FIFTY STATE SURVEY OF CHOICE OF LAW RULES
IN INSURANCE COVERAGE LITIGATION
By Stephen D. Coggins Footnote1
While conflict of law issues are not common in most insurance claims, it is quite another matter when multiple policyholders, insurers and claims are involved, especially when losses occur over extended periods of time in different locations. In these cases, both insureds and insurers expend considerable resources in delving through the complex choice of law rules in applicable states. See "Manual for Complex Insurance Coverage Litigation," at xix-xx, 3-5 (Prentice-Hall Law in Business, 1993). Unquestionably, the choice of law determination can dictate the outcome. Footnote2 Recognizing the complexity and importance of this task, TIPS offers this fifty state survey in the hope it will save many research hours and costs.
Still, only so much work can be saved by this survey. The survey's summary merely gets the proverbial "foot in the door." If choice of law questions are germane to your case, then the chances are that your facts are many and complicated. Moreover, once you look up a particular state's choice of law principles in this survey, you will be struck by their ambiguity. This makes a prompt choice of law determination difficult, perhaps even impossible. Footnote3
Currently in vogue across the nation are carefully
crafted "balance of interests" models for resolving
choice of law issues. A paradigm of jurisprudential fairness,
the models avoid every appearance of arbitrariness. However,
these "balancing of interests" tests (whether
called "significant contacts," "significant
relationships," "governmental interest," or
"center of gravity" tests) all weigh confusing,
imprecise and conflicting standards. Even those states
adhering to the bright-line "place of contract"
test torture the rule with enough exceptions to deprive it of
any clarity.
One might think that the ambiguity could be resolved
by express choice of law provisions in insurance policies.
Such terms have indeed been enforced; still, a court might be
influenced by the Restatement (Second) of Conflict of Laws,
Section 187, which provides that the party's choice of law
governs unless (1) the chosen state has no "substantial
relationship" to the parties or the transaction; or (2)
application of the chosen law would be "contrary to a
fundamental public policy of the state with the materially
greater interest" in the issue in dispute. Moreover,
Section 193 of The Restatement [regarding contracts of fire,
surety or casualty insurance] provides:
Start_Block"the validity of such contracts and the rights created thereby are determined by the local law which the parties understand to be the principal location of the insured risk during the term of the policy, unless with respect to the particular issue, some other state has a more significant relationship . . . to the parties and their transaction, in which event the local law of the other state will be applied."
Consequently, an express choice of law clause might be ignored in certain contexts, adding still nother element of uncertainty.
One thus wonders if the uncertainty inherent in the "balancing of interests" model is a mirage. Posing as an oasis of judicial fairness, it can lure our clients to drink bitter inefficiency and uncertainty. The weighed factors are so vague and inconsistent that two particular tribunals hearing the same case can reach opposite results, depending on the particular values held by the court. The fact that the court goes through a process of "checking off" a list of factors may not guarantee fairness any more than unbridled discretion.
For we lawyers and our clients, this is the hand
that has been dealt us. We must play it to the best of our
ability. We hope what follows helps you play the best hand
possible. For ease of use, the survey is divided into two
parts. First, there is a description of each applicable test,
with a listing of each state following that test. Second,
there is an attached listing of the states in alphabetical
order with the particular choice of law principle adopted by
that state described briefly with citations.
A. CHOICE OF LAW APPROACHES.
1. Traditional Approach: Lex Loci Contractus
("The Place of the Contract")
Many states still pay homage to the traditional lex loci contractus conflict of law principle, which applies the underlying substantive law of the state where the contract was "entered." Generally speaking, a contract is entered where "the last act necessary to complete the contract" occurred.
At first blush, the traditional rule has the appeal
of certainty. However, many cases ingraft onto the rule
enough nuances to render certainty an illusion. For instance,
the states often differ on what is the "last act
necessary to complete the contract." The place of
application, residence of the insured, where the premium was
paid, where the premium was received, and the place a policy
was countersigned all enjoy support as pivotal factors.
