Mayo v. Hartford Life Insurance (193 F. Supp. 2d 927, 2002)

United States District Court for the Southern District of Texas 2002-03-05

Citations

Full opinion text

MEMORANDUM OPINION

ATLAS, District Judge.

The parties in this case dispute the validity of corporate-owned life insurance policies purchased by employers on the lives of their employees and former employees. Plaintiffs are Texas citizens suing as representatives of a putative class of individuals, and estates of individuals, who worked for Defendant Camelot Music, Inc. (“Camelot”) and Trans World Entertainment Corporation (“Trans World”) (collectively, the “Camelot Defendants”) and Wal-Mart Stores, Inc. (“Wal-Mart”). These companies, collectively referred to as the “Employer Defendants,” are named in this action as representatives of a putative class of employers who purchased corporate-owned life insurance policies (“COLI policies”) insuring the lives of Texas citizens. The Employer Defendants purchased these life insurance policies from various insurance companies, including Hartford Life Insurance Company (“Hartford”) and AIG Life Insurance Company (“AIG”).

The Court has before it several pending motions. The Camelot Defendants move to dismiss Plaintiffs’ claims in their entirety. The Camelot Defendants also move for summary judgment. Plaintiffs have cross-moved for partial summary judgment against the Camelot Defendants. Defendant Wal-Mart moves for summary judgment on the claims against it. The Wachovia Bank of Georgia, N.A. (“Wacho-via”), as trastee for Defendant Wal-Mart Stores, Inc. Corporation Grantor Trust (‘Wal-Mart Trust”), seeks summary judgment in its favor. Defendant Hartford also moves for summary judgment, and Defendant AIG moves to dismiss and for summary judgment. Finally, Wal-Mart objected to evidence submitted by Plaintiffs. All motions are ripe for adjudication. The Court heard argument on these motions on September 7, 2001 and January 11, 2002. The parties submitted supplemental materials after the January 11 Hearing.

Having considered the parties’ submissions, the record, and the applicable authorities, the Court grants some of the motions and denies others, as set forth specifically below.

I. BACKGROUND FACTS

This case is an uncertified class action that involves a dispute over the rights to benefits from company-owned life insurance policies. Plaintiffs Scott Mayo, Tori-bio Rochas, Jr., Tomas Pena, Daniel Garza, and Charles W. Holmes, Jr. are Texas citizens who were employees of Defendant Camelot (collectively, sometimes referred to as the “Camelot Plaintiffs”). Another Plaintiff is the Estate of Douglas Sims (“Sims Estate”), which is represented in this action by Deborah Sims, the independent executrix of the Sims Estate and a Texas citizen. Douglas Sims was a Texas citizen who worked for Defendant Wal-Mart until his death on December 1, 1998.

Defendant Camelot was a Pennsylvania corporation. It was acquired in December 1997 by Defendant Trans World, a New York corporation with its principal place of business in New York. Defendant Wal-Mart is a Delaware corporation with its principal place of business in Arkansas. Defendant Wal-Mart Trust was established by Wal-Mart in Georgia and is represented in this action by its trustee, Defendant Wachovia, a bank apparently “located” in Georgia. Defendant Hartford is a Connecticut insurance company with its principal place of business in Connecticut. Defendant AIG is a Delaware insurance company with its principal place of business in Delaware.

Camelot employed the Camelot Plaintiffs during the 1980s and 1990s. All Camelot Plaintiffs ceased their employment with Camelot by 1998. Wal-Mart employed Douglas Sims from 1987 until his death in December 1998.

The subject of this case is the validity of COLI policies, insurance policies purchased and owned by the Employer Defendants on the lives of their employees. These policies list the employers as the sole beneficiaries. As explained by Hartford, the employers borrowed money from the insurers to pay the COLI policy premiums. The employers claimed the interest paid on these loans as tax deductions. The employer also earned non-taxable interest through the COLI policies. Upon the death of an employee, the employer would use the death benefit from the policy to repay the premium loans. The Internal Revenue Service (“IRS”) disputes Defendants Camelot and Wal-Mart’s deductions and the tax implications of the COLI policies.

On February 16, 1990, Camelot purchased from Mutual Benefit Life Insurance Company (“Mutual”) COLI policies on the lives of all of its employees who worked more than twenty hours per week. Camelot and/or Trans World is the beneficiary of these policies. Plaintiffs allege that Camelot purchased the policies in secret and did not request permission from its employees. The policies remain in effect. Counsel for Camelot, however, represented to the Court that there was a “very real” possibility that Camelot would surrender the policies. This decision was contingent on the resolution of a tax case concerning the policies.

On or about December 28, 1993, Wal-Mart bought COLI policies from Hartford and AIG on the lives of its employees, including Douglas Sims. Like Camelot, Wal-Mart was to receive the proceeds of the policies. Plaintiffs allege that Wal-Mart purchased these policies in secret and that Douglas Sims never consented to the purchase. Wal-Mart asserts that it paid a portion, between $5,000 and $10,000 for current employees, of the proceeds of the COLI policies to the estates of its deceased employees as a Special Death Benefit. The Special Death Benefit was never paid to the Sims Estate because Wal-Mart discontinued that benefit before Sims’s death. Wal-Mart represented to the Court that it had surrendered all its COLI policies in January 2000.

It is undisputed that the Insurer Defendants developed and marketed the COLI policies to employers. Plaintiffs contend that the COLI policies were a tax avoidance scheme that was challenged by IRS. On the other hand, Defendants contend that the COLI policies were used to fund employee benefit plans.

II. THE PARTIES’ BASIC CONTENTIONS

Plaintiffs’ essential contention is that the COLI policies are contrary to Texas public policy because the Employer Defendants do not have an “insurable interest” in their lives.

Plaintiffs seek to certify two classes. First, they request certification of a plaintiff class that consists of:

All Texas citizens (or if deceased, the Texas citizen’s estate) whose lives are or were insured under a COLI policy issued by AIG Life Insurance Company, Mutual Benefit Life Insurance Company or Hartford Life Insurance Company that purportedly named an employer or former employer as the policy’s beneficiary or owner, excluding those who are current officers of the named policy beneficiary or owner (or if deceased, those who were officers of the policy beneficiary at their death) and those who designated the policy’s beneficiary.

Complaint, at 11. Second, Plaintiffs request certification of a Employer Defendant class of:

[C]ompanies that bought insurance policies written by AIG Life Insurance Company, Mutual Benefit Life Insurance Company or Hartford Life Insurance Company, that insure or insured the lives of Texas employees other than corporate officers and name the company as beneficiary or owner.

