State v. BP PLC, #28933
Court | Supreme Court of South Dakota |
Writing for the Court | JENSEN, Justice |
Citation | 948 N.W.2d 45 |
Parties | The STATE of South Dakota, the South Dakota Petroleum Release Compensation Fund, Plaintiff and Appellant, v. BP PLC, BP America, Inc., BP Products North America, Inc., BP West Coast Products, LLC and its predecessor companies and subsidiaries, Defendants and Appellees. |
Decision Date | 12 August 2020 |
Docket Number | #28933 |
948 N.W.2d 45
The STATE of South Dakota, the South Dakota Petroleum Release Compensation Fund, Plaintiff and Appellant,
v.
BP PLC, BP America, Inc., BP Products North America, Inc., BP West Coast Products, LLC and its predecessor companies and subsidiaries, Defendants and Appellees.
#28933
Supreme Court of South Dakota.
ARGUED ON JANUARY 14, 2020
OPINION FILED August 12, 2020
JUDITH K. ZEIGLER WEHRKAMP, Special-Appointed Assistant Attorney General, Harrisburg, South Dakota, MATTHEW J. HERMAN, ROBERT M. FOOTE of Foote, Mielke, Chavez & O'Neil, LLC, Geneva, Illinois, MICHAEL L. MURPHY of Bailey & Glasser LLP, Washington, D.C., Attorneys for plaintiff and appellant.
JEFFERY D. COLLINS, THOMAS G. FRITZ of Lynn Jackson Shultz & Lebrun P.C., Rapid City, South Dakota, DAVID ZOTT, MARTIN L. ROTH, DANIEL L. SIEGFRIED of Kirkland & Ellis LLP, Chicago, Illinois, Attorneys for defendants and appellees.
JENSEN, Justice
[¶2.] The circuit court initially granted BP's motion for summary judgment on all but one of the 19 indirect claims, determining the claims were time-barred by the applicable statute of limitations. Later, the circuit court granted BP's motion for summary judgment on the Fund's remaining
[948 N.W.2d 49
claims against BP. The Fund appeals, arguing that the circuit court erred in dismissing its claims. The Fund also argues the circuit court abused its discretion in denying its motion for discovery sanctions. We affirm.
Facts and Procedural History
[¶4.] To receive reimbursement for environmental cleanup costs, a UST owner or operator must submit an application to the Fund, disclose any available insurance coverage for the contamination, and execute a subrogation assignment that transfers to the Fund the applicant's rights of action and claims which the applicant may have against any party, including insurers, who may be liable to indemnify any remediation costs at a UST site. The UST owner or operator must also certify that no settlement or release has been or will be made with any party responsible for the cleanup costs without the written consent of the Fund.
[¶5.] Between 1990 and 2002, BP submitted applications and received approximately $3.1 million in total payments from the Fund for cleanup costs at 27 eligible UST sites in South Dakota. The contamination at the 27 sites was reported to have occurred between 1987 and 1998. The largest single reimbursement paid to BP for cleanup costs at any of the 27 sites was $677,800. The individual reimbursements at other sites were less than $500,000. BP's applications claimed there was no insurance coverage to indemnify the cleanup costs. BP also submitted letters with the applications representing it was self-insured for the UST contamination events for which BP sought reimbursement. In a 1992 cover letter forwarding an application to the Fund that sought reimbursement for seven sites, BP stated the liability insurance "does not provide coverage for the referenced sites as, inter alia , remediation expenses do not exceed the [policy] deductible." The Fund reimbursed BP without further inquiry or investigation into possible insurance coverage.
[¶6.] Starting in the 1950s, BP purchased comprehensive general liability (CGL) insurance for liabilities arising from its operations. The CGL policies purchased by BP were high deductible plans. The earliest policies had a self-insured retention (SIR) of $500,000 per occurrence and provided no indemnity to BP for claims that did not exceed the SIR. In 1971, the SIR for BP's CGL policies was increased to $2.5 million per occurrence. In 1972, BP increased the SIR for its CGL policies to $5 million per occurrence and maintained the SIR at that level thereafter.
[¶7.] By at least 1973, the CGL polices purchased by BP also contained pollution exclusions for liability arising from gradual releases of pollutants. Coverage was only afforded under these exclusions if the occurrence was "sudden and accidental." In 1985, the CGL polices purchased by BP included "absolute" pollution exclusions that barred coverage for liability arising from any pollution claim, including UST cleanup costs. The policies also contained "owned property exclusions" that precluded coverage for damage due to an occurrence on BP's property, and limited liability
[948 N.W.2d 50
coverage to property damage owned by third parties.
[¶9.] Several years after BP filed suit, BP and its insurers began settlement negotiations. To achieve finality, the insurers conditioned settlement of the 23 large-dollar claims on a buyback by the insurers of all estimated liabilities under the CGL insurance policies purchased by BP during this time. To facilitate these discussions, BP retained a team of consultants to prepare a Settlement Report to quantify BP's total environmental contamination exposure before absolute pollution exclusions were introduced into the CGL policies on June 1, 1985.
[¶10.] The Settlement Report primarily discussed the liabilities at the 23 industrial sites that were the subject of the litigation. The Settlement Report included a chapter discussing the potential environmental contamination at BP's gas stations, terminals, and bulk plants, which BP referred to as its "marketing system." Because the cleanup costs for USTs at these sites generally did not exceed the SIRs in BP's policies, the report discussed a "single occurrence theory" in an effort to aggregate the cleanup costs for all USTs into a single occurrence. This theory posited that the single occurrence was BP's decision in 1917 to sell refined petroleum products at retail by storing and selling these products from company-owned above ground tanks and USTs. BP calculated the potential cleanup costs for thousands of retail outlets, over many decades, by estimating a per-station figure and multiplying it by the total number of BP gas stations, so that the total cleanup costs for USTs owned and operated by BP exceeded the SIRs. These calculations only included pollution at UST sites that occurred prior to the introduction of the absolute pollution exclusions in the CGL polices on June 1, 1985.
