Land O'Lakes, Inc. v. Emp'rs Mut. Liab. Ins. Co. of Wis., Case No. 09–CV–0693 PJS/TNL.

Decision Date06 March 2012
Docket NumberCase No. 09–CV–0693 PJS/TNL.
Citation846 F.Supp.2d 1007
PartiesLAND O' LAKES, INC., Plaintiff, v. EMPLOYERS MUTUAL LIABILITY INSURANCE COMPANY OF WISCONSIN and The Travelers Indemnity Company, Defendants. Employers Insurance Company of Wausau, f/k/a Employers Insurance of Wausau a Mutual Company, and The Travelers Indemnity Company, Third–Party Plaintiffs, v. White Mountains Reinsurance Company of America, successor to Mutual Service Casualty Insurance Company, and Doe Insurer Defendants 1–10, Third–Party Defendants.
CourtU.S. District Court — District of Minnesota


Steven P. Zabel, Leonard, Street and Deinard, for plaintiff Land O' Lakes, Inc.

David C. Linder and Hilary J. Loynes, Larson King, LLP, for defendant/third-party plaintiff Employers Insurance Company of Wausau.

Charles E. Spevacek, Michael P. McNamee, and Katrina M. Giedt, Meagher & Geer, P.L.L.P., for defendant/third-party plaintiff The Travelers Indemnity Company.

Jeanne H. Unger and Shanda K. Pearson, Bassford Remele, PA, for third-party defendant White Mountains Reinsurance Company of America.


PATRICK J. SCHILTZ, District Judge.

Plaintiff Land O' Lakes has sued two of its insurers—defendants Employers Insurance Company of Wausau (Wausau) 1 and The Travelers Indemnity Company (Travelers)—seeking payment of defense costs and indemnity in connection with an environmental-cleanup action brought against Land O' Lakes by the Environmental Protection Agency (“EPA”). Wausau and Travelers have brought third-party claims against White Mountains Reinsurance Company of America (White Mountains), which provided insurance coverage that might apply to the EPA action against Land O' Lakes.

Three summary-judgment motions and a related discovery motion are before the Court. Land O' Lakes moves for summary judgment that Wausau and Travelers (“the insurers”) must pay Land O' Lakes' past and future defense costs and must indemnify Land O' Lakes for a yet-to-be-determined amount of environmental-cleanup costs. The insurers move for summary judgment that they are liable for nothing. And White Mountains moves for summary judgment that, if the insurers are required to pay Land O' Lakes' defense or indemnity costs, the insurers cannot seek contribution from White Mountains. In addition, Land O' Lakes moves for leave to supplement the summary-judgment record to include a recent letter from the EPA that Land O' Lakes contends is relevant to the pending motions.

This case is extraordinarily complex—it involves multiple insurance policies issued by multiple companies over multiple years—and the parties' summary-judgment motions raise a host of difficult issues under both Minnesota and Oklahoma law.2 The Court attempts to address most of those issues below. Although the Court does not agree with all of the insurers' arguments, the Court ultimately concludes that the insurers are not obligated to defend or indemnify Land O' Lakes. Likewise, while the Court does not agree with all of White Mountains' arguments, the Court ultimately concludes that White Mountains is entitled to summary judgment on the insurers' contribution claims.3 The Court therefore grants the summary-judgment motions of the insurers (Wausau and Travelers), grants the summary-judgment motion of White Mountains, denies the summary-judgment motion of Land O' Lakes, and denies the motion of Land O' Lakes to supplement the summary-judgment record.


Land O' Lakes is a large member-owned agricultural cooperative. In 1981, Land O' Lakes agreed to acquire Midland Cooperatives, Inc. (“Midland”). Pursuant to that agreement, Land O' Lakes and Midland merged on January 1, 1982. Insurers' Joint Appendix (“JA”) Ex. 47.5

Midland began operating an oil refinery in Cushing, Oklahoma in 1943. 6 Previously, the refinery had been operated by various owners since the early 1900s. After operating the refinery for roughly 34 years, Midland sold the refinery in 1977 to the Hudson Oil Refinery Company (“Hudson”). Thus, when Land O' Lakes acquired Midland, Midland had not operated the Cushing refinery for about five years.

Midland's successor, Hudson, abandoned the Cushing refinery in 1982 and went bankrupt two years later. Soon thereafter, the EPA took enforcement action against Hudson, and Hudson agreed to clean up the refinery site. Hudson ran out of money for cleanup operations after about ten years, and a federal court released Hudson from any further cleanup obligations in 1994. In the meantime, sometime in the early 1990s, a contractor may have undertaken salvage operations at the refinery site that further damaged the environment. JA Ex. 22 at LOL0181302.

