In re Celotex Corp.

• Decision Date: 17 April 1996
• Docket Number: Bankruptcy No. 90-10016-8B1,90-10017-8B1. Adv. No. 91-40.
• Citation: 194 BR 668
• Parties: In re The CELOTEX CORPORATION, et al., Debtors. The CELOTEX CORPORATION, et al., Plaintiffs, v. AIU INSURANCE COMPANY, et al., Defendants.
• Court: U.S. Bankruptcy Court — Middle District of Florida

194 B.R. 668 (1996)

In re The CELOTEX CORPORATION, et al., Debtors The CELOTEX CORPORATION, et al., Plaintiffs, v. AIU INSURANCE COMPANY, et al., Defendants.

Bankruptcy Nos. 90-10016-8B1, 90-10017-8B1. Adv. No. 91-40.

United States Bankruptcy Court, M.D. Florida, Tampa Division.

April 17, 1996.

COPYRIGHT MATERIAL OMITTED

Jeffrey W. Warren, Bush, Ross, Gardner, Warren & Rudy, P.A., Tampa, FL, for debtors.

Charles P. Schropp, William R. Daniel, Schropp, Buell & Elligett, P.A., Tampa, FL, Deborah A. Swindells, Karen L. Bush, Nicholas J. Zoogman, Anderson, Kill, Olick & Oshinsky, Washington, DC, Stephen A. Madva, Montgomery McCracken Walker & Rhoads, Philadelphia, PA, Bruce Bishop, Willcox & Savage, Norfolk, VA, George N. Wood, Vice President and General Counsel, The Celotex Corporation, Tampa, FL, for plaintiffs.

Sara Kistler, Assistant United States Trustee, Tampa, FL.

John W. Kozyak, Kozyak Tropin Throckmorton & Humphreys, P.A., Miami, FL, for Asbestos Property Damage Claimants Committee.

Charles M. Tatelbaum, Johnson, Blakely, Pope, Boker, Ruppel & Burns, P.A., Clearwater, FL, for Unsecured Trade Creditors Committee.

William Knight Zewadski, Trenam, Simmons, Kemker, Scharf, Barkin, Frye & O'Neill, Tampa, FL, for Unofficial Asbestos Health Claim Co-Defendants Committee.

H.C. Goplerud, Honigman Miller Schwartz and Cohn, Tampa, FL, Sheldon S. Toll, Honigman Miller Schwartz & Cohn, Detroit, MI, for Asbestos Health Claimants Committee.

Daniel C. Sauls, John Flyger, Steptoe & Johnson Company, Washington, DC, for Highlands Insurance Co., Old Republic Insurance Company.

Robert J. Bates, Jr., Maryann C. Hayes, Stanley V. Figura, Bates Meckler Bugler & Tilson, Chicago, IL, for Eric Reinsurance Company.

Deborah M. Paris, Paris & Associates, Tampa, FL, for Certain Underwriters at Lloyd's of London (Plaisted).

John A. Yanchunis, Blasingame Forizs & Smiljanich, St. Petersburg, FL, for Transportation Insurance Company, Continental Casualty Company, Columbia Casualty Company, Eric Reinsurance Company and Zurich American Insurance Company.

David C. McLauchlan, Andrew Kochanowksi, Lord Bissell & Brook, Chicago, IL, for Certain Underwriters at Lloyd's of London.

Thomas B. Keegan, Robins, Kaplan, Miller & Ciresi, Chicago, IL, for Employers Mutual Casualty Company.

William Clearly, Mendes & Mount, New York City, for Barrett and London Market Companies.

Gregory J. Willis, Bart Billbrough, Walton Lantaff Schroeder & Carson, Miami, FL, for Florida Insurance Guaranty Association, Inc.

W. Gray Dunlap, Jr., Tampa, FL, for Hartford, First State & Twin City Insurance Companies.

Rolph Gilbertson, Zeele & Larson, Minneapolis, MN, for Employers Insurance of WAUSAU.

Margaret Jones, Grippo & Eldon, Chicago, IL, for American Insurance Company and National Surety Corporation.

Thomas B. Mimms, Jr., MacFarlane Ferguson, Tampa, FL, for American Home Assurance Company, AIU Insurance Company, Highlands Insurance Company, Old Republic Insurance Company, Granite State Insurance Company, National Union Fire Insurance Company of Pittsburgh, PA., Employers Mutual Casualty Company, American Insurance Company, National Surety Company, St. Paul Surplus Lines Insurance Company.

Christine A. Nykiel, Jackson & Cambell, Washington, DC, for American Home Assurance Company, AIU Insurance Company, Granite State Insurance Company, Lexington Insurance Company, National Union Fire Insurance Company of Pittsburgh, PA.

Elizabeth G. Repaal, Harris Barrett, Mann & Dew, Tampa, FL, for Northbrook, as successor in interest to Allstate Insurance Company.

Mary A. Lau, Lau Lane Pieper Conley & McCreadie, P.A., Tampa, FL, for Employers Insurance Company of WAUSAU.

Elizabeth B. Sandza, Cynthia T. Andreason, Leboeuf Lamb Greene & Macrea, Washington, DC, for Hudson Insurance Company and Gibraltar Casualty Company.