[¶11.] The individuals involved in settlement negotiations testified that the insurers rejected BP's "single occurrence theory" for the USTs. However, between September 1997 and April 1998, BP entered into settlement agreements with the insurers for as much as $205 million for the 23 large-dollar industrial sites that were the subject of the litigation. The settlements were significantly less than the total cost of $2.7 billion calculated by BP to clean up these industrial sites. The settlement agreements provided that the payments did not include any amounts BP had received or might receive in the future from state or federal UST reimbursement funds.
[¶12.] In 2010, the Fund filed suit against BP, seeking to recover $3.1 million previously paid by the Fund to BP for the cleanup costs at 27 UST sites in South Dakota. The Fund alleged that settlements
[948 N.W.2d 51
between BP and its insurers were made in violation of the Fund's subrogation rights and that BP engaged in fraud by failing to disclose the coverage lawsuits and settlements. The Fund alleged several theories of liability and rights to reimbursement from BP: Count I (violations of SDCL Ch. 34A-13 and ARSD 74:32:01, et. seq. for failure to disclose and misrepresentation of certain information required to be provided by statute); Count II (alleging statutory and other...
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WHERE DREAMS COLLIDE: WILSON V. MAYNARD AND THE SOUTH DAKOTA SUPREME COURT'S INTERPRETATION OF RESTRICTIVE RESIDENTIAL COVENANTS.
...summary judgment for the defendants). (74.) Id. [paragraph] 14, 961 N.W.2d at 600 (quoting State v. BP plc, 2020 SD 47, [paragraph] 18, 948 N.W.2d 45, 52; Jackson v. Canyon Place Homeowner's Ass'n, Inc., 2007 SD 37, [paragraph] 7, 731 N.W.2d 210, (75.) Id. [paragraph][paragraph] 30-33, 961 ......
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Godbe v. City of Rapid City, #29251
...and Decision [¶19.] We review the circuit court's entry of summary judgment de novo. State v. BP plc , 2020 S.D. 47, ¶ 18, 948 N.W.2d 45, 52. "The existence of a duty in a negligence action is a question of law subject to de novo review by this Court." Hohm , 2008 S.D. 65, ¶ 3, 753 N.W.2d a......
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Wilson v. Maynard, #29307
...will affirm a circuit court's decision so long as there is a legal basis to support its decision." State v. BP plc , 2020 S.D. 47, ¶ 18, 948 N.W.2d 45, 52 (internal citations omitted). "The [circuit] court's interpretation of a covenant is a legal question which we review de novo." Jackson ......
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Godbe v. City of Rapid City, 29251-a-SRJ
...Analysis and Decision [¶19.] We review the circuit court's entry of summary judgment de novo. State v. BP plc, 2020 S.D. 47, ¶ 18, 948 N.W.2d 45, 52. "The existence of a duty in a negligence action is a question of law subject to de novo review by this Court." Hohm, 2008 S.D. 65, ¶ 3, 753 N......
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Godbe v. City of Rapid City, #29251
...and Decision [¶19.] We review the circuit court's entry of summary judgment de novo. State v. BP plc , 2020 S.D. 47, ¶ 18, 948 N.W.2d 45, 52. "The existence of a duty in a negligence action is a question of law subject to de novo review by this Court." Hohm , 2008 S.D. 65, ¶ 3, 753 N.W.2d a......
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Wilson v. Maynard, #29307
...will affirm a circuit court's decision so long as there is a legal basis to support its decision." State v. BP plc , 2020 S.D. 47, ¶ 18, 948 N.W.2d 45, 52 (internal citations omitted). "The [circuit] court's interpretation of a covenant is a legal question which we review de novo." Jackson ......
-
Godbe v. City of Rapid City, 29251-a-SRJ
...Analysis and Decision [¶19.] We review the circuit court's entry of summary judgment de novo. State v. BP plc, 2020 S.D. 47, ¶ 18, 948 N.W.2d 45, 52. "The existence of a duty in a negligence action is a question of law subject to de novo review by this Court." Hohm, 2008 S.D. 65, ¶ 3, 753 N......
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Wilson v. Maynard, #29307
...will affirm a circuit court's decision so long as there is a legal basis to support its decision." State v. BP plc, 2020 S.D. 47, ¶ 18, 948 N.W.2d 45, 52 (internal citations omitted). "The [circuit] court's interpretation of a covenant is a legal question which we review de novo." Jackson v......
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WHERE DREAMS COLLIDE: WILSON V. MAYNARD AND THE SOUTH DAKOTA SUPREME COURT'S INTERPRETATION OF RESTRICTIVE RESIDENTIAL COVENANTS.
...summary judgment for the defendants). (74.) Id. [paragraph] 14, 961 N.W.2d at 600 (quoting State v. BP plc, 2020 SD 47, [paragraph] 18, 948 N.W.2d 45, 52; Jackson v. Canyon Place Homeowner's Ass'n, Inc., 2007 SD 37, [paragraph] 7, 731 N.W.2d 210, (75.) Id. [paragraph][paragraph] 30-33, 961 ......