803 F. Supp. 2d 209
E.D.N.Y2011Background
- Wausau issued two workers' compensation and employers' liability policies to Horizon for 2008 and 2009.
- Horizon is the first named insured; numerous other insureds are named as additional insureds across the policies.
- Nine insureds are New York domiciliaries; others are in Pennsylvania or Delaware; policies issued from New York and countersigned there.
- Wausau alleges defendants failed to pay outstanding premiums and assessments for the 2008 policy and that the 2009 policy was terminated for failure to provide a letter of credit.
- Plaintiff seeks the total amount due under both policies, plus interest and costs.
- Defendants assert a counterclaim and an affirmative defense for negligent handling of workers' compensation claims, seeking damages and fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Which law governs the counterclaim and defense? | New York law applies to the dispute overall. | Pennsylvania and Delaware law apply to their claims. | New York law applies to the counterclaim and affirmative defense. |
| Can multiple states' laws apply to a single insurance policy? | No; one state's law should apply per policy. | Yes; each insured's domicile could dictate different laws. | One state's law applies to each policy; applying multiple states' laws is inappropriate. |
| What is the appropriate law choice framework for this insurance contract context? | Apply the center-of-gravity/contacts approach under New York choice-of-law. | Consider domicile contacts of all insureds to determine applicable law. | New York has the most significant contacts; NY law governs both policies. |
Key Cases Cited
- Foster Wheeler Corp. v. Gen. Elec. Co., 36 A.D.3d 17 (1st Dep't 2006) (multistate insured contracts; one state's law per policy; domicile consideration)
- Zurich Ins. Co. v. Shearson Lehman Hutton, 84 N.Y.2d 309 (1994) (location of insured risk and Restatement § 193 guidance in choice of law)
- Maryland Casualty Co. v. Continental Casualty Co., 332 F.3d 145 (2d Cir. 2003) (center-of-gravity approach to conflicts of laws and contacts weighing)
- Schwartz v. Liberty Mutual Ins. Co., 539 F.3d 135 (2d Cir. 2008) (consideration of insured risk location and other factors toward NY law)
- O'Neill v. Yield House Inc., 964 F.Supp.806 (S.D.N.Y. 1997) (application of choice-of-law rules in multistate policy context)
- Dunlap v. State Farm Fire & Casualty Co., 878 A.2d 434 (Del. 2005) (recognition of implied covenant influences in insurance contexts)