*1 advisory subd. com- committee
ment a that a decision reflect determination COMPANY, Respondent, GOPHER OIL not a a motion reconsideration is v. from prerequisite appeal judgment an delayed appeal and the should not order be AMERICAN HARDWARE MUTUAL a motion reconsideration. COMPANY, INSURANCE Appellant. appeal judg- delaying an
Instead order until a motion for ment or reconsidera- No. C1-98-737. of, any disposed tion is claimed errors Appeals Court of of Minnesota. sought was which reconsideration can be di- rectly appeal judg- reviewed from the 2, 1999. Feb. trial or order. If ment committed error, can reversible the error be corrected appeal judgment
in the from the or order. if the trial
And court made no reversible
error, refusal to a motion allow for recon- change upon
sideration decision
reconsideration is harmless. appeal properly
This was taken from the
judgment challenges the merits or- judgment.
ders that involve the merits of the
Our is review limited those decisions.
Moberg Moberg,
(Minn.1984) (if appeal challenges some rul-
ings appealable that are some are
not, appellate review is limited to those appealable).
are
DECISION trial court denying did err
Baker’s motion for JNOV. The trial court did
not abuse its in denying discretion Baker’s request
motion for new trial or his for a hearing. trial
Schwartz denial of request to
Baker’s make motion to recon- denying posttrial
sider order his motions appealable.
is not
Affirmed. *5 Broady,
Keith J. R. Hedges, Steven Timo- thy Matson, Abdo, P.A., C. Abdo & Minne- apolis, respondent. Metcalf, Seholle, Scholle,
Robert S. Mark Metcalf, Ltd., Minneapolis, Beisel & ap- pellant. SHORT, by
Considered decided LANSING, Judge, Presiding Judge, and RANDALL, Judge. policy umbrella court found the commercial
OPINION as of also contained UL-21 endorsement LANSING, Judge July policies were renewed 1972. The corporation, oil-distributing by Gopher on July A successor Janu- and cancelled action, declaratory judgment seeks through ary 1,1976. prede- from its and defense
indemnification Romness, of the owners Charles one liabilities insurer environmental cessor’s State, also an of Arrow- was owner predecessor’s activities stemming from the Refining Company from 1961 1976. head the district conclude that four sites. We Refining, Arrowhead insured under or revers- not abuse its discretion court did insurer, by disposed of oil issued different coverage, partial ibly finding granting err re-refining process its on its sludge from site, one di- summary judgment excluding site) (the in a property Arrowhead wetland recting that actual occurred a verdict “sludge lagoon.” as referred site, jury, ruling instructing at one (MPCA) Agency Minnesota Pollution Control objections, ordering indemnifi- evidentiary Refining Arrowhead end closed defense costs. The district cation and 1976. jury’s supported findings and verdict are Corporation, In Bame Oil October evidence, affirm. we Bame, purchased Gopher Fred owned Subsequently, Bame Oil took State. FACTS Hard- corporate as its name. American Company (Gopher) has been Gopher Oil unaltered, effect, policies remained ware’s potentially liable for envi- found liable and is period, knowledge throughout despite this Compre- cleanup costs under ronmental ownership. Gopher re- change Response, Compensa- Environmental hensive with American Hardware newed *6 Act, Liability §§ 9601- tion and U.S.C. 1981, eight through end of 1975. In the (1994) (CERCLA), and the Minnesota State, years Gopher purchase his after Act, Response Liability and Environmental corporation, Gopher Rub- and Bame another (1996) (MER- §§ 115B.01-.241 Minn.Stat. Cote, the purchased ber Arrowhead site. LA), predecessor for activities of its cor- the 1991, four Beginning Gopher in received (Gopher poration, Gopher Company State Oil for alleged it was liable environ- claims that State). Gopher a wholesale dis- State was Gopher mental contamination due State’s and, lubricating products oil tributor of and Gopher alleged The claims State activities. motor oil. until it re-refined used June for, opera- and of contaminants was a source by-product re-refining process A of the was site, of, Gopher State tor the Arrowhead sludge, Gopher disposed of at oil which State in 1960s sludge the 1950s and disposed of oil dump four a sites. The sites number Brooklyn dump Park at and Bellaire Arrowhead, litigation involved in this are