Throughout the 1990s, the Oklahoma Department of Environmental Quality (“ODEQ”) monitored the Cushing refinery site. The refinery site takes up roughly 200 acres. A state highway runs through the site, dividing it into a 165–acre portion known as the “North Refinery” and a 35–acre portion known as the “South Refinery.”

In 1998, a joint inspection of the Cushing refinery site by the EPA and the ODEQ revealed deteriorated, leaking structures and equipment—including asbestos-containing material—and in late 1998 EPA contractors began an emergency removal action to address immediate threats to human health and the environment.

The EPA placed the Cushing refinery site on the “National Priorities List” or “NPL” in July 1999—that is, the EPA designated the refinery as a “Superfund” site. The Superfund is a federal fund for cleaning up abandoned hazardous-waste sites. The Superfund was established by the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. §§ 9601–75 (“CERCLA”).7

Two years later, in 2001, the EPA began removing additional material from the Cushing refinery site. This second removal action, which continued into 2003, was a so-called “non-time-critical” removal action (as distinct from the earlier “emergency” removal action). Most of the structures and equipment that Hudson had left behind were removed from the site as part of this removal action.

In January 2001—at around the time that the EPA began the non-time-critical removal action—the EPA sent Land O' Lakes a “Special Notice Letter” about the Cushing refinery site. JA Ex. 17. The letter informed Land O' Lakes that, based on Midland's past ownership of the site and Land O' Lakes' later acquisition of Midland, the EPA considered Land O' Lakes a “Potentially Responsible Party (“PRP”) under CERCLA. CERCLA provides, in § 9607(a), that certain parties—PRPs—may be required, under certain circumstances, to pay the costs of cleaning up Superfund sites that they (or their predecessors) previously owned.

In the 2001 “Special Notice Letter”—also known as a “PRP letter”—the EPA asked Land O' Lakes to pay roughly $8.9 million for the costs of the EPA's cleanup actions to that point. The EPA also informed Land O' Lakes that to determine what additional cleanup work was needed at the site, the EPA planned to conduct a “Remedial Investigation” followed by a “Feasibility Study”—together called an “RI/FS”—of the site. Then, to actually clean up the site, the RI/FS would be followed by a “Remedial Design” and “Remedial Action”—called an “RD/RA”—that is, the cleanup itself. The EPA invited Land O' Lakes to “negotiate a settlement ... to conduct the RI/FS for the Site and fund related EPA and State costs.” JA Ex. 17 at EPAFOIA0010240.

Land O' Lakes responded to the PRP letter in March 2001. JA Ex. 18. Land O' Lakes refused to pay the $8.9 million in past costs that the EPA had incurred, and Land O' Lakes also refused “to prepare or pay expenses associated with preparation of” an RI/FS. JA Ex. 18 at LOL0181345. Land O' Lakes argued that any hazardous waste at the site was the fault of Hudson, not Midland, and thus Land O' Lakes was not responsible for any cleanup costs. Id. at LOL0181348 (“EPA has not presented credible evidence that hazardous substances were disposed of at the Site during the time that Midland owned the refinery.”).

Although Land O' Lakes' response to the 2001 PRP letter denied any liability, Land O' Lakes nevertheless notified Wausau and Travelers of the EPA's claims. JA Ex. 23 (letter notifying Wausau of claims); JA Ex. 36 (letter from Travelers acknowledging receipt from Land O' Lakes of notice of claims). Land O' Lakes sought a defense and indemnity under various Comprehensive General Liability (“CGL”) policies issued by Wausau to Midland and by Travelers to Land O' Lakes and to Midland.

After numerous letters back and forth, Wausau declined in November 2001 to defend Land O' Lakes, arguing that the PRP letter was not a covered “suit” under the relevant policies. JA Ex. 29 at WAU–000638. Land O' Lakes protested this decision by letter in January 2002, characterizing Wausau's actions as “a declination of coverage and a breach of [Wausau's] duty to defend.” JA Ex. 30 at WAU–000637. Land O' Lakes apparently met with Wausau about the claim sometime after this, see JA Ex. 31, but for the next six years, Land O' Lakes did not take any further steps to challenge Wausau's denial of defense and indemnification obligations.

Travelers likewise declined to defend Land O' Lakes. JA Ex. 38. In April 2001, Travelers made two arguments in response to Land O' Lakes' request for coverage. First, Travelers said that certain excess policies that Travelers had issued to Midland would not be in play until $19 million in primary coverage was exhausted, and Land O' Lakes had not shown that the EPA's claims threatened to exhaust that much primary coverage. These excess policies are not at issue in this case.

Second, Travelers said that the primary CGL policies that it had issued to Land O' Lakes could not apply because Travelers had issued the policies before Land O' Lakes acquired Midland. Thus—according to Travelers—the policies could not cover any damages incurred by Midland before Land O' Lakes...

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