Northern States Power Co. v. Fidelity and Cas. Co. of New York
| Decision Date | 03 August 1993 |
| Docket Number | No. C3-92-2363,C3-92-2363 |
| Citation | 504 N.W.2d 240 |
| Parties | NORTHERN STATES POWER COMPANY, Appellant, v. FIDELITY AND CASUALTY COMPANY OF NEW YORK, Defendant, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, as itself and as successor in interest to Mercury Insurance Company, et al., Respondent. |
| Court | Minnesota Court of Appeals |
Syllabus by the Court
1. Where there is a continuing injury potentially invoking coverage under successive policies, the total insuring intent of a policy must be analyzed to determine if the policy provides primary or excess coverage.
2. The district court erred in granting summary judgment because there was a genuine issue of material fact as to whether any or all Minnesota Pollution Control Agency mandated expenditures were necessary to clean up existing contamination.
3. The district court erred in granting summary judgment when there was a genuine issue of material fact as to whether the "own property" exclusion precluded coverage.
4. Under the actual damage trigger theory, damages are to be allocated among the carriers in proportion to the injuries that occurred during each policy period.
5. Under the actual damage trigger theory, self-insured retentions are treated as deductibles and must be satisfied, in accordance with the terms of the policy, for each policy under which the insured is seeking coverage.
Larry D. Espel, Greene Espel, Minneapolis, for appellant.
Charles E. Spevacek, Meagher & Geer, Minneapolis, for respondent.
Charles E. Lundberg, Bassford, Heckt, Lockhart, Truesdell & Briggs, P.A., Minneapolis, and Wiley, Rein & Fielding, Washington, DC, for amicus Ins. Environmental Litigation Ass'n.
Considered and decided by SCHUMACHER, P.J., and NORTON and PETERSON, JJ.
Northern States Power Company (NSP) appeals from the district court's grant of summary judgment, arguing that the policies of respondent St. Paul Fire and Marine Insurance Company (St. Paul) provide primary coverage and that St. Paul is therefore responsible for an allocable share of damages. By notice of review, St. Paul contends the district court incorrectly found that the "own property" exclusion does not preclude coverage and that preventative response costs constitute damages. We reverse and remand.
In the early 1900's, NSP operated a coal gas manufacturing plant in Faribault, Minnesota. In 1981, the Minnesota Pollution Control Agency (PCA) discovered contamination on the site. According to NSP's expert, there is contaminated groundwater, oil in the water table, oxide box waste contaminated soil, coal tar, and coal tar contaminated soil. The PCA and NSP entered into a consent order in 1988. Under the terms of the order, NSP is subject to continuing monitoring requirements. NSP contends that to date it has incurred $1,625,390.57 in response costs for investigatory and remedial actions. This includes $852,517.66 to outside vendors, $344,323.92 in internal costs, and $428,548.99 in interest.
To recover its costs, NSP sued 14 carriers that provided insurance to NSP from 1946 through 1985. NSP has settled with all carriers, except St. Paul, on terms analogous to Pierrenger settlements.
Five St. Paul policies are at issue. Their policy periods, policy limits, and self-insured retentions are as follows:
Policy Period Policy Limits Self"Insured Retention
10/01/58"01/01/62 $5,000,000 $ 25,000
01/01/62"07/01/63 $5,000,000 $ 25,000
07/01/63"01/01/67 $5,000,000 $ 25,000
01/01/67"01/01/70 $5,000,000 $ 25,000
01/01/70"01/15/73 $5,000,000 $100,000
The policies are essentially the same. All are labeled "EXCESS LIABILITY POLICY" and provide comprehensive general liability coverage. The policies provide that St. Paul agrees to pay
on behalf of the Insured all sums which the Insured shall become obligated to pay by reason of the liability imposed upon him by law * * * for damages because of injury to or destruction of tangible property, including the loss of use thereof.
There is an exclusion for "injury to or destruction of * * * property owned by the Insured."
If the Insured's liability insured under this Policy is covered by any other valid and collectible insurance, then this policy shall act as excess insurance over and above such other insurance.
The policies further provide:
The Insured or any company as his insurer shall pay the first $25,000 [or $100,000] for each occurrence or series of occurrences arising out of one event.