sites, a of con- Gopher and that was source Bellaire, Park, Brooklyn and Oak Grove. disposed of Oak taminants at Grove January through From October Hardware Go- dump site. American denied purchased general Gopher commercial State on all four claims. pher’s tenders of defense (CGL) liability policies from American Hard- Agency Protection Company. July Environmental In Go- ware Insurance (EPA) against brought an action three-year poli- enforcement pher purchased State a CGL severally alleging jointly and three-year Gopher, it was cy and a umbrella commercial cleanup of the investigation for policy Hardware. American liable from American clean-up cost site. The estimated Gopher Arrowhead Hardware was aware State re- In million. operations. for was in excess part $38 as of its the site waste oil refined $1,225,000 April Gopher agreed pay July Beginning in con- CGL endorsement, Arrowhead claim. settle- a settle the pollution exclusion tained endorsement, claims coverage also covered the United States’ limited ment UL-21 against Gopher Rubber Cote. pollution Bame and damage from to sud- property for in to participate refused The district American accidental occurrences. den negotiations expect on behalf the settlement of Go- or intend the actual at the pher. Brooklyn Park site. The court conducted an three-day nonjury bench additional trial on claim, In the Bellaire the MPCA ordered issues and issued its final order December soil Bellaire Sanitation to remove contami- 31,1997, January 28,1998. amended Ameri- sludge nated oil from the site. The clean- Gopher appeal can Hardware and from the $330,421.72. up cost was Bellaire Sanitation trial, orders, pretrial, claiming and final a Gopher, alleging disposed sued separate grounds total for reversal. oil at sludge site in 1966 and 1967. against claim, defended itself jury found liable one-half of the ISSUES cleanup costs. I. holding Did the district court in err claim, Brooklyn In the Park EPA purchased that insurance on Gopher pay cleanup made demand predecessor corporation provide cover- alleged costs site. claim age corporation? to successor disposed State had of oil sludge the site in Gopher’s 1950s and 1960s and that share II. Did granting the district court err cleanup of the cost was in excess of $1.3 summary judgment to American Hard- claim, Gopher disputed million. and the ware on the Oak claim? Grove record litigation does indicate that has been concluded. The EPA also made a jury III. Did the district err its pay demand on cleanup costs instructions? at the Oak Grove site. reasonably support IV. Does evidence 1994, Gopher brought In October de- this jury’s findings of fact? claratory against action American Hardware. The district court held American Hard- Did the V. district court err its other duty ware had a defend based evidentiary procedural rulings or in predecessor’s policies. This court dis- findings? its substantive appeals missed American Hardware’s award, VI. Did the district court err ruling district premature, as Go- denial, or allocation of in- defense and pher Oil Co. American Hardware Mut. demnification costs? C5-96-1658, Ins. Nos. C5-96-1689 *7 1996) 27, (order (Minn.App. Aug. opinion); ANALYSIS Gopher v. Oil Co. Hardware Mut. Co., 29, (Minn.App. Ins. No. I C9-96-2022 Oct. 1996) (order opinion), supreme and the Interpretation poli of an insurance denied review. The district court subse- cy’s application coverage and of the that de quently granted American Hardware’s mo- present to undisputed termination ques facts summary judgment tion on the Oak law, of tions which are reviewed novo. de Grove claim. It determined that the activi- Cos., 264, v.Vue State Farm Ins. 582 N.W.2d at later, ties Oak Grove occurred in 1973 and (Minn.1998). Unambiguous 265 and unde policies when the contained the en- UL-21 policy given terms a fined must be their dorsement. ordinary, plain, popular meaning. Jenoff, or tried, remaining Co., factual Hampshire issues were v. New Inc. Ins. 558 N.W.2d (1) jury (Minn.1997). and the Gopher determined: did not 262 Ambiguous terms are expect injury or intend the actual against at the be resolved the insurer and site; (2) disposal Arrowhead of sludge the oil expectations accordance with the reasonable (3) injury site; caused actual at the Bellaire (citing Heights of the Id. insured. Columbia Motors, expect Co., did not or intend the actual Inc. v. Allstate Ins. 275 N.W.2d (4) site; injury (Minn.1979)). at disposal the Bellaire the guiding principle sludge oil injury judicial caused actual interpretation at the Brook- coverage provi (5) site; lyn Park actual give the occurred is to sions effect to the intentions of the (6) 1966; from 1954 to did parties as in the terms of insur- reflected the losses); assigned Mining Mfg. Co. Co. v. Minnesota & B.S.B. ing contract. Diversified 175, 179 Co., Co., F.Supp. American Motorists Ins. 457 N.W.2d Travelers Indent. v. (contract (W.D.Wash.1996) (Minn.1990). 