Whose Law is it Anyway?  
Choice-of-Law Analysis in Fenestration Litigation  
b y C h a r l e s A . C h i p ” G e n t r y  
he owner and manager of  
Made-Up Glass Shop Inc., based  
out of Missouri called me recently,  
explaining his company had just been  
sued for allegedly defective windows.  
The windows were sold and installed  
Sure, the U.S. Constitution and Federal  
Statutes apply to every state, but when it  
comes to fenestration litigation and  
into a new apartment complex in Califor- insurance coverage disputes, there is a good  
nia.The general contractor hired numer-  
chance state law will dictate the outcome.  
ous subcontractors from New Mexico to  
assist in the construction of the building  
and installation of the windows.  
that New York law applies to any cover- ask your in-house counsel or another at-  
Before the project began, the glass age dispute,my questions were twofold: torney of your choice who is well-versed  
manufacturer purchased a new Com- (1) What does your insurance contract in insurance coverage issues to read,  
mercial General Liability (CGL) insur- say in terms of the governing law, and analyze, and summarize your coverage.  
ance policy with “United Heritage of (2) In what state was the lawsuit filed Ask them to verify exactly what you are  
Ohio.” It was cheaper than last year’s (or will be filed)?  
policy, but seemed like it provided the  
same type of coverages and protec- State by State  
agreeing to,what you are paying for,and  
what you are obligated to do under the  
terms of the contract.  
tions. The manufacturer tendered the  
new case to its new insurance carrier.  
Different states have different laws.  
Sure, the U.S. Constitution and Federal clare which state’s law will apply, and  
Often, insurance contracts don’t de-  
As is typical in commercial con- Statutes apply to every state, but when even if they do, contracts, or portions  
struction defect litigation, the insur- it comes to fenestration litigation and of contracts, may be deemed “unen-  
ance company “reserved its rights” to insurance coverage disputes, there is a forceable” by a court of law. For exam-  
potentially disclaim coverage and not good chance state law will dictate the ple, a court may consider a contract  
pay defense costs and indemnity dol- outcome. Insurance protections and unconscionable, vague, ambiguous or  
lars down the road. As you know, if obligations are interpreted and han- against public policy. Let’s assume, for  
you’ve read my previous articles, the dled differently depending on the state purposes of our analysis, the court in  
reservation of rights creates a conflict law that applies to the case.  
question threw out the New York law  
of interest between the insurance com-  
pany and the insured.  
The easiest way to determine which portion of the insurance contract, de-  
law applies to an insurance coverage claring it unconscionable.Now, regard-  
The carrier also claimed that the law dispute is to look at the contract be- ing the underlying construction defect  
of the state of New York applies to any tween the fenestration company and the case,what law applies among Missouri,  
insurance coverage case. In fact, the insurance carrier.In continuing with the California, New Mexico or Ohio? The  
carrier was threatening a lawsuit in example above, if the CGL policy con- answer depends on the choice-of-law  
New York to determine its obligations tract between the manufacturer and the analysis employed by the court.  
to the manufacturer in defending the insurance company specifically states  
There are three choice-of-law theo-  
construction-defect case.The owner of that “in the event of a coverage dispute, ries employed by courts in the United  
the manufacturer was confused. What the law of the state of New York will States to determine which state’s laws  
gives? Why is New York in the picture?!? apply,” then the law of the state of New apply to a cause of action: (1) the Tra-  
In advising the company from Mis- York will apply. It’s really that simple. ditional Approach, (2) the Significant  
souri, about a project located in Cali- Parties generally are bound by contract Relationship Test and (3) the Govern-  
fornia, with subcontractors hired from terms they agree to. Read the language mental Interest Analysis Approach.  
New Mexico,an insurance policy issued of your CGL policy with absolute preci-  
by an Ohio company, and an assertion sion. If you find yourself overwhelmed,  
continued on page 16  
USGlass, Metal & Glazing | December 2017  
New Mexico applies a version of the particular state will likely provide the brought. If one state’s law has a more  
Traditional Approach. Missouri and answer to most choice-of-law questions favorable case law or statutory author-  
Ohio apply versions of the Significant when applying the Significant Relation- ity, you’re better off fighting the issues  
Relationship Test. California applies a ship Test.  
version of the Governmental Interest  
there. My advice: (1) know what’s in  
your policy, (2) understand how your  
coverage works, and (3) be aware of  
Analysis Approach.  