Id. Plaintiffs have not yet moved for class certification.

Plaintiffs seek the benefits of the COLI policies. Specifically, Plaintiffs request a declaration, under 28 U.S.C. § 2201, that (i) the Employer Defendants do not now have and never have had an “insurable interest” in the lives of their employees, as insurable interests are defined by Texas law, (ii) that the Employer Defendants are not the lawful owners of the COLI polices, and (in) that Plaintiff employees are the “lawful owners” of the COLI policies, with all rights of the “owner” as defined in the policies. Plaintiffs seek a final judgment “providing remedies necessary to give the declarations force and effect,” which Plaintiffs define as a final judgment (i) placing the polices and all benefits from the policies in a constructive trust for the benefit of Plaintiffs, (ii) awarding “money identifying the amount held in constructive trust by members of the defendant-employer class for the benefit of the plaintiffs and members of the plaintiff-insured person class”; and (iii) disgorging the “money unjustly had and received by members of the defendant-employer class through the [COLI] policies in issue.” Complaint, at 12-13.

Defendants assert numerous defenses to Plaintiffs’ claims. First, Defendants contend that Plaintiffs’ claims are founded upon Texas law, but Georgia law governs this case and Plaintiffs cannot state a cause of action under Georgia law. Defendant Wal-Mart contends that Plaintiffs’ claims are preempted by Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq. (“ERISA”). Defendant AIG contends that the claims of Plaintiff Sims Estate are time-barred since the COLI policy sold to Wal-Mart on Sims’s life was created in December 1993 and Wal-Mart gave Sims notice of the existence of the insurance at about that time. Defendant AIG also argues that the Sims Estate has failed to state a claim under the insurable interest doctrine and moves to dismiss these claims. The Camelot Defendants contend that the Camelot Plaintiffs’ claims are not ripe, since these Plaintiffs all are still living, and their causes of action accrue only when the death benefits under the COLI policies are payable. Finally, the Camelot Defendants contend that the Camelot Plaintiffs’ claims are not legally viable because the Texas insurable interest doctrine does not provide a remedy to living insureds and does not allow reformation of the insurance contract. Each of these matters will be addressed in turn.

III. APPLICABLE LEGAL STANDARDS

The parties have filed numerous motions to dismiss and motions for summary judgment. The Court notified the parties at the January 11, 2002 conference that if documents or other evidence outside of the pleadings had been submitted in connection with a motion to dismiss, the Court intended to convert the motion, if appropriate, to a motion for summary judgment. See Fed. R. Civ. P. 12(b). The Court therefore permitted the parties to make additional submissions.

A. Standard for Motions to Dismiss

A motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure is viewed with disfavor and is rarely granted. Kennedy v. Tangipahoa Parish Library Bd. of Control, 224 F.3d 359, 365 (5th Cir.2000). The complaint must be liberally construed in favor of the plaintiff, and all facts pleaded in the complaint must be taken as true. Zephyr Aviation, L.L.C. v. Dailey, 247 F.3d 565, 573 (5th Cir.2001). The district court may not dismiss a complaint under Rule 12(b)(6) “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Southern Christian Leadership Conf. v. Supreme Court of Louisiana, 252 F.3d 781, 786 (5th Cir. 2001). Thus, the Court must determine whether the complaint states any valid claim for relief in the light most favorable to the plaintiff and with every doubt resolved in the plaintiffs behalf. Lowrey v. Texas A & M Univ. Sys., 117 F.3d 242, 247 (5th Cir.1997). Furthermore, a plaintiff must plead specific facts, not mere conclusory allegations or unwarranted deductions of fact, in order to avoid dismissal for failure to state a claim. Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498, (5th Cir.2000).

B. Summary Judgment Standard

In deciding a motion for summary judgment, the Court must determine whether “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (en banc); Boze v. Branstetter, 912 F.2d 801, 804 (5th Cir.1990). Material facts are those facts “that might affect the outcome of the suit under the governing law.” Smith v. Brenoettsy, 158 F.3d 908, 911 (5th Cir.1998). The facts are to be reviewed with all “justifiable inferences” drawn in favor of the party opposing the motion. Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir.1998). However, factual controversies are resolved in favor of the nonmovant “only when there is an actual controversy- — that is, when both parties have submitted evidence of contradictory facts.” Laughlin v. Olszewski, 102 F.3d 190, 193 (5th Cir. 1996).

The party moving for summary judgment has the initial burden of demonstrating the absence of a material fact issue with respect to those issues on which the movant bears the burden of proof at trial. The movant meets this initial burden by showing that the “evidence in the record would not permit the nonmovant to carry its burden of proof at trial.” Smith, 158 F.3d at 911.

The burden then shifts to the nonmov-ant to demonstrate that summary judgment is inappropriate. See Morris, 144 F.3d at 380. This is accomplished by producing “significant probative evidence” that there is an issue of material fact so as to warrant a trial, see Texas Manufactured Hous. Ass’n v. Nederland, 101 F.3d 1095, 1099 (5th Cir.1996); Taylor v. Principal Financial Group, Inc., 93 F.3d 155, 161 (5th Cir.1996); Transamerica Ins. Co. v. Avenell, 66 F.3d 715, 718-19 (5th Cir. 1995); Forsyth v. Barr, 19 F.3d 1527, 1533 (5th Cir.1994), and that is “sufficient to support a jury verdict.” Morris, 144 F.3d at 380; Doe v. Dallas Indep. School Dist., 153 F.3d 211, 215 (5th Cir.1998). This burden is not met by mere reliance on the allegations or denials in the non-movant’s pleadings. E.g., Morris, 144 F.3d at 380. Likewise, “unsubstantiated or conclusory assertions that a fact issue exists” do not meet this burden. Id. Instead, the non-moving party must present specific facts which show “the existence of a ‘genuine’ issue concerning every essential component of its case.” Id. Dispute about a material fact is genuine only if evidence is such that reasonable a jury could return a verdict for nonmoving party. Stafford v. True Temper Sports, 123 F.3d 291, 294 (5th Cir.1997); Hanks v. Transcontinental Gas Pipe Line Corp., 953 F.2d 996, 997 (5th Cir.1992).

In the absence of any proof, the Court will not assume that the nonmovant could or would prove the necessary facts. McCollum Highlands, Ltd. v. Washington Capital Dus, Inc., 66 F.3d 89, 92 (5th Cir.), revised on other grounds upon denial of reh’g, 70 F.3d 26 (5th Cir.1995); Little, 37 F.3d at 1075. Rule 56 mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a sufficient showing of the existence of an element essential to the party’s case, and on which that party will bear the burden at trial. Little, 37 F.3d at 1075.