1480-81 sale of all cover- assets transferred insurance challenges the age coverage by opera- also transferred ruling is that covered district law). tion of to Gopher State policies issued under the provision included a the because a purpose non-assignment by an was not bound protect is to the from an in clause insurer assignment policy under the with interest agreed risk has to insure. crease the it undisputed It is that neither its consent. out Ins., 1128; at National Am. 501 F.2d Gopher obtained American nor ed.1995). (3d § Couch Insurance 35:3 assign to the express Hardware’s consent But an giving when insurer’s events rise policy. ruling under the In ment of interest occurred, liability already have the insurer’s policy irre was covered change a risk is not increased consent, Hardware’s spective of American Ins., identity. insured’s National Am. distinguished the district court between F.2d at 1128. risk, changes poli assignment of a which assignment An a does not ex loss activities, assignment of cy’s covered activities; pand only risk to cover other it loss, arising assigns claim from a which a identity change allows a insured activity during policy period. covered policy’s coverage to reconnect to the Corp. v. Ocean Accident & Guar. South See 1129-30; Acci loss. Id. at Ocean insured Co., (8th 441, 444 western Bell Tel. 100 F.2d dent, 444-45; Couch, supra, 100 F.2d distinction); Cir.1939) Windey (making same Ins., 35:7; § see Northern 955 F.2d Co., Mut. Ins. v. North Star Farmers (agreeing analysis that with Ocean Accident’s (1950) 279, 283, * * * honoring assignment’ ‘no “rationale for claus loss, (“Assignment, does not con after liability presale es vanishes when arises only policy, but assignment an stitute activity”). liability This transfer address right policy. or of action on the claim problem es when an insurer be created assignment policy an does void the Such an comes liable at the is accident time there assigned if it is with provision under a policy or under the but occurrence covered consent shall become out the insurer’s against the loss is enforced a successor own void.”). Credit, Citicorp Indus. Inc. Federal er. appellate courts have not direct- Minnesota (N.D.Ill. F.Supp. Ins. question of a no- ly whether addressed 1987) (when that creates event has occurred nassignment-without-consent clause is en- indemnity liability liability poli under an against corporation forceable successor may assigned cy, rights with be assets and lia- acquires predecessor’s *8 insurer). or without consent of jurisdictions in other have bilities. Courts great majority a clause courts follow this to enforce such when refused of acquisition corporation’s pre- of a distinction risk and loss and allow successor between Couch, predecessor’s assign supra, an insured to a loss. decessor’s assets transfers the See, § purchase agreement Allied at e.g., Northern Ins. Co. v. 35:7. The issue losses. (9th Co., 1353, Gopher “assign all provided 955 F.2d Cir. that State would Mut. Ins. 1992) Gopher to Oil. substantially prede- all of the assets” of State Bame (purchase Although assigned specifically, cover- not assets transferred insurance cessor’s law); by assignment Na- “all the assets” also age operation to found the successor Inc., Agency, assigned to Bame Oil Gopher v. State’s losses tional Am. Ins. Co. Jamison Cir.1974) (8th 1125, reasoning (listing Gopher. to 1128-30 and then 501 F.2d refusing to en- exceptions nonassignment- is consistent with cases to enforcement declining nonassignment-without-consent clauses and to en- force without-consent clause n enforcing not supports that in sale assets between and the rationale provisions force assigned also all assets and the clauses. partners rely nation, attempt brought Hardware’s to if the claim is even under argue against to ma
Minnesota case law
subsequently
legislation.
