Wednesday, February 17, 2010

U.S. District Court discusses choice of law issues

Last week I posted about Stonewall Ins. Co. v. Travelers Cas. & Sur. Co., __ F. Supp.2d __, 2010 WL 6395 (D. Mass.), in which Judge Harrington applied the Texas law of equitable contribution.

I have said before that Massachusetts choice of law rules as they apply to insurance coverage disputes amount to so much gibberish. Choice of law issues are even less clear when the dispute is not between an insurer and an insured--who entered a contract with each other and, at least in theory, had reasonable expectations about which state's law should interpret the contract--but between insurers of the same insured, who have no contract with each other.

In Stonewall, a dispute between insurers over allocation of defense costs, Judge Harrington summed up the choice of law doctrine: "Determining which jurisdiction's laws should control is not a technical analysis according to Massachusetts' choice-of-law doctrine; instead, the court takes a broader view, and considers the interests and facts relevant to the particular matter before the court." Now I totally get how to determine what state's law to apply--don't you?

Judge Harrington held that Texas law applied for three reasons. "First, the claims arise from products manufactured by the Key Houston Company, a Texas-based division of Jacksonville Shipyards, Inc. Second, the majority of the claims for which S & S paid defense costs are from Texas. Third, most importantly, Texas law firms generated the overwhelming majority of the defense costs."

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