This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2000).






Western National Mutual Insurance Company,





Westling Manufacturing, Inc. et al.,



Liberty Mutual Insurance Company, et al.,



Allied Mutual Insurance Company,



Filed September 18, 2001

Reversed and remanded

Randall, Judge


Hennepin County District Court

File No. CT 99-4682



James T. Martin, Gislason, Martin & Varpness, P.A., 7600 Parklawn Avenue South, Suite 444, Edina, MN 55435 (for respondent Western National)


William L. Lucas, William L. Lucas, P.A., 7456 Cahill Road, Edina, MN 55439-2728 (for appellants)


Thomas E. Peterson, Peterson & Hektner, Ltd., 145 Paramount Plaza III, 7831 Glenroy Road, Minneapolis, MN 55439 (for respondent Allied Mutual)


            Considered and decided by Randall, Presiding Judge, Stoneburner, Judge, and Huspeni, Judge.*

U N P U B L I S H E D   O P I N I O N

R. A. RANDALL, Judge

            Appellants were notified by the Minnesota Pollution Control Agency (MPCA)  that the groundwater under their property was contaminated with perchloroethylene.  Appellants voluntarily cooperated with the MPCA for 20 months before tendering their defense to their insurers.  Respondent Western National Mutual Insurance Company (Western National), denied the claim and petitioned the district court for a declaration that it had no duty to defend appellants.  The district court found that a duty to defend existed but, the 20-month delay constituted a breach by appellants of their duty to notify.  The district court then granted summary judgment in favor of respondent Western National.  The court later amended its order and also granted summary judgment in favor of respondent Allied Mutual Insurance Company (Allied Mutual).  Because the district court did not determine whether coverage existed after determining the existence of a duty to defend and because no legal prejudice was shown despite appellants' notification delay, we conclude that the district court was premature in granting summary judgment in favor of respondents, and we reverse and remand.


            In 1971, Donald Westling purchased property located at 700 Old Highway 18 South in Princeton, Minnesota.  In January 1972, Donald Westling leased the property to Westling Manufacturing Inc., which used perchloroethylene (perc) on the property to degrease and clean remanufactured auto parts until June 1972.

            In July 1996, the Minnesota Pollution Control Agency (MPCA) sent a notification letter to Donald Westling informing him that the groundwater under his property was contaminated with perc levels that exceeded the Minnesota Department of Health's health-risk limit for that substance.  In the letter, the MPCA invited Donald Westling to consider participating in the MPCA's Voluntary Investigation and Cleanup (VIC) program.  The MPCA warned that failure to voluntarily provide information would expose Donald Westling, as the property owner, to the enforcement provisions of Minnesota's Superfund law.

            John Westling applied for enrollment in the VIC program, on behalf of his father, and from October 1996 until March 1998, the Westlings conducted an investigation and provided the MPCA with information on the extent but not the source or possible time frame for the perc contamination.  In March 1998, appellants Donald Westling, John Westling, and Westling Manufacturing, Inc., (the Westlings) submitted a claim to respondent Allied Mutual, along with contemporaneous claims to respondent Western National and defendants Employers Mutual Casualty Company and Liberty Mutual Insurance Company, to defend against the MPCA's demands.  In April 1998, Western National denied coverage on the grounds that no "suit" had been initiated, no reported "occurrence" of a sudden and accidental release of a contaminant had been reported that would give rise to coverage, and the Westlings had violated the terms of their policy by assuming liability without giving notice to Western National.  Western National did continue to investigate, but in February 1999 issued a final denial of coverage.  Later Western National commenced an action in district court seeking a declaratory judgment that it had no duty to defend or indemnify the Westlings against any claims, notices, or suits pertaining to groundwater contamination at or near the Westling Manufacturing site.  Western National alternatively asked that the duty be apportioned among the insurance companies if the court decided that Western National had a duty to defend or indemnify.

            Allied Mutual moved for summary judgment declaring that there were no genuine issues of material fact.  The Westlings moved for partial summary judgment declaring that Allied Mutual had a duty to defend.  Western National also moved for summary judgment declaring that Western National had no duty to defend or to indemnify the Westlings.  The district court granted summary judgment in favor of Western National and later amended the judgment to include Allied Mutual.  The Westlings now appeal from the district court's amended judgment.


I.          Summary Judgment

On appeal from summary judgment, the reviewing court asks whether there are any genuine issues of material fact to be determined and whether the district court erred in its application of the law.  O'Malley v. Ulland Bros., 549 N.W.2d 889, 892 (Minn. 1996).  In making this determination, the reviewing court views the evidence in the light most favorable to the party against whom summary judgment was granted.  Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993).

