Insurance policies frequently contain choice-of-law provisions providing that their interpretation is subject to the law of a particular jurisdiction. Thus, if a policy’s choice-of-law provision requires that the policy be interpreted in accordance with New York law, then the policy should be interpreted in accordance with New York law. That seemingly self-evident proposition was recently upheld by the United States District Court for the Southern District of New York in Cajun Conti, LLC v. Starr Surplus Lines Ins. Co., 23 Civ. 8844 (KPF), 2025 WL 764131 (S.D.N.Y. Mar. 11, 2025).
But, according to the insured, Cajun Conti, the proposition is not self-evident at all. This is because the insurance policy containing the New York choice-of-law provision was issued to Cajun Conti in Louisiana, and, under the Louisiana Insurance Code, foreign choice-of-law provisions are void, at least for policies issued in Louisiana and subject to approval by the Louisiana Department of Insurance. See La. Rev. Stat. § 22:868.
The Southern District, however, rejected Cajun Conti’s invocation of the Louisiana statute, and enforced the parties’ contractual commitment to be bound by New York law. Cajun Conti, 2025 WL 764131, at *4-*7. The Court did so for several reasons.
First, Section 5-1401 of New York’s General Obligations Law provides that any contract governing transactions in excess of $250,000 containing a New York choice-of-law provision is enforceable in New York. Indeed, New York’s highest court has held that a provision subject to Section 5-1401 obviates the need for any further conflicts-of-law analysis. The provision is presumptively enforceable. Cajun Conti, 2025 WL 764131, at *4.
Second, the Cajun Conti court noted that, even in the absence of Section 5-1401, New York courts should enforce choice-of-law provisions as a matter of contract interpretation. To that end, the court cited a recent decision from New York’s Court of Appeals holding that “when the parties have chosen New York law, a court may not contravene that choice through common-law conflicts analysis.” Cajun Conti, 2025 WL 764131, at *5 (citing Petróleos de Venezuela S.A. v. MUFG Union Bank, N.A., 41 N.Y.3d 462, 476 (2024)).
Third, the Cajun Conti court rejected a “public policy” exception to the foregoing rules, finding no basis for such an exception in controlling New York law. Cajun Conti, 2025 WL 764131, at *6.
Based on the foregoing principles of New York law, the Cajun Conti court concluded that the Louisiana statute purporting to void the contract provision is ultimately irrelevant.
The takeaway is that courts in New York should apply New York law to insurance policies requiring the application of New York law, irrespective of alleged public policy concerns arising from contrary law of the insureds’ home state. This rule provides certainty to the parties concerning their rights and obligations and ensures that their contractual intent will be upheld.
Business Interruption Insurance, COVID-19 and Direct Physical Damage under New York Law
By Damon Vocke and David T. McTaggart
To date, approximately 150 business-interruption insurance coverage lawsuits have been filed in federal courts arising from COVID-19 and related government-ordered restrictions. In what appears to be the first substantive ruling on the merits in these cases, the Southern District of New York recently ruled against an insured who could not meet its burden to show a likelihood of success in establishing “property damage” due to the novel coronavirus to support its claim for injunctive relief. See Social Life Magazine, Inc. v. Sentinel Ins. Co., 1:20-cv-03311-VEC (Dkt. 24-1, S.D.N.Y. May 14, 2020). Judge Caproni expressed sympathy “for every small business that is having difficulties during this period of time,” but concluded that “New York law is clear” in requiring actual property damage to trigger business interruption coverage. Because the insured’s coverage theory rested on a government shutdown in the absence of any property damage, the Court denied its preliminary injunction motion, reasoning “this is just not what’s covered under these insurance policies.”
Duane Morris’ Thomas Newman Recognized as the NYC Appellate “Lawyer of the Year” by Best Lawyers
Duane Morris’ Thomas Newman has been named by Best Lawyers as the 2019 “Lawyer of the Year” in New York City for Appellate Practice. The recognition is given to only one attorney for each practice area and city. Lawyers are selected based on high marks received during peer-review assessments conducted by Best Lawyers each year. Mr. Newman also received this distinction in 2018 and 2013.
Mr. Newman practices in the areas of insurance and reinsurance law, including coverage, claims handling, contract drafting and arbitration and litigation. In addition to his insurance/reinsurance practice, Mr. Newman has wide experience in appellate practice and has handled hundreds of appeals in both state and federal courts in New York and elsewhere and has argued 80 appeals in the New York Court of Appeals.
He is a member of the American Academy of Appellate Lawyers; a life member of the American Law Institute; a Fellow of the Chartered Institute of Arbitrators; a member of the London Court of International Arbitration; a member of the American College of Coverage and Extracontractual Counsel; a member of ARIAS-U.S.; a member of the Federation of Defense and Corporate Counsel; a Fellow of the New York State Bar Association Foundation; and a member of the New York State Office of Court Administration’s Advisory Committee on Civil Practice.
He is the original author of New York Appellate Practice, co-author of the Handbook on Insurance Coverage Disputes and the author of numerous articles on insurance/reinsurance and appellate practice.
Viking Pump: New York Court of Appeal Holds That Consolidated Edison Pro Rata Allocation Rule and Horizontal Exhaustion Rule Do Not Apply Under Facts of Case
The New York Court of Appeal on Tuesday, May 3, held that the Consolidated Edison pro rata allocation rule does not apply where the policies have prior insurance and non-cumulation clauses. The Court held that the pro rata rule in Consolidated Edison depends on policy language and that the prior insurance and non-cumulation clause is inconsistent with a pro rata approach. However, the Court did say that prior insurance and non-cumulation clauses would be enforced as anti-stacking clauses. Such enforcement could limit the amount of coverage available to a policyholder. The Court of Appeal also held that under the circumstances of the case, horizontal exhaustion would not apply.
To view this decision, please visit the New York Courts website.