This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2002).






Domtar, Inc.,





Niagara Fire Insurance Company, et al.,



Allstate Insurance Company of Canada, et al.,



Chubb Insurance Company of Canada, et al.,



New Hampshire Insurance Company, et al.,



Zurich Insurance Company,



Filed March 2, 2004

Klaphake, Judge


Ramsey County District Court

File No. C5-98-4656


Douglas L. Skor, Daniel L. Scott, Larson King, LLP, 2800 Wells Fargo Place, 30 East Seventh Street, St. Paul, MN  55101 (for appellant)


Thomas A. Pearson, Bethan M. Davies, Cronan, Pearson & Quinlivan, 1201 Marquette Avenue South, Suite 110, Minneapolis, MN  55403 (for respondents Niagara Fire Ins. Co., et al.)


Stephen J. Foley, Thomas W. Pahl, Stephen L. Wilson, Foley & Mansfield P.L.L.P., 250 Marquette Avenue, Suite 1200, Minneapolis, MN  55401; and


Ilene M. Korey, Clausen Miller P.C., 10 South LaSalle Street, Chicago, IL  60603-1098 (for respondents American Home Assurance Co. and New Hampshire Ins. Co.)


John M. Anderson, Charles E. Lundberg, Matthew J. Franken, Bassford Remele, 33 South Sixth Street, Suite 3550, Minneapolis, MN  55402 (for respondents Chubb Ins. Co., et al.)


Ruth S. Marcott, Felhaber, Larson, Fenlon & Vogt, P.A., 225 South Sixth Street, Suite 4200, Minneapolis, MN  55402-4302 (for respondent Zurich Ins. Co.)


            Considered and decided by Anderson, Presiding Judge, Klaphake, Judge, and Crippen, Judge.*

U N P U B L I S H E D   O P I N I O N


            Appellant Domtar, Inc., brought this action in 1998 against a number of its primary, umbrella, and excess liability insurers for breach of contract and a declaration that they must defend and indemnify it from claims arising out of soil and groundwater contamination at 56 of its former and current wood processing facilities.  Several insurers have settled with Domtar and several others remain but are not part of this appeal, which involves only four high-level excess liability insurers and six of the 56 sites.[1]

            In this appeal, Domtar challenges the district court’s dismissal of its action against these four respondents,[2] based on the court’s determination that Domtar failed to show that it has suffered damages sufficient to reach these high-level excess policies.  On appeal, Domtar argues that the district court (1) erred in its “occurrence” analysis and in refusing to aggregate the losses incurred by Domtar at the six sites; (2) improperly ruled, at this summary judgment stage, that the damages were caused by “continuous and ongoing” operations at the six sites, and thus governed by the “pro rata by time on the risk” allocation methodology; and (3) failed to properly consider Domtar’s settlements with several of its underlying insurers.

              Because Domtar has failed to produce probative, competent evidence to support its claims and to rebut specific facts cited by respondents showing that Domtar’s damages are insufficient to reach respondents’ high-level excess policies, we affirm the district court’s grant of summary judgment to respondents.


            For decades, Domtar has engaged in the processing and manufacture of treated wood products, including railroad ties and utility poles, at facilities in the United States and Canada.  See Domtar, Inc. v. Niagara Fire Ins. Co., 563 N.W.2d 724 (Minn. 1997) (involving Domtar’s action against some of these same insurers for claims arising out of operation of tar plant in Duluth, Minnesota).  This appeal involves six of those facilities, located in Canada at Trenton, Ontario; New Westminster, British Columbia; Delson, Quebec; Dawson Creek, British Columbia; Cochrane, Alberta; and Truro, Nova Scotia.

            Respondents AIG and Federal provided high-level excess liability insurance policies to Domtar between 1969 and 1986.  Coverage under these policies does not attach until the limits of any underlying policy have been exhausted.  The lowest annual attachment point for any of the Federal policies is $10 million per occurrence; the lowest annual attachment point for any of the AIG policies is $5 million per occurrence.