Moreover, some states signal that the "place of contract" rule will be readily discarded should appropriate facts present themselves to the court. E.g., Iones v. State Farm Mutual Automobile Insurance Company, 509 N.W.2d 829, 833 (Mich.Ct.App. 1993) [if the court of last resort in the foreign state has not stated the applicable foreign law with "absolute certainty" then Michigan law will apply]; Nationwide Mutual Insurance Company v. Walter, 434 A.2d 164, 167 (Pa. 1981) ["significant relationship test" likely to be adopted in the future].
In addition, some states have statutes specifying that the state where an application is taken is deemed to be the place where the insurance contract is made. E.g., Alabama Code, Sec. 27-14-22 (1975); North Carolina General Statute § 58-3-1. Moreover, some states statutorily provide that the location of the insured property is deemed to be the place of contract. E.g., N.C.Gen.Stat. § 58-3-1; South Carolina Code Annot. § 3861-10 (Lawyer Co-op, 1993).
Among the states clinging to lex loci contractus are: Alabama, Arkansas, Florida, Kansas, Maine, Michigan, Nevada, North Carolina, Pennsylvania, South Carolina, South Dakota, and Tennessee.
2. If Execution and Validity is Issue, Then Law of the State of Contracting Applies: If Performance of the Policy is in Question, Then Place of Performance Applies.
Other states take a more surgical approach than the bright line lex loci contractus rule. These states examine whether the issue is one of validity and meaning of the contract. In that instance, the state may apply the law of the state where the contract was made. If, however, the issue is one relating to the performance under the insurance policy, then the law of the state where performance was to take place applies. States following this approach include Connecticut, Georgia, Louisiana, Montana, Rhode Island, and Wyoming.
3. The "Balancing of Interests or
"Significant Relationship" Test.
Modern cases tend to discard more rigid territorial rules in favor of a more flexible and analytical framework reflecting the Restatement (Second) of Conflict of Laws, Sections 6 and 188. The goal is to determine which state has the most "significant relationship" to dispute. The Restatement lists the following factors to be taken into account when choosing the applicable state law:
a. The needs of the interstate and international systems;
b. The relevant policies of the forum;
c. The relevant policies of other interested states and the relative interests of those states in the determination of the particular issue; [To determine the interest of the states, one looks to (1) the place of contracting; (2) the place of negotiation of the contract; (3) the domicil, residence, nationality, place of incorporation, and place of business of the parties. Restatement (Second) of Conflicts of Laws, § 188(2).]
d. The protection of justified expectations;
e. The basic policies underlying the particular field of law;
f. Certainty, predictability and uniformity of result; and
g. Ease in the determination and application of the law to be applied.
Among the states that have adopted the "most significant relationship" test are: Alaska, Colorado, Footnote4 District of Columbia, Footnote5 Idaho, Iowa, Kentucky, Maine, Missouri (state with most significant relationship is usually that state where "the risk is located"), Nebraska, New Hampshire, New Jersey, Ohio, Oklahoma (place of execution presumed to be the state with the most significant relationship), Texas (unless insurer and insured are both in Texas; then Texas law applies, regardless of the state with the most substantial relationship), Washington, and Wisconsin. Indiana's "most intimate contacts" test appears to be substantially the same as the "significant relationship" test.
Some states refer to a "center of gravity" test (New York and Utah) that appears in substance to be the "significant relationship" test.
Regardless of whether a state calls its test, a "significant contacts," "substantial relationship" or "center of gravity" analysis, the court weighs the place of contracting, place of negotiation, place of performance, the location and the subject matter of the contract, the domicile, residence, nationality, place of incorporation and place of business of the parties, all in an effort to determine which state's law has the higher stake in the controversy
4. Place of Risk.
Some states emphasize location of the particular risk. Among them are Massachusetts, Mississippi, North Carolina, South Carolina, Utah, Virginia, and West Virginia. (However, in motor vehicular insurance cases, West Virginia focuses upon the significant relationship test.)