Interpretation of insurance contract language is a question of law.  Meister v. Western Nat'l Mut. Ins. Co., 479 N.W.2d 372, 376 (Minn. 1992).  A reviewing court must ascertain and should give effect to the parties' agreement.  Fillmore v. Iowa Nat'l Mut. Ins. Co., 344 N.W.2d 875, 877 (Minn. App. 1984).  Where contract language is clear and unambiguous, "the language used must be given its usual and accepted meaning."  Lobeck v. State Farm Mut. Auto. Ins. Co., 582 N.W.2d 246, 249 (Minn. 1998) (quotation omitted).  Doubts as to coverage must be resolved against the insurer issuing the policy in favor of coverage, and the burden rests with the insurer to prove the insured's claim is not covered.  Prahm v. Rupp Constr. Co., 277 N.W.2d 389, 390 (Minn. 1979).

            A.        The VIC Program

The district court, relying on Minnesota Mining & Mfg. Co. v. Travelers Indem. Co., 457 N.W.2d 175 (Minn. 1990), agreed with the Westlings' argument that the MPCA's invitation to voluntarily participate in the VIC program should be construed as a suit triggering an insurer's duty to defend.  See Minnesota Mining, 457 N.W.2d at 183 (determining that request for response action (RFRA) issued by MPCA was equally as coercive as civil suit). 

A case closely on point is SCSC Corp. v. Allied Mut. Ins. Co., 536 N.W.2d 305 (Minn. 1995), where the supreme court addressed the issue of whether an action taken by the MPCA constituted a "suit" as defined in a comprehensive general liability (CGL) policy.  Id. at 315.  Similar to this case, in SCSC the MPCA notified the insured that the groundwater under its facility was contaminated with perc.  Id. at 309.  The MPCA issued a request for information (RFI) instructing the insured to provide information on chemical storage and knowledge of any chemical leaks at the facility.  Id.  After receiving the RFI, the MPCA issued a request for response action (RFRA) requiring the insured to take specific action to remediate the site.  Id.  The RFRA warned that the insured's failure to comply would subject the insured to "civil penalties of up to $20,000 per day for each day [the insured] failed to take the requested action."  Id. at 309-10. 

The insurer argued that the MPCA's RFI was, at most, only a claim that did not invoke a duty to defend because it did not carry the threatening, coercive tone of a lawsuit.  Id. at 315.  The court disagreed and concluded that a MPCA action in the form of an RFI constituted a suit and invoked the duty to defend.  Id. at 315-16.  Relying on Aetna Cas. & Sur. Co. v. Pintlar Corp., 948 F.2d 1507, 1516-17 (9thCir. 1991), which held that a letter issued by the EPA constitutes a "suit" because an "ordinary person" would perceive such a letter as notice of the "effective commencement of a 'suit' necessitating a legal defense," the supreme court stated that

it logically follows from both our analysis and our decision in 3M that the term "suit" as used in a CGL policy, includes action taken by the MPCA in the form of an RFI.


SCSC, 536 N.W.2d at 315.

In this case, based on SCSC, the district court was correct in its finding that the MPCA's letter constituted a suit that triggered Western National's and Allied Mutual's duty to defend.  In the first paragraph of the letter, the MPCA informed Donald Westling that his property "is the site of a release of a hazardous substance (Release), as defined in Minn. Stat. § 115B.02, subd. 8 and subd. 13."  The MPCA requested that Donald Westling "consider participating in the VIC program to further investigate the source, magnitude, and extent of the Release and conduct any necessary cleanup."  The MPCA reiterated that a

voluntary approach is often a more efficient and timely way to carry out MPCA-approved investigations and cleanup without using the enforcement provisions of the state Superfund law.


The MPCA warned that if Donald Westling did not volunteer to participate in the VIC program,

the Site will be referred to the MPCA Site Assessment Unit with a recommendation to place the Site on the Comprehensive Environmental Response, Compensation, and Liability Information System list for further investigation or placement of the Site on the state's Permanent List of Priorities list for state Superfund enforcement.


In the last paragraph, the MPCA indicated a decision must be made within 90 days to participate in the VIC program.  The MPCA stated there would be no further offers to participate in the VIC program or to take advantage of any liability shield provided by the program.

The language of the MPCA's letter to Donald Westling contains the same elements that the RFI and RFRA exhibited in SCSC: an initial request for voluntary cooperation to provide information and notice that a cleanup of the site would be required and that if voluntary compliance was not provided, the matter would be referred for state Superfund enforcement.  To a layman, such as Donald Westling, the MPCA letter has all the earmarks of a legal document: it was sent by certified mail, had the wording of a legal mandate, and gave a time limit for compliance.  The language that the MPCA used is coercive in nature and leaves no doubt in the reader's mind that legal action will be used to achieve compliance.

Because of the coercive nature of the MPCA's letter, the district court did not err by concluding that the MPCA's invitation to participate in the VIC program constituted a suit that triggered Western National's and Allied Mutual's duty to defend.

