Cargill v. Ace Am. Ins. Co.
| Decision Date | 30 June 2010 |
| Docket Number | No. A08-1082.,A08-1082. |
| Citation | 784 N.W.2d 341 |
| Parties | CARGILL, INCORPORATED, et al., Appellants,v.ACE AMERICAN INSURANCE COMPANY, et al., Respondents,Affiliated FM Insurance Company, et al., Respondents,Allianz Underwriters Insurance Company, et al., Respondents,Allied World Assurance, et al., Defendants,American Guarantee and Liability Insurance Company, et al., Respondents,American Home Assurance Company, et al., Respondents,American Employers' Insurance Company, et al., Respondents,Arch Reinsurance Ltd., Respondent,Associated International Insurance Company, Respondent,Everest Reinsurance Company, et al., Respondents,Great American Assurance Company, Respondent,Certain Underwriters at Lloyd's, et al., Respondents,Employers Mutual Casualty Company, et al., Respondents,General Security Indemnity Company of Arizona, et al., Respondents,Hartford Accident and Indemnity Company, et al., Respondents,Pennsylvania Lumbermens Mutual Insurance Company, et al., Respondents,Minnetonka Insurance Company, Respondent,Liberty Mutual Insurance Company, Respondent,Northwestern National Insurance, Respondent,St. Paul Fire and Marine Insurance Company, et al., Respondents,The Orion Insurance Company, PLC, et al., Respondents,XL Insurance America, Inc., Respondent. |
| Court | Minnesota Supreme Court |
COPYRIGHT MATERIAL OMITTED
Syllabus by the Court
A court can order primary insurers who insure the same insured for the same risks, and whose policies are triggered for defense purposes, to be equally liable for the costs of defense based on equitable contribution where there is otherwise no privity between the insurers.
Paul L. Langer, Proskauer Rose LLP, Chicago, IL; and Thomas C. Mielenhausen, Christopher H. Yetka, Lindquist & Vennum P.L.L.P., Minneapolis, MN, for appellants.
Margaret J. Orbon, Clausen Miller P.C., Chicago, IL; and Dale O. Thornsjo, Michael M. Skram, Johnson & Condon, P.A., Minneapolis, MN, for respondents American Home Assurance Company and National Union Insurance Company of Pittsburgh, PA.
Kenneth W. Dodge, Louise A. Behrendt, Stich, Angell, Kreidler & Dodge, P.A., Minneapolis, MN, for respondents One Beacon American Insurance Company, f/k/a Commercial Union Insurance Company and American Employers' Insurance Company.
Robert W. Kettering, Theodore J. Smetak, Paul E.D. Darsow, Arthur, Chapman, Kettering, Smetak & Pikala, P.A., Minneapolis, MN; and Michael J. Cohen, Meissner Tierney Fisher & Nichols S.C., Milwaukee, WI, for respondent Liberty Mutual Insurance Company.
Charles E. Spevacek, Amy J. Woodworth, Meagher & Geer, P.L.L.P., for respondents St. Paul Fire and Marine Insurance Company, St. Paul Surplus Lines Insurance Company, Travelers Casualty & Surety Company, f/k/a The Aetna Casualty & Surety Company; and The Travelers Indemnity Company.
Laura A. Foggan, Amanda Schwoerke, Wiley Rein LLP, Washington, D.C.; and Chad A. Snyder, Law Offices of Chad A. Snyder LLC, Minneapolis, MN, for amicus curiae Complex Insurance Claims Litigation Association.
Appellants Cargill, Inc., and Cargill Turkey Production, L.L.C. (collectively Cargill), sought a declaratory judgment in Hennepin County District Court against approximately 50 insurance companies. Cargill claimed that each of its insurers has an obligation to defend and indemnify Cargill in lawsuits brought in Oklahoma and Arkansas alleging environmental contamination. Respondent Liberty Mutual Insurance Company filed a counterclaim against Cargill, and cross-claims against several of Cargill's other insurers, seeking a declaration that Liberty Mutual would have subrogation or contribution rights from the other insurers for defense costs.
Cargill moved for partial summary judgment as to Liberty Mutual's duty to defend Cargill, but the district court denied Cargill's motion and granted partial summary judgment for Liberty Mutual. The court declared that Liberty Mutual has the right to seek contribution for defense costs from any insurer that has a duty to defend Cargill for the claims in the underlying litigation, and that costs of defense would be apportioned equally among such insurers. But the district court certified the following question for appellate review: “Can a court order primary insurers, who insure the same insured for the same risks, and whose policies are triggered for defense purposes, to be equally liable for the costs of defense where there is otherwise no privity between the insurers?” The court of appeals answered the question in the affirmative. Cargill, Inc. v. Ace Am. Ins. Co., 766 N.W.2d 58, 60 (Minn.App.2009). We granted both Cargill's petition for review and Liberty Mutual's petition for cross-review on the question of whether the Iowa National rule 1 applies to the circumstances of this case. We overrule Iowa National and affirm the court of appeals, although on different grounds.