ORDER ON MOTION FOR SUMMARY JUDGMENT AS TO CHOICE OF LAW

THOMAS E. BAYNES, Jr., Bankruptcy Judge.

I. INTRODUCTION

THIS CAUSE came on for consideration upon Cross Motions for Summary Judgment. This Court has considered all arguments and evidence, including the entire record for this case, consistent with a ruling on a motion for summary judgment. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986) (holding the standard of proof in summary judgment rulings is the same as it would be at trial); Celotex v. Catrett, 477 U.S. 317, 323-35, 106 S.Ct. 2548, 2552-59, 91 L.Ed.2d 265 (1986) (discussing the appropriate burdens of proof and types of evidence to use in summary judgment decisions); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-88, 106 S.Ct. 1348, 1355-57, 89 L.Ed.2d 538 (1986) (detailing the elements of summary judgment analysis). Finding no genuine issues of material fact remain, this Court grants the Debtor/Plaintiff's Motion for Summary Judgment and rules Illinois law applies under a lex loci contractus analysis.

II. DISCUSSION

These Motions for Summary Judgment on the choice of law address an issue fundamental to this case. The issue was first addressed in this Court's Order, entered November 24, 1992, ruling the law of Florida applies to determine the Choice of Law in this case, and further, the test in Florida is a lex loci contractus analysis.¹ The issue addressed at this time is how to apply the lex loci contractus analysis to the facts of this case.²

A. Lex Loci Contractus in Florida

Florida's application of lex loci contractus analysis has not developed in any easily discernable, straight line fashion. The effect of public policy considerations is often the haven for the peculiar outcomes of particular cases.³ However, the Court finds two decisions are key to applying lex loci contractus under Florida law: Shapiro v. Associated International Insurance Co., 899 F.2d 1116 (11th Cir.1990) and Jemco, Inc. v. United Parcel Service, Inc., 400 So.2d 499 (3rd Dist. Ct.App.1981).

Both of these cases stand for the proposition the test under a Florida lex loci contractus analysis is determining "`the place where the last act necessary to complete the contract was done.'" Shapiro, 899 F.2d at 1119 (quoting Jemco, 400 So.2d at 500); see Fioretti v. Massachusetts General Life Insurance Co., 53 F.3d 1228, 1235 (11th Cir.1995); Sturiano v. Brooks, 523 So.2d 1126, 1129-30 (Fla.1988). This is "the traditional choice of law rule in Florida." Id.⁴ The Court applies the last act test to decide where the contract was completed and, thus, which state's law would apply.

B. The Facts

There are numerous facts in this case relevant to determining where the insurance contracts were completed. All of the parties, even prior to litigation, were very involved with each other. The Debtor (The Celotex Corporation), the insurance broker (Rollins Burdick Hunter (RBH)), the wholesale brokers, the associated agents, and all of the Defendants (Insurance Companies) had strong interaction with each other from year to year. The relationships were not simple transactions where an individual contacts a broker, the broker finds an agent, and the agent issues a policy to the individual. The activity here required multiple phases of interaction over a long period of time and a broad spectrum of insurance coverage.

The communication required to maintain these relationships included discussions and debates, exchanges of documents, mutual interest —every type of activity associated with purchasing insurance in the open market place. The relationships existed prebankruptcy and prelitigation. Thus, there was a long life to these relationships within a particular business context. Evidence presented, particularly in the bodily injury portion of this trial, supports the existence of this life. The evidence included volumes of yearly applications to renew insurance coverage, submissions attached to those applications, form 10-K's, annual reports, discussions regarding premiums and coverage — all of these communications address the same types of issues in the context of the parties' relationships.

The Debtor used the same broker, RBH, for the most part. All of the Defendants' used similar type brokers. All of this activity occurred within the Illinois insurance market, where all of the participants were well known to each other. Regardless of whether brokers or agents were used by Defendants outside the Illinois market, they all interacted with RBH which is situated in Illinois. The relationships all existed in the same market — the Illinois insurance market. In the legal context, everyone dealt with RBH. The negotiating, the contracting, the offers, the acceptances, the binders, the claims, and all other related transactions shared this predicate.

The facts associated with Florida are far less numerous. Primarily, Florida domiciled the Debtor. While this Court acknowledges the principal place of business of a major party is a relevant fact, it is not sufficient to conclude the choice of law. Admittedly, some decisions were made by Celotex in Florida. Decisions, however, were made on occasion in other states as well. These decisions, possibly made in New York, London, or Florida, are not sufficient to shift the balance away from the Illinois market — a market in which all of parties functioned.

C. Applying Lex Loci Contractus to the Facts

Applying the last act test under the Florida lex loci contractus analysis, this Court finds the ultimate act binding all the parties together in their individual contracts took place in Illinois through the various agents of all the parties. The Court takes this position ultimately based on the importance of the binding of insurance coverage issued in Illinois as the culmination of the business relationship between the parties. In the context of insurance law, the particular companies and insureds are bound by the acts of their agents. Without elaborating on the details of what each agent can or cannot do, the law is clear that delivery of the binders of...