C. Texas Insurable Interest Doctrine

“[I]t is against the public policy of the State of Texas to allow anyone who has no insurable interest to be the owner of a policy of insurance upon the life of a human being.” Griffin v. McCoach, 123 F.2d 550, 551 (5th Cir.1941); accord, DeLeon v. Lloyd’s London, Certain Underwriters, 259 F.3d 344, 350 (5th Cir.2001); Cheeves v. Anders, 87 Tex. 287, 28 S.W. 274, 275 (1894); Tamez v. Certain Underwriters at Lloyd’s, London, International Accident Facilities, 999 S.W.2d 12, 16-17 (Tex.App.-Houston [14th Dist.] 1999, pet. denied). Put another way, the “State of Texas has established a fixed policy with reference to its own citizens, by and through which it refuses to permit one who has no insurable interest in a living person to be and become the beneficiary in an insurance policy written on the life of such living person.” Cole v. Browning, 187 S.W.2d 588, 593 (Tex.Civ.App.-Ft. Worth 1945, writ refd w.o.m.) (citing Cheeves v. Anders, 87 Tex. 287, 28 S.W. 274 (1894)). The doctrine has been defined more specifically to provide that a “putative beneficiary only has an insurable interest in the life of another where the beneficiary is £(1) so closely related by blood or affinity that he wants the other to continue to live, irrespective of the monetary considerations; (2) a creditor; [or] (3) one possessing a reasonable expectation of pecuniary benefit or advantage from the continued life of another.’ ” Tamez, 999 S.W.2d at 17 (quoting Drane v. Jefferson Standard Life Ins. Co., 139 Tex. 101, 161 S.W.2d 1057, 1058-59 (1942)); Stillwagoner v. Travelers Ins. Co., 979 S.W.2d 354, 360-61 (Tex. App.-Tyler 1998, no pet.); DeLeon, 259 F.3d at 350.

Since the mid-1950’s, by Texas statute, Tex. Ins. Code, art. 3.49-1, §§ 2-3, an individual may designate his own beneficiary — even if that beneficiary otherwise lacks an insurable interest under common law. Texas law also allows an employer to obtain death benefit from “key-man” life insurance on a crucial employee. See Ta-mez, 999 S.W.2d at 18 n. 4 (citing Tex. Ins. Code, art. 3.49).

IV. CHOICE OF LAW

A. Overview

Defendants all raise a threshold choice of law issue. The jurisdiction of this Court is based on diversity of citizenship. 28 U.S.C. § 1332 Defendants argue that Georgia law — which Defendants contend does not recognize Plaintiffs’ causes of action — governs this dispute. In response, Plaintiffs argue that Texas state courts would apply the Texas common law insurable interest doctrine to COLI policies on the lives of Texas citizens.

Relevant to this choice of law issue is the place where the COLI policy transactions occurred. Defendants Camelot and Wal-Mart contend that their COLI policy transactions are centered in the state of Georgia. The Camelot Defendants claim that they intended to situate their COLI policies in Georgia, and intended for Georgia law to apply. According to James Van Etten, a Vice President of Hartford, Camelot’s COLI policies were issued in Georgia and were administered by a third party administrator in that state. Other than these conclusory assertions, the Camelot Defendants have offered no evidence to support this contention. Plaintiffs have submitted materials from a tax case related to the Camelot COLI policies. Camelot’s insurance broker testified in that proceeding that the COLI policies had closer ties to Ohio then Georgia. Plaintiffs also have provided evidence that some activity related to the administration of the COLI policies occurred in Texas, since death certificates were obtained in Texas when insureds who died were Texas residents.

Wal-Mart submits evidence that it established the Wal-Mart Trust, which was created in Georgia to own the COLI policies, to forward funds to pay policy premiums to the insurers, and to transmit policy proceeds to Wal-Mart. Wal-Mart further asserts that it applied for and received the policies in Georgia and intended the policies to be governed by Georgia law.

Defendants strenuously contend that the resolution of the choice of law issue is strictly determined by the Texas conflict of law rules relating to contract actions. However, Plaintiffs are not signatories to the COLI policies. Plaintiffs do not claim that Defendants are liable for breaching the terms of those contracts. Plaintiffs do not seek to enforce rights under the terms of the COLI policy contracts as written. Plaintiffs did not participate in the negotiation for the contracts. Plaintiffs did not receive or give definitive consideration for their involvement in the contracts. Thus, Plaintiffs’ role is not the ordinary participant in the formation of a contract and Plaintiffs’ causes of action do not fit the typical breach of contract rubric. Rather, Plaintiffs’ claims arise under the Texas common law insurable interest doctrine with equitable remedies sought under unjust enrichment principles.

The parties have cited and the Court is aware of no Texas authority that employs contract choice of law principles in an action that involves purely the insurable interest doctrine. This case accordingly raises a choice of law issue of first impression.

The decision as to what state’s law will apply must be made for each disputed claim separately. It is possible that the state whose law applies to the COLI policies in a dispute between the signatories to the policy contract may differ from the state whose law applies to issues regarding a non-signatory’s claim about the absence of an insurable interest. Ultimately, the relevant question is whether a Texas court would apply Texas or Georgia law on insurable interests.

Defendants insist that contract choice of law principles should be applied. Plaintiffs do not supply any probative alternative approach. Since Plaintiffs want to benefit from the insurance contracts, and sive contract doctrines are a focus of many the contentions of the parties, the Court concludes that the contract claim choice of law analysis provides an appropriate framework. The Court holds that Texas courts would apply the Texas insurable interest doctrine, even though other disputes concerning these COLI policies may be governed by other states’ laws.

B. Applicable Contract Choice of Law Principles

In diversity cases, federal courts must apply the conflict of law rules of the state in which they sit. Klaxon v. Stentor, 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); Denman v. Snapper Div., 131 F.3d 546, 548 (5th Cir.1998). Accordingly, this Court will apply the conflict of laws principles followed by Texas state courts.

The Texas Supreme Court has adopted the “most significant contacts” test of the Restatement (Second) of Conflicts of Laws § 6 (“Restatement”) for determining all choice of law issues. Duncan v. Cessna Aircraft Co., 665 S.W.2d 414, 420-21 (Tex. 1984); see also Minnesota Mining & Mfg. Co. v. Nishika Ltd., 953 S.W.2d 733, 735-36 (Tex.1997); Maxus Exploration v. Moran Bros., Inc., 817 S.W.2d 50, 53 (Tex. 1991).

