Great Lakes Insurance SE v. Raiders Retreat Realty Co.

Pennsylvania business Raiders Retreat Realty Co. (Raiders) (defendant) purchased an insurance policy from German company Great Lakes Insurance (Great Lakes) (plaintiff) to cover Raiders’ boat. The parties’ maritime-insurance contract stated that New York law governed any disputes. After Raiders’ boat ran aground, Raiders filed a claim with Great Lakes. However, Great Lakes refused coverage, arguing that Raiders had violated the parties’ contract by failing to properly maintain the boat’s fire-suppression system. Great Lakes sued Raiders in a federal district court located in Pennsylvania, seeking a declaratory judgment that Raiders breached the insurance contract. Raiders countersued, arguing that under Pennsylvania contract law, Raiders was entitled to recover under the insurance contract. Great Lakes argued that New York law governed, not Pennsylvania law, and that under New York law, Raiders was not entitled to recover. The district court concluded that New York law governed and thus rejected Raiders’ contract claim. The court of appeals reversed, finding that although the choice-of-law clause was presumptively enforceable, the presumption was rebutted if, on remand, the district court concluded that applying New York law would violate Pennsylvania’s public policy concerning insurance. The United States Supreme Court granted certiorari.