Grouping of contacts

Matter of Matter of Unitrin Direct/Warner Ins. Co. v Brand, 2014 NY Slip Op 05887 [2nd Dept. 2014]

At the time of the accident, Collins maintained automobile liability insurance in Florida with Allstate Insurance Company with liability limits for bodily injury in the amount of $100,000 per person/$300,000 per occurrence and supplementary uninsured/underinsured motorist (hereinafter SUM) coverage for bodily injury in the amount of $100,000 per person/$300,000 per occurrence. Allstate tendered the bodily injury policy limit in the amount of $100,000 in settlement of Brand's claim.

At the time of the accident, Brand maintained automobile insurance coverage with the petitioner Unitrin Direct/Warner Insurance Company (hereinafter Unitrin) with policy limits for bodily injury also of $100,000 per person/$300,000 per occurrence and SUM coverage for bodily injury also of $100,000 per person/$300,000 per occurrence. Brand claimed that his injuries exceeded the limits of Collins' policy, and demanded from the American Arbitration Association in New York arbitration of a claim for SUM benefits under his Unitrin policy. In response to Brand's demand for arbitration, Unitrin moved for a permanent stay of arbitration on the ground that the SUM coverage was not triggered under New York law because the offending vehicle was not underinsured since Collins' bodily injury liability coverage under the Allstate policy equaled Brand's bodily injury liability coverage under the Unitrin policy. Unitrin argues that the "center of gravity"/"grouping of contacts" analysis demonstrates that New York is the forum that has the most significant contact to the dispute such that New York law should govern this matter. Brand contends, however, that under the "center of gravity"/"grouping of contacts" analysis, Florida law should control.

It is undisputed that this conflict of law question, although arising in the context of a motor vehicle accident, must be resolved by the conflict of law rules relevant to contracts, not torts (see Matter of Eagle Ins. Co. v Singletary, 279 AD2d 56). Generally, "the courts apply the more flexible center of gravity' or grouping of contacts' inquiry, which permits consideration of the spectrum of significant contacts' in order to determine which State has the most significant contacts to the particular contract dispute" (id. at 58-59, quoting Matter of Allstate Ins. Co. [Stolarz-New Jersey Mfrs. Ins. Co.], 81 NY2d 219, 226). "In general, significant contacts in a case involving contracts, in addition to the place of contracting, are the place of negotiation and performance, the location of the subject matter of the contract, and the domicile or place of business of the contracting parties" (id. at 59). As to insurance contracts specifically, significance has been attached to the " local law of the state which the parties understood was to be the principal location of the insured risk . . . unless with respect to the particular issue, some other state has a more significant relationship under the principles stated in § 6 [of the Restatement] to the transaction and the parties'" (Zurich Ins. Co. v Shearson Lehman Hutton, 84 NY2d 309, 318, quoting Restatement [Second] of Conflict of Laws § 193). In the case of a noncommercial vehicle, which is by its nature mobile, the principal location of the insured risk is the place where the vehicle is to be principally garaged (Matter of Eagle Ins. Co. v Singletary, 279 AD2d at 59).

Here, as the Supreme Court correctly noted, the insurance contract at issue was written to conform to the laws, rules and regulations of New York State, and was obtained in New York by Brand, a New York resident, from an insurance company doing business in New York. Furthermore, Brand served the demand for SUM arbitration upon the American Arbitration Association in New York. Applying the grouping of contacts inquiry to these facts, New York has the most significant contacts with the parties and the contract. Indeed, such a conclusion would be in conformity with the reasonable expectations of the contracting parties.

Brand's reliance on Florida as the situs of the accident confuses the contacts that might be significant in a tort case with those that are material in a contract dispute (see Matter of Allstate Ins. Co. [Stolarz-New Jersey Mfrs. Ins. Co.], 81 NY2d 219). New York law applies herein.

Under New York law, SUM coverage is only triggered where the bodily injury liability insurance limits of the policy covering the tortfeasor's vehicle are less than the liability limits of the policy under which a party is seeking SUM benefits (see Insurance Law § 3420[f][2][A]; Matter of Allstate Ins. Co. v Rivera, 12 NY3d 602, 607-608; Matter of AIU Ins. Co. v Hibbert, 85 AD3d 779). Here, Collins' Allstate policy limits for bodily injury were identical to Brand's Unitrin policy limits for bodily injury. Hence, Collins does not qualify as an underinsured driver.

Accordingly, the Supreme Court properly granted the petitioner's application to permanently stay arbitration of a claim for SUM benefits.

