NEW YORK HIGH COURT HOLDS CHOICE OF LAW SHOULD BE EMPLOYED FOR EACH POLICY IN MIDLAND INSURANCE LIQUIDATION PROCEEDINGS
On March 17, 2010 we reported on the decision of a New York intermediate appellate court to apply New York law to disallowed claims under insurance policies issued by Midland Insurance Company, an insolvent multiline insurer placed into liquidation in New York. The appellate court based its decision, in part, on the New York “paramount state interest” of ensuring that distributions from an insolvent insurer are made “in an equitable manner.” The appellate court had reversed the trial court, which had found that New York’s standard choice of law analysis for contracts, known as a “grouping of contacts” or “center of gravity” test, should be conducted to determine which laws to apply to each Midland policy. The New York Court of Appeals has now reversed the appellate court and reinstated the trial court’s decision. The high court explained that because the claims of the policyholders “derive from the insurance policies issued by Midland prior to its insolvency,” choice of law analysis for each policy should be employed. In re Liquidation of Midland Insurance Co., 2011 N.Y. Slip Op. 02716 (N.Y. April 5, 2011).
This post written by Michael Wolgin.
