FEDERAL CHOICE-OF-LAW PRINCIPLES REQUIRE APPLICATION OF NEW YORK LAW, ELIMINATING PLAINTIFF’S PENNSYLVANIA STATUTORY CLAIMS (Philadelphia Federal)

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The marine insurance policy at issue had a New York choice-of-law provision.  The insured attempted to assert claims under Pennsylvania law, including claims for breach of fiduciary duty, statutory bad faith under 42 Pa.C.S. § 8371, and violations of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law.

Because marine insurance is governed by federal admiralty law, federal choice-of-law principles apply.  Under federal choice-of-law principles, and in light of the fact there were sufficient contacts with New York, the court enforced the choice-of-law provision and found the case subject to New York substantive law.  In addition, the court concluded, “that the public policy of a state where a case was filed cannot override the presumptive validity, under federal maritime choice-of-law principles, of a provision in a marine insurance contract where the chosen forum has a substantial relationship to the parties or the transaction.”

Thus, the court granted the insurer judgment on the pleadings, and dismissed the two Pennsylvania statutory claims, since they did not arise under New York law. The court also dismissed the breach of fiduciary duty claim, as no such cause of action exists under New York law for the mere breach of an insurance contract.

Date of Decision:  February 22, 2021

Great Lakes Ins. SE v. Raiders Retreat Realty Co., LLC, U.S. District Court Eastern District of Pennsylvania No. CV 19-04466, 2021 WL 668806 (E.D. Pa. Feb. 22, 2021) (Robreno, J.)

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