The Restatement provides that a court must follow, “subject to constitutional restrictions ... a statutory directive of its own state on choice of law.” Restatement § 6(1); Maxus Exploration, 817 S.W.2d at 54. Neither Plaintiffs nor Defendants assert that a statutory directive governs the outcome of the choice of law issue in this case. In the absence of a statutory directive, the Court is to consider the relevant choice of law principles in the Restatement. Id.

The Restatement’s analysis commences with § 6, which sets forth the pertinent overriding principles:

(a) the needs of the interstate and international systems,

(b) the relevant policies of the forum,

(c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue,

(d) the protection of justified expectations,

(e) the basic policies underlying the particular field of law,

(f) certainty, predictability and uniformity of result, and

(g) ease in the determination and application of the law to be applied.

Restatement § 6(2).

In contract cases, Texas courts examine the § 6 principles in light of the parties specific “contacts” or factors listed in Restatement § 188. The pertinent contacts under § 188 are:

(a) the place of contracting,

(b) the place of negotiation of the contract,

(c) the place of performance,

(d) the location of the subject matter of the contract, and

(e) the domicile, residence, nationality, place of incorporation and place of business of the parties.

Restatement § 188(2); Minnesota Mining and Mfg. Co., 953 S.W.2d at 735-36; Maxus Exploration, 817 S.W.2d at 53-54; Houston Casualty Co. v. Certain Underwriters at Lloyd’s London, 51 F.Supp.2d 789, 797 (S.D.Tex.1999). “These contacts are to be evaluated according to their relative importance with respect to the particular issue.” Restatement § 188(2). In general, it is not the number of contacts with a particular state that is determinative. Duncan, 665 S.W.2d at 421. “Some contacts are more important than others because they implicate state policies underlying the particular substantive issue.” Id. Ultimately, the “selection of the applicable law depends on the qualitative nature of the particular contacts.” Id. Once the facts pertaining to the parties’ and the dispute’s contacts with various states are established, the Court is to decide the choice of law issue as a matter of law. Id.

C. Analysis of Restatement § 6 Considerations in Insurable Interest Cases

The Court analyzes the § 6 principles first, and then considers the § 188 contacts in that context. The importance of the § 6 principles is heightened in this case because this case does not fit the typical contract dispute pattern. As explained in Section IV.A., supra, Plaintiffs’ relationship with Defendants, the actual contracting parties, is unique in that Plaintiffs did not participate in or agree to the creation of the insurance contracts in issue.

1. The Relevant Policies of the Forum, Policies of Other Interested States, and the Relative Interests of Those States in the Determination of the Particular Issue

Texas Public Policy Generally. — Texas courts have repeatedly refused to follow the majority rule adopted by other states that allows non-creditors and non-family members to have an insurable interest in another’s life. E.g., DeLeon, 259 F.3d at 350 (employer did not have insurable interest in employee’s life); Griffin, 123 F.2d at 551 (assignees of insured’s former business partners and life insurance beneficiaries did not have insurable interest); Drane v. Jefferson Standard Life Ins. Co., 139 Tex. 101, 105-06, 161 S.W.2d 1057, 1058-59 (1942) (godson had insurable interest in godmother’s life only because godson had a reasonable expectation of pecuniary benefit from godmother, who made frequent and substantial gifts to godson during his lifetime); Cheeves, 87 Tex. at 291, 28 S.W. at 275 (former partner of insured did not have insurable interest after leaving partnership); Tamez, 999 S.W.2d at 16-17, 19 (employer did not have insurable interest in employees); Stillwagoner, 979 S.W.2d at 360-61 (employer did not have insurable interest in employee); Cole, 187 S.W.2d at 593 (former wife did not have insurable interest in former husband). Texas maintains a strong public policy requiring the beneficiary of an insurance contract to have an insurable interest in the life of the insured.

The Griffin Cases, Other Insurable Interest Decisions and Texas Public Policy. — Plaintiffs predominantly argue that the choice of law decision in this case is governed by the opinions of the United States Supreme Court in Griffin v. McCoach, 313 U.S. 498, 506, 61 S.Ct. 1023, 85 L.Ed. 1481 (1941), and the Fifth Circuit on remand in Griffin v. McCoach, 123 F.2d 550, 551 (5th Cir.1941). The Court concludes that the Griffin cases do not dispose of the issue presented by Plaintiffs’ claims, but the opinions provide valuable insight into the insurable interest doctrine and its importance as law of the State of Texas.

In Griffin, the Supreme Court held that Texas courts have the constitutional authority to “refuse enforcement of an insurance contract where the beneficiaries have no insurable interest on the ground of its interference with local law.” 313 U.S. at 506, 61 S.Ct. 1023. The personal representatives of Gordon, a deceased Texas citizen, disputed the entitlement of certain beneficiaries of a life insurance policy on Gordon’s life. Id. at 499-500, 61 S.Ct. 1023. The Supreme Court stated:

It is “rudimentary” that a state “will not lend the aid of its courts to enforce a contract founded upon a foreign law where to do so would be repugnant to good morals, would lead to disturbance and disorganization of the local municipal law, or, in other words, violate the public policy of the state where the enforcement of the foreign contract is sought.”

Id. at 506, 61 S.Ct. 1023 (citation omitted). The court held that it would be constitutionally permissible for a Texas court to refuse the enforcement of a foreign contract that violated local public policy embodied in the Texas insurable interest doctrine. Id. at 507, 61 S.Ct. 1023. However, the court explained that Texas may only apply its public policy to foreign contracts that relate to “anything done or to be done within [its] borders.” Id. at 507, 61 S.Ct. 1023. The Supreme Court in Griffin did not decide whether Texas courts would apply the Texas insurable interest doctrine to foreign life insurance contracts on the lives of Texas citizens. Id. at 504, 507, 61 S.Ct. 1023. Instead, the court remanded the issue to the Fifth Circuit. Id.