            In support of its summary judgment motion, Federal submitted copies of Domtar’s “Environmental Site Profiles,” updated as of 1999, which summarize its damages at the six involved sites.  The profiles include information on the ownership histories, dates of operation, nature of the alleged damages, approximate dates of damage, site descriptions, substances involved, damages paid to date, and total estimated damages (past and future).  The figures set out in the profiles are summarized as follows:

Site                    Period of             Expenditures            Total Estimated

                             Damage               to Date                       Damages                                

Cochrane           1962-87               $2,780,373                   $25,000,000


Dawson              1970-86               $3,364,184                   $22,000,000



Delson               1957-86               $3,146,141                   $39,500,000


New                   1950-86               $8,132,342                   $83,000,000



Trenton              1956-86               $7,194,960                   $40,000,000


Truro                  1956-86               $5,494,701                   $116,500,000


With respect to each site, Domtar candidly admits that the “upper range of damages is unlikely to be reached under any presently known scenario.”[3]

            Federal also submitted portions of a 2002 deposition of former Domtar engineer Robert Watson and a copy of a 1988 report prepared by Watson regarding the Trenton site.  Watson’s report indicated that contaminants generally entered the Trenton site in a variety of ways, ranging from “poor housekeeping practices” to leaks, drips, spills, and dumping and burying of materials.  Although Watson prepared his report with respect to the Trenton site, he acknowledged during his deposition that the list “basically” applied to Domtar’s other sites as well.  Watson’s testimony and report tended to confirm that contamination at the sites was not caused by any one specific event, but by various causes and to varying degrees, depending on the activities at each site and the geographic and geological characteristics of the site itself.

            In opposition to respondents’ motions to dismiss and for summary judgment, Domtar submitted a June 2000 affidavit of geologist George Linkletter.  Based on his review of “certain technical reports and related documentation generated in connection with the investigation and remediation work that has been conducted at the Sites at issue,” Linkletter stated:

Though Domtar has yet to identify all potential sources of the property damage, my independent assessment has allowed me to conclude that the presence of substances of concern at the Sites is generally attributable to the business or operations of Domtar and its predecessors and, in significant part, so became present as a result of one or more events or happenings that were sudden in time and accidental in nature.


Linkletter set out a list of incidents that occurred between 1974 and 1980 at the different sites, which included leaks, releases, spills, and explosions of various substances.  With respect to each incident, Linkletter asserted that “it is my professional opinion that an event such as the one described above was a substantial and material cause of the property damage and other injury at [the named] site.”

            In granting summary judgment to respondents, the district court determined that the damages claimed by Domtar at each of its sites were not sufficient to trigger coverage using the “pro rata by time on the risk” allocation because the total amount of damages divided by the number of years of damage failed to exhaust the underlying policies and reach respondents’ high-level excess policies.  The court noted that Domtar “has had since 1998 to present concrete, specific information . . . to connect the millions of dollars of damages [it has incurred] to sudden and accidental events rather than to continuous and on-going operations,” but that it had failed to do so.



            Initially, we note that respondent AIG moved to dismiss for lack of “justiciability.”  A declaratory judgment action presents a justiciable controversy if it involves (1) definite and concrete assertions of a right that emanates from a legal source; (2) a genuine conflict in tangible interests between parties with adverse interests; and (3) specific resolution by judgment rather than presenting hypothetical facts that would form an advisory opinion.  Cincinnati Ins. Co. v. Franck, 621 N.W.2d 270, 273-74 (Minn. App. 2001).  In Franck, this court affirmed dismissal of an action brought by an umbrella insurer against an injured party, where neither the insured nor the primary insurer were parties to the action and the injured party had not obtained a judgment in excess of the primary coverage.  Id.

            Unlike Franck, this case presents an actual controversy between an insured and its insurers regarding coverage under different contracts, proof of damages, and allocation of those damages between the various insurers.  We therefore conclude that this case presents a justiciable controversy and is properly before us.  Because the bases for AIG’s motion to dismiss and the bases for Federal’s summary judgment motion are identical, we construe AIG’s motion as one for summary judgment and analyze it accordingly.


            Summary judgment is appropriate where the record shows there are no genuine issues of material fact and either party is entitled to judgment as a matter of law.  Minn. R. Civ. P. 56.03.  The evidence is viewed in a light most favorable to the nonmoving party, and any doubts about the existence of a material fact are resolved in that party’s favor.  Funchess v. Cecil Newman Corp., 632 N.W.2d 666, 672 (Minn. 2001).

