations period moves from “procedure” (normally governed by the forum) to “contract substance.”
Forum-Shopping Considerations: Plaintiffs injured in Alabama but insured under foreign-state policies must reckon with potentially shorter contractual deadlines, making timely notice and filing critical.
Public-Policy Contours: The case signals willingness to subordinate § 6-2-15 to party autonomy when foreign contacts predominate and the contractual term mirrors a sister state’s statute.

Complex Concepts Simplified

UIM Coverage: Insurance that pays an insured for injuries caused by drivers who have no liability insurance or insufficient limits.
Statute of Limitations: The legal time limit for bringing a lawsuit. In Alabama, most contract actions have six years, but this can be shortened by contract Alabama public policy forbids.
Choice-of-Law Clause: A contractual provision selecting which state’s laws will govern disputes. If drafted broadly, it usually covers only substantive rules unless it unmistakably addresses procedure.
Lex Loci Contractus: Traditional doctrine applying the law of the state where a contract was made to issues of validity and interpretation.
Rule 12(c) Motion: A request for judgment on the pleadings. The court assumes all well-pleaded facts in the non-movant’s favor and decides if, as a matter of law, the movant prevails.

Conclusion

Jackson v. State Farm cements a practical, party-autonomy-driven exception to Alabama’s anti-shortening statute. When an insurance contract (or any contract) explicitly imports another state’s statute of limitations, and that state bears a substantial relationship to the parties and the transaction, Alabama courts will enforce the shorter period—even when Alabama’s own procedural law would provide more time. The ruling underscores the importance of careful contract drafting and prompt pursuit of UIM claims whenever out-of-state policies are involved. Future litigants must scrutinize choice-of-law and limitations clauses immediately; once two years (or another foreign period) elapses, Alabama courts are now firmly positioned to dismiss untimely suits.