719 F.3d 868 (8th Cir. 2013), 12-2215, Doe Run Resources Corp. v. Lexington Ins. Co.

Docket Nº:12-2215.
Citation:719 F.3d 868
Opinion Judge:LOKEN, Circuit Judge.
Party Name:DOE RUN RESOURCES CORPORATION, Plaintiff-Appellant v. LEXINGTON INSURANCE COMPANY, Defendant-Appellee.
Attorney:Marc D. Halpern, argued, San Diego, CA, Heather L. Mayer, on the brief, for appellant. Joseph Hinkhouse, argued, Chicago, IL, Scott R. Ostericher, Seth M. Jaffe, Sarah H. Dearing, Robyn Fox, on the brief, for appellee.
Judge Panel:Before LOKEN, MURPHY, and COLLOTON, Circuit Judges.
Case Date:June 13, 2013
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit
 
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Page 868

719 F.3d 868 (8th Cir. 2013)

DOE RUN RESOURCES CORPORATION, Plaintiff-Appellant

v.

LEXINGTON INSURANCE COMPANY, Defendant-Appellee.

No. 12-2215.

United States Court of Appeals, Eighth Circuit.

June 13, 2013

Submitted: Jan. 16, 2013.

Page 869

Marc D. Halpern, argued, San Diego, CA, Heather L. Mayer, on the brief, for appellant.

Page 870

Joseph Hinkhouse, argued, Chicago, IL, Scott R. Ostericher, Seth M. Jaffe, Sarah H. Dearing, Robyn Fox, on the brief, for appellee.

Before LOKEN, MURPHY, and COLLOTON, Circuit Judges.

LOKEN, Circuit Judge.

Doe Run Resources Corporation (" Doe Run" ), the largest integrated lead producer in the Western Hemisphere, operates the Sweetwater Mine and Mill near Viburnum, Missouri. Doe Run extracts and crushes ore containing lead and other metals at the mine, processes the crushed ore at a mill near the mine, and either sells the resulting lead concentrate on the world market or transports it by truck to Doe Run's smelter for processing into ingots, bars, and other forms. In 2006, Nadist, LLC, a neighboring landowner, sued Doe Run, alleging environmental property damage resulting from the mine and mill operations (the " Nadist Lawsuit" ).

More than three years later, Doe Run tendered defense of the Nadist Lawsuit to Lexington Insurance Company (" Lexington" ) under Commercial General Liability (CGL) policies Doe Run purchased between 1998 and 2006. When Lexington denied coverage on numerous grounds, Doe Run commenced this declaratory judgment action seeking to enforce Lexington's contractual duty to defend Doe Run. The district court 1 granted summary judgment dismissing the complaint, concluding that Lexington had no duty to defend because the policies' absolute pollution exclusions unambiguously bar coverage of all claims asserted in the Nadist Lawsuit. Doe Run appeals. Missouri law governs the issues raised on appeal in this diversity case. Reviewing the district court's grant of summary judgment and interpretation of the policies de novo, we affirm. See Royal Ins. Co. of Am. v. Kirksville Coll. of Osteopathic Med., 191 F.3d 959, 961 (8th Cir.1999) (standard of review).

I.

Nadist filed the Nadist Lawsuit in June 2006 and the operative First Amended Complaint in February 2008. In October 2008, the State of Missouri intervened as plaintiff, asserting the same claims for relief under state and federal environmental laws. In September 2009, Doe Run gave Lexington notice of the Nadist Lawsuit and demanded " full defense coverage" under enumerated CGL policies. Those policies imposed two distinct contractual duties, the duty to indemnify Doe Run for covered losses, and the duty to defend Doe Run in a lawsuit seeking damages for losses that may be covered. In this lawsuit, Doe Run seeks only to enforce the duty to defend, which is broader than the duty to indemnify. " The presence of some insured claims in the underlying suit gives rise to a duty to defend, even though uninsured claims or claims beyond the coverage may also be present." Lampert v. State Farm Fire & Cas. Co., 85 S.W.3d 90, 93 (Mo.App.2002).

Under Missouri law, the duty to defend arises when there is potential liability at the outset of the third party's case. Normally, the duty " is determined by comparing the language of the insurance policy with the allegations in the complaint." McCormack Baron Mgmt. Servs., Inc. v. Am. Guar. Liab. Ins. Co., 989 S.W.2d 168, 170 (Mo.1999) (citation omitted). " But the insurer may not ignore ‘ actual facts,’ that

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is, ‘ facts which were known, or should have been reasonably apparent at the commencement of the [underlying lawsuit].’ " Esicorp, Inc. v. Liberty Mut. Ins. Co., 193 F.3d 966, 969 (8th Cir.1999) (quotation omitted). Here, this standard is more difficult to apply because Doe Run waited three years before tendering defense of the Nadist Lawsuit to Lexington, when Doe Run had already incurred $2,700,000 in defense costs. But as the district court recognized, our focus must still be on the claims asserted in the Nadist Lawsuit's First Amended Complaint. Lexington has no duty to defend if the policies' pollution exclusions barred coverage of all claims asserted in the Nadist Lawsuit. Cas. Indem. Exch. v. City of Sparta, 997 S.W.2d 545, 553 (Mo.App.1999). Where insurance policy terms unambiguously apply, including coverage exclusions, they will be enforced as written. Krombach v. Mayflower Ins. Co., 827 S.W.2d 208, 210 (Mo.1992); Auto Club Family Ins. Co. v. Jacobsen, 19 S.W.3d 178, 183 (Mo.App.2000).

Given this focus of the duty-to-defend inquiry, we will quote at some length from the twenty-six-page First Amended Complaint in the Nadist Lawsuit. The complaint began with general allegations regarding the Doe Run operations at issue:

2. Through its mismanagement of the Mine and Mill, Doe Run has caused hazardous and toxic substances, primarily lead, zinc and lead tailings but also other substances including arsenic, cadmium, chromium, copper, manganese, nickel, and thallium to contaminate the soil, air, and water around the Mine and Mill, including property owned by Nadist.

3. According to sampling performed by the Missouri Department of Natural Resources (" MDNR" ) and Nadist itself, the contamination Doe Run has caused is extreme both in breadth and in the danger it poses to human health and the environment.

4. In addition, there is significant contamination in the Sweetwater and Adair Creeks downstream of likely discharge points ... in the Mill area.

6. .... MDNR has documented a release from the tailings pond into the Ozark Aquifer, on information and belief creating a risk to domestic wells near the Mine and Mill.

7. ... The high concentrations of lead and other toxic substances are being detected at or near the surface with the highest concentrations closest to Doe Run's Mill and the haul road, suggesting lead contamination emanates from the Mill and haul trucks that carry ore concentrate from the Mill.

8. .... Lead is a probable human carcinogen known to...

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