            A nonmoving party cannot rest on mere averments, conclusory statements, or by postulating evidence that might be developed at trial.  Id.  A nonmoving party must offer significant, probative evidence and produce specific facts that create some genuine issue for trial.  Senn v. Youngstedt, 589 N.W.2d 314, 315 (Minn. App. 1999), review denied (Minn. May 18, 1999); St. Paul Fire & Marine Ins. Co. v. Metro. Urology Clinic, P.A., 537 N.W.2d 297, 300 (Minn. App. 1995).  We will not disturb a district court’s grant of summary judgment

when the nonmoving party presents evidence which merely creates a metaphysical doubt as to a factual issue and which is not sufficiently probative with respect to an essential element of the nonmoving party’s case to permit reasonable persons to draw different conclusions.


DLH, Inc. v. Russ, 566 N.W.2d 60, 71 (Minn. 1997) (nonmoving party must offer “substantial” evidence to establish genuine issue for trial).

            A.         Aggregation of Losses at Multiple Sites

            Domtar argues that the district court erred by failing to aggregate the losses at each of its six sites.  Domtar reasons that when these losses are aggregated and considered to be a single “occurrence,” the resulting losses of approximately $11,000,000 per annum exceed the limits of the underlying policies and reach respondents’ excess policies.

            The underlying policies are occurrence-based policies and generally define “occurrence” to mean

an event, including continuous and repeated exposure to conditions, which results in Personal Injury or Property Damage neither expected nor intended from the standpoint of the Insured.  All such exposure to substantially the same general conditions shall be deemed one occurrence.


As Domtar notes, this language does not specifically limit an occurrence to claims or conditions arising at or related to one premise or location, as some other policies do.  See Domtar, Inc. v. Niagara Ins. Co., 563 N.W.2d 724, 731 (Minn. 1997) (citing the following language from one excess policy:  “All such exposure to substantially the same general conditions existing at or emanating from one premises location shall be deemed one occurrence.”).  The absence of this particular language, however, does not mean that the losses at all of Domtar’s sites must be aggregated.  Rather, losses and claims for property damages and other injuries must still arise from exposure to “substantially the same general conditions” in order to be considered a single occurrence.

            Respondents argue that the site profiles prepared by Domtar show that the activities and causes of contamination at each of the sites are too varied to be considered a single occurrence:  the operations began at different times, used different processes, had unique geologic settings, and resulted in different types and amounts of contamination.  Domtar counters that its operations at all sites were conducted as an integrated business unit, with uniform and standardized procedures followed for the purchase of raw materials, the design and construction of facilities, general operating procedures, planning, risk management, financial reporting, and staff functions.  While Domtar asserts that “discovery” has established these uniform procedures, it cites only to statements in one of its memoranda and fails to cite to any evidence in the record, such as business records of operations at the various sites or affidavit or deposition testimony by a witness competent to testify regarding the operations at the various sites.  These statements fail to support Domtar’s claim that the operations and activities at the six sites were so uniform that the damages at these sites all arose from substantially the same general conditions so as to be considered one occurrence.

            Domtar further cites a number of product liability cases, which involve the manufacture and distribution of defective products, in an attempt to support its claim that the damages at all of its sites should be aggregated and considered one occurrence.  See, e.g., Mich. Chem. Corp. v. Am. Home Assur. Co., 728 F.2d 374, 379 (6th Cir. 1984); Champion Int’l Corp. v. Cont’l Cas. Co., 546 F.2d 502, 504-05 (2nd Cir. 1976); Owens-Ill., Inc. v. Aetna Cas. & Sur. Co., 597 F. Supp. 1515, 1524-26 (D. D.C. 1984).  We do not believe that these product liability cases support Domtar’s position that environmental contamination at multiple geographic sites, some of which are located hundreds of miles apart, can be considered as a single occurrence.  Several environmental contamination cases have specifically rejected this proposition.  See, e.g., Endicott Johnson Corp. v. Liberty Mut. Ins. Co., 928 F. Supp. 176, 180-81 (N.D.N.Y. 1996) (repeated dumpings at landfill and at barrel reconditioning site constituted two occurrences); Pub. Serv. Co. v. Wallis & Cos., 986 P.2d 924, 938 (Colo. 1999) (affirming trial court’s finding, which was based on record support, that there was single continuous “occurrence” at each site).