enacted
Minnesota
unavailing.
jority
is
Both of
it
rule
the eases
Mfg.,
(recogniz-
Mining
&
457 N.W.2d
inapposite
cites are
because
successor
ing longstanding
prohibition
contamination
corporations
attempted
those
to ob
cases
in.
groundwater
predating CERCLA and
coverage
tain
for a loss that arose after the MERLA).
law,
Under Minnesota
the losses
acquired
predecessor corpora
successor
during Gopher
policy period,
occurred
State’s
274,
Mitby,
tion.
Closuit v.
238 Minn.
See
Quemetco
apply.
and
does
275-76,
(1953);
Yoselow
Inc.,
argument
final
Bakery,
Hardware’s
Peoples
itz v.
201 Minn.
(1938);
601-05,
coverage
policy
is
on a
277 N.W.
222-24
see also
based
exclusion
(“The
Couch,
§
“all
(Supp.1998)
pur
by
supra,
35:7
liabilities assumed
contract.” Ameri
pose
assignment
protect
of a no
is to
can
clause
claims
this exclusion relieves
liability,
from
duty
the insurer
increased
and after
any
indemnify Gopher
it of
to
defend
giving
liability
to
events
rise
the insurer’s
agreement
because the
between
occurred,
risk
Oil,
have
insurer’s
cannot
be
transferring
assign
State and Bame
and
by change
increased
the insured’s identi
ing
liabilities,
liability
assets
is
as
ty.”). American Hardware’s reliance on au
by
sumed
contract.
This exclusion
as
thority
similarly
states
other
overlooks
suming
liabilities
contract serves the same
the factual
distinctions
these cases that
purpose
policy provision preventing
as the
Argo
an
risk.
demonstrate
increased
See
assignment
prevent
of risk:
an in
naut
Co. v.
Southwest Ins.
American Home
Gopher’s pur
crease in risk to the insurer.
F.Supp.
Assurance
chase of
State created no fundamen
(N.D.Tex.1980) (providing coverage to unin
entity
change
tal
insured
is not
company
sured division of
would increase
type
liability assumption
con
covered),
ajfd
risk
expanding activities
provision
prohibit.
tract
is intended to
Con
(5th Cir.1981); Qualman
F.2d
assignment-of-loss theory,
sistent with the
Bruckmoser,
361, 471
163 Wis.2d
policy’s
exclusion should
be read in
(Wis.App.1991) (providing coverage
such a manner as to
entitle an insurer
misrepresentation
on contract and
claims
having
windfall of not
an occur
insure
by expanding
would
risk
increase
activities
premiums
it
covering.
rence that
received
covered). The
losses
issue here occurred
The district court did
err in
its inter-
State,
Gopher acquired Gopher
before
pretation
finding
extending coverage
in
does not
assigned
its losses to
crease American Hardware’s
risk.
See
duty
and that American Hardware had a
Ins.,
(a
Northern
Expected
may
equated with
conduct
be
not
reckless conduct. This standard does
Adequacy
Support Jury
Evidence to
preclude
of circumstantial
the use
evidence
Expected
Injuries
on
or
Verdict
Intended
* *
proof
or
of willful blindness
*.
jury’s
A
special
form
verdict
an
The instruction accords with the standard set
“only
swers can be set
if no
aside
reasonable
interpreting
meaning
forth in Domtar
the
Domtar,
jury.”
mind could find as did the
damage
“certainty”
“expected”
require
(citation omitted);
at
563 N.W.2d
see
harm, equating
“high degree
this
Inc.,
cer- Hughes
Mktg.,
v. Sinclair
389 N.W.2d
(Minn.1986)
tainty” with
conduct.
id.
(jury
reckless
See
will
verdict
be
misleading
confusing
any
not
theory
instruction was
or
on
sustained
reasonable
based on
evidence).
accurately
jury’s
stated the law.
We will set aside a
evidence,
only
verdict
if the
in the
viewed
Hardware
con
also
verdict,
light most favorable to the
contra
tends that the district court’s instruction on dicts the verdict.