On remand, the Fifth Circuit implicitly concluded that Texas law applied, and interpreted the effect of the Texas insurable interest doctrine on the facts before it. Griffin, 123 F.2d at 551. The Fifth Circuit held that Texas law required the insurance proceeds to be paid to the estate of the insured, rather than the contractual beneficiaries’ assignees who lacked an insurable interest in the life of the insured under Texas law. The court of appeals gave two reasons for its holding. First, the insurance proceeds were in the custody of the court. Id. Second, the court of appeals held that “it is against the public policy of the State of Texas to allow anyone who has no insurable interest to be the owner of a policy of insurance upon the life of a human being.” Id. The court further stated that it had “no reason to think that courts of Texas would permit citizens of other states to speculate upon the death of one of its citizens by means of contracts made without the state when the same is forbidden within its territorial limits.” Id.

The Griffin decisions accurately reflect Texas precedent on choice of law and policy. For example, a Texas court in Manhattan Life Ins. Co. v. Cohen, 139 S.W. 51, 57 (Tex.Civ.App.-San Antonio 1911, writ dism’d), held that an assignment of the beneficial interest in life insurance policies on the life of a Texas citizen to one with no insurable interest was governed by Texas law. The Cohen court emphasized the importance of Texas policy by stating that, even if the assignment were governed by, and valid under, another state’s law, “it may be doubted whether, on account of its being contrary to the distinctive policy of the forum in which the suit was brought, such laws would be given effect by the courts of Texas.” Id.

In Cole v. Browning, another Texas appellate court held that Texas had a legitimate governmental interest in deciding the rights to an insurance policy’s proceeds when the insured died while he and the named beneficiary under the policy were temporarily residing in Texas. 187 S.W.2d 588, 593 (Tex.Civ.App.-Fort Worth 1945, writ ref d w.o.m.). The court held that a Texas court will apply Texas insurable interest law to all insurance policies relating to persons residing in Texas, even if these individuals are citizens of states with contrary insurable interest law. Id. at 594. “A state may prohibit the enjoyment by persons within its borders of rights acquired elsewhere which violate its laws or public policy.” Id. at 594; accord Bell v. Phillips, 152 F.2d 188, 190 (5th Cir.1945).

The Current Viability of Texas Insurable Interest Doctrine. — In response to Plaintiffs’ Griffin arguments, Defendants characterize Texas policies and the insurable interest doctrine as obsolete. These arguments are meritless. For example, Wal-Mart argues that the public policy of Texas is an “old common law rule that has been heavily weakened by statute.” Yet, Texas courts have consistently and recently applied the insurable interest doctrine. Further, although Texas courts recognized certain exceptions to the doctrine even before portions of the doctrine and its exceptions were codified in the Texas Insurance Code, see Tex. Ins. Code, art. 3.49, Texas courts have held firm in recent years declining to give employers an insurable interest in all of their employees: “The mere existence of an employer/employee relationship is never sufficient to give the employer an insurable interest in the life of the employee.” Stillwagoner, 979 S.W.2d at 361; see Tamez, 999 S.W.2d at 17-19. Accordingly, Defendants’ attempts to characterize the insurable interest doctrine as “obsolete” or “weakened” fails.

Hartford asserts that, even if the Texas insurable interest doctrine has continued vitality, Article 21.42 of the Texas Insurance Code expresses the state’s current policy to limit the extraterritorial application of Texas law. Article 21.42 provides in relevant part:

Any contract of insurance payable to any citizen or inhabitant of this State by any insurance company or corporation doing business within this State shall be held to be a contract made and entered into under and by virtue of the laws of this State relating to insurance.

Hartford argues that “Article 21.42 is designed to ensure only that Texas law will apply to contracts made between Texas citizens and insurance companies doing business in Texas, when and, only when those contacts are made in the course of the company’s Texas business,” and thus the Texas Legislature intended to exclude COLI policies payable to beneficiaries outside Texas. This argument is rejected. First, there is nothing in Article 21.42 to support the inference that the Texas Legislature, in enacting Article 21.42, intended to repeal by implication the longstanding, prophylactic common law insurable interest doctrine. The Texas Legislature by Article 21.42 expressed its intent to expand Texas regulatory authority to foreign entities doing business in Texas, who elect to pay or designate beneficiaries who live in or are citizens of Texas. There is no basis to conclude that this legislative decision represents an intention by Texas to abandon silently the insurable interest doctrine that protects its citizens in a different circumstance, namely, when the insured, rather than the beneficiary, is the Texas resident. The Court therefore rejects Defendants’ attempt to discount the Texas insurable interest doctrine as obsolete or as limited by Article 21.42.

Georgia’s Interests in Determination of the Issues. — Defendants argue that Georgia has a stronger interest than Texas in the application of its public policy. Defendants also posit that enforcement of the Texas policy in this case will infringe Georgia’s public policy.

These contentions are singularly unpersuasive. Nothing in the record establishes that the State of Georgia has an interest in enforcing its laws in Texas as to Texas inhabitants. Indeed, Defendants fail to answer meaningfully the question why the Georgia Legislature or Georgia citizens care if an employer (within or outside of Georgia) is prohibited from obtaining insurance on the life of its Texas employees. There is no indication that the State of Georgia intended this result when adopting its insurable interest statutes.

Defendants’ analysis, taken to its logical conclusion, is that the state of Georgia may unilaterally authorize any company or person claiming a connection to that state to abrogate a contrary public policy in the remaining forty-nine states. Under Defendants’ theory, in order to impose Georgia’s law on all other states, all any employer need do is purchase a COLI policy on employees nationwide, while the employer’s representatives are in Georgia, or purchase through a legal entity created for the purpose of invoking Georgia law. If this extraterritorial application of one state’s law to citizens of another state were applied universally, then states could not enforce their own conflict of laws doctrines in their own courts, and states’ substantive law would be impossible to ascertain with any certainty.

In any event, this Court is not obligated to give effect within the State of Texas to the laws of other states if the laws violate the fundamental Texas public policy. A “state is not required to enforce a law obnoxious to its public policy.” Griffin, 313 U.S. at 507, 61 S.Ct. 1023.

As to the extraterritorial application of state law, Defendants also rely on Home Insurance Co. v. Dick, 281 U.S. 397, 50 S.Ct. 338, 74 L.Ed. 926 (1930). Defendants argue that application of the Texas insurable interest doctrine in the case at bar “raises serious Constitutional questions involving due process.” This argument lacks merit. Home Insurance involved a property damage claim for coverage under insurance issued in Mexico by a Mexican underwriter of a tugboat that operated outside the United States. The insurance was owned and negotiated by a person while living and working in Mexico. Neither the insur-anee contract, the subject-matter of that contract, nor the parties had any meaningful contacts with Texas. The Supreme Court ruled that “[a] state may of course prohibit and declare invalid the making of certain contracts within its borders. Ordinarily, it may prohibit performance within its borders, even of contracts validly made elsewhere, if they are required to be performed within the state and their performance would violate its laws.” Home Insurance, 281 U.S. at 407, 50 S.Ct. 338. The Home Insurance ruling thus actually supports Plaintiffs’ position.

