The case involved a comprehensive general liability policies issued to a general contractor with construction projects across the U.S. The policies contained no choice-of-law provisions. In a declaratory action for coverage of faulty construction liability at a Kansas project site, the Missouri federal district court applied Missouri’s multi-factored choice-of-law test set forth under Section 188 of the Restatement (Second) of Conflict of Laws. While acknowledging that the project took place in Kansas, the district court went on to note that both the contractor’s headquarters and insurance agent were located in Missouri, which was also the place of contracting for the policies. Applying the Section 188 test, the district court found that Missouri had more contacts with the disputed policies than Kansas, and proceeded to apply Missouri law to conclude that no coverage was available.
On appeal, the contractor argued that instead of applying Section 188, the district court should have focused on the principal location of the insured risk as the determinative factor to conclude that Kansas law should prevail. The contractor cited the Restatement’s Section 193, which addresses choice-of-law rules for disputes involving “contracts of fire, surety or casualty insurance.” The appellate court rejected the argument, explaining that since no single location of risk can be identified under multiple-risk policies, Section 193’s choice-of-law analysis could not be employed.
The appellate court further rejected the contractor’s assertion that discrete construction contracts listed as “designated contracts” or “described projects” under the policies could qualify as single risk locations. The appellate court ruled that despite the listing of various location-specific projects, it would have been impossible for the contracting parties to fairly and accurately predict the principal location of any risk under the policies. Accordingly, Section 193’s choice-of-law analysis did not apply.