Brand's contention that Unitrin's payment of first party benefits constituted an agreement that Florida law controls is without merit, as Unitrin's payment of first party benefits in the first instance was required pursuant to 11 NYCRR 65-3.12(a)(3) and (b). To the extent there was a dispute between Unitrin and Allstate as to the priority of first party benefits, that is a matter to be resolved between the insurers (see Insurance Law § 5105; 11 NYCRR 65-3.12[b]; 65-4.11).


Place of the wrong

Gianvito v Premo Pharm. Labs., Inc., 2012 NY Slip Op 02066 (1st Dept., 2012)

In these product liability actions, plaintiffs allege that they suffered injury due to in utero exposure to the estrogen drug Diethylstilbestrol (DES), and they urge application of the "market share" theory of liability. The law to be applied in DES cases is the law of "the place of the wrong," which is considered to be "the place where the last event necessary to make the actor liable occurred" (Kush v Abbott Labs., 238 AD2d 172, 173 [1997] [internal quotation marks omitted]). Here, the unrefuted evidence demonstrates that plaintiffs' mothers were residents of New Jersey while pregnant, that the mothers ingested DES while in New Jersey, that they received medical treatment in New Jersey, and that plaintiffs were born in New Jersey. Accordingly, the last event to make defendant DES manufacturer liable clearly occurred in New Jersey, and thus New Jersey law applies (see id.).

New Jersey has not formally adopted a market share theory of liability in DES or similar cases (see Namm v Charles E. Frosst and Co., Inc., 178 NJ Super 19, 427 A2d 1121 [1981]; Shackil v Lederle Laboratories, 116 NJ 155, 561 A2d 511 [1989], revg 219 NJ Super 601, 530 A2d 1287 [1987]; see also Matter of New York County DES Litig., 281 AD2d 173 [2001]). Contrary to plaintiffs' contention, such a theory cannot be found based on dicta from certain New Jersey appellate courts (i.e., Shakil, 116 NJ at 191, 561 A2d at 529; Moreno v Am. Home Products, Inc., 2010 WL 4028605, 2010 NJ Super Unpub LEXIS 1537 [NJ Super Ct App Div, July 12, 2010, No. A-3935-07T2], cert denied 205 NJ 101, 13 A3d 364 [2011]). Moreover, to the extent New Jersey law is unsettled on the issue, we decline to expand the law therein to allow plaintiffs to allege a market share theory (Kush, 238 AD2d at 173). Lastly, to the extent that two of the four plaintiffs have been able to identify the drug manufacturer responsible for their alleged DES-related injuries, they cannot rely on the market share theory (see Lyons v Premo Pharm. Laboratories, Inc., 170 NJ Super 183, 192, 406 A2d 185, 190 [1979], cert denied 82 NJ 267, 412 A2d 774 [1979]).


Conflict of Laws

Rose v Arthur J. Gallagher & Co., 2011 NY Slip Op 06374 (2nd Dept., 2011)

This action arises from the alleged failure of the defendants, in their capacity as insurance brokers, to provide the plaintiffs with an accurate quote for the cost of certain insurance coverage. The third, fourth, and fifth causes of action in the amended complaint, which are at issue on this appeal, allege negligence, professional malpractice, and breach of fiduciary duty, respectively. The only issue disputed by the parties is whether the conduct alleged in those three causes of action is governed by Louisiana law or New York law.

The three causes of action in question sound in tort and, thus, contrary to the parties' contentions, the conflict-of-laws standard that applies in contract-based actions (see Zurich Ins. Co. v Shearson Lehman Hutton, 84 NY2d 309, 317-319) does not apply here. Since the laws alleged to be in conflict—including those regarding the availability of punitive damages, an important purpose of which is deterrence (see Ross v Louise Wise Servs., Inc., 8 NY3d 478, 489) — are of a conduct-regulating nature, the law of the place of the tort applies (see Padula v Lilarn Props. Corp., 84 NY2d 519; Cooney v Osgood Mach., 81 NY2d 66, 72; Schultz v Boy Scouts of Am., 65 NY2d 189, 198; Shaw v Carolina Coach, 82 AD3d 98, 101). In this case, the allegedly negligent quote was requested by the plaintiffs, and provided by the defendants, through e-mail communications that were sent from and received in New York. Thus, the tortious conduct alleged in the amended complaint is governed by New York law. Since the parties charted a procedural course in which the viability of the three causes of action in question depends upon whether they are governed by Louisiana law, the Supreme Court properly awarded the defendants summary judgment dismissing those causes of action.