The State of Oklahoma sued Cargill in 2005 under the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §§ 9601-9628 (2000), and the Solid Waste Disposal Act, 42 U.S.C. § 6972 (2000), alleging that Cargill's poultry waste disposal practices polluted and damaged land and water in the Illinois River Watershed. Cargill was also named as a defendant in a number of lawsuits in Arkansas alleging personal injury and wrongful death as a result of exposure to allegedly contaminated poultry litter.
Cargill notified its liability insurers of the Oklahoma and Arkansas litigation, requesting that the insurers defend and indemnify Cargill. Liberty Mutual agreed to pay its share of the reasonable and necessary defense costs in conjunction with Cargill's other insurance carriers for the Oklahoma and Arkansas lawsuits, subject to a complete reservation of rights, deductible provisions, and all other policy terms and conditions.2 But because none of Cargill's insurers agreed to fully defend Cargill or pay defense costs without contribution from other insurers, Cargill chose to defend itself in the Oklahoma and Arkansas lawsuits.
In February 2007 Cargill filed a complaint in Hennepin County District Court seeking declaratory judgment and other relief against approximately 50 insurance carriers with whom Cargill had liability policies in effect, at some point, from 1957 to 2006.3 Cargill asked the district court to declare that each insurer has a duty to provide a complete and undivided defense in the Oklahoma and Arkansas lawsuits and that each insurer has a duty to indemnify Cargill.4 Liberty Mutual counterclaimed against Cargill, asking that the district court require Cargill to enter into a loan receipt agreement or to create such an agreement. In addition, Liberty Mutual filed cross-claims against several of Cargill's other insurers, asking the court to declare that Liberty Mutual had subrogation or contribution rights against these other insurers. Recognizing that the insurers' duty to indemnify depended on the resolution of the underlying lawsuits in Oklahoma and Arkansas, the district court decided to divide the lawsuit into two phases and to address the insurers' duty to defend in the first phase.
In May 2007 several of the insurance companies, including Liberty Mutual, offered to pay Cargill's reasonable and necessary defense costs in the underlying actions, subject to the insurers' respective reservation of rights, and contingent on Cargill executing a loan receipt agreement.5 Cargill refused to enter into a loan receipt agreement with the insurers. In October 2007 Liberty Mutual sent Cargill a check for partial payment for past defense costs, but again required that Cargill execute a loan receipt agreement. Under the proposed agreement, Liberty Mutual offered to pay Cargill's defense costs in the underlying actions if Cargill permitted Liberty Mutual to seek recovery of defense costs from other insurers that are determined to have a duty to defend Cargill. Cargill refused to enter into the loan receipt agreement with Liberty Mutual and returned the check. Cargill was concerned that it would have to bear part of the defense costs because, according to Cargill, some of Cargill's primary or lower-level insurance policies (“fronted policies”) acted “merely as a retention or deductible, and do not provide Cargill with any economic risk transfer of defense costs to the primary insurer.” 6 Cargill alleges that some of these policies are in place to trigger umbrella and excess policy coverage. These fronted policies allegedly provide no defense costs coverage to Cargill because of retrospective premiums that were calculated to equal the losses paid, reinsurance of losses by a captive Cargill insurer, and high deductibles that match policy limits, thereby potentially subjecting Cargill to bearing part of the defense costs.
In November 2007 Cargill moved for partial summary judgment as to Liberty Mutual's duty to defend based on a single comprehensive general liability policy that was in effect from June 1969 to June 1972. Cargill asked the district court to declare that:
Liberty Mutual filed a cross-motion for summary judgment, asking that the court require Cargill to enter into a loan receipt agreement, or that the court create such an agreement, or that the court declare that such an agreement is not necessary in order for Liberty Mutual to seek contribution of defense costs from other liable insurers.
While these motions were pending, Cargill proposed a revised loan receipt agreement to Liberty Mutual, under which Liberty Mutual would agree not to make a claim for defense costs against Cargill or its subsidiaries. Cargill further proposed...
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...we have considered the practice of other states in deciding whether to overrule our precedent, see Cargill, Inc. v. Ace Am. Ins. Co ., 784 N.W.2d 341, 352-53 (Minn. 2010) (noting that our precedent was "the minority view" among other courts), we never have held that the extent to which othe......
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Parents v. Green, A11–0402.
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