Id.
injury”
when an “actual
occurs was errone
jury
argues
jury:
ous. The
instructed the
finding Gopher
erred in
not expect
State did
Environmental contamination of
soil is
injuries
the actual
intend
that occurred at
type
injury
considered to be
of actual
the Arrowhead site from 1961 to 1976. The
the soil.
has the burden of estab-
jury
that, during
heard evidence
the 1960s
lishing
injury
that an actual
has occurred.
1970s,
odor,
damage,
the visual
only
danger
runoff
surface
were the
dangers
known
from
disposing
the oil
injury
purposes
The actual
insur-
sludge
property.
on the
This included
may
coverage
necessarily
ance
occur at
from the
letter
MPCA’s executive director
time that the act was
which
committed
stated,
part
“the site in
is saturated with
damage,
but
leads
rather at the date
physically
oil and [is]
unattractive” and that
damage
property.
is actual
there
problem appeared
to be odors “rather
The instruction follows the well-settled stan
pollution.”
jury
than water
also heard
injury
dard for
actual
when an
occurs. See
testimony
practice
that industrial
at the time
Hosp.
v.
groundwater
Fairview
& Health Care Servs.
St.
did not consider
contamination
Co.,
evaluating
pollution.
Paul Fire & Marine Ins.
effects
jury
reasonably
could
find that
(Minn.App.1994)(triggering
cov
State
event for
expect
injuries
did not
or intend the actual
erage
injury,
anis
actual
“such as contamina
during
years
the Arrowhead site
from
soil”),
groundwater
aff'd,
tion of
Domtar,
1961 to 1976. See
N.W.2d at
(Minn.1995).
injury
An
N.W.2d
actual
(testimony
provided
expert
Domtar’s
party
can
disposes
occur when a
of contami
supported
jury’s
the reasonableness of the
Indus.,
ground. Ray
nants in the
Inc.
conclusion).
Co.,
Liberty Mut.
974 F.2d
Ins.
765-66
(6th Cir.1992) (injury occurred when contam
challenges
landfill); TBG,
placed in
inants were
Inc. v.
adequacy
support
of the evidence to
Co.,
F.Supp.
Commercial
Ins.
Union
jury’s finding
injury
that actual
occurred at
(N.D.Cal.1990)
(injury
1452-53 & n.
disposed
sludge
oil
time
contaminants
occurred when
were released
dump
dump
in the
It
sites.
asserts
sites
property);
Hosp.
Fairview
& Health Care
expected
were
contaminants
receive
Paul Fire Marine
Servs. v. St.
&
Ins.
and,
sludge
thus the oil
did
cause
(Minn.1995)(actual
inju
535 alternatively,
any injury
occur
did not
ry
immediately
occur
if
not in
could
waste is
disposal
years
the time of
but
later. Al
disposal
sealed containers and
site
does
though
regulato
evidence demonstrated that
system).
have a liner or leachate collection
ry procedures
evolved
laxer
more
standards,
court did not
law in
stringent
The district
misstate the
American Hardware did
statute,
evidence,
through
instructing
jury
injury.”
“actual
not demonstrate
*11
operations in
Refining’s
claims
on Arrowhead
dump
of a
site
the nature
law that
or case
by
against
surrounding
brought
the
States
Go-
en-
United
injury to the
negates actual
coverage for
Gopher established
timing
pher.
respect
to
With
vironment.
policy, and American
disputed,
activities under
its
was
injury,” the evidence
“actual
in
pointed
no exclusion
Hardware
Ameri-
competent evidence
contains
the record
but
“operator”
inju-
policies for an
can Hardware’s
that actual
who testified
witnesses
from
noted,
court
American
disposed of
status. As the district
State
Gopher
when
occurred
ries
in
Gopher
this
through
Hardware’s refusal
defend
dump sites
sludge in the
oil
weighs
litigation
against
belated claim
and soil at the sites.
mixing
sludge
oil
injuries.
was
liable for the
support
Gopher
in
rec-
findings
jury’s
The
have
has not
an
American Hardware
shown
abuse
ord.
excluding
Arrowhead Refin-
discretion
jury-verdict
last
American Hardware’s
ing’s policies
any
or that
exclusion caused
Gopher
challenge
finding
State
is to the
Kroning
prejudice requiring a new trial. See
Brooklyn
sludge
Park
at the
disposed of oil
Co.,
v. State Farm Auto. Ins.
