Appellate Divisions Announce Differing Choice-of-Law Analyses for Insurance Claims

On January 28, 2014, the First Department issued a decision in Davis & Partners, LLC v. QBE Ins. Corp., 2014 NY Slip Op. 00449, discussing which state's law governed a liability policy covering multi-state risks.

Based on the "standard 'grouping of contacts' analysis," the court found that New York law applied because

[t]he contract between contractor Jansons Associates, Inc. and the construction manager was related to a project located in New York. . . . It appears to have been executed in New York. It required Jansons to carry insurance and to name Davis & Partners and RFD 425 Fifth Avenue, both New York entities, as additional insureds under the policy. It contains a choice-of-law provision naming New York as the forum and the governing law of choice. The 'occurrence' under the policy and the ensuing litigation occurred in New York. These factors outweigh the fact that Janson's principal place of business is in New Jersey. As the 'principal location of the insured risk,' New York has 'the most significant relationship to the transaction and the parties.'

On December 16, 2013, we blogged about a recent Second Department decision, QBE Ins. Corp. v. Adjo Contracting Corp., 2013 NY Slip Op. 08238, which took at different approach to the same choice-of-law question, holding that "the state of the insured's domicile should be regarded as a proxy for the principal location of the insured risk." The additional insureds under the policy at issue in Davis & Partners were New York entities, but the court did not take that factor as dispositive and instead examined the totality of the circumstances to determine the forum with the "most significant relationship to the transaction and the parties." These seemingly contradictory holdings illustrate the complexity of choice-of-law issues generally and in the context of insurance policies governing multi-state risks in particular.