B.        Prejudicial Impact

The district court found that because the Westlings unilaterally agreed to participate in the VIC program and incur obligations and expenses before notifying Western National and Allied Mutual, Western National and Allied Mutual suffered substantial prejudice.  The court reasoned that Western National and Allied Mutual were not given an opportunity to investigate the claim and determine who was the responsible party or to evaluate if the VIC program was the best option available.  The court also reasoned that Western National and Allied Mutual were not given an option to conduct a defense against the MPCA's claims.  We disagree.

Minnesota has recognized strict liability for groundwater contamination for many years.  Minnesota Mining, 457 N.W.2d at 183.  "Minnesota was one of the first American jurisdictions to adopt the strict liability rule" for damages caused by anything kept on one's property that, if it escaped, naturally would cause harm.  Id. (citation omitted).

The statute codifying this standard states:

Except as otherwise provided in subdivisions 2 to 12, and notwithstanding any other provision or rule of law, any person who is responsible for a release or threatened release of a hazardous substance from a facility is strictly liable, jointly and severally, for the following response cost and damage * * * .


Minn. Stat. 115B.04, subd. 1 (2000).  The statute also provides a defense from liability when the release is the act or omission of a third party who is not an employee, agent "or a person in the chain of responsibility for the generation, transportation, storage, treatment, or disposal of the hazardous substance."  Id., subd. 7(4) (2000).

Western National and Allied Mutual have not been prejudiced by the Westlings' agreement to participate in the VIC program.  Western National and Allied Mutual have the opportunity to investigate and determine if someone other than the Westlings is responsible for the contamination of Don Westling's property.  If another party is found to have caused the contamination, Western National and Allied Mutual may initiate action for the recovery of their expenses. 

A similar situation existed in Musicland Group, Inc. v. Ceridian Corp., 508 N.W.2d 524 (Minn. App. 1993), review denied (Minn. Jan. 27, 1994), where 1-1-1 Trichloroethane (TCA) contaminated a property owner's groundwater, and the owner of the contaminated property informed an adjacent property owner of the contamination. Id. at 528.  During construction of a warehouse on its property, the adjacent property owner adopted new plans to contain the TCA's migration.  Id.  The adjacent property owner initiated an action against the owner of the contaminated property under the Minnesota Environmental Response and Liability Act (MERLA) to recover the added cost the adjacent property owner incurred during construction to prevent the TCA from migrating onto its property.  Id.  This court analyzed the issue of whether "MERLA provide[s] relief to a private individual whose response cost and economic losses were not the result of actual contamination on the individual's property".  Id.  This court held that, while MERLA's objective was to minimize the effect of hazardous substances released in the environment, MERLA would be frustrated if it were "construed solely as a cleanup statute."  Id. at 530.  The court upheld the jury's determination that the owner of the contaminated property was negligent "and the damages awarded to [the adjacent property owner] were both reasonable and necessary response costs."  Id. at 536.

The Westlings' actions were not voluntary; they were requirements imposed by state law on property owners to mitigate damage to groundwater.  Because this is a pollution case, the district court overstated the impact on Western National and Allied Mutual due to the Westlings' delayed notification.  Western National and Allied Mutual still have all their options to investigate the groundwater contamination and mitigate their liability, and continue to attempt to legally avoid coverage.  If an investigation reveals that Donald Westling is not the "responsible party" Western National and Allied Mutual are not foreclosed by MERLA from seeking indemnification from the responsible party.

C.        Duty to Indemnify

"The duty to defend is distinct from and broader than the duty to indemnify." SCSC, 536 N.W.2d at 316 (citation omitted).  "If any claim is arguably covered under a policy, the insurer must defend and reserve any arguments regarding coverage."  Id. (citation omitted).  In an action to determine insurance coverage, once the insured has established a prima facie case of coverage, it "is entitled to go to the jury." Id. at 313 (quotation omitted).

The issue of whether a duty to indemnify exists has not been determined in this case.  As the district court stated, if it had not ordered summary judgment, more investigation would be needed to determine the exact nature and cause of the contamination making it more likely that fact issues would be in dispute requiring the case to be presented to a fact-finder to resolve.  The Westlings conceded at oral argument that they are not entitled to recover expenses they incurred before they notified Western National and Allied Mutual of the MPCA's letter.  Thus, if the Westlings established their prima facie case on remand, the fact-finder should decide the question of coverage and indemnification from the point the Westlings notified their insurers.

The district court prematurely granted summary judgment.  After establishing that a triggering event occurred, the district court should have evaluated whether the
Westlings had established a prima facie case of coverage and, if they had, the court should have then submitted the question of coverage and indemnification to a fact-finder.

D.        Duty to Notify

Because we conclude that the district court's order for summary judgment was premature, we need not address the issue of whether the Westlings breached their duty to notify.

Reversed and remanded.

*  Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. Art. VI, § 10.