The facts in the case at bar are also materially distinguishable from those in Home Insurance. Here, Defendants chose to insure the lives of employees who, at the inception of the policies in issue, lived (and now may still live) in Texas. At the time these employees were insured, information on these employees had to be gathered from Texas. The insurable risk is inescapably connected to the insured’s physical location, which, for Texas insureds, is in the State of Texas. When insureds residing in Texas die, information must be obtained from this state, and their estates are likely to be probated here. These connections to Texas are materially different from Home Insurance where there was an absence of any contemporaneous contact by the parties or the property subject to the insurance in issue.

In addition, the Supreme Court decided Home Insurance eleven years before its Grijfin decision. In Griffin, as discussed above, the Supreme Court specifically held that it would be constitutionally permissible for Texas to apply its insurable interest doctrine to a foreign contract.

Thus, the Court rejects Defendants’ arguments that Georgia has a stronger interest in the disputed issues than Texas. Giving Georgia law the extraterritorial effect requested by Defendants would encroach on the Texas Legislature’s and Texas courts’ prerogatives. The Court also rejects Defendants’ contention that Home Insurance controls this case or limits Texas courts’ application of the Texas insurable interest doctrine. Requiring compliance with the Texas insurable interest doctrine is not an improper extraterritorial application of Texas law.

2. The Basic Policies Underlying the Particular Field of Law

The issues in this case implicate the fundamental purpose of and policies underlying life insurance. Under Texas law, “the essential foundation of a life insurance policy is the life of a human being.” Gibralter Colorado Life Co. v. Taylor, 132 Tex. 328, 123 S.W.2d 318, 321 (1939). The primary purpose of life insurance is the “protection of those who would be pecuni-arily damaged by the death of the insured.” Hildbrandt v. Ames, 27 Tex.Civ. App. 377, 66 S.W. 128, 131 (Tex.Civ.App. 1901, writ refd). Texas courts have held generally that “to permit those who would not be so damaged to receive the benefit of the policy would be to defeat the purpose and intent of the contract.” Id.; accord Hansen v. Blackmon, 169 S.W.2d 955, 962 (Tex.Civ.App.-El Paso 1942), aff'd 140 Tex. 536, 169 S.W.2d 962 (1943) (“The primary purpose of life insurance is not investment, but protection.”). Texas courts follow this principle when applying the insurable interest doctrine:

Bluntly expressed, insurable interest ... is determined by monetary considerations, viewed from the standpoint of the beneficiary. Would [the beneficiary] regard himself as better off from the standpoint of money, would [the beneficiary] enjoy more substantial economic returns should the insured continue to live; or would [the beneficiary] have more, in the form of the proceeds of the policy, should [the insured] die? Therefore, it is said that if the situation is such that [the beneficiary] might be led to conclude that he would profit by [the insured’s] death, the policy is void as to him since the public has a controlling concern that no person have an interest in the early death of another, an interest that may give rise to a temptation to destroy [the insured’s] life.

Drane, 161 S.W.2d at 1059. Enforcement of the Texas insurable interest doctrine advances Texas policies underlying insurance law.

3. The Protection of Justified Expectations and the Need for Certainty, Predictability, and Uniformity of Result

Defendants argue that the protection of justified expectations, and the need for certainty, predictability, and uniformity of result, demand enforcement of the COLI policies using Georgia law. Defendants stress that, when they created the COLI policies, they expected that Georgia law would apply to those policies. Defendants acknowledge that there are no choice of law provisions in the COLI policies. Nevertheless, Defendants contend that the choice of law provisions in the Wal-Mart Trust Agreement, the Wal-Mart Trust’s location, and all Defendants’ activities in Georgia require that the issues in this case be governed exclusively under Georgia law. Defendants further assert that application of Georgia law nationwide would advance the goal of uniformity and predictability of the result under the COLI policies.

Under the Restatement, reliance by contracting parties on their agreed terms, including selection of laws, ordinarily is a significant consideration. Restatement § 187. The parties’ agreed terms, however, cannot control in every circumstance. Particularly when an integral interested party, such as the insured in an insurance contract, played no active part in the creation of the contract in issue, the other parties’ self-serving expectations cannot automatically govern choice of law issues in the parties’ disputes. Plaintiffs did not negotiate or agree to the COLI contract terms. Nor did many even know of the insurance at all.

The Court concludes that Defendants’ expectation when entering into the COLI contracts that Georgia law would apply with regard to Texas insureds was not justified. Defendants admittedly set up the COLI policies in Georgia and selected Georgia law to avoid contrary public policies in states such as Texas. In doing so, Defendants are deemed to have taken the risk that a Texas court would decline to apply Georgia law, as prior Texas cases indicated.

Defendants also fail to demonstrate how application of Georgia law to Texas insureds advances the need for certainty, predictability, and uniformity of result. Defendants provide no meaningful reason why Texas citizens and residents should not be able to count on enforcement of the longstanding Texas insurable interests doctrine. Rather, Defendants look at the matter from solely their own perspective, contending that private parties should be able to contract for the result they desire without regard to the effect of the contract on others. The Restatement § 6’s goal of the need for certainty, predictability, and uniformity of result is not intended to serve as a subterfuge for parties to override public policies and laws. The goal of certainty, predictability, and of uniformity served in the case at bar by the consistent application of Texas law to Texas citizens, not application of Georgia law at Defendants’ behest.

4. Needs of Interstate and International Systems and Ease in the Determination and Application of the Law to be Applied.

Defendants contend that it would serve the interstate system for courts to permit parties to make contracts involving residents of other states. This contention is unfounded when the contracts flout an established public policy of another state by manipulating choice of law considerations, the interstate system is undermined. Cf., Griffin, 123 F.2d at 551 (“[W]e have no reason to think that the courts of Texas would permit citizens of other states to speculate upon the death of one of its citizens by means of contracts made without the state when the same is forbidden within its territorial limits.”). Interstate or international systems are advanced by each jurisdiction having easily ascertainable, certain, uniform, and predictable law governing disputes in that jurisdiction.