NSP moved for partial summary judgment. The district court found that NSP's damages resulted from injury to property, the damages resulted from a continuing occurrence during the terms of St. Paul's policies, the "own property" exclusion did not preclude coverage, and St. Paul was not prejudiced by late notice. However, the court denied NSP's motion on the ground that the "other insurance" provisions in St. Paul's policies converted them to policies in excess of all other policies. Therefore, St. Paul was an excess carrier and would not be responsible for response costs unless the costs exceeded the limits of the primary policies. The district court did not decide whether the losses were greater than the coverage provided by the settling carriers.
NSP and St. Paul then filed cross-motions for summary judgment. St. Paul argued that NSP's losses were less than the coverage available from the primary insurance policies. NSP argued that the district court erred in finding that St. Paul's policies were excess, that St. Paul had not established that there was other valid and collectible insurance that covered the same liability, and that the court should allocate NSP's damages on a policy limits basis. The district court granted St. Paul's motion for summary judgment. NSP appeals.
1. Did the district court err in finding that St. Paul's policies provide excess insurance?
2. Did the district court err in finding, as a matter of law, that the claimed expenses are damages from injury to property?
3. Did the district court err in finding, as a matter of law, that the "own property" exclusion does not preclude coverage?
4. How should damages be allocated when using the actual injury trigger theory of coverage?
5. How should the self-insured retentions be treated when using the actual injury trigger theory of coverage?
On appeal from summary judgment, this court must decide whether there are any genuine issues of material fact and whether the trial court correctly applied the law. City of Va. v. Northland Office Properties, 465 N.W.2d 424, 427 (Minn.App.1991), pet. for rev. denied (Minn. Apr. 18, 1991). Interpretation of an insurance contract is a question of law which this court reviews de novo. Garrick v. Northland Ins. Co., 469 N.W.2d 709, 711 (Minn.1991).
1. NSP contends that St. Paul was a primary carrier for the years 1958 through 1973 and is responsible for an allocable share of the response costs. St. Paul responds that the district court properly found that St. Paul was an excess carrier.
The district court compared the "other insurance" clauses of the St. Paul policies to the "other insurance" clauses in the settling carriers' policies. If there was other valid and collectible insurance covering the risk, St. Paul's policies were excess over any insurance that covered the liability, whereas the settling carriers' policies provided that they were excess over policies other than excess policies. The district court found that the clauses did not conflict and that St. Paul's policies became excess to all other policies covering the liability.
We disagree. The district court looked only at the type and language of the "other insurance" clauses. Minnesota courts have rejected this Lamb-Weston-type approach. 1 Minnesota evaluates coverage by examining the total policy insuring intent, as determined by the primary function of the policy and the primary policy risks upon which the premiums were based. Integrity Mut. Ins. v. State Auto. & Casualty Underwriters Ins. Co., 307 Minn. 173, 175, 239 N.W.2d 445, 446 (1976); see also Interstate Fire & Casualty v. Auto-Owners Ins. Co., 433 N.W.2d 82, 85 (Minn.1988); Federal Ins. Co. v. Prestemon, 278 Minn. 218, 231, 153 N.W.2d 429, 437 (1967); but cf. Illinois Farmers Ins. Co. v. Depositors Ins. Co., 480 N.W.2d 657 (Minn.App.1992) ().
Here, we do not have overlapping coverage in the technical sense because the policies at issue have different policy periods. Minnesota courts, however, have applied this analysis even in the absence of "other insurance" clauses. See Garrick, 469 N.W.2d at 712 (). We extend the use of this analysis in the present case to determine if St. Paul's policies are primary or excess.
Here, we use the broad Integrity approach as presented in Richardson v. Ludwig, 495 N.W.2d 869, 874-75 (Minn.App.1993), pet. for rev. denied (Minn. Apr. 20, 1993), to analyze the intent of the St. Paul policies. 2
(a) Specific Description : St. Paul's policies are labeled excess policies. Looking to the standard language of the policies, however, St. Paul clearly intended to provide NSP with comprehensive general liability coverage.
(b) Premium : It is unclear from the record what premiums were paid.
(c) Primary/Incidental Coverage : St. Paul, like the settling carriers, provided comprehensive general liability coverage. St. Paul's policies were intended to provide the first layer of coverage subject to NSP's self-insured retentions. In fact, from July 1, 1963 to December 31, 1972, NSP had another carrier provide excess insurance.
(d) Other Relevant Factors : Comparing "other insurance" clauses in policies providing coverage over different time periods may lead to inequitable...
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