5. Comparative Governmental Interest or Comparative Impairment Approach.
Under this approach, the court only weighs the
factors involved in the "substantial relationship"
test, but with a special emphasis on any competing interest
of the involved states. Mindful of federalism concerns,
courts applying this approach ask first whether there is in
fact a true conflict among the potential states' particular
laws. If a true conflict is isolated, the court looks to the
law of the state whose policy would be more greatly impaired
if that law were not applied. E.g., Bernhard v. Harrah's
Club, 546 P.2d 719 (Cal.), cert.denied. 429 U.S. 859, (1876).
Among the jurisdictions following this approach are
California, the District of Columbia and Minnesota.
With these choice of law approaches briefly explained, each state's approach is identified below in alphabetical order.
B. FIFTY-STATE SURVEY
1. ALABAMA.
Alabama applies the general rule that the law of the state where the contract was executed determines the rights and liabilities of the parties to the contract. Harrison v. Insurance Co. of North America, 318 So.2d 253, 257 (Ala. 1975). An Alabama statute provides that all contracts of insurance which are applied for within Alabama are deemed made within the state, and thus subject to Alabama's laws. Ala. Code § 27-14-22 (1975).
2. ALASKA.
Alaska has not addressed the appropriate test to apply in deciding choice of law issues in insurance contract actions. In Wear v. Farmer's and Merchant's Bank of Las Cruces, 605 P.2d 27, 31, n. 11 (Alaska 1990), however, Alaska used "the most significant relationship test" in an action on a promissory note to determine what law should govern.
3. ARIZONA.
Arizona uses the "most significant contacts" test to determine which law to apply in cases which require interpretation of an insurance contract. Smith v. Home Indemnity Co., 728 So.2d 666, 667 (Ariz.Ct.App. 1986). In deciding which State has "the most significant contacts," the following factors are considered: the place of contracting, the location of the insured chattel at the time of contracting, and the domicile of the insured. (This appears to be a "location of the insured risk" test.)
4. ARKANSAS.
Arkansas resolves choice of law questions in contract actions by application of its own laws to contracts "prepared and signed in Arkansas." Standard Leasing Corporation v. Schmidt Aviation, 576 S.W.2d 181, 184 (Ark. 1979). However, Arkansas has adopted the "most significant relationship" test for choice of law questions in tort actions. See e.g., Williams v. Carr, 565 S.W.2d 400 (Ark. 1978); Schlenner v. Firemen's Insurance Co., 730 S.W.2d 217 (Ark. 1987).
5. CALIFORNIA.
California utilizes the "governmental interest" approach to resolve choice of law issues in insurance coverage cases. Under this approach, the Court examines the respective interests of the litigants and the involved states, the place of contracting, the place of negotiation, the place of performance, the location of the subject matter of the contract, the domicile, the residence, the nationality, the place of incorporation, the place of business of the parties, the character of the contract, and the relevant purposes of the contract law under consideration. Stonewall Surplus v. Johnson Controls, 17 Cal.Rptr.2d 713, 718 (Cal.Ct.App. 1993).
6. COLORADO.
Colorado has adopted the "most significant relationship test" to apply in an insurance contract action. State Farm Mutual Auto Ins. v. Mandiola, 865 P. 2d 909, 911 (Colo.Ct.App. 1993); TPCL, Inc. v. United Nate Ins. Co., 44 F.3d 1484, 149-91 (10th Cir. 1995). Under this test, in the absence of an effective choice of law provision in a contract, the court should consider the place of negotiation of the contract, the place of performance, the location of the subject matter of the contract and the domicile or residence of the parties to determine which state bears the most significant relationship to the contract. In Wood Brothers Homes. Inc. v. Walker Adjustment Bureau, 601 P.2d 1369 (Colo. 1979), the Supreme Court further held that there is a presumption that the laws of the state where the contract is to be performed will apply.
7. CONNECTICUT.
Generally, Connecticut applies the law of the place where the contract was made in actions involving the validity and construction of the contract. Williams v. State Farm Mutual Automobile Ins. Co., 641 A.2d 783, 787 (Conn. 1994): However, if the contract is to have its operative effect or place of performance in a jurisdiction other than the place where it was entered into, Connecticut applies the law of the state of operative effect or performance in actions involving the contract's validity or construction. Breen v. The Aetna Casualty Assurety Companies, 220 A.2d 254 (Conn. 1966).