The application of Texas law to insurance contracts on the lives of Texas residents and citizens is an easily ascertainable rule that respects each jurisdiction’s choices and priorities. The application of Texas insurable interest law is not difficult. As set forth above, the doctrine is well established in Texas and has been uniformly applied. It is common that, in matters a state has authority to regulate, the state’s courts consistently will apply that state’s law to disputes involving its citizens. Defendants’ insistence that private contracting parties be able to impose on non-signatories the state law the contracting parties select, despite the impact of that law on other state’s citizens, contravenes the uniformity of Texas law, thereby undercutting the needs of an interstate system and the promotion of ease of determination and application of the law to be applied.

D. Application of Texas Choice of Law Principles to the COLI Contracts

1. Analysis of Restatement § 188 Principles for Contract Disputes

As discussed above, the choice of law analysis in contract cases focuses on the parties’ contacts with a jurisdiction in the following respects:

(a) the place of contracting,

(b) the place of negotiation of the contract,

(c) the place of performance,

(d) the location of the subject matter of the contract, and

(e) the domicile, residence, nationality, place of incorporation and place of business of the parties.

Restatement § 188(2); Minnesota Mining and Mfg. Co., 953 S.W.2d at 735-36; Maxus Exploration, 817 S.W.2d at 53-54; Houston Casualty Co. v. Certain Underwriters at Lloyd’s London, 51 F.Supp.2d 789, 797 (S.D.Tex.1999). The choice of law analysis must be performed under § 188(2) for each disputed issue. “Some contacts are more important than others because they implicate state policies underlying the particular substantive issue.” Duncan v. Cessna Aircraft Co., 665 S.W.2d 414, 421 (Tex.1984). The comments to the Restatement further teach that “[standing alone, the place of contracting is a relatively insignificant contact.” Restatement § 188 cmt. e. Ultimately, the selection of the applicable law depends on the qualitative nature of the parties’ particular contacts with the respective jurisdictions. Duncan, 665 S.W.2d at 421.

2. The Wal-Mart COLI Policies

In this case, the Wal-Mart Defendants allege that the Wal-Mart COLI policies have the most significant contacts with the state of Georgia and that Wal-Mart intended Georgia’s law to apply. The Wal-Mart Defendants allege that the Wal-Mart Trust was created in Georgia to purchase the COLI policies from Defendants AIG and Hartford. The Wal-Mart Trust Agreement (“Trust Agreement”) named Wachovia, a bank doing business in Georgia, as the Trustee and established Georgia as the situs of the Wal-Mart Trust. Wal-Mart, through the Wal-Mart Trust, directed the purchase of the COLI policies between December 1993 and sometime in 1995. Raymond H. Sapp, a trust officer of Wachovia who was involved with creation of the Wal-Mart Trust, attests that: (i) Wal-Mart applied for and was issued the COLI policies in the state of Georgia, (ii) premium payments were made by the Wal-Mart Trust by wire transfer from Georgia to the offices of AIG and Hartford, and (iii) none of the COLI policies were made, issued, received, paid, or performed in Texas. Wal-Mart established the Wal-Mart Trust and “structured its COLI program in this way to take advantage of favorable Georgia law on ‘insurable interest.’ ” Based on these facts, Wal-Mart and the Insurer Defendants argue that all of the contacts listed in Restatement § 188 favor the application of Georgia law.

After consideration of all the parties’ contacts with various states, in light of the contacts’ relative importance to the insurable interest issue, this Court holds that Texas choice of law rules dictate that Texas insurance law should apply to Plaintiffs’ claims. The detailed analysis follows.

Place of Contracting. — Defendant Wal-Mart contends that its evidence establishes that the COLI policies were applied for and issued in Georgia. Plaintiffs point to inconsistencies in Wal-Mart’s evidence and argue that they need discovery to obtain evidence that raises fact issues regarding the place of contracting.

The Court finds Defendants’ evidence is vague and inconclusive. Sapp, a Wachovia bank employee who was responsible for trust administration generally and the Wal-Mart Trust in particular, avers that the COLI policies Wal-Mart ultimately purchased were “applied for” in a meeting in Atlanta, Georgia on December 28, 1993, and were “issued” and “received by the Trust” there. This and the other evidence before the Court suggests that Sapp signed the application in Georgia and sent them to the insurers’ home offices in various states and the insurers sent the policies from their home offices to Sapp in Georgia. The place of Sapp’s signing the AIG policy documents is pertinent but not dispositive as to the “place of contracting” factor. The AIG application also is signed by the insurance agent and an AIG Vice President, but their locations when they signed are not established in the record. Nothing in the record specifically establishes that the other parties to the contract documents signed in Georgia. Thus, there is a fact issue as to the “place of contracting.”

This fact issue, however, is not material. Even if there was sufficient evidence to meet Wal-Mart’s summary judgment burden to establish Georgia as the place of contracting, the Court finds that this factor alone is inadequate to justify the application of Georgia law. Each contact must be evaluated “according to their relative importance with respect to the particular issue.” Restatement § 188(2). Defendants contrived to make Georgia the place of contracting for the express purpose of taking advantage of favorable Georgia law on insurable interests. Wal-Mart attempted artificially to avoid the Texas insurable interest doctrine. In view of the policy considerations involved in that doctrine, which must be considered under Restatement § 6, the Court accords the “place of contracting” factor little weight in the choice of law analysis in this case.

Place of Negotiation. — Defendants argue that the “place of negotiation” factor favors the application of Georgia law to the Wal-Mart COLI policies. Defendants’ sole evidence for this assertion is the superficial testimony of Sapp. Sapp avers that the Wal-Mart COLI policies were “applied for” in a meeting in Atlanta, Georgia, on December 28, 1993. This evidence does not address explicitly where the negotiations took place. Indeed, Wal-Mart’s corporate headquarters are in Arkansas, the company has facilities all over the nation, and the insureds live in many states. The broker’s contact information on one of the application forms was in Minnesota. Further, the Insurer Defendants are not headquartered in Georgia. There is no specific evidence as to the identity of the representatives who negotiated for these Defendants the material terms of the COLI policies, such as the size of the premiums. Nor is there evidence as to who gathered crucial data about the Texas insureds, or how the information was amassed, for the COLI policies. Accordingly, Defendants have failed to establish Georgia as the “place of negotiations” for the Wal-Mart policies.

Even if Defendants are deemed to have shown that some key negotiations occurred in Georgia, this contact does not justify the application of Georgia law to Plaintiffs’ claims against Wal-Mart. As previously noted, Defendants contrived to submit the applications for the thousands of COLI policies covering employees nationwide. Defendants’ participation in a meeting in Georgia was specifically for the purpose of invoking favorable Georgia law and thereby attempting to evade Texas public policy. In light of the policy factors discussed above, the dearth of probative evidence on any negotiations, and the artificiality of the putative contacts with Georgia, the Court gives the “place of negotiation” factor no weight in its choice of law analysis.

