## Facts

- Foster Wheeler Corporation faced thousands of asbestos-related bodily injury claims implicating multiple policy years and insurers.
- Foster Wheeler was incorporated in New York; its principal place of business moved from New York to New Jersey in 1962 and remained in New Jersey during the disputed policy years.
- Liability policies were largely negotiated and placed through New York-based brokers and were signed and delivered through New York channels.
- Policy administration and premium-related dealings were handled largely in New Jersey, where Foster Wheeler generally met with its brokers.
- Foster Wheeler asserted that New Jersey contacts and the potential availability of the New Jersey insurance guaranty association favored applying New Jersey law.
- The dispute concerned which state’s law governed policy interpretation and allocation of defense and indemnity for long-tail asbestos claims.

## Issues

1. Under New York contract conflicts rules, whether New York or New Jersey law governs interpretation of Foster Wheeler’s liability insurance policies covering long-tail asbestos claims.
2. Whether the policies’ “center of gravity” is determined primarily by the insured’s principal place of business during the policy years or by other contacts such as place of negotiation, issuance, and delivery.
3. If New York law governs, whether New York’s pro rata allocation method applies to defense and indemnity obligations across triggered years, including periods of no insurance or self-insurance.

## Decision

- The Appellate Division affirmed the order granting partial summary judgment to the insurers.
- The court held New York law governed under New York’s grouping-of-contacts (center-of-gravity) approach.
- The court concluded that the concentration of New York contacts—New York incorporation and New York-based negotiation, brokerage, and delivery—outweighed New Jersey contacts tied to headquarters location and policy administration.
- Applying New York law, the court approved use of New York’s pro rata allocation for long-tail asbestos liabilities, including assigning the insured a share for uninsured/self-insured periods absent contrary policy language.

## Legal Principles

- New York applies a “grouping of contacts” (center-of-gravity) test to contract choice-of-law questions, weighing negotiation and contracting location, issuance/delivery, the insured’s domicile or principal place of business, and the relevant governmental interests.
- For multistate insurance risks, the insured’s principal place of business is an important contact, but it is not dispositive; courts weigh it against other contract-formation contacts and state regulatory interests.
- Where New York law governs long-tail bodily injury claims, allocation is generally pro rata across triggered policy years based on time on the risk, and the insured bears responsibility for uninsured or self-insured periods unless the policy provides otherwise.

## Conclusion

The court held that New York had the most significant relationship to the liability policies and therefore New York law governed, leading to application of New York’s pro rata allocation framework for multiyear asbestos defense and indemnity obligations.


Certain Underwriters at Lloyd’s, London v. Foster Wheeler Corp., 36 A.D.3d 17, 822 N.Y.S.2d 30 (N.Y. App. Div. 1st Dep’t 2006)