8. DELAWARE.
Delaware has adopted the "most significant contacts theory" of § 188 Restatement (Second) of Conflict of Laws (1971) to resolve choice of law questions in insurance coverage actions. Harper Ins. Co. v. Newmont Mining Corp., 564 A.2d 352, 356 (Del. 1989).
9. DISTRICT OF COLUMBIA.
Washington, D.C. applies the law of the state which has the "more substantial interest in the resolution of the issue" in a contract action. Fowler v. A&A Comp., 262 A.2d 344, 348 (D.C. 1970). Generally, this test results in application of the law of the state where the contract was executed. Young v. State Farm Mutual Automobile Insurance Company, 213 A.2d 890, 891 (D.C. 1965).
10. FLORIDA.
Florida applies the doctrine of lex loci contractus, which provides that the law of the jurisdiction where the contract was executed controls. Sturiano v. Brooks, 523 So.2d 1126, 1128 (Fla. 1988). This traditional approach has been used in actions involving automobile and life insurance polices despite Florida's adoption of the "most significant relationship" test in the tort context.
11. GEORGIA.
Georgia contract actions are governed by the law of the state where the contract was made when matters of execution, interpretation, or validity are at issue, and by the law of the state where it is to be performed when the issue is one concerning performance. Wallace v. Harrison, 304 S.E.2d 487, 489 (Ga.Ct.App. 1983).
12. HAWAII.
Hawaii has not addressed the rule to be applied to conflict of law questions in insurance coverage actions. However, Hawaii seems to look favorably upon the Restatement tests. See Ergo. Inc. v. Horizon Cargo Transport. Inc., 670 P.2d 1277, 1281 (Haw. 1983).
13. IDAHO.
In analyzing which state's law should be applied in the interpretation and construction of insurance contracts, Idaho has adopted the "most significant relationship test" of the Restatement (Second) of Conflict of Laws. Royal Globe Insurance Co. v. Royal Grove. etc., 594 P.2d 633, 636 (Idaho 1979).
14. ILLINOIS.
Illinois has adopted the "most significant contacts test" of the Restatement (Second) of Conflict of Laws § 188, to determine which law should apply in construing an insurance contract. International Surplus Lines Ins. Co. v. Pioneer Life Ins. Co. of Illinois, 568 N.E.2d 9, 14 (Ill.App.Ct. 1990).
15. INDIANA.
The law of the forum having the "most intimate contacts" with the facts determines which law governs an action on a contract in Indiana. Pennington v. American Family Ins. Group, 626 N.E.2d 461, 465 (Ind.Ct.App. 1993). The following factors are considered in determining the "most intimate contacts": the place of contract, the place of negotiation, the place of performance, the location of the subject matter, and the party's place of business. Dohm & Nelke v. Wilson Foods Corp., 531 N.E.2d 512,513 (Ind.Ct.App. 1988). Often, the state with the most "intimate contacts" in insurance contract actions is the state where the contract was executed. Pennington, 626 N.E.2d at 465 (an insurance contract was executed in the state where application is made, the premium is paid and the policy is delivered).
16. IOWA.
Iowa has adopted the Restatement (Second) of Conflict of Laws approach. Absent an effective choice of law by the parties, Iowa will apply the law of the jurisdiction with the "most significant relationship" to the transaction in dispute. Paul v. State Automobile & Casualty Underwriters, 296 N.W.2d 779, 781 (Iowa 1980).
17. KANSAS.
In resolving choice of law issues regarding contract construction, Kansas applies the rule of lex loci contractus, the law of the place of the making. Frasher v. Life Investor's Ins. Co., 796 P.2d 1069, 1071 (Kan. 1990).
18. KENTUCKY.
Kentucky applies the law of the state with "the most significant relationship" to the transaction and the parties in insurance coverage actions. Lewis v. American Family Ins. Group, 555 S.W.2d 579, 581 (Ky. 1977) (using this test will usually result in application of the law of the residence of the named insured).