Place of Performance. — Defendants argue in conclusory fashion that the place of performance favors application of Georgia law. Defendants contend that the Wal-Mart Trust was located in Georgia, and that all premiums were paid from, and policy proceeds were paid to, that Trust in Georgia. Defendants’ contentions are not persuasive.

The Court has considered the fact that the nominal owner of the policies, the Wal-Mart Trust, was located in Georgia and that all monies relating to the policies went through the Trust. However, it is clear that all the Wal-Mart Trust’s activities were conducted at the express direction of Wal-Mart. The Wal-Mart Trust was created for the purpose of serving, and in fact served, as a mere conduit in Georgia for the funds paid by Wal-Mart. The Wal-Mart Trust had only ministerial functions in the administration of the COLI policies. Thus, Defendants have not established that there are substantial contacts with Georgia on the place of performance factor. On the other hand, under the Wal-Mart/AIG COLI policies, all premium payments were not “received” and thus counted unless the payments reached the AIG headquarters in Delaware. Also, the “Renewable Level Term Insurance Rider,” Form 49827 (3/90), an integral part of the COLI policies, as evidenced by the Sims Policy, recites that it was “[s]igned for the Company at Wilmington, Delaware.” If an insurance contract specifies that premium payments are to be made at the insurance company’s home office, the general Texas rule is that the place of performance of the contract is the state in which the insurer’s home office is located. Seiders v. Merchants Life Ass’n, 93 Tex. 194, 54 S.W. 753, 754 (1900) (holding that place of performance of a life insurance contract was the state where premiums were made payable, even if the contract was made in another state). Accord, New York Life Ins. Co. v. Baum, 700 F.2d 928, 933 (5th Cir.1983); American National Insurance Co. v. Huckleberry, 638 F.Supp. 233, 235 (N.D.Tex.1986).

In addition, the Wal-Mart COLI policies issued by AIG require that all required written notice and requests be sent to the insurer’s Delaware office. Payment of proceeds under those policies occurred only when “proof is received at our [insured’s] administrative office [in Delaware] of [the] Insured’s death.”

Further, Wal-Mart, doing business nationwide, and headquartered in Arkansas, was the true beneficiary of these insurance policies. Evidence of this fact appears in “Client Master Information Form, Exhibit A” attached to the parties’ Letter of Understanding. The “Company Name to Appear on Policy” was “Wal-Mart Stores, Inc.,” with an Arkansas address. Only the “Billing Address” was Wachovia Bank of Georgia, N.A. in Atlanta.

Finally, Wal-Mart’s argument fails to address a critical component of the performance of the COLI polices, payment by the insurer of the benefits upon death of the insured. The parties agree that definitive proof to the Insurer Defendants of death of an insured is necessary before policy benefits are payable to the beneficiary. This proof, for Texas residents, can only be obtained from the records of the state of Texas. Georgia has no connection to this aspect of performance.

The court accordingly concludes that the location of the Wal-Mart Trust and the facts on which Wal-Mart relies are not dispositive in the § 188 choice of law analysis in connection with the dispute at bar. After considering all the contacts of the parties regarding performance of the COLI policies generally and the Sims Policy specifically, it is apparent that Georgia has only a weak connection to these insurance policies with respect to the “place of performance.” Texas has a significant relationship in this regard, which tips this important factor heavily in favor of Texas.

Location of the Subject Matter of the Contract. — Defendant Wal-Mart asserts that the location of the subject matter of the COLI policy contracts favors the application of Georgia law. Wal-Mart focuses on the fact that the Insurer Defendants paid COLI policy proceeds on deceased insureds to the Wal-Mart Trust in Georgia. Wal-Mart further asserts that the only contact with Texas was the place of residence of employee Douglas Sims, a Texas resident. Wal-Mart’s assertions ignore the existence of the responsibilities, risks, and rewards to the insurance carriers and to Wal-Mart during the life of the insureds under the COLI policies. Wal-Mart was obligated to pay the Insurer Defendants premium payments while the Wal-Mart COLI policies were in effect. These policies involved financial obligations during the insured’s life, as well as upon the insured’s death. For the Sims Policy, and policies on Texas insureds, the location of the insureds is crucial to Defendants. During any insured’s life, proof that the insured is in fact still living entitles the insurer to premiums from the policy owner. When an insured such as Sims died, different contractual responsibilities applied; the insurer then was obligated to pay the policy proceeds. That obligation arose generally as a result of an event in Texas, the death of the insured. It is the insured’s life that is the subject matter of the COLI policy. Since Sims and the other Plaintiffs in this suit are (or were) citizens or residents of Texas, the location of the subject matter of the COLI policies is Texas.

This result is consistent with Texas law. Texas courts have held that the subject matter of a life insurance policy is the life of the insured. Specifically, a life insurance policy that lapsed before the insured died cannot be reinstated after the insured’s death because the insured’s life— the subject matter of the policy- — no longer exists. Gibralter Colorado Life Co. v. Taylor, 132 Tex. 328, 123 S.W.2d 318, 321 (1939); P.M. Baker v. Penn Mutual Life Ins. Co., 617 S.W.2d 814, 815-816 (Tex.Civ. App.-Houston [14th Dist.] 1981, n.w.h.). “The essential foundation of a life insurance policy is the life of a human being.” Gibralter, 123 S.W.2d at 321.

The Restatement provides that “[t]he state where the [subject of the contract] is located will have a natural interest in transactions affecting it.” Restatement § 188, cmt. e. Accordingly, the location of the subject matter of the Sims Policy and the other COLI policies insuring the lives of Texas citizens or residents is Texas.

Public policy considerations prompt the Court in this case to give the “subject matter of the contract” factor great significance in the choice of law analysis. The Texas insurable interest doctrine exists to protect the lives of Texas citizens. Cheeves, 28 S.W. at 275 (“It is against the public policy of this state to allow any one who has no insurable interest to be the owner of a policy of insurance upon the life of a human being.”); Griffin v. McCoach, 123 F.2d at 551 (“The [insurable interest] rule in Texas is for the protection of the lives of its citizens.”). This Texas public policy is integrally intertwined with the subject matter of the contracts in issue.

Domicile of the Parties. — Defendants argue that the domicile of the parties to the COLI policies favors the application of G