Pitzer College vs.

Indian Harbor Insurance Company

Pitzer College (“Pitzer”) is one of the Claremont Colleges in Southern California. The Claremont
University Consortium (“CUC”) is an umbrella entity that enters into insurance contracts on behalf of
the Claremont Colleges. CUC purchased an insurance policy (the “Policy”) from Indian Harbor
Insurance Company (“Indian Harbor”) to cover Pitzer for remediation expenses caused by pollution-
related damage. New York law governs any issues arising under the Policy.1

On January 10, 2011, Pitzer became aware of darkened soils at the construction site for a new
dormitory. By January 21, 2011, Pitzer determined that remediation would be required. After
assessing its options, Pitzer secured one of two Transportable Treatment Units (“TTU”) located in
Southern California to remediate the soils. The remediation treatment was successful, and Pitzer
completed the dormitory a few days before the students' move-in date.

In its section describing coverage for remediation expenses (Section I.B.), the Policy contained a
notice provision requiring Pitzer to provide Indian Harbor with notice of any condition requiring
remediation.2 In its section describing reporting (Section VII.B.), the Policy contained a consent
provision stating that Indian Harbor would not cover any expenses Pitzer incurred for remediation
without first obtaining Indian Harbor's consent.3 The consent provision included an exception for
emergencies, but required Pitzer to notify Indian Harbor “immediately thereafter” it incurred any
emergency expenses.

Pitzer did not inform Indian Harbor of the remediation until July 11, 2011, approximately three months
after it completed remediation and six months after it discovered the darkened soils. Nor did Pitzer
obtain Indian Harbor's consent before commencing remediation or paying remediation costs. On
August 10, 2011, Indian Harbor acknowledged receipt of Pitzer's notice of remediation. On March 16,
2012, Indian Harbor denied coverage on the basis of Pitzer's late notice and its failure to obtain
Indian Harbor's consent.

Pitzer sued Indian Harbor in Los Angeles County Superior Court, alleging that the insurer breached
the Policy by failing to indemnify Pitzer for the remediation costs. Indian Harbor removed the case to
federal court on the basis of diversity jurisdiction and moved for summary judgment.

The district court granted Indian Harbor summary judgment. The district court applied New York law,
finding that Pitzer failed to establish that the California notice-prejudice rule was a fundamental public
policy that overrode the Policy's choice of law provision. The district court determined that summary
judgment was warranted because Pitzer failed to notify Indian Harbor. The district court also
concluded that summary judgment was separately warranted because Pitzer failed to comply with the
Policy's consent provision. The district court further concluded that Pitzer's remediation work did not
fall within the emergency exception, but that, even if it did, Pitzer was not entitled to rely on the
exception because it failed to “immediately thereafter” notify Indian Harbor of the emergency.

Issue: Whether California’s common law notice-prejudice rule is a fundamental public policy of the
State of California such that a choice of law provision in an insurance policy which does not conform
to that rule may be overridden?

Ruling: The California Supreme Court held that California’s notice-prejudice rule is a fundamental
public policy in the insurance context, supporting the application of California law under a choice of
laws analysis. In addition, the Court held that the rule generally applies to consent (aka “no voluntary
payments”) provisions in first party insurance policies but not to consent provisions in third party
liability policies.
Kearney v. Salomon Smith Barney, Inc.

Facts

Kelly Kearney and other residents of California (Kearney) (plaintiffs) filed a class-action suit in
California state court against Salomon Smith Barney Inc. (Salomon) (defendant), a financial
institution. Kearney alleged that Salomon recorded telephone conversations between Salomon clients
and brokers in the company’s Atlanta, Georgia, office without the clients’ knowledge or consent.
Kearney argued that Salomon’s secret recordings violated a California law that required all parties to
a telephone conversation to have knowledge of and consent to any recording. Salomon argued that
the trial court ought to apply Georgia law, which permitted the recording of a telephone conversation
so long as one party to the conversation consented. The trial court agreed and granted Salomon’s
motion to dismiss the complaint. Kearney appealed. The court of appeals affirmed the judgment of
the trial court, concluding that Georgia law applied to the matter. The Supreme Court of California
granted certiorari to review.

