First Department Chooses Connecticut as Law Governing Commercial Liability Policy

COMMERCIAL LIABILITY – CHOICE OF LAW
Liberty Surplus Ins. Corp. v. National Union Fire Ins. Co. of Pittsburgh, Pa.
(1st Dept., decided 11/5/2009)

In this insurer vs. insurer suit, defendant National Union moved to dismiss three causes of action of plaintiff's amended complaint, presumably arguing that New York rather than Connecticut law applied to render those causes of action non-viable. 

In AFFIRMING New York Supreme's order that had denied National Union's motion, the First Department held:

A contract of liability insurance is governed by "the local law of the state which the parties understood was to be the principal location of the insured risk" (Zurich Ins. Co. v Shearson Lehman Hutton, 84 NY2d 309, 318 [1994], quoting Restatement [Second] of Conflict of Laws § 193). Where the covered risks are spread over multiple states, courts will generally locate the risk in one state, namely, "the state of the insured's domicile at the time the policy was issued," and a "corporate insured's domicile is the state of its principal place of business" (Certain Underwriters at Lloyd's, London v Foster Wheeler Corp., 36 AD3d 17, 24-25 [2006], affd 9 NY3d 928 [2007]). The liability policies at issue in this action were issued by defendants to Hontz Elevator Company, which had operations in several states but maintained its principal place of business in Connecticut, the state of its incorporation. Accordingly, the subject policies, which do not contain choice-of-law provisions, are governed by Connecticut law. We further note that the accident giving rise to the underlying personal injury litigation occurred in Connecticut; that the subject policies contain amendatory endorsements required by Connecticut law but no New York endorsements; and that the record, while showing that Hontz had locations in Connecticut, Florida, Massachusetts and Rhode Island, gives no indication Hontz conducted any operations in New York.