Opinion ID: 808087
Heading Depth: 1
Heading Rank: 4

Heading: Conflicts Analysis

Text: We consider next whether the applicable state law would either (1) enforce the express condition precedent as written or (2) require Global to prove that it suffered prejudice from any late DSOL remittance. Global argues that New York law applies, and that it would enforce the Certificate as written without requiring proof of prejudice. PEIC counters that Pennsylvania law applies, and that it would require Global to prove prejudice. We agree with Global.7 7 As a preliminary matter, PEIC insists that Global has waived its argument that New York law applies. We disagree. The most cursory of glances at the District Court‘s opinion reveals that this is not so. The Court mentioned that ―Global argues that New York law should apply, which does not require a reinsurer to demonstrate prejudice resulting from late notice but that, in any event, Pennsylvania and New York law do not conflict on this point.‖ 2011 WL 2003359 at 27
As a federal court sitting in diversity, we apply the choice-of-law rules of the forum state, which is Pennsylvania in this case. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941); Amica Mut. Ins. Co. v. Fogel, 656 F.3d 167, 170-71 (3d Cir. 2011). ―Pennsylvania applies the . . . flexible, ‗interests/contacts‘ methodology to contract choiceof-law questions.‖ Hammersmith v. TIG Ins. Co., 480 F.3d 220, 226-27 (3d Cir. 2007). When a contract like the Certificate does not contain an express choice-of-law provision (or indicate that the parties implicitly agreed to be bound by a particular state‘s law), the first step in the analysis is to identify the jurisdictions whose laws might apply. Id. at 230. As candidates, the parties offer New York and Pennsylvania. Next, we must determine the substance of these states‘ laws, and look for actual, relevant differences between them. Id. ―If [the] two jurisdictions‘ laws are the same, then there is no conflict at all, and a choice of law analysis is unnecessary.‖ . The Court goes on to devote half of its opinion to the choice-of-law issue. Id. at -. Although we disagree with the Court‘s analysis, we cannot pretend that it does not exist. Furthermore, it is an open question whether choice-oflaw issues are waiveable in this Circuit. See Huber v. Taylor, 469 F.3d 67, 75 n.12 (3d Cir. 2006) (noting that we ―have not adopted a consistent rule regarding whether choice of law issues are waiveable,‖ and discussing cases in which we ―held that choice of law questions cannot be waived‖ and another in which ―we considered the choice of law question waived‖). As we did in Huber, we decline to resolve this tension because Global did not waive its argument, even assuming that it is waiveable. 28 Id. (emphasis in original). If there are actual, relevant differences between the laws, then we ―examine the governmental policies underlying each law, and classify the conflict as a ‗true,‘ ‗false,‘ or an ‗unprovided-for‘ situation.‖ Id. ―A deeper choice of law analysis is necessary only if both jurisdictions‘ interests would be impaired by the application of the other‘s laws (i.e., there is a true conflict).‖ Id. (quotation marks and alteration omitted) (emphasis in original).
The law of New York is not in dispute. When a reinsurance contract expressly requires a reinsured to provide its reinsurer with prompt notice of a claim or occurrence as a condition precedent to coverage and the reinsured fails to do so, that failure excuses the reinsurer from its duty to perform, even if it did not suffer prejudice as a result of the late notice. To understand New York‘s interests in having this rule apply here, a brief account of the rule‘s development is necessary. In Unigard Security Insurance Co. v. North River Insurance, 594 N.E.2d 571 (N.Y. 1992), the Court of Appeals of New York addressed how courts should interpret a prompt notice provision that is not explicitly a condition precedent to coverage. At that time, New York courts had long applied a ―settled‖ rule of construction to primary insurance contracts: the notice provision ―operates as a condition precedent and . . . the insurer need not show prejudice to rely on the defense of late notice.‖ Id. at 573. They recognized this as a ―limited exception to two established rules of contract law: (1) . . . ordinarily one seeking to escape the obligation to perform under a contract must demonstrate a material breach or prejudice; and (2) . . . a contractual duty ordinarily will not be construed as a condition precedent absent clear language 29 showing that the parties intended to make it a condition.