By
year
1966.
site each
between
(new
(Minn.1997)
only
appropriate
trial
testimony
only
of one wit-
focusing
on the
ruling
evidentiary
appellant
when
shows
cre-
ness,
did
dis-
who
State
testified
error).
prejudicial
ated
sludge until 1965 or
Ameri-
pose of oil
testimony
the other
Hardware overlooks
can
argues
also
disposed of oil
indicating that
State
Minn. R.
district court violated
Civ.
jury’s
period.
sludge throughout
jury
by allowing
P. 49.01
to review sam
adequately
on
issues is
verdict
each
these
ple
policies
periods
insurance
by
supported
the evidence.
setting
specific
out
issue and
exhibits
periods.
provides:
rule
insurance
y
may require
jury
The court
return
only
form
special
of a
verdict
Rulings
Evidentiary and Procedural
special
finding upon
written
each issue
Findings Relating to the
the District Court’s
* *
*
Except
provided
fact.
as
Rule
Arrowhead Site
49.01(b),
court nor counsel shall
neither the
Hardware
a cluster
American
raises
jury
inform the
the effect of its answers
liability
that relate to its
for activi
issues
ease.
the outcome of the
at the
site. The first
ties
Arrowhead
issues
49.01(a).
Minn.
P.
49.01
R. Civ.
Rule
relates
evidentiary rulings.
American
relate
by
counsel and
statements
argues that
the district court
Hardware
directly
does not
address what
is
evidence
by
jury
excluding
during the
trial
Ar
erred
appropriate
jury
to review. The
Refining’s
poli
separate insurance
rowhead
cases
involve
American
relies
by
Group.
issued
Travelers Insurance
cies
improper
by
or the
statements
counsel
court.
prej
that it was
Hardware asserts
See,
Simon,
e.g., Hassler v.
its discretion review case, policies. Gopher moved for a directed verdict injury that an at actual occurred the Arrow Operation Arrowhead Site year head site each from 1961 1976. The findings A district court’s “will granted court the motion based on the un- manifestly palpa not be unless reversed undisputed evidence. It was contradicted bly v. contrary to the evidence.” Malmin Refining operated that Arrowhead from 1961 Grabner, 82, 86, 39, Minn. 163 N.W.2d addition, to 1976. In John Erdmann testified (1968). argues that the contamination occurred each time Arrowhead finding groundwa court erred the soil Refining sludge placed sludge oil into the by, ter the Arrowhead site were owned lagoon. similarly Norman Wenck testified care, custody or in control of injury an actual occurred each a time during years through 1976. party disposed sludge. of oil Viewing the light uneontradieted evidence in most fa Romness, Kemp, and Bill Bo- Orville Hardware, vorable to American the evidence fey purchased Refining Arrowhead in 1961. supported the directed verdict an actual Romness, Eventually Kemp, and William injury throughout occurred Re Arrowhead corporation. Although Heino owned the fining’s operation. an Romness was owner of both Arrowhead State, Refining corporations injury, Beyond the actual were distinct he entities. Heino testified disputes sufficiency of the evi considered Romness and Gessner be supporting dence the conclusion charge Refining’s operations. of Arrowhead injury State contributed to an actual each But he also testified he was Arrowhead year at the Arrowhead site. The record Refining’s president and that he did book indicates State sent Arrowhead Re inventory, keeping, managed handled ac 24,000 gallons fining Although of oil. Moreover, may counts. a corporation lia be parties dispute all of this whether was waste operator ble as an of a if it site even does not oil, Gopher good settled the claim in faith due property own maintain under potential liability to its for the entire amount. care, custody, or control. See Musicland supports The evidence the conclusion that Group, Corp., v. Inc. Ceridian 508 N.W.2d Gopher supplied Refining Arrowhead (if 524, (Minn.App.1993) corporation’s 532-33 continuously with oil waste 1961 to operations migration of caused the contami Domtar, (in 1973. See 563 N.W.2d 732-33 nearby may nants on property it be deemed difficult cases when exact dates are uncer “operator” an of nearby property), review tain, presume can continuous damage (Minn. 1994). Despite denied Jan. Go proven ending between start date and an pher’s as an “operator,” status the record date); Fidelity Northern States Power Co. v. supports