Stonewall Surplus Lines Ins. Co. v. Johnson Controls, Inc

In Stonewall Surplus Lines Ins. Co. v. Johnson Controls, Inc. (1993) 14 Cal.App.4th 637, a large manufacturing corporation with operations in 18 states and 5 foreign countries purchased excess liability insurance in Wisconsin. The company was sued for negligence and punitive damages in California, after a battery it manufactured and sold in California exploded here, injuring a California resident. The court applied California law prohibiting insurance for punitive damages, rather than Wisconsin law (which allowed such coverage). Because the manufacturer did business in 18 states, and it indicated this in applying for coverage, the court reasoned the parties intended the multiple risk policy to be treated as a series of separate policies insuring against a particular risk in each state. It concluded the parties expected the risk of liability from activities at the California plant to be governed by California law. (Id. at pp. 648-649.)