‖ Id. (citations omitted). Before considering whether this no-prejudice-required exception should apply in the reinsurance context, the Unigard Court made clear that it was addressing the issue in the context of the contract before it. Id. at 574. The contract in that case required the reinsured to provide ―prompt notice . . . of any occurrence or accident which appear[ed] likely to involve th[e] reinsurance,‖ but it did not use the words ―condition precedent‖ or any other words indicating an intent to create a condition precedent. Id. at 572. The Court noted that ―[t]here is nothing in [the notice provision or elsewhere in the contract] indicating that the parties intended that the giving of notice should operate as a condition precedent. If ordinary rules of contract were applied, the prompt notice provision in the . . . certificate would not be construed as a condition precedent.‖ Id. at 573-74 (citation omitted). With this caveat in mind, the Court pointed to differences between primary insurance and reinsurance, and held that a reinsurer must demonstrate how any late notice caused it prejudice before coverage could be excused. Id. at 575. It considered prompt notice to be ―of substantially less significance for a reinsurer than for a primary insurer‖ because ―[a] reinsurer is not responsible for providing a defense, for investigating the claim or for attempting to get control of the claim in order to effect an early settlement.‖ Id. at 574. And although late notice may impair a reinsurer‘s ―right to associate,‖ the Court found that such a risk was not ―sufficiently grave to warrant applying a presumption of prejudice.‖ Id. The Court of Appeals for the Second Circuit has confirmed that Unigard‘s must-show-prejudice rule is a default rule of contract construction that parties may contract 30 around with an express condition precedent. See Christiana Gen. Ins. Corp. of N.Y. v. Great Am. Ins. Co., 979 F.2d 268, 274 (2d Cir. 1992). Citing Unigard, the Second Circuit noted that ―[f]or a reinsurer to be relieved from its indemnification obligations because of the reinsured‘s failure to provide timely notice, absent an express provision in the contract making prompt notice a condition precedent, it must show prejudice resulted from the delay.‖ Id. at 274 (emphasis added); see also Constitution Reinsurance Corp. v. Stonewall Ins. Co.,980 F.Supp. 124, 130-31 (S.D.N.Y. 1997), aff’d mem. on opinion below, 192 F.3d 899 (Table) (2d Cir. 1999). New York‘s rule is rooted in freedom of contract. ―An express contract for indemnity,‖ like the Certificate, ―remains a contract[;] [h]ence, the parties are free, within limits of public policy, to agree upon conditions precedent to suit.‖ Constitution Reinsurance Corp., 980 F.Supp. at 131 (quoting Continental Cas. Co. v. Stonewall Ins. Co., 77 F.3d 16, 19 (2d Cir. 1996)).
The parties do not agree on the law of Pennsylvania. This is hardly surprising because the Supreme Court of Pennsylvania has not addressed (1) how a court should interpret a prompt notice provision in a reinsurance contract that is not an express condition precedent to coverage or (2) whether parties may contract around a default must-showprejudice rule with an express condition precedent. In the absence of a controlling opinion from a state‘s highest court on an issue of state law, we typically predict how that court would decide the issue. See Nationwide Mut. Ins. Co. v. Buffetta, 230 F.3d 634, 637 (3d Cir. 2000). When predicting state law, we ―can . . . give due regard, but not conclusive effect, to the decisional law of lower state courts.‖ 31 Id. But ―[t]he opinions of intermediate appellate state courts are ‗not to be disregarded by a federal court unless it is convinced by other persuasive data that the highest court of the state would decide otherwise.‘‖ Id. (quoting West v. AT&T Co., 311 U.S. 223, 237 (1940)). The District Court began with the Supreme Court of Pennsylvania‘s decision in Brakeman v. Potomac Ins. Co., 371 A.2d 193 (Pa. 1977). That case addressed late notice in the primary insurance context, but — unlike Unigard — it did not announce a default rule of construction; it went further. Brakeman held that, under a liability insurance policy, late notice will not relieve an insurer of its coverage obligations unless it proves that breach of the notice provision caused it prejudice. Id. at 198. The Court made no exception for policies that make prompt notice an express condition precedent to coverage. In fact, the policy at issue provided that ―[n]o action shall lie against [the insurer] unless, as a condition precedent thereto, the insured shall have fully complied with all the terms of th[e] policy.‖ Id. at 195. Thus, under Brakeman public policy trumps notice provisions that are express conditions precedent to coverage. The Brakeman Court jettisoned its insistence on ―the freedom of private contracts‖ in this context for two reasons. Id. at 196. First, ―an insurance contract is not a negotiated agreement; rather its conditions are by and large dictated by the insurance company to the insured.‖ Id. Specifically, ―an insured is not able to choose among a variety of insurance policies materially different with respect to notice requirements, and a proper analysis requires this reality to be taken into account.‖ Id. Second, it would be ―unfair to insureds,‖ and ―unduly severe and inequitable,‖ to allow an insurance company to accept the insured‘s premiums and then seek to deny coverage ―unless a sound reason exists for doing so.‖ Id. at 196-98. A notice provision is not meant ―to 32 provide a technical escape-hatch by which to deny coverage.‖ Id. at 197 (quotation marks omitted). Only one Pennsylvania case, Ario v. Underwiting Members of Lloyd’s of London Syndicates, 996 A.2d 588, 598 (Pa. Cmwlth. Ct. 2010), even mentions the prejudice issue in the reinsurance context. There, the Commonwealth Court devoted only two sentences to the law on point: [T]he ―notice-prejudice‖ rule applies in both Pennsylvania and New York. See Brakeman v. Potomac Ins. Co., 371 A.2d 193 (1977); see also Unigard Sec. Ins. Co. v. North River Ins. Co., 594 N.E.2d 571 (1992). Under this rule, unless the insurer establishes prejudice resulting from the insured‘s failure to give notice as required under the policy, the insurer cannot avoid its contractual obligation. Brakeman, 371 A.2d at 198. Unigard, 594 N.E.2d at 573. Id.8 The Court could not decide whether the reinsurer was prejudiced on the record before it; thus, it denied summary judgment. Id. Further diluting any guidance the case offers, the reinsurance agreement at issue did not contain an express condition precedent. In fact, it did not contain any notice requirement at all; the reinsurer argued that the ―follow form‖ provision incorporated the notice requirements from the underlying direct policy. Id. at 591, 598. 8 As our discussion above demonstrates, Ario‘s account of New York law is incomplete. 33 Global correctly points out that, under Pennsylvania law, the invalidation of contract provisions on public policy grounds is a rare and significant exercise of judicial power. In the absence of a plain indication [that a contract provision is contrary to public policy] through long governmental practice or statutory enactments, or of violations of obvious ethical or moral standards, the Court should not assume to declare contracts contrary to public policy. The courts must be content to await legislative action. Heller v. Pa. League of Cities & Municipalities, 32 A.3d 1213, 1220-21 (Pa. 2011) (quotation marks and alteration omitted). It is only when a given policy is so obviously for or against the public health, safety, morals or welfare that there is a virtual unanimity of opinion in regard to it, that a court may constitute itself the voice of the community in so declaring [that the contract provision is against public policy]. Id. at 1221 (quotation marks omitted). Still, we suspect that Pennsylvania‘s interest in preventing technical forfeitures of coverage drops a heavy 34 counterweight. In the primary insurance context, we have recognized that ―the Brakeman rule applies even to policies between sophisticated parties.‖ Trustees of the Univ. of Pa. v. Lexington Ins. Co., 815 F.2d 890, 897 (3d Cir. 1987). In Trustees, we discerned that ―although a sophisticated consumer has greater power and experience with which to negotiate individual terms of an insurance policy, . . . Brakeman rested above all on the court‘s unwillingness to permit a forfeiture of insurance protection ‗unless a sound reason exists for doing so.‘‖ Id. Trustees, however, did not involve a notice requirement expressed as a condition precedent. In fact, we made clear that we were not deciding ―whether Pennsylvania courts would enforce an explicit waiver of Brakeman’s protection by a sophisticated insured.‖ Id. at 897 n.2. Our suspicion about Pennsylvania law is further enhanced by our prediction that ―under New Jersey law . . . a reinsurer must show prejudice in order to prevail on a late notice defense asserted against its reinsured.‖ British Ins. Co. of Cayman v. Safety Nat’l Cas., 335 F.3d 205, 207 (3d Cir. 2003) (emphasis added).9 In that case, we acknowledged that the contract-of-adhesion rationale for a must-show-prejudice rule does not apply as strongly in the reinsurance context, but concluded that the fairness rationale does, and ultimately this carries the day. Admittedly, reinsurance contracts ―do not bear all the indicia of adhesion endemic in contracts for 9 The notice provision at issue in British Insurance, however, did not include condition-precedent language. Id. at 207. As a result, we had no occasion to consider whether parties could overcome the must-show-prejudice rule with an express condition precedent to coverage. Still, the decision provides some insight as to how the Supreme Court of Pennsylvania might decide the issue before us. 35 primary coverage;‖ and they are ―clearly more in the nature of indemnity agreements between two sophisticated insurance companies.‖ Id. at 213. Nonetheless ―[t]he New Jersey Supreme Court clearly frowns upon literal interpretation of notice provisions in situations where it results in the insured forfeiting coverage it has already paid for absent some countervailing consideration (such as prejudice) on the part of the insurer that has accepted premiums in return for offering coverage.‖ Id. at 213. For that reason, we predicted New Jersey law would still require a showing of prejudice in reinsurance cases. British Insurance is consistent with ―the differences in the contractual undertakings of primary insurers and reinsurers because notice provisions are significantly less important to the reinsurer than a primary insurer.‖ Id. Notice of claims and occurrences in the primary insurance context ―afford[s] the insurer an opportunity to form an intelligent estimate of its liabilities, to afford it an opportunity to investigate the claim while witnesses and facts are available and to prevent fraud and imposition upon it.‖ Id. at 213 (quotation marks omitted). In the reinsurance context, it is the sole obligation of the ceding insurer to investigate, litigate, settle, or defend claims and, while the reinsurer may have a ―right to associate,‖ we considered that right (especially since it is rarely exercised) insufficient to outweigh New Jersey‘s policy against forfeiture. Id. at 214. Predicting the substance of state law in the absence of a controlling opinion from that state‘s highest court is an uncomfortable consequence of our diversity jurisdiction. Such speculation intrudes ―on the lawmaking function of that state court,‖ and creates a ―fundamental incompatibility . . . with the most basic principles of federalism‖ because ―judges who are not selected under the state‘s system and who are not answerable to its constituency are undertaking an inherent 36 state court function.‖ Dolores K. Sloviter, A Federal Judge Views Diversity Jurisdiction Through the Lens of Federalism, 78 Va. L. Rev. 1671, 1682, 1687 (1992). Our discomfort is compounded here because the Supreme Court of Pennsylvania has ―affirmed [its] reticence to throw aside clear contractual language based on the often formless face of public policy.‖ Heller, 32 A.3d at 1220 (quotation marks omitted). Global suggests that we can minimize the strains on federalism that an ―Erie guess‖10 would cause by simply inverting the usual order of the choice-of-law analysis in those cases where the guesses themselves are ultimately unnecessary because the analysis calls for the application of another state‘s well-settled law. We cannot, however, conduct a proper choice-of-law analysis without forming some prediction of a candidate state‘s law and its interest in having that law apply. Given our review of Pennsylvania law and our precedent, we assume without deciding, solely for the sake of our choice-of-law analysis, that Pennsylvania would apply a must-show-prejudice rule to reinsurance contracts, even when the contract makes the notice provision an express condition precedent to coverage.
Given our assumption about Pennsylvania law, we are confronted with a true conflict. Applying a must-showprejudice rule would promote Pennsylvania‘s assumed interest in protecting its reinsureds from losing coverage that they have already paid for in the absence of a sound reason for doing so. In contrast, applying New York law here would promote its interest in protecting sophisticated business 10 See Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938) (holding that substantive state law applies in diversity cases). 37 parties‘ freedom to enter into contracts without having their terms disregarded or rewritten by courts. In this context, applying one state‘s law would impair the interests of the other, and there is a true conflict. Because we assume a true conflict exists, we ―determine which state has the greater interest in the application of its law.‖ Hammersmith, 480 F.3d at 231 (quotation marks omitted). To do so, we use a methodology that combines the approaches of the Restatement (Second) of Conflicts of Law and governmental interest analysis. Id. We begin ―the analysis by assessing each state‘s contacts under the Second Restatement,‖ and ―turn to § 188(2) (the general provision governing contracts), which directs us to take the following contacts into account: (1) the place of contracting; (2) the place of negotiation of the contract; (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.‖ Id. at 232-33.11 This requires ―more than a mere counting of contacts.‖ Id. at 231 (quotation marks omitted). Instead, ―we must weigh the contacts on a qualitative scale according to the policies and interests underlying the particular issue.‖ Id. (quotation marks omitted). Here, the precise place of contracting is somewhat unclear, but New York certainly had a more significant relationship to the Certificate‘s formation than Pennsylvania did, given that Pennsylvania had no relationship whatsoever in 1980. ―[T]he place of contracting is the place where . . . the last act necessary, under the forum‘s rules of offer and acceptance, [occurred] to give the contract binding effect . . . .‖ Restatement (Second) of Conflicts of Law § 188 11 PEIC concedes that § 188 is the proper section of the Restatement to consider. See PEIC Br. 30. 38 cmt. e. Insurance contracts often designate that place as the place of delivery Crawford v. Manhattan Life Ins. Co. of N.Y., 221 A.2d 877,880 (Pa. Super. Ct. 1966). Here, Constitution delivered the Certificate to PEIC‘s broker in Minnesota, but the parties do not address whether delivery was in fact the last act necessary.12 The District Court found that offer and acceptance became complete in New York when Constitution confirmed by cable dated June 5, 1980, its agreement to participate for 25% of the $4 million excess layer. Thus, ―the place of contract formation was New York,‖ which ―PEIC concedes . . . is arguably the case.‖ 2011 WL 2003359, at . There were no meaningful negotiations concerning the Certificate. PEIC‘s Minnesota broker exchanged telexes with Constitution in New York, but the terms and conditions were never in dispute. Thus, it is difficult to speak at all of a ―place of negotiation.‖ Both possible places of performance that we discussed in Hammersmith — ―where the premiums are received‖ and ―the state in which notice should have been provided‖ — point to New York. 480 F.3d at 234, 234 n.13. In this case, Buffalo Forge sent its premiums under the Excess Policy to 12 For example, the Court of Appeals of New York has explained that in ―the London market — the Mecca of the reinsurance world,‖ an exchange of telexes constitutes a binding agreement, and ―[d]elivery of the original insurance policy to the reinsurer and issuance by the latter of a formal certificate of reinsurance may not occur until much later, and indeed are technically unnecessary for a binding agreement.‖ Sumitomo Marine & Fire Ins. Co., Ltd.-U.S. Branch v. Cologne Reinsurance Co. of Am., 552 N.E.2d 139, 142 (N.Y. 1990). 39 PEIC‘s broker in Minnesota, which then sent Constitution in New York its share under the Certificate. As for ―the state in which notice should have been provided,‖ notice is due where the entity to be notified is located, which in this case is, and has always been, New York. Id. at 234. For our purposes, it is the place of performance. The subject matter of the Certificate, a contract of indemnity, is PEIC‘s liability to Buffalo Forge. It is difficult to pinpoint an actual location for such an abstract subject matter. To the extent it is located anywhere, an insurer's liability on a policy simply shares a location with the insurer itself. In that context, the location of the subject matter of the Certificate is the same as the location of PEIC. Turning to the location of the parties, we reiterate that while PEIC is now a Pennsylvania corporation domiciled in Pennsylvania, it was a California stock insurance company located in Los Angeles when the Certificate was issued in 1980. PEIC only became a Pennsylvania insurance company in 1999. In contrast, Constitution was (and Global is) a New York corporation domiciled in New York. Having identified the contacts that § 188 deems important, we calibrate our qualitative scale to ensure that we weigh the contacts according to the policies and interests underlying the particular issue before us. Id. at 231. According to PEIC, ―the issue at hand is the nature of the obligations imposed by the contract rather than the validity of the contract.‖ PEIC Br. 34 (quotations and alterations omitted). The opposite is in fact true. We have already decided much of the nature of the relevant obligation imposed, namely Paragraph D‘s DSOL provision. We have decided when that obligation arises and whether it qualifies as a condition precedent to coverage or as something else, and 40 we have done so without first conducting a choice-of-law analysis because the basic rules of interpretation do not differ between New York and Pennsylvania. What is before us is whether a prompt notice provision that is expressly stated as a condition precedent to coverage is valid and enforceable as written. With this mind, we acknowledge that the Restatement (Second) instructs courts to consider various fundamental principles when conducting a choice-of-law analysis. See Restatement (Second) of Conflicts of Law § 6(2). When determining which state has the most significant relationship to a contract and the issue concerns the validity of a contractual provision, the protection of the parties‘ justified expectations is ―of considerable importance.‖ Id. at § 188 cmt. b. This comes as no surprise because ―[p]rotection of the justified expectations of the parties is the basic policy underlying the field of contracts.‖ Id. at § 188 cmt. b. When the validity of a contractual provision is at stake, the parties‘ expectations should be measured from their vantage point at the time of contracting, because ―[p]arties entering a contract will expect at the very least, subject perhaps to rare exceptions, that the provisions of the contract will be binding upon them.‖ Id. ―Their expectations should not be disappointed by application of the local law rule of a state which would strike down the contract or a provision thereof unless the value of protecting the expectations of the parties is substantially outweighed in the particular case by the interest of the state with the invalidating rule in having this rule applied.‖ Id. When we use the protection of justified expectations to adjust the weight of the contacts discussed above, we are convinced that New York has the most significant relationship to the Certificate. A New York reinsurer accepted, in New York, the terms and conditions proposed by 41 a Minnesota broker, acting on behalf of the New York underwriting office of a California company located in Los Angeles. At the time, there would have been simply no reason for the parties to expect that Pennsylvania law would govern whether particular provisions of the contract they were entering into were valid as written. Pennsylvania entered the picture, as a matter of pure happenstance, 19 years later when PEIC relocated to Pennsylvania. PEIC has not pointed us to any authority that would justify allowing this unilateral decision to blur our focus on the facts and the protection of the parties‘ justified expectations at the time of contracting.13 Finally, we must consider the ―interests and policies that may be validly asserted by each jurisdiction.‖ Hammersmith, 480 F.3d at 235 (quotation marks omitted). New York has an interest in protecting the rights of sophisticated parties, particularly New York reinsurers and insurers who operate out of New York offices, to enter into contracts and to have their terms enforced predictably, with administrative ease, and without second guesses from the courts after costly litigation. Our comments in Hammersmith about New York‘s interest in the primary insurance context in 13 Citing our decision in Amica Mut. Ins. Co. v. Fogel, 656 F.3d 167 (3d Cir. 2011), PEIC claims that we should assess the parties‘ justified expectations about the validity of Paragraph D‘s DSOL provision at the time when it moved to Pennsylvania. Amica holds that when a district court transfers an action sua sponte under 28 U.S.C. § 1404(a), the transferor forum‘s choice-of-law rules travel with the action to the transferee forum. Id. at 169-70. It neither says nor implies anything about one party‘s post-contract move to another jurisdiction changing the parties‘ justified expectations about the validity of their contract provisions. 42 having a need-not-show-prejudice rule are also relevant here: ―New York has decided that requiring strict compliance with notice provisions is the most effective means of protecting certain interests of insurance carriers. We will not substitute our judgment for that of the New York courts by concluding that a prejudice rule would just as effectively serve these interests.‖ Id. at 232 n.12. Pennsylvania has an interest in ensuring that its cedants receive coverage that they have paid for and that reinsurers avoid ―technical escape-hatches‖ to coverage in the absence of prejudice. The District Court also found that ―Pennsylvania has an interest in achieving uniformity in a situation where the ceding company [like PEIC here] has ceded portions of its risk to various reinsurers.‖ 2011 WL 2003359 at  (citing Ario, 996 A.2d at 596-97). But in this case, having multiple jurisdictions‘ laws apply to the same risk is an undesirable consequence entirely of PEIC‘s own doing. PEIC chose to purchase reinsurance from two New York companies, an Illinois company, and a Massachusetts company, rather than four companies from the same jurisdiction. Ultimately, while both New York and Pennsylvania have interests in applying their law here, PEIC has undermined and lessened Pennsylvania‘s interests and has failed to persuade us that those interests, even if unimpaired, substantially outweigh the parties‘ justified expectation that the provisions of their contract would be valid. In sum, we conclude that New York has the most significant relationship to the Certificate and the greater interest in having its law applied, especially because applying its law would protect the parties‘ justified expectations at the time of contracting. Thus, New York‘s law applies and the Certificate‘s DSOL provision is enforceable as we read it. 43