19. LOUISIANA.
LA. Civ. CODE ANN. art. 10 (West 19**), provides that the effect of written instruments are governed by the laws of the state where executed; but if the acts are to have effect in another country, then they are regulated by the law of the country where such acts are to have effect. The language "where such acts are to have effect" is to be determined by application of the interest analysis stated in Restatement (Second) Conflict of Laws. Ark.LA-Tex. Timber Co, Inc. v. Georgia Casualty & Surety Co., 516 So.2d 1217 (La.Ct.App. 1987).
20. MAINE.
Maine has adopted the Restatement (Second) of Conflict of Laws (1971) approach to resolving choice of law questions. When insurance contract issues arise, Maine applies the law of the state which the parties understood was to be the principal location of the insured risk during the term of the policy, unless some other state has a more significant relationship to the transaction and the parties. Baybutt Construction Corp. v. Commercial Union Ins. Co., 455 A.2d 914, 918 (Me. 1983) [overruled on other grounds in Peerless Insurance Co. v. Brennon, 564 A.2d 383 (Me. 1989)].
21. MARYLAND.
Choice of law questions are resolved in Maryland by following the rule of lex loci contracts " The contract is deemed "made" where the last act necessary to make the contract binding is performed. Typically, the last act in forming an insurance policy is delivery and payment of premium. Commercial Union Ins. Co. v. Porter Hayden Co., 630 A.2d 261, 266 (Md. 1993).
22. MASSACHUSETTS.
In Hartford National Bank & Trust Co. v. United Truck Leasing Corp., 511 N.E.2d 637, 640, n.6 (Mass.App.Ct. 1987) applied the Restatement (Second) of Conflict of Laws, § 193 (1971) in holding that in an action on an insurance contract, it is appropriate to apply the law of the state where the insured risk is principally located.
23. MICHIGAN.
In Michigan, interpretation of a contract is governed by the law of the state in which the contract was entered. Jones v. State Farm Mutual Automobile Ins. Co., 509 N.W.2d 829, 833 (Mich.Ct.App. 1993). However, if the court of last resort in the foreign state has not stated the applicable foreign law with "absolute certainty," then Michigan law will apply to an action instituted in Michigan. Jones, 509 N.W. 2d at 833.
24. MINNESOTA.
Minnesota applies a five factor test to determine which state's laws will govern. Jepson v. General Casualty Co. of Wisconsin, 513 N.W.2d 467, 470 (Min. 1994). The five factors to be considered in an action involving an insurance contract are: (1) predictability of results; (2) maintenance of interstate and international order; (3) simplification of judicial tasks; (4) advancement of the forum's governmental interests; and (5) application of the better rule of law. Jepson, 513 N.W. 2d at 470, citing, Milkovich v. Saary, 295 Minn. 155 (1973).
25. MISSISSIPPI.
The Mississippi choice of law rule applicable to actions on insurance contracts is that the law of the state that the parties understood was to be the "principal location of the risk." Boardmen v. United Services Automobile Association, 470 So.2d 1024, 1033 (Miss. 1985).
26. MISSOURI.
Missouri has applied the Restatement (Second) Conflict of Laws §§ 188 and 193, which focus upon the law of the state which the parties understood to be the "principal location of the insured risk." Crown Center v. Occidental Fire & Casualty Co. of North Carolina, 716 S.W.2d 348, 357-358 (Mo.Ct.App.1986).
27. MONTANA.
In Montana, choice of law is governed by statute. Section 28-3-102 of the Montana Code Annotated provides that a contract is to be interpreted according to the law and usage of the place where it is to be performed; or if it does not indicate a place of performance, then according to the law and usage of the place where it is made. In the insurance context, unless the terms of the insurance contract states otherwise, the law of the place of performance controls its legal construction and effect, while the law of the place where the contract is made governs questions of execution and validity. Youngblood v. American States Ins. Co., 866 P.2d 203 ( 1993) citing Mont. Code Ann. § 28-3-102 (1992).