Issue: WON the grant of injunctive relief proper

Ruling:

Once a preliminary analysis has identified a true conflict of the governmental interests involved as
applied to the parties under the particular circumstances of a case, the comparative impairment
approach to the resolution of such conflict seeks to determine which state's interest would be more
impaired if its policy were subordinated to the policy of the other state. This analysis proceeds on the
principle that true conflicts should be resolved by applying the law of the state whose interest would
be more impaired if its law were not applied. Exponents of this process of analysis emphasize that it
is very different from a weighing process. The court does not weigh the conflicting governmental
interests in the sense of determining which conflicting law manifested the better or the worthier social
policy on the specific issue. The process can accurately be described as accommodation of
conflicting state policies, as a problem of allocating domains of law-making power in multi-state
contexts -- limitations on the reach of state policies -- as distinguished from evaluating the wisdom of
those policies. Emphasis is placed on the appropriate scope of conflicting state policies rather than on
the quality of those policies.
Manufacturers Hanover Trust Co. v. Guerrero,

G.R. No. 136804, February 19, 2003

FACTS:

In 1994, respondent Rafael Ma. Guerrero (“Guerrero” for brevity) filed a complaint for damages
against petitioner Manufacturers Hanover Trust Co. and/or Chemical Bank (“the Bank” for brevity)
with the RTC. Guerrero sought payment of damages allegedly for (1) illegally withheld taxes charged
against interests on his checking account with the Bank; (2) a returned check worth US$18,000.00
due to signature verification problems; and (3) unauthorized conversion of his account. The Bank filed
its Answer alleging, inter alia, that by stipulation Guerrero’s account is governed by New York law and
this law does not permit any of Guerrero’s claims except actual damages. Subsequently, the Bank
filed a Motion for Partial Summary Judgment seeking the dismissal of Guerrero’s claims for
consequential, nominal, temperate, moral and exemplary damages as well as attorney’s fees on the
same ground alleged in its Answer. Guerrero opposed the motion.

The affidavit of Alyssa Walden, a New York attorney, supported the Bank’s Motion for Partial
Summary Judgment. Alyssa Walden’s affidavit (“Walden affidavit” for brevity) stated that Guerrero’s
New York bank account stipulated that the governing law is New York law and that this law bars all of
Guerrero’s claims except actual damages. The Philippine Consular Office in New York authenticated
the Walden affidavit. 

The RTC denied the Bank’s Motion for Partial Summary Judgment and its motion for reconsideration.
The Bank filed a petition for certiorari and prohibition with the Court of Appeals assailing the RTC
Orders. In its Decision, the Court of Appeals dismissed the petition. Hence, the instant petition.

ISSUE:

Whether or not the Bank’s proof of facts to support its motion for summary judgment may be given by
affidavit.

Ruling:

NO. There can be no summary judgment where questions of fact are in issue or where material
allegations of the pleadings are in dispute. The resolution of whether a foreign law allows only the
recovery of actual damages is a question of fact as far as the trial court is concerned since foreign
laws do not prove themselves in our courts. Foreign laws are not a matter of judicial notice. Like any
other fact, they must be alleged and proven. Certainly, the conflicting allegations as to whether New
York law or Philippine law applies to Guerrero’s claims present a clear dispute on material allegations
which can be resolved only by a trial on the merits.

Under Section 24 of Rule 132, the record of public documents of a sovereign authority or tribunal may
be proved by (1) an official publication thereof or (2) a copy attested by the officer having the legal
custody thereof. Such official publication or copy must be accompanied, if the record is not kept in the
Philippines, with a certificate that the attesting officer has the legal custody thereof. The certificate
may be issued by any of the authorized Philippine embassy or consular officials stationed in the
foreign country in which the record is kept, and authenticated by the seal of his office. The attestation
must state, in substance, that the copy is a correct copy of the original, or a specific part thereof, as
the case may be, and must be under the official seal of the attesting officer.
Compagnie De Commerce Et De Navigation D'extreme Orient, Vs. The Hamburg Amerika
Packetfacht Actien Gesellschaft

G.R. No. L-10986 March 31, 1917

FACTS:

1. COMPAGNIE DE COMMERCE ET DE NAVIGATION D'EXTREME ORIENT (Compagnie) is

acorporation duly organized and existing under and by virtue of the laws of France, with its principal
office inParis and a branch office in Saigon, Vietnam. THE HAMBURG AMERIKA
PACKETFACHT ACTIENGESELLSCHAFT(Hamburg) is a corporation organized under the laws of
Germany with its principal office inHamburg and represented in Manila by Behn, Meyer & Company
(Limited), a corporation.2. HAMBURG owned a steamship named SAMBIA, which proceeded to the
port of Saigon and on board wasthe cargo belonging to COMPAGNIE. There were rumors
of impending war between Germany and Franceand other nations of Europe. The master of the
steamship was told to take refuge at a neutral port (becauseSaigon was a French
port).3. COMPAGNIE asked for compulsory detention of its vessel to prevent its property from leaving
Saigon.However, the Governor of Saigon refused to issue an order because he had not been officially
notified of thedeclaration of the war.4. The steamship sailed from Saigon, and was bound for Manila,
because it was issued a bill of health by theUS consul in Saigon. The steamship stayed continuously
in Manila and where it contends it will be compelledto stay until the war ceases. No attempt was
made on the part of the defendants to transfer and deliver the cargoto the destinations as stipulated
in the charter party.5. BEHN, MEYER and COMPANY (agent of HAMBURG in Manila) offered to
purchase the cargo fromCOMPAGNIE, but the latter never received the cable messages so they
never answered. When a survey wasdone on the ship, it was found that the cargo was infested with
beetles, so BEHN asked for court authority tosell the cargo and the balance to be dumped at sea.
The proceeds of the sale were deposited in the court, waitingfor orders as to what to do
with it.6. BEHN wrote COMPAGNIE again informing the latter of the disposition which it made upon
the cargo.COMPAGNIE answered that it was still waiting for orders as to what to
do. COMPAGNIE wanted all the proceeds of the sale to be given to them (damages, for the

defendants’ failure to deliver the cargo to the

destinations Dunkirk and Hamburg), while defendants contended that they have a lien on the
proceeds of thesale (amount due to them because of the upkeep and maintenance of the ship crew
and for commissions for thesale of the cargo).6. The trial court ruled in favor of the plaintiffs. On
appeal, the defendants made the following assignments onappeal (that the court had no jurisdiction,
that the fear of capture was not force majeure, that the court erred inconcluding that defendant is
liable for damages for non-delivery of cargo, and the value of the award ofdamages). On appeal, the
plaintiffs also contended that the court erred in not giving the full value of damages

ISSUE: WON the master of the steamship was justified in taking refuge in Manila (therefore being
the cause of the non-delivery of the cargo belonging to the plaintiffs)

Ruling:

A shipmaster must be allowed a reasonable time in which to decide what course he will adopt as
to thedisposition of his cargo, after entering a port of refuge; and though he must act promptly
thereafter, when thecargo is a perishable one, neither he nor the shipowner is responsible for loss or
damage suffered by the cargoas a result of its detention aboard the vessel during such time as may
reasonably necessary to come to adecision in this regard.Under the circumstances set out in
the opinion, the master of the Sambia proceeded with all reasonable dispatchand did all that could
be required of a prudent man to protect the interests of the owner of the cargo aboard isvessel; so
that any losses which resulted from the detention of the cargo aboard the Sambia must be attributed
to

the act of the “Enemy of the King” which compelled the Sambia to

 flee to a port of refuge, and made necessarythe retention of the cargo aboard the vessel at anchor
under a tropical sun and without proper ventilation until itcould be ascertained that the interests of the
absent owner would be consulted by the sale of this perishablecargo in the local market.In fleeing
from the port of Saigon, and taking refuge in Manila Bay the master of the Sambia was not acting
forthe common safety of the vessel and her cargo. The French cargo was absolutely secure from
danger of seizureor confiscation so long as it remained in the port in Saigon, and the flight of the
vessel was a measure of precaution adopted solely and exclusively for the preservation of the vessel
from the danger of seizure orcapture.Dispositive: So much of the judgment as provides for the
delivery to the plaintiff of the net proceeds of the saleof the cargo (P128,977.71) affirmed; but so
much thereof as allowed damages for a breach of the charter party(P60,841.32) reversed.
M/S BREMEN AND UNTERWESER REEDEREI, GMBH

v. ZAPATA OFF-SHORE COMPANY

407 U.S. 1 (1972)

FACTS:

The Bremen (BREMEN), a German towing corporation, contracted to transport a self-elevating drilling
rig from Louisiana to Ravenna, Italy - in the Adriatic Sea, for Zapata Off-Shore Co. (ZAPATA), a
Houston-based American Corporation. Their towing agreement included a forum-selection clause
(FSC) providing for the “litigation of any dispute in the High Court Justice in London (English
tribunal).” When suddenly, a storm forced Bremen to make land in the nearest port of refuge which is
in Tampa, Florida and since the rig under tow was damaged, Zapata sued there, ignoring the forum
clause. The Bremen responded by invoking the forum clause and moved to dismiss for lack of
jurisdiction or on forum non conveniens grounds. In the meantime, Bremen was faced with a dilemma
in the pending action in the United States court at Tampa. The six-month period for filing action to
limit its liability to Zapata and other potential claimants was about to expire,  but the United States
District Court in Tampa (DISTRICT COURT) had not yet ruled on Bremen’s motion to dismiss or stay
Zapata's action after the six-month period for filing the limitation action had run, that the District Court
denied Bremen’s motion to dismiss or stay Zapata's initial action. 