            Absent substantial, probative evidence to the contrary, we reject Domtar’s claim that the varied activities at its geographically and geologically distinct sites are one occurrence, merely because wood processing activities are carried on at these sites and they are operated by related corporate entities.[4]

            B.         Allocation of Losses between Successive Insurers

            Domtar argues that the district court erred in applying a “pro rata by time on the risk” allocation to Domtar’s claimed losses.  Domtar further argues that given existing factual disputes regarding “discrete and identifiable” events at many of the sites over the years, as demonstrated by the Linkletter affidavit, the district court erred in granting summary judgment.

            Minnesota courts have applied two different methodologies when allocating liability to insurance policies for damages from environmental contamination that continues for a period of many years.  The first, “pro rata by time on the risk” allocation, assumes that the damages were so continuous as to be indivisible.  N. States Power Co. v. Fid. & Cas. Co. of N.Y., 523 N.W.2d 657, 664 (Minn. 1994).  Application of this methodology is fairly straightforward:

If, for example, contamination occurred over a period of 10 years, 1/10th of the damage would be allocable to the period of time that a policy in force for 1 year was on the risk and 3/10ths of the damage would be allocable to the period of time a 3-year policy was in force.


Id.  Under this method of allocation, Domtar’s estimated losses would fail to reach respondents’ high-level excess policies during any one year.

            The other allocation methodology was first applied in SCSC Corp. v. Allied Mut. Ins. Co., 536 N.W.2d 305 (Minn. 1995).  In that case, the jury found that the damages were the result of a sudden and accidental occurrence.  Id. at 318.  Under those facts, the supreme court refused to apply NSP’s “pro rata by time on the risk triggering approach.”  Id.  Because the jury found that the damages all arose from a single event in 1977, the court held that only the 1977 $100,000 primary policy and the $1 million excess policy were triggered, and that damages in excess of the $1.1 million aggregate limit were not covered.  Id.  Under this method of allocation, Domtar would have to prove that all of the damages at any one site arose from a single discrete and identifiable event;  only the policies on the risk at the point of initial contamination would pay for all the damages that follow.  Id.

            In cases since NSP and SCSC, the supreme court has made it clear that pro rata by time on the risk is not necessarily the proper allocation methodology in every case involving environmental contamination or continuous and ongoing damages.  See In re Silicone Implant Ins. Coverage Litig., 667 N.W.2d 405, 421-22 (Minn. 2003) (holding that allocation pro rata by time on the risk not applicable because silicone breast implantation is readily identifiable discrete event from which all alleged injuries arose and is more akin to single spill in SCSC than to situations in NSP, where contamination could not be apportioned among causes).  Rather, pro rata by time on the risk properly applies “only in those difficult cases in which property damage is both continuous and so intermingled as to be practically indivisible.”  Domtar, 563 N.W.2d at 733.

            Domtar argues that it submitted evidence, in particular the Linkletter affidavit, which shows that a number of “discrete and identifiable” spills and other events had taken place between 1974 and 1980, all of which were sudden, unexpected, and unintended.  But, as respondents note, Domtar has “acknowledged” in its site profiles that the damages at all of its sites began years before the sudden events identified by Linkletter.  These site profiles and other evidence submitted by respondents, including Watson’s deposition testimony and report, show that the damages here were caused by continuous and ongoing operations at the various sites.  Even if Domtar had offered some evidence of discrete events, it failed to rebut evidence offered by respondents establishing that Domtar’s damages were caused by continuous and ongoing activities at the sites, which were so intermingled and continuous as to be indivisible.  See Westling v. W. Nat’l Mut. Ins. Co., 581 N.W.2d 39, 44-45 (Minn. App. 1998) (suggesting that pro rata by time on the risk appropriate where evidence is presented of both continuous and single-event contamination and where contamination cannot be apportioned among causes).

            While issues involving damages