28. NEBRASKA.
Nebraska applies the Restatement (Second) approach to choice of law questions regarding the validity and interpretation of a contract. Powell v. American Charter Federal Savings and Loan Ass'n, 514 N.W.2d 326, 332 (Neb. 1994). The factors relevant to such a determination include the place of contracting, the place of negotiation, the place of performance, the location of the subject matter, and the domicile or residence of the parties. Powell, 514 N.W.2d at 331-332.
29. NEVADA.
Nevada applies the law of the situs of the insurance contract, unless this factor is outweighed by public policy concerns. Nevada courts have made favorable comments regarding the Restatement (Second) of Conflict of Laws analysis, so Nevada law on the subject may well evolve into full adoption of Restatement principles. Sotirakis v. United Service Automobile Association, 787 P.2d 788, 790 (Nev. 1990).
30. NEW HAMPSHIRE.
New Hampshire applies the law of the state with the "most significant relationship" to the contract. Glowski v. Allstate Ins. Co., 589 A.2d 593, 595 (N.H .1991).
31. NEW JERSEY.
Absent a choice of law provision, New Jersey applies the traditional rule of lex loci contractus. Buzzone v. Hartford Accident & Indemnity Co., 129 A.2d 561 (N.J. 1957). However, if another state has a dominant and significant relationship to the parties and the underlying issue, then the basic rule will yield to the laws of the other state. State Farm Mutual Automobile Ins. Co. v. Simmons Estate, 417 A.2d 488, 493 (N.J. 1980).
32. NEW MEXICO.
In State Farm Mutual Ins. Co. v. Conyers, 785 P.2d 986, 990 (N.M. 1989), the court refused to categorically reaffirm the traditional rule of lex loci contractus. However, the court also refused to adopt or reject for all cases the Restatement Second conflict of laws "significant relationship" test. Thus, the choice of law approach in New Mexico is undecided.
33. NEW YORK.
The "center of gravity" test determines the choice of law in New York contract actions. Under this approach, the court considers the following factors: the place of contracting, where the policy was written as evidence of the parties understanding regarding the principal location of the insured risk, and the interest of the forum state. Matter of Allstate Ins. Co. (Stolarz), 613 N.E.2d 936, 939 (N.Y. 1993).
34. NORTH CAROLINA.
North Carolina's insurance contract choice of law rules are statutory. The state applies its laws to all policies that are "made within the state." N.C.G.S. § 58-3- 1 (1991). Contracts of insurance that were applied for in North Carolina or that cover property, lives, or interests in North Carolina are deemed to be "made" within North Carolina. Id.
35. NORTH DAKOTA.
North Dakota uses the "significant contacts" approach to decide choice of law questions in contract cases. Plante v. Columbia Paints, 494 N.W.2d 140, 141-143 (N.D. 1992). Under this test, the following contacts are considered in determining the applicable law: the place of contracting, the place of negotiation of the contract, the place of performance, the location of the subject matter of the contract, and the domicile residence nationality, place of incorporation, and place of business of the parties.
36. OHIO.
Ohio follows the principles set forth in Restatement (Second ) of Conflict of Laws § 188 (1971) in resolving choice of law questions in contract actions. Morton International. Inc. v. Hubber Lns. Co., 607 N.E.2d 28, 34 (Ohio Ct.App.1992). Thus, the court examines the place of performance and the situs of the subject matter to determine which state bears the "most significant relationships to the insurance policy."
37. OKLAHOMA.
Oklahoma follows the traditional rule that applies the law of the state where the last act of the contract was made. Bohatulan v. Allstate Ins. Co., 820 P.2d 787 (Okla. 1991). However, Oklahoma recognizes two exceptions to this rule. First, if application of the other state's law violates public policy as expressed by the legislature or if application of the law of another state would effectively deprive the insured of benefits in an existing Oklahoma insurance contract, then Oklahoma will not apply the other state's law. Roby v. Bailey, 856 P.2d 1013, 1015 (Okla.Ct.App. 1993). Second, where another jurisdiction has the "most significant relationship," the "most significant relationship" test may be used to demonstrate the traditional rule is not adequate to protect the interests of the forum and the rights of the parties. Bohannan, 820 P. 2d at 796, n. 5.
