Choice of Law in Contract Cases

I've been on hiatus from blogging for a few weeks owing to (a) crush of work, followed by (b) vacation at the beach with my family, including my brand new granddaughter.

But I'm back now, spending this beautiful California Sunday taking a look at what's new in the world of litigation and appeals in the Golden State.

One new Court of Appeal decision stands out, dealing with conflicts of laws.  This is a subject that gave me a headache thirty plus years ago in law school, and not much has changed in that regard since then.  In most cases, and particularly in tort cases, California courts apply a fairly convoluted version of the "governmental interest test," about which I will say no more in order to avoid sending either readers, or myself, off to an afternoon nap.

But the new case has to do with contracts.  Specifically, it involves an insurance contract between a Texas based insured and a Texas based insurer.  The insured's oil and gas drilling activities in Beverly Hills supposedly caused personal injuries and death, and the insured was sued.

You probably won't be surprised to learn that California's law on an insurer's  duty to defend lawsuits is more pro-insured than the law in Texas.  So under California law, the insurer potentially had a duty to defend under California law, and not under Texas law. 

After a long discussion of all those governmental interest cases that pretty much lost my attention, the Court of Appeal held that they didn't matter because of California's Civil Code section 1646:  in a contract case, questions of interpretation are determined by the law of the place of performance.  An insurance policy is performed in the place where the risk exists.  So California law applies.

The Court seemed to feel that no previous court had squarely addressed this question in this context.  I didn't go back and check the Court's work, but I don't remember seeing anything directly on point.  The ruling goes well beyond insurance contracts, and seems to apply to just about any contract interpretation case involving a choice of law issue.  It is refreshing to have a court hold that a statute means what it says.

By the way, Civil Code section 1646.5 says the parties can draft around this "place of performance" rule in contracts involving more than $250,000 that aren't consumer, employment or service contracts.

Off-topic post -- RIP Max Roach

I rarely include off-topic posts.  But while I was gone, Max Roach passed at the age of 83, and the loss is a tremendous one.  As all jazz lovers know, he was the second to last of the great bop and post-bop drummers (Roy Haines is still alive), and, just as importantly, an innovator all his life. You can hear him at his most vibrant on  Clifford Brown and Max Roach (Emarcy/Universal, 1954), Thelonius Monk's Brilliant Corners (Riverside/Concord, 1956) and Money Jungle, in trio with Duke Ellington and Charles Mingus (Blue Note/EMI, 1962), which Ben Ratliffe of the NYT aptly called "an odd record of aggression and calm," but which I never get tired of.  You can also hear him with Clifford Brown here, and see him playing solo here.