RICO Violation and Choice-of-law Clause

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7^th Circuit Court of Appeals

Case Name: Daniel J. Ratajczak, et al. v. Land O’ Lakes, et al.

Case No.: 16-3418

Officials: BAUER, EASTERBROOK, and RIPPLE, Circuit Judges.

Focus: RICO Violation and Choice-of-law Clause

We have three appeals: (1) Land O’Lakes contends that it is entitled to treble damages under RICO and a state-law counterpart (which we do not mention again); (2) the Ratajczaks contend that Packerland’s insurers had to defend and indemnify them in Land O’Lakes’s suit; (3) the Ratajczaks maintain that their own insurer must indemnify them for much of what they paid to Packerland’s buyer in settlement. We tackle the subjects in that order.

The policy provides for the application of New York law. This was a multijurisdictional business transaction. Beazley is based in the United Kingdom. Its adjuster for U.S. claims is located in New York. It is understandable that Beazley prefers to designate one state’s law for all of its business in this nation; it can become familiar with New York law more easily than it can master (and price) the intricacies of many states’ insurance laws. The Ratajczaks are sophisticated business people and entered this transaction with eyes open; they cannot escape the choice-of-law clause in this policy. New York permits insurers to insist on having control of settlements. Vigilant Insurance Co. v. Bear Stearns Cos., 10 N.Y.3d 170, 177–78 (2008). So the Ratajczaks lose for two reasons: the deductible offsets the maximum damages for breach of a general warranty, and they settled without Beazley’s consent. Other arguments have been considered but do not require discussion.

Affirmed

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.