Land O' Lakes, Inc. v. Employers Insurance Company of Wausau
728 F.3d 822
| 8th Cir. | 2013Background
- Land O’ Lakes acquired Midland (which formerly operated a refinery in Cushing, OK) in 1982; EPA identified contamination and designated the site a Superfund site in 1999–2003 investigations and removal actions.
- EPA sent a 2001 PRP (Potentially Responsible Party) letter to Land O’ Lakes demanding reimbursement for prior response costs (~$8.9M), inviting negotiations, and enclosing a draft Administrative Order on Consent; Land O’ Lakes denied responsibility and sought coverage from its insurers (Wausau and Travelers).
- Insurers declined to defend in 2001 (Wausau) and thereafter (Travelers), and Land O’ Lakes waited several years before suing them in 2009 for breach of the duty to defend and for indemnification of cleanup costs.
- EPA proceeded with RI/FS and issued a 2007 ROD estimating the remedy cost; in 2008 EPA sent another PRP letter demanding about $21M and draft consent documents; in 2009 EPA issued a Unilateral Administrative Order directing Land O’ Lakes to implement the remedy, and Land O’ Lakes performed remediation.
- The district court granted summary judgment for insurers: (1) Land O’ Lakes’s duty-to-defend claim was time-barred because the 2001 PRP letter triggered the insurers’ duty to defend and started Minnesota’s six-year contract statute of limitations; (2) the owned-property exclusion barred indemnity because the cleanup concerned contamination confined to the insured’s property and not remediation of identified third-party property damage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 2001 PRP letter constituted a "suit" triggering the insurers’ duty to defend | 2001 letter was merely an invitation to investigate; duty only arose with the 2008 letter | 2001 PRP letter began adversarial enforcement and thus triggered duty to defend | 2001 PRP letter was a "suit" for arguably-covered damages and triggered the duty to defend; statute of limitations bars 2009 claim |
| Whether the 2008 PRP letter created a distinct accrual event restarting limitations | 2008 letter imposed new obligations and cost estimates, so accrual began then | 2008 letter was a continuation of the same enforcement process begun in 2001 | 2008 letter was a continuation of the 2001 claims; not a new accrual event |
| Whether the insurers breached duty to defend when they declined in 2001 | Warranted relief because insurers wrongfully denied defense | Insurers contended no coverage; also argued limitations and other policy defenses | Court found insurers breached duty to defend in 2001 but Land O’ Lakes’s claim to enforce that duty is time-barred by Minnesota six-year statute |
| Whether the owned-property exclusion bars indemnity for EPA-mandated cleanup costs | Cleanup addressed an existing threat and third-party property had been harmed historically, so exclusion inapplicable | Exclusion applies because EPA-ordered cleanup addressed contamination confined to insured’s property and was not causally related to ongoing harm to the same third-party property | Owned-property exclusion applies; Land O’ Lakes failed to show the required causal relation and contemporaneous third-party injury/threat, so no indemnity |
Key Cases Cited
- SCSC Corp. v. Allied Mut. Ins. Co., 536 N.W.2d 305 (Minn. 1995) (PRP letters can constitute a "suit" under CGL policies)
- Wooddale Builders, Inc. v. Md. Cas. Co., 722 N.W.2d 283 (Minn. 2006) (insurer's duty to defend extends to any claim that arguably falls within coverage)
- Domtar Inc. v. Niagra Fire Ins. Co., 563 N.W.2d 724 (Minn. 1997) (owned-property exclusion does not bar coverage where there is actual third-party injury and an existing threat to that same third-party property)
- Minn. Mining & Mfg. Co. v. Travelers Indem. Co., 457 N.W.2d 175 (Minn. 1990) (causal relationship required between cleanup costs and covered third-party property damage)
- N. States Power Co. v. Fid. & Cas. Co. of N.Y., 504 N.W.2d 240 (Minn. Ct. App. 1993), aff'd as modified, 523 N.W.2d 657 (Minn. 1994) (government-mandated cleanup costs can be covered when contamination has damaged third-party property)
- Remodeling Dimensions, Inc. v. Integrity Mut. Ins. Co., 819 N.W.2d 602 (Minn. 2012) (duty to indemnify requires actual coverage, distinct from duty to defend)
- Face, Festivals & Concert Events, Inc. v. Scottsdale Ins. Co., 632 F.3d 417 (8th Cir. 2011) (standard of review for contract interpretation and summary judgment)