Whos AccountAble?  
Lastly, if the apartment complex both (a) the protections guaranteed by  
If the apartment complex chose to  
bring suit in the state of New Mexico, chose to bring suit in the state of Cal- your carrier, and(b) your obligations  
a court would likely apply the Tradi- ifornia, the court would likely apply a as an insured.  
tional Approach, and the choice of law version of the Governmental Interest  
Providing you with an explanation as  
analysis would depend on the type of Analysis Approach. This approach is to how “choice of law” analysis works,  
the cause of action (Tort v. Contract). very similar to the Significant Rela- in the event there is no choice-of-law  
If the claims against the manufacturer tionship Test, as the court considers provision in your insurance policy, one  
are tort or fraud claims, the law of the four factors: (1) the place where the (or a combination) of the choice-of-law  
state where the injury occurred, in injury occurred, (2) the place where analysis will be necessary to determine  
this case California, would most likely the conduct causing the injury oc- what state law applies to any disagree-  
apply. However, if the claims against curred, (3) the domicile, residence, ments between you and your insurance  
the manufacturer are contract claims, nationality, place of incorporation or company. In the event a state is identi-  
for example,for breach of warranty,the place of business of the parties, and fied in the insurance policy for choice-  
Traditional Approach dictates that the (4) the place where the parties’ rela- of-law purposes, it’s likely enforceable.  
action is to be governed by the place tionship is centered. Essentially, the As you might imagine, in the event an  
where the contract was made. In ana- court looks at each state’s law and de- insurance company adds a choice-of-  
lyzing a claim for breach of contract or termines what interests that state’s law law clause identifying a specific state,  
a warranty dispute, a court employing is meant to protect. For example, if the it does so because that state’s laws  
the Traditional Approach would likely state of Missouri has a significant pol- are likely favorable to the insurance  
apply the law of either Missouri or Cal- icy interest in having its laws applied to company.  
ifornia,depending on where the parties contracts signed within its borders,but  
signed the contract.  
If the apartment complex chose to fer contracts signed within its borders  
the state of California appears to pre- In the end  
After reviewing the contract between  
bring suit in Missouri or Ohio, a court be governed by the law of the state in the manufacturer and its insurance  
would likely apply the Significant Re- which the contract is to be fulfilled, the company, I quickly realized the docu-  
lationship Test, in which a number of court will apply the law of the state of ment was silent regarding the applica-  
principles are weighed to select the Missouri because it has a more signifi- tion of any particular state’s law. So, I  
proper choice of law. These principles cant “governmental interest” in having asked, “What state has the apartment  
include: (1) The relevant policies of its laws applied to the current lawsuit. complex chosen to bring suit?” The  
other interested states,(2) the protection  
All three approaches weigh the pros owner quickly glanced at the heading  
of justified expectations,(3) the policies and cons of applying different states’ of the lawsuit, and fell silent.“Canada,”  
underlying that specific field of law and laws, and aim to arrive at a fair and he quietly murmured. I replied, “Well,  
4) predictability and uniformity.Would just result based on the circumstances at least you have a bit better under-  
a Missouri company doing business in and facts of each case. If the contract standing of the analysis if you’re sued  
California“expect”the law of the state of between the manufacturer and its in- in the States. Now let’s turn to what  
New Mexico to apply to such a dispute? surance company propounds that the happens when you are sued in a dif-  
Most likely, no. Are Missouri and Cali- law of a certain state will apply to any ferent country!” I’ll cover what you do  
fornia“interested states,”which favor the disputes between insurer and insured, then in another article ... n  
law of their states to apply to such a dis- the law of that state almost certainly  
pute? Most likely,yes.Do we want people applies. Courts tend to hold parties ac-  
and companies that do us wrong in one countable for contracts they agree to,  
Charles A. “Chip” Gentry is  
state to escape liability by applying the and sign. If the contract is silent as to  
a founding member of Call &  
law of another? No.Although the Signif- the law that should apply to a dispute,a  
Gentry Law Group in Jefferson  
City, Mo. He can be reached  
icant Relationship Test can be difficult to choice-of-law analysis must be applied  
predict, it is almost the most elemental based on the particular test employed  
and easiest to apply.The case law of that by the state in which the lawsuit was  
USGlass, Metal & Glazing | December 2017  

© 2017 Copyright Key Communications Inc. All rights reserved. 
No reproduction of any type without expressed written permission.