finding court’s that Gopher did (Minn. & Cos. 663-64 not control the Arrowhead site. 1994) (same). addition, Gopher’s liability In alleged was also based on its role as an Injury Directed Verdict Actual at Ar- “operator” of the throughout Arrowhead site rowhead Site period. operator Its status serves as an independent basis court’s directed verdict, Reviewing a directed this verdict inju State caused actual court independently if determines the evi ry throughout period. We affirm the present dence was sufficient to a fact ques an directed verdict that actual Martinez, jury. tion to the Boone v. year occurred at the Arrowhead site each (Minn.1997). N.W.2d The evidence between 1961 and 1976. light is viewed in the most favorable nonmoving party. Id. A directed verdict is American Hardware’s Knoum-Loss De- appropriate present if the evidence does on Arrowhead Claim fense question jury. of fact to the Vanden 399, 404, Lyon County, Broucke v. Insurance cannot be issued for a (1974). 222 N.W.2d no longer known loss because there is a risk. Noska, pre-tender de- district court’s denial Mut. Ins. Waseca Co. (Minn.1983). may costs. An fense n. 6 insurer using the known-loss against claim defend (1) Reasonableness Arrowhead Settle- *13 of of the when knew loss if the insured defense ment known-loss policy. the Id. The applied proof insured withheld requires the defense argues the dis American Hardware property known information about $1,225,000 material by finding trict court erred the subsequently insured damage for which the claim amount for the Arrowhead settlement Domtar, at insurance. reasonable, obtained provide support not but does was Gopher argues 737. American Hardware undisputed testimony argument. for its The sludge of oil disposal that State knew the attorney Gopher of on the the who defended causing an actual (1) the Arrowhead site was claim that the es Arrowhead established knew injury. testified that Romness Heino clean-up of the Arrowhead site timated costs sludge vegeta- lagoon million; (2) and the dead about the approximately the set were $38 surrounding it. But at best his testimo- tion prudent and based was reasonable tlement ny that the Gopher State knew demonstrated liability joint for the Gopher’s on and several a risk to surface sludge unsightly (3) oil was and amount; showed Go entire the evidence It did not State water. establish Refining pher employees assisted Arrowhead causing disposal oil was sludge (4) that the knew operations; future and its and defense groundwater contamination. See soil and costs that would be incurred in defend trial Domtar, 552 Niagara Inc. v. Fire Ins. supports dis ing claim. record the the The (known- (Minn.App.1996) 747 N.W.2d finding that the trict court’s settlement requires in- loss that the defense evidence amount was reasonable. loss, that of the the insured sured knew (2) Liability loss), ajfd Allocation Settlement leading acts to the knew of the of part grounds, part, other rev’d on challenge to the In its allocation (Minn.1997). Domtar, As in N.W.2d liability, American Hardware the settlement is no in the record that Go- there evidence that first the district court erred asserts pher knew loss. known-loss Arrow allocating more than one-third not, law, bar does as a matter of defense because Bame head settlement recovery. Gopher’s were also defen Rubber Cote liability in the was determined
dants whose did not But Hardware American settlement. VI demonstrating that it was introduce evidence $1,225,000 Costs settle divide reasonable Defense Indemnification allocation equally. evidence ment may An recover de insured testimony of Go undisputed consisted judgment declaratory in a action costs fense $10,000 attorney that was a pher’s defense by against an insurer based on breach of Bame’s and allocation reasonable duty insurer of its to defend. Morrison share of the settle Rubber Cote’s combined Swenson, 127, 137-38, 142 Minn. by testimony was buttressed This ment. (1966). This court reviews indicating Refin Arrowhead other evidence and costs under an abuse-of- award fees oil operations disposal ing ceased Domtar, 563 N.W.2d at discretion standard. most the contami sludge in 1976 and that Findings of or effec 740. fact underlie sludge disposal was due to oil