38. OREGON.
Oregon courts look to the Restatement (Second) of Conflict of Laws for guidance. Hence, conflict of law questions in insurance actions must be resolved by the law of the state with the "most significant contacts." Industrial Indemnity v. Pacific Maritime, 777 P.2d 1385, 1386 ( Or.Ct.App. 1989). The terms of the insurance policy, the place of issuance, the location of the insurer's home office, and the location of the insured, determine which state has the more significant relationship to the parties and the insurance contract. Manaz v. Continental American Life Ins. Co., 843 P.2d 480, 482 (Or.Ct.App. 1992).
39. PENNSYLVANIA.
The traditional Pennsylvania rule is that the construction of a contract is governed by the law of the state where the contract was made. Crawford v. Manhattan Life Ins. Co. of New York, 221 A.2d 877, 880 (Pa. 1966). An insurance contract is made in the state in which the last act legally necessary to bring the contract into effect occurs . An insurance contract is "made" upon delivery. Although Pennsylvania has not had the opportunity to adopt the Restatement "significant relationship test" in a contract action, the court stated that adoption was likely. See Nationwide Mutual Insurance Co. v. Malta, 434 A.2d 164, 167 (Pa. 1981).
40. RHODE ISLAND.
In Rhode Island, contracts are governed by the laws of the state in which they are made, unless they are made with a view to performance in another state, in which case they will be governed by the law of such state. Matarese v. Calise, 305 A.2d 112, 118, n.4 (R.I. 1973).
41. SOUTH CAROLINA.
The South Carolina Code provides that all contracts of insurance on property, lives or interests in the state are considered to be made in state and are subject to laws of the state. S.C. Code Ann. § 3861-10 (Law. Co-op. 1993); See also Sangamo Weston. Inc. v. National Suretv Co., 414 S.E.2d 127 (S.C. 1992).
42. SOUTH DAKOTA.
South Dakota applies the law of the place where the contract was made, unless it is shown that it was the intention of the parties to be bound by the law of some other place. Greggs v. United Services Life Ins. Co., 117 N.W.2d 804, 806-07 (S.D. 1962).
43. TENNESSEE.
The general rule in Tennessee regarding choice law in contract actions is that the substantive law of the place where the contract was made governs the rights and obligations of the parties. Ohio Casualty Insurance Company v. Travelers' Indemnity Company, 493 S.W.2d 465 (Tenn. 1973).
44. TEXAS.
In the absence of either a valid contractual agreement between the parties regarding the applicable law, or a local statutory provision controlling the disposition of the choice of law question, Texas applies the Restatement's "significant relationship test." Duncan v. Cessna Aircraft Co., 665 S.W.2d 414 ( Tex. 1984). In American Assurance Co. v. Safwav Steel Products Co. Inc. A Div. of Figgi Intern, Inc., 743 S.W. 2d 693, 697 (Tex.Ct.App.1987), the court did not apply the most significant relationship test in construing the coverage of an insurance contract because a statute controlled the issue. Tex.Ins.Code Ann. § 21.42 (West 1981) (Any contract of insurance payable to any citizen or inhabitant of this state by any insurance company or corporation doing business within this state shall be held to be a contract made . . . under the laws of this state. . . .)
45. UTAH.
The nature of the rights and obligations under an insurance policy is governed by the law of the place where the contract was made. Gressler v. New York Life Ins. Co., 156 P.2d 212, 214 (Utah 1945).
46. VERMONT.
Vermont uses the "center of gravity" approach to resolve conflict of law issues. Boston Law Book Co. v. Hathorn, 127 A.2d 120, 125 (Vt. 1956). To determine the "center of gravity," courts examine the following factors: (a) the place of contracting; (b) the place of negotiation; (c) the place of performance; (d) the location of the subject matter of the contract; and (e) the domicile residence, nationality, place of incorporation and place of business of the parties. Pioneer Credit Corp. v. Carden, 245 A.2d 891, 894 (Vt. 1968). The place of contracting and the place of performance are the most important factors. Pioneer Credit Corp., 245 A.2d at 894.
