Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-arwd-2_05-cv-02163/USCOURTS-arwd-2_05-cv-02163-4/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Insurance Contract

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AO72A

(Rev. 8/82)

IN THE UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF ARKANSAS

FORT SMITH DIVISION

PLASTIC RESEARCH AND 

DEVELOPMENT CORPORATION, an 

Arkansas Corporation, and 

EBSCO INDUSTRIES, INC., 

a Delaware Corporation PLAINTIFFS

V. No. 2:05-CV-02163

HOUSTON CASUALTY COMPANY, 

a Texas Corporation DEFENDANT

ORDER

Currently before this Court is Defendants’ Motion for

Summary Judgment (Doc. 98). After reviewing the pleadings and

the evidence on file, including the Plaintiffs’ Response in

Opposition to Motion for Summary Judgment (Doc. 105) and Brief

in Support (Doc. 106), in the light most favorable to the

nonmoving party as required, the Court finds that there are

issues of material fact which preclude summary judgment. Those

include, but are not limited to, whether an oral agreement to

allocate defense costs between the parties included settlement

costs. 

Additionally, the Court concludes that Alabama substantive

law should apply. The Defendant contends that Alabama law

controls the substantive issues in this case, while the

Plaintiffs claim Arkansas law applies. In disputes arising

under a contract, Arkansas applies the “most significant

relationship” test to determine which state’s substantive law

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AO72A

(Rev. 8/82)

governs the contract issues. Williams v. Carr, 565 S.W.2d 400

(Ark. 1978). To determine which state has the most significant

relationship, Arkansas courts consider (1) the place of

contracting; (2) the place of negotiation; (3) the place of

performance; (4) the location of the subject matter of the

contract; and (5) the domicile, residence, nationality, place of

incorporation and place of business of the parties. See Crisler

v. Unum Ins. Co. Of Am., 233 S.W.3d 658 (Ark. 2006). 

In the case before us, the contract was negotiated and

entered into in Alabama. The contract was issued to EBSCO at

its principal address in Birmingham, Alabama, and an EBSCO

officer located in Alabama was responsible for acquiring the

policy and handling claims. Def. Exh. 12 (Declarations, Item 1)

and Bozzelli Dep. (10/31/06) at 13:11-19; Bozzelli Dep.

(11/20/07) at 7:22-9:22. The contract was registered and

delivered as a surplus line coverage under the Alabama Surplus

Line Insurance Law, as evidenced by the official state stamp on

the declarations page of the contract. Def. Exh. 12

(Declarations page). The place of performance was also in

Alabama. The premiums were paid and all communications

regarding the contract came from EBSCO in Alabama. Bozzelli

Dep. (11/20/07) at 8:12-9:6, 10:5-9 and Def. Exhs. 8, 40, 42,

44, 46. Alabama counsel advised EBSCO on the policy coverage

and the requests for payments of money to reimburse defense and

settlement costs were sent from EBSCO in Alabama. Friedman Dep.

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AO72A

(Rev. 8/82)

(11/1/06) at 13:15-19; Friedman Dep. (11/20/07) at 25:15-26:11,

30:23-31:15; Bozzelli Dep. (11/20/07) at 73:10-74:1. Although

the subject matter of the contract cannot be found to be in any

single state, the fact that EBSCO was responsible for acquiring

and maintaining the Policy and its principal place of business

was in Alabama is significant. The fact that the underlying

litigation occurred in Arkansas and Separate Defendant, PRADCO,

one of the entities covered by the Policy, is located in

Arkansas is not sufficient to overcome these other factors. 

Accordingly, the Defendants’ motion for summary judgment

(Doc. 98) should be and hereby is DENIED. This case remains set

for a jury trial on February 19, 2008 at 9:00 A.M..

IT IS SO ORDERED this 23rd day of January, 2008. 

/s/ Robert T. Dawson 

Honorable Robert T. Dawson 

United States District Judge

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