Land O' Lakes, Inc. v. Employers Mutual Liability Insurance, 846 F. Supp. 2d 1007

Background

Land O’ Lakes sues its insurers Wausau and Travelers for defense costs and indemnity related to EPA CERCLA cleanup at the Cushing refinery site in Oklahoma; White Mountains seeks contribution from insurers; PRP letters in 2001 and 2008 triggered potential defense obligations; EPA ordered cleanup via UAO in 2009; site remediation largely completed by 2010–2011 with ongoing five-year review; Minnesota and Oklahoma law govern different policy aspects; owned-property exclusions and allocation issues are central to coverage and indemnity disputes.
The Cushing refinery was operated by Midland (later Midland-Merged with Land O’ Lakes) and Hudson previously; EPA designated the site as Superfund in 1999; initial PRP letter in 2001 demanded about $8.9 million and RI/FS participation, with later 2008 PRP letter demanding about $20.9 million and RD/RA involvement; Land O’ Lakes repeatedly denied responsibility but notified insurers of claims.
Insurers declined defense in 2001, later argued coverage arguments; the court must determine whether the duty to defend was triggered, whether the damages sought were arguably covered, and whether exclusions and choice-of-law affect indemnity; the court ultimately grants summary judgment to the insurers and White Mountains, denies Land O’ Lakes’ motion to supplement, and denies Land O’ Lakes’ summary judgment.
The owned-property exclusion, if construed under Domtar and NSP I, precludes indemnity for costs arising from Midland’s preexisting ownership of the refinery property unless there is a current third-party injury that the cleanup is addressing.
Allocation and form of damages (time-on-the-risk) and whether groundwater/environmental harms constitute third-party injury affect the pro rata allocation if any coverage existed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether PRP letters are suits triggering defense duty	Land O’ Lakes: 2001 PRP letter was a suit; 2008 continued the action.	Wausau/Travelers: PRP letters are not suits or did not seek covered damages.	Yes, 2001 PRP letter is a suit seeking arguably covered damages; 2008 is a continuation; but the claim is time-barred.
Whether the 2001 PRP letter sought arguably covered damages	EPA’s 2001 letter sought RI/FS participation and damages that included cleanup and potential third‑party damages.	Damages claimed in 2001 did not necessarily fall within covered damages.	The 2001 letter sought arguably covered damages, supporting breach of defense in 2001.
Whether the duty to defend was timely barred by the statute of limitations	Land O’ Lakes argues 2008 letter revived or created new triggers; 2001 trigger is timely.	Insurers argue defense duty either never arose or arose in 2001 and is barred.	The breach occurred in 2001 and is time-barred under Minn. Stat. § 541.05.
Whether the owned-property exclusion precludes indemnity for cleanup costs	Domtar/NSP I allow some coverage for cleanup on insured property to protect third‑party property.	Owned-property exclusion precludes coverage for damage to Midland’s property.	Yes, owned-property exclusion precludes indemnity for Land O’ Lakes’ cleanup costs.
Whether White Mountains can be liable for defense-cost contribution	Land O’ Lakes seeks contribution from White Mountains for defense costs.	Wausau/Travelers breached their duty to defend; Cargill precludes contribution; choice of law favors Minnesota.	White Mountains granted summary judgment; breach precludes contribution and no defense costs to contribute.

Key Cases Cited

SCSC Corp. v. Allied Mut. Ins. Co., 536 N.W.2d 305 (Minn. 1995) (suit includes a government environmental-action analog to PRP letters; duty to defend)
Bahr v. Boise Cascade Corp., 766 N.W.2d 910 (Minn. 2009) (overruled in part on coverage issues; rule changes on certain remedies)
Domtar, Inc. v. Niagara Fire Insurance Co., 563 N.W.2d 724 (Minn. 1997) (owned-property exclusion exception for protecting third-party property; dual-purpose costs)
NSP I (Northern States Power Co. v. Fidelity & Cas. Co. of N.Y.), 504 N.W.2d 240 (Minn. Ct. App. 1993) (economic allocation under owned-property exclusion when groundwater is involved)
NSP II (Northern States Power Co. v. Fidelity & Cas. Co. of N.Y.), 523 N.W.2d 657 (Minn. 1994) (pro rata by time on the risk allocation method for long-tail pollution claims)
Cargill, Inc. v. Ace American Insurance Co., 784 N.W.2d 341 (Minn. 2010) (breach of duty to defend precludes equitable contribution rights)
Briscoe United States Fidelity & Guaranty Co., 239 P.2d 754 (Okla. 1952) (definition/meaning of ‘accident’ under Oklahoma law; reasonable-expectations approach)
Wooddale Builders, Inc. v. Md. Cas. Co., 722 N.W.2d 283 (Minn. 2006) (duty to defend broader than indemnity; allocation guidance)
Jepson v. Gen. Cas. Co. of Wis., 513 N.W.2d 467 (Minn. 1994) (choice-of-law framework for insurance disputes)