Key Decisions

September 2012 – Choice Of Law Provision Was Not Against Public Policy

(filed under: Key Decisions Archive | September 26, 2012)

Other Cases Of Interest 

A Choice Of Law Provision In An Indemnity Agreement Was Not Against Public Policy

Maxim Crane Works v. Tilbury Constructors
(Cal. Ct. of App., 3d Dist.), filed August 8, 2012

Steven Gorski sued Maxim for personal injuries arising from a worksite injury. Maxim cross-complained against Tilbury Constructors, Gorski’s employer, seeking indemnity. Maxim’s indemnity claim was based on a contract between it and Tilbury. The contract, which used a preprinted form supplied by Maxim, provided that it would be governed by Pennsylvania law. The contract provided that in the event Maxim had to sue on the contract, it would be entitled to attorney’s fees.

The trial court found the indemnity agreement under which Maxim was suing, was inapplicable to Gorski’s claim. It based this finding on Pennsylvania law.

The trial court then awarded Tilbury its attorney’s fees in full, without apportioning them between defending against the indemnity contract and defending against Gorski’s underlying claim.

On appeal, Maxim contended the trial court should not have applied Pennsylvania law to the dispute between it and Tilbury. Maxim also challenged the award of attorney fees.

The Court of Appeal affirmed.

The court first found that Maxim and Tilbury were free to select whose law to apply and that since Maxim was a Pennsylvania company and its contract provided that Pennsylvania law governed, it was reasonable to apply Pennsylvania law. It then rejected Maxim’s argument that applying Pennsylvania law was contrary to California public policy. Since the issue was how liability should be shared as between Maxim and Tilbury, California’s public policy of ensuring injured workers were compensated was not in issue.

The court next found that the trial court had not abused its discretion in awarding Tilbury its attorney’s fees without trying to apportion between those incurred in challenging Gorski’s injury claims and Maxim’s indemnity claims. The court ruled that since Maxim had conceded that California law made the attorney’s fee clause in its contract reciprocal, Maxim could not challenge the application of California law to the fee issue. It then ruled that given the interrelationship between Gorski’s injuries, Maxim’s liability for those, and Tilbury’s potential liability for indemnifying Maxim, the trial court could properly award Tilbury its fees without apportionment.