United States District Court, D. Minnesota
Matthew R. Veenstra, Alain M. Baudry, Kutak Rock LLP,
Minneapolis, Minnesota, Harry N. Niska, Ross & Orenstein
LLC, Minneapolis, Minnesota, for Plaintiff.
A. Ziemianski, Cozen O'Connor, Houston, Texas, Stacey A.
Broman, Meagher & Geer, PLLP, Minneapolis, Minnesota, for
MEMORANDUM OPINION AND ORDER
action, Plaintiff Rembrandt Enterprises, Inc.
(“Rembrandt”) has sued its insurer, Defendant
Illinois Union Insurance Company (“Illinois
Union”), to recover losses stemming from an outbreak of
highly pathogenic avian influenza (“HPAI, ”
commonly referred to as “bird flu”). Presently
before the Court is Illinois Union's Motion for Partial
Summary Judgment. For the reasons that follow, the Motion
will be granted in part and denied in part.
owns and operates commercial poultry farms in several states,
including Minnesota and Iowa. In 2011, it purchased a
Premises Pollution Liability Insurance Policy (“the
Policy”) from Illinois Union. The Policy insured
Rembrandt's farms against losses caused by a
“pollution condition, ” that is, “[t]he
discharge, dispersal, release, escape, migration or seepage
of any . . . irritant, contaminant, or pollutant . . . on,
in, into, or upon [covered] land and structures.” It
also provided “remediation” coverage for costs
incurred responding to a “pollution condition, ”
specifically, “reasonable expenses required to restore,
repair or replace real or personal property to substantially
the same condition it was in prior to being damaged during
the course of responding to a ‘pollution
condition.'” The Policy was in effect when bird flu
was first discovered in the United States in 2014. The virus
spread and, eventually, reached Rembrandt's farms in
Rembrandt, Iowa, and Renville, Minnesota, in late April and
early May 2015. The flu was particularly virulent: at the
Renville farm, for example, 711 hens died on Tuesday, May 12,
2015, but the number steadily increased to more than 132, 000
hens on Thursday, May 21 alone.According to charts prepared by
Rembrandt, it expected that more than a million hens in
Renville would perish from the flu in the following week,
which would leave only approximately 500, 000 alive in a
facility that originally housed more than 2 million. Indeed,
Tom Seigfreid, Rembrandt's Vice President of Operations
and its Rule 30(b)(6) designee, testified that despite
Rembrandt's efforts to contain the infection, it expected
that all of the birds at the affected facilities would
that happened, however, federal and state regulators ordered
Rembrandt to quarantine its facilities and euthanize all of
its birds at these locations, to help contain spread of the
virus. Because there were millions of birds at each facility,
the “depopulation” and cleanup took several
months; indeed, Rembrandt euthanized more than 1.9 million
birds at its Rembrandt farm alone. Once this process was
complete, it purchased new chicks to “repopulate”
its facilities, spending more than $21 million to do so.
Repopulation efforts were finally completed in January 2017.
result of the foregoing, Rembrandt submitted a claim to
Illinois Union for the Policy's entire $7 million limit:
$5 million for business interruption losses and $2 million
for remediation expenses. Illinois Union denied coverage, and
Rembrandt then commenced this action. The parties agreed to
bifurcate the matter, addressing liability first and damages
second, and later cross-moved for summary judgment as to
liability. On January 12, 2017, the Court denied those
Motions, concluding there were genuine issues whether (1)
bird flu had “dispersed, released, migrated, or
seeped” onto or into Rembrandt's facilities, a
prerequisite to coverage, and (2) the flu had spread due to
human activity, which would trigger an exclusion in the
Policy. (See Doc. No. 146.)
parties then undertook damages discovery. With that discovery
complete, Illinois Union now moves for partial summary
judgment, arguing Rembrandt cannot recover the $2 million it
seeks for remediation costs. Its Motion has been fully
briefed, the Court heard argument on August 25, 2017, and the
Motion is ripe for disposition.
judgment is proper if, drawing all reasonable inferences in
favor of Rembrandt, no genuine issue of material fact exists
and Illinois Union is entitled to judgment as a matter of
law. Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett,
477 U.S. 317, 322-23 (1986). Illinois Union bears the burden
of showing the material facts in the case are undisputed.
Id. at 322; Johnson v. Wheeling Mach.
Prod., 779 F.3d 514, 517 (8th Cir. 2015). The Court must
view the evidence, and the inferences that may reasonably be
drawn from it, in the light most favorable to Rembrandt.
Ryan v. Armstrong, 850 F.3d 419, 424 (8th Cir.
2017); Letterman v. Does, 789 F.3d 856, 858, 861
(8th Cir. 2015). Rembrandt may not rest on allegations or
denials, but must show through the presentation of admissible
evidence that specific facts exist creating a genuine issue
for trial. Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 256 (1986); Nationwide Prop. & Cas. Ins. Co. v.
Faircloth, 845 F.3d 378, 382 (8th Cir. 2016).
Rembrandt incurred significant expenses in connection with
the forced euthanization of its flocks - such as disposal of
carcasses and disinfecting its facilities - it seeks to
recover only two types of expenses under the Policy's
provision for “remediation costs”: (1) money
spent acquiring chicks to replace euthanized birds, in order
to repopulate its flocks, and (2) money spent to heat its
barns once the flocks had been depopulated. For the reasons
that follow, the Court concludes repopulation expenses are
reimbursable, but heating expenses are not.