United States District Court, D. Minnesota
Karen H. Ventrell, COLLIAU CARLUCCIO KEENER MORROW PETERSON & PARSONS, 2020 K Street NW, Suite 505, Washington, DC 20006; and Jeanne H. Unger and Susan E. Gustad, BASSFORD REMELE, PA, 33 South Sixth Street, Suite 3800, Minneapolis, MN 55402, for plaintiff.
Dale O. Thornsjo and Mark R. Azman, O'MEARA LEER WAGNER & KOHL, PA, 7401 Metro Boulevard, Suite 600, Minneapolis, MN 55439, for defendant.
Andrew J. Detherage and John P. Fischer, BARNES & THORNBURG LLP, 11 South Meridian Street, Suite 1313, Indianapolis, IN 46204; and Annamarie A. Daley, BARNES & THORNBURG LLP, 225 South Sixth Street, Suite 2800, Minneapolis, MN 55402, for intervenor-defendant.
MEMORANDUM OPINION AND ORDER
JOHN R. TUNHEIM, District Judge.
Plaintiff Continental Casualty Company ("Continental") and Defendant National Union Fire Insurance Company of Pittsburgh, PA ("National Union") each provided commercial general liability insurance to the Valspar Corporation ("Valspar") at different times between the period from 1971 through 2004. Beginning in 2006, Continental incurred costs in defending Valspar against four toxic tort lawsuits ("the underlying lawsuits"), which alleged damages resulting from long-term exposure to products manufactured or sold by Valspar. The underlying lawsuits implicated the insurance policies of all of Valspar's historical insurers - including Continental and National Union - as they alleged exposure to and injury from Valspar's products beginning, at the latest, in 1966, and extending through at least May 1990.
Continental brought the present declaratory judgment action against National Union seeking contribution from National Union to the costs Continental incurred in defending Valspar against the underlying lawsuits, based on the theory that National Union owed Valspar a duty to defend against the underlying lawsuits, and therefore has an equitable obligation to contribute to defense costs incurred by another insurer in connection with those lawsuits. On March 29, 2013, the Court granted in part Continental's motion for summary judgment, finding that National Union had a duty to defend Valspar and therefore has a duty to contribute to defense costs incurred by Continental. The Court's order left open the question of the dollar amount of contribution that National Union was required to make to Continental, pending the receipt of further information from the parties regarding the defense costs incurred with respect to the underlying lawsuits and the amount, if any, that National Union had already contributed. The parties have now submitted two sets of supplemental briefs regarding the amount of contribution owed by National Union. Because Continental Casualty has presented undisputed evidence that it incurred $563, 645.36 in defending the underlying lawsuits, and National Union is responsible for a one-seventh share of those costs, the Court will order contribution in the amount of $80, 520.77 plus interest recoverable thereon in an amount to be determined.
I. VALSPAR'S INSURERS
Continental issued five commercial general liability insurance policies to Valspar, providing coverage from January 1, 1971, through January 1, 1976. (Compl. ¶ 9, Feb. 9, 2009, Docket No. 1.) Under these policies, Continental had "the right and duty to defend any suit against" Valspar seeking damages for bodily injury or property damage to which the insurance applied. ( Id. ¶ 10, Ex. A at 7.)
From 1990 through 2004 Valspar and National Union entered into annual agreements which together formed an insurance program ("the Program") and provided general commercial liability insurance to Valspar. Each Program year consisted of a general commercial liability policy in addition to other documents such as indemnity agreements, promissory notes, funding schedules, and deductible liability insurance endorsements, which further defined the financial and other obligations of Valspar and National Union with respect to the insurance provided by the Program. ( See Second Aff. of Kristen Quast, Exs. 1-42, May 31, 2012, Docket No. 187.) In particular, under various Program years, Valspar was either required to reimburse National Union for costs incurred in defending Valspar under the Program up to the deductible limit of the Program year ( see, e.g., Second Quast Aff., Ex. 31 at 1612, Ex. 36 at 1676), reimburse National Union for defense costs without limitation ( see id., Ex. 39 at 1863, Ex. 41 at 1967), or assume direct responsibility for paying defense costs under the Program policies ( see id., Ex. 35 at 1631).
II. THE UNDERLYING LAWSUITS
The underlying lawsuits were filed in 2005 and 2006, and alleged harm caused by long-term exposure to benzene contained in products manufactured or sold by Valspar. (Compl. ¶¶ 15, 18, 21, 24; Second Decl. of Karen Ventrell, Ex. A at 1, 6, Ex. B at 42, 45, Ex. C at 1, 4, Ex. D at 28, 36-38, Jan. 25, 2010, Docket Nos. 110-11.) Because of the length of exposure and timing of the injuries alleged, the underlying lawsuits triggered coverage years of Continental, National Union, and other insurance companies that provided insurance to Valspar between 1976 and 1990. (Second Ventrell Decl., Ex. A at 6, Ex. B at 45, Ex. C at 4, Ex. D at 36-38.)
Valspar tendered defense of the underlying lawsuits to Continental, National Union, and its other historical insurers, after which Continental determined it had a duty to defend Valspar. (Second Quast Aff. ¶ 3; Supplemental Aff. of Kristen Quast, Exs. A-D, July 12, 2012, Docket No. 213.) Subject to a reservation of rights, Continental allowed Valspar to retain its own independent counsel and agreed to reimburse Valspar for its defense payments reasonably incurred in defending against the underlying actions. (First Decl. of Karen Ventrell, Ex. 1 at 2, Sept. 15, 2009, Docket No. 35; Supplemental Quast Aff., Exs. A-D.) Continental requested contribution to Valspar's defense from National Union, which National Union declined to provide on the basis that Valspar had not exhausted certain deductible amounts under the Program and therefore National Union's defense obligations under the Program years were not implicated. (Compl., Ex. K; Second Quast Aff., Ex. 43 at 5592.)
Continental reimbursed Valspar for over $500, 000 in costs Valspar incurred defending against the underlying lawsuits. (Decl. of Wayne Binkowski, Ex. A, July 12, 2012, Docket No. 215.) On February 9, 2009, Continental brought the present action against National Union, seeking contribution to those costs. In its complaint, Continental sought "a judicial declaration that National Union has a duty to defend Valspar" and "a judicial declaration that Continental has a right of contribution and is entitled to contribution from National Union for defense expenses ...