May It Please The Court

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May It Please The Court
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Quote of the Day - Los Angeles is a large city-like area surrounding the Beverly Hills Hotel. - Fran Lebowitz
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Texas Company's Insurance Policy Certificates Issued To Californians Trigger California Law

Texas is a big state.  So big, in fact, that when Texans come to California to find oil and gas and bring their Texas insurance policies along, we're going to treat them like natives, invoke California law and ignore Texas law.

Howdy, pardner, welcome to the Golden State.

Makes sense, if you think about it.  But before you go too far, consider the trial court''s ruling, which we at first don't need the facts to muddy up:  "the insurance contract was made and accepted between a Texas insurer and a Texas-based insured in Texas and was to be performed under Texas law."

Sounds convincing, until you stir in two little facts:  first, the Texas insured came to Beverly Hills (despite the obvious pun to hillbillies and "oil that is, black gold, Texas tea"), that City is in California.  Second, the Texas insurance company issued several Certificates of Insurance to public agencies associated with the City of Beverly Hills, permitting the Texas insured, an oil company, to drill for oil and gas in the Hills around Beverly. 

The situation triggers a conflict of laws analysis, the dream of every Civil Procedure law professor, and this case is no different.  The trial court thought Texas law applied instead of California.  But a close look at a little-used statute, California Civil Code section 1646 essentially says when there's a question over which state's law applies, look to where the contract is to be performed or where it was made.

When this lawsuit wound its way up to the appellate court, the justices saw it quite differently than the trial court.  But first we have to stir in one more fact to this mix.  the lawsuit that triggered the Texas company's insurance policy was brought by Lori Lynn Moss and others, who alleged the Texas company, Frontier Oil, released toxic chemicals at their Beverly Hills drilling site, which resulted in personal injuries and deaths.

Now we have two California connections:  a promise by the Texas insurance company, RLI Insurance, to insure Frontier in Beverly Hills and an alleged injury in Beverly Hills. 

The appellate court took 44 pages to say that California law applies, but by now, you can see why.  The insurance contract was made between RLI and the City of Beverly Hills in California for Frontier's drilling operations in California.  To top it off, the alleged injuries occurred here, too. 

It doesn't take much imagination to understand why the appellate court overruled the trial court, once you combine the facts with the law.  Isn't that, after all, what they teach in law school?  IRAC?  Issue, Rule, Analysis of the facts to the law and Conclusion.

The moral of the story?  If you come to California to do business here, expect California law to apply. 

Posted by J. Craig Williams on Sunday, September 09, 2007 at 13:56 Comments (0)


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