The Delaware Supreme Court ruled in Stillwater Mining Co. v. National Union Fire Insurance Co. of Pittsburgh, PA, 289 A.3d 1274 (Del. 2023) that Delaware law, and not Montana law, governed the question of whether the insurer had a duty to defend a company that was incorporated in Delaware, but had its principle place of business in Montana. The case involved the interpretation and application of D&O policies issued to a Montana based mining company. The D&O policies did not contain a choice of law provision. However, the policies did contain amendatory endorsements, one of which provided for conformity with Montana law. Additionally, there was an endorsement regarding alternative dispute resolution, which provided that any mediator or arbitrators were to give due consideration to the general principles of the law of the state where the insured was incorporated when it came to determining the construction or interpretation of the policy. There was no territorial limitation on the coverage granted by the policy, but the D&O policies providing coverage anywhere in the world for the insured’s operation.
The Delaware Supreme Court found that the State of Delaware had the most significant relationship to the dispute in question, and to the parties, because the insured corporation was a citizen of Delaware.
As a general principle, the state in which the principle location of the insured risk is present in will have the most significant relationship for purposes of conflict analysis. However, when the insured risk was not limited to a single state, courts considered a number of other factors. The Delaware Supreme Court found that the dispute between the parties mainly concerned the interpretation of the contract, i.e., the parties’ rights and obligations under the D&O policies. The Court asserted that the State of Delaware had a greater interest than Montana because the dispute involved D&O policies that were purchased by a Delaware corporation and the case involved an appraisal action brought in Delaware.