nation under a a fee award are reviewed tuate supports district site. record R. “clearly Civ. erroneous” standard. finding. court’s (1) disputes P. 52.01. Second, argues American settle the reasonableness of the Arrowhead (2) dividing ment, the settlement liability for the court erred the allocation of (3) costs, years settlement, liability pro into rata shares the 13 defense allocation excluding the (4) and then from 1961 award of defense costs Go (5) endorse- of the UL-21 Gopher disputes share because pher’s claims. dismissed sites, Grove, including ment. Hardware maintains that in all involved Oak closely segregated the allocation is inconsistent with were so intertwined that a difficult, finding billing extremely actual occurred from 1961 if would have been Domtar, against Gopher and the claim impossible, to create.” See period included 1981. (holding N.W.2d at 740-41 trial did not awarding abuse its discretion in all defense no Hardware offered evidence billing costs was segregated). when In provided waste oil or ad- sent addition, observed, as the district court Refining vice Arrowhead between any American Hardware could have avoided however, Gopher, and 1976. introduced evi- question cost acting of defense allocation ship during dence that it did not oil waste *14 duty Gopher. on its id. to defend at 740 See years. supports those record (citing Fund Fireman’s Ins. Cos. v. Ex-Cell- court’s use of cutoff 1973 as the date. Ar- (E.D.Mich. 1339, Corp., F.Supp. O 790 Refining down operations rowhead shut its 1992) (had accepted insurer tender of defense Nothing in 1976. in the record indicates dispute there would have been no about rea Gopher contributed additional contamination costs)). necessary sonable and defense to the site between and 1981. The supports record the court’s of allocation de supports record the district court’s of the use on fense costs the Arrowhead claim. 1973, period from to the court’s exclu- years sion 1976 to and the exclu- sion based on UL-21 endorse- (k) Oak and Oth- Costs Grove Defense
ment. er Dismissed Claims Finally, argues American Hardware district court awarded de it is Gopher’s liable activities at fense costs on the Oak and Grove other the Arrowhead site it because acted as an concluding dismissed claims after operator, which an activity. was not insured costs were reasonable and were “intertwined initially policy We note does not duty and related to the issues of to defend activity “operating” exclude and that the set duty indemnify.” reject and to We any assign “operator” tlement did not re Hardware’s citation of error on the court’s sponsibility Gopher. to But whether First, may award for party three reasons. “operating” significance, legal has the district declaratory recover costs in a defense action court found that the contaminated soil and on long prevails unsuccessful claims so as it groundwater at the Arrowhead site were not 741 (affirming trial. Id. at award de by, care, custody, owned in the or control fense costs claim to submitted Gopher years during through jury). Gopher prevailed majority on the 1976. findings The district court’s have the Second, claims, its Gopher’s claims at trial. record, requisite support in the find we Grove, except for scope Oak are within no reversible error in the court’s allocation of policy’s coverage. Although American liability. the settlement authority Hardware relies involves policy’s claims scope, outside the it does not
(3) Arrowhead
Costs
Defense
dispute that
other
claims
dismissed
were
argues
that the
parallel
covered. The claims
to
are
those
district court
litigated
should have divided the
policy.
defense
and come within the
See
equally among
Meadowbrook,
costs
Gopher, Gopher Rubber
Inc. v. Tower Ins.
Cote,
(Minn.1997) (insurer’s
pro
Bame. American Hardware
duty
equal
duced no
an
evidence that
arguably
coverage
division
defend claims
within
indemnification).
would be reasonable. The district court rea
extends until
basis for
no
sonably
testimony
Gopher’s Finally,
relied on
ability
an
dispute
insurer’s
attorney that
the amount
attorney
defense
of costs
reasonableness of
fees is diminished
attributable
Bame
improperly
Rubber when
has
declined a tender
Domtar,
very very
was “a
Cote
small amount” and on
defense.
other
Affirmed.