The US District Court in Tampa, relying on the Carbon Black Export, disregarded the FSC saying that
it is unenforceable and instead conducted a forum non conveniens analysis.

The Court of Appeals affirmed the District Court’s use of a forum non conveniens analysis and also
held that the said forum-selection clause is unenforceable, reiterating the traditional view of many
American courts that 'agreements in advance of controversy whose object is to oust the jurisdiction of
the courts are contrary to public policy and will not be enforced.' It even ruled that unless the selected
state or forum named in the FSC would provide a more convenient forum than the state in which suit
is brought, the FSC will not be enforced.

ISSUE:

WON the forum-selection clause in the towing contract of The Bremen and Zapata is enforceable and
binding among the parties.

RULING:

YES. The forum-selection clause, which was a vital part of the towing contract, is enforceable and
binding on the parties unless the party seeking to avoid it can meet the heavy burden of showing that
its enforcement would be unreasonable, unfair, or unjust.

The Supreme Court reversed the decision of the Court of Appeals. It stated that absent an FSC, a
forum non conveniens analysis would be appropriate, but that in times of expanding world trade and
commerce, judicial hostility towards FSCs is outdated. Continued judicial hostility towards FSCs, the
Court explained, would have the opposite effect on the much desired expansion of American
business and industry.

Thus, the Supreme Court asserted a new attitude towards choice clauses, by reasoning that
Americans simply could not continue to force their laws into the forefront of international commerce
and trade agreements by giving their courts control over every conflict in international trade and
commerce in which a U.S. party is involved. In addition to ending the hostility towards FSCs, the
Court developed a new analytical framework in the area of international contracts, abandoning the
traditional forum non conveniens analysis used in domestic contract cases.

Supreme Court asserted a new attitude towards choice clauses, by reasoning that Americans simply
could not continue to force their laws into the forefront of international commerce and trade
agreements by giving their courts control over every conflict in international trade and commerce in
which a U.S. party is involved. In addition to ending the hostility towards FSCs, the Court developed a
new analytical framework in the area of international contracts, abandoning the traditional forum non
conveniens analysis used in domestic contract cases.

Despite the Supreme Court’s support for FSCs, the Court in The Bremen held that several
circumstances would allow a court to disregard an FSC. These exceptions or defenses can be
roughly characterized as: (1) unreasonableness, (2) fraud, (3) undue influence or overweening
bargaining power,(4) the traditional exceptions for voiding any contract, and (5) public policy

An FSC is not binding if a party can prove that enforcement would be unreasonable or unjust. Mere
inconvenience or additional expense is not the test of unreasonableness since it may be assumed
that the parties received benefits under the contract in exchange for these potential
problems. Therefore, unless serious unexpected inconvenience is present, there is no basis for
concluding that it would be unfair, unjust, or unreasonable to hold a party to his bargain.
China Airlines vs. Chiok

G.R. No. 152122. July 30, 2003

Facts: Daniel Chiok purchased from China Airlines a passenger ticket for air transportation covering
Manila-Taipei-Hong Kong-Manila. The said ticket was exclusively endorsable to PAL Before Chiok his
trip, the trips covered by the ticket were pre-scheduled and confirmed by the former. When petitioner
arrived in Taipei, he went to CAL to confirm his Hong Kong- Manila trip on board PAL. The CAL office
attached a yellow sticker indicating the status was OK. When Chiok reached Hong Kong. he then
went to PAL office to confirm his flight back to Manila. The PAL also confirmed the status of his ticket
and attached a ticket indicating a status OK. Chiok proceeded to Hong Kong airport for his trip to
Manila. However, upon reaching the PAL counter, he was told that the flight to Manila was cancelled
due to typhoon. He was informed that all confimed flight ticket hokders of PAL were automatically
booked for the next flight the following day. The next day, Chiok was not able to board the plane
because his name did not appear on the computer as passenger for the said flight to Manila.

Issue: Whether or not CAL is liable for damages?

Ruling: The contract of air transportation between the petitioner and respondent, with the former
endorsing PAL the segment of Chiok's journey. Such contract of cariage has been treated in this
jurisprudence as a single operation pursuant to Warsaw Convention, to which the Philippines is a
party. In the instant case, PAL as the carrying agent of CAL the latter cannot evade liability to
respondent, Chiok, even though it may have been only a ticket issuer for Hong Kong- Manila sector.