47. VIRGINIA.
The Virginia Conflict of Law Rule requires application of the law of the place where the insurance contract is written and delivered. Buchanan v. Doe, 431 S.E.2d 289 (Va. 1993).
48. WASHINGTON.
Washington applies the "most significant relationship" test to determine which state's laws should apply in an contract action. Factors which indicate the "most significant contacts" include: the place of contracting, the place of negotiation of the contract, the place of performance, the location of the subject matter of the contract, the domicile, residence, nationality, place of incorporation, and place of business of the parties, the relevant policies and interests of the state, and the subject matter of the contract. Dairyland Ins. Co. v. State Farm Mutual Automobile Ins. Co., 701 P.2d 806, 808-809 (Wash.Ct.App. 1985).
49. WEST VIRGINIA.
The general rule in West Virginia regarding choice of law in contracts cases is to apply the law of the state where the contract was made and performed. General Electric Co. v. Kevser, 275 S.E.2d 289 (W.Va. 1981). However, in the motor vehicle insurance context, the laws of the state where the policy was issued and the principal risk was located govern, unless another state has a more significant relationship to the transaction and the parties. Lee v. Saliga, 373 S.E.2d 345 (W.Va. 1988).
50. WISCONSIN.
Wisconsin has adopted the "most significant relationship" test to determine which law to apply in insurance coverage actions. Belland by Rosenberg v. Allstate Insurance Co., 410 N.W.2d 611, 613-14 (Wis.Ct.App. 1987). The factors measuring this relationship include the place of contracting, the place of performance, the place of the subject matter of the contract, the domicile, nationality, place of incorporation, and place of business of the parties, the law under which the contract will be most effective, other contracts presented in the given case, and the policies of the competing jurisdictions. Belland by Rosenberg. 410 N.W.2d at 614.
51. WYOMING.
Wyoming has not expressly addressed the issue as to how to determine which state's law will govern in a contract action. However, Wyoming has addressed the issue under the U.C.C. See Cherry Creek Dodge. Inc. v. Carter, 733 P.2d 1024, 1027 (Wyo. 1987) (where negotiations and delivery occur in Wyoming, Wyoming law applies).
Mr. Coggins is a partner in the Raleigh office of Parker, Poe, Adams & Bernstein, where he specializes in insurance coverage, intellectual property and commercial disputes. He extends special thanks to Michele R. Vroman, Esquire of his office for her legal research.
A perfect illustration of this dynamic is Gilbert Spruance Company v. Pennsylvania Manufacturers Association Entrance Company, 629 A.2d 885 (N.J. 1993), which was a dispute over pollution coverage. The insured in that case sought to prevent the insurer from invoking the pollution exclusion clause by invoking the equitable doctrine of estoppel. The estoppel was premised upon representations made by the insurer to the applicable state insurance regulatory authority. If New Jersey law was deemed to apply, then the policyholder would likely prevail. See Morton International v. General Accident Insurance Company, 629 A.2d 831 (N.J. 1993), reh.den. (1994) [Held: insurers estopped from denying coverage based on the "sudden and accidental discharge" language of the pollution exclusion clause]; however, if Pennsylvania law applied, the victory would have likely gone to the insurer. See, Lower Paxon Township v. United States Fidelity and Guaranty Company, 557 A.2d 393, 399 (Pa.Sup., 1989).
See "Manual for Complex Insurance Coverage Litigation" at 4-7, 4-8.
Colorado presumes that the state with the most significant relationship is that state where a performance takes place. Wood Brothers Homes, Inc. v. Walker Adjustment Bureau, 601 P.2d 1369 (Colo. 1979).
The state with the most substantial relationship is generally thought to be the place where the contract was executed. Young v. State Farm Mutual Automobile Insurance Company, 213 A.2d 890, 891 (I).C. 1965).