Opinion ID: 557231
Heading Depth: 2
Heading Rank: 2

Heading: Choice of State Law

Text: 20 After concluding that federal maritime law does not govern the assured's right to payment on the marine insurance policy, we next must determine whether Texas or Louisiana insurance law applies. Albany argues that, even if federal maritime law does not apply, the district court should have applied a similarly strict Louisiana law. 8 Although a federal court customarily applies the choice of law rules of the forum in which it is located, Klaxon v. Stentor Electric Manufacturing Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021, 85 L.Ed. 1477 (1941), the court in maritime cases must apply general federal maritime choice of law rules. Gonzalez v. Naviera Neptuno A.A., 832 F.2d 876, 880 n. 3 (5th Cir.1987). Cf. Hellenic Lines v. Rhoditis, 398 U.S. 306, 90 S.Ct. 1731, 26 L.Ed.2d 252 (1970); Lauritzen v. Larsen, 345 U.S. 571, 73 S.Ct. 921, 97 L.Ed. 1254 (1953). In this case, we must consider the choice of law rules which specifically govern marine insurance disputes. 21 The decisions of this Court that attempt to explain the proper choice of state insurance law governing the interpretation of marine insurance policies are seemingly in conflict. This Court has held that the law of the state in which the [insurance] contract was formed determines the parties' rights. Graham v. Milky Way Barge, Inc., 811 F.2d 881, 885 (5th Cir.1987). It has held that the law of the state where the marine insurance contract was issued and delivered is the governing law. Elevating Boats, Inc. v. Gulf Coast Marine, Inc., 766 F.2d 195, 198 (5th Cir.1985). See also Eagle Leasing Corp. v. Hartford Fire Ins. Co., 540 F.2d 1257, 1261 (5th Cir.1976), cert. denied, 431 U.S. 967, 97 S.Ct. 2926, 53 L.Ed.2d 1063 (1977). It has held that [i]n identifying the appropriate state law to apply, we look to the state having the greatest interest in the resolution of the issues. Truehart v. Blandon, 884 F.2d 223, 226 (5th Cir.1989). See also Transco Exploration Co. v. Pacific Employers Ins. Co., 869 F.2d 862, 863 (5th Cir.1989). Considered separately under the circumstances of this particular appeal, these choice of law rules point the Court in entirely different directions: the contract was countersigned and therefore likely formed in Louisiana; it was issued in Louisiana but delivered in Texas; and Texas appears to have the greatest interest in the application of its law. 22 Nonetheless, we believe that we can reconcile these seemingly inconsistent choice of law rules. Modern choice of law analysis, whether maritime or not, generally requires the application of the law of the state with the most significant relationship to the substantive issue in question. See Restatement (Second) of Conflict of Laws Sec. 6 (1980). In contract cases, courts must consider such factors as the place of formation of the contract and the place of negotiation of the contract to determine which states have sufficient contact with the transaction and the parties to support the application of their law. Id. Sec. 188 (1971). However, the application of the most significant relationship approach does not simply turn on the number of contacts each state has with the controversy. The most significant relationship approach instead examines the relative interests of all of the states which share a sufficient relationship with the transaction and the parties. Id. Sec. 6. 23 We conclude that the first two choice of law rules this Court has applied in marine insurance disputes--requiring the application of the law of the state in which the policy was formed or the law of the state in which the policy was issued and delivered--identify only the states which have sufficient contact with the policy and the parties that their laws can be applied. The third choice of law rule--requiring the application of the law of the state with the greatest interest--identifies the state law that should be applied. A federal court in a marine insurance dispute must apply the first two rules to isolate the eligible states; of these states, the court then must determine which state has the greatest interest in the resolution of the issues. Truehart, 884 F.2d at 226. 24 A review of the first two choice of law rules reveals that both Texas and Louisiana have sufficient contact with the marine insurance policy and the parties to support the application of their insurance laws. Of these two states, Texas has a considerably greater interest in the application of its insurance code. Texas has a strong interest in the protection of its citizens, including Anh Thi Kieu, against the overbearing tactics of insurance underwriters. Louisiana's interest in the protection of citizens of foreign states is less significant. The insurance laws of Texas should have been applied, and appropriately, the district court so applied them. Albany's argument that Louisiana insurance law governs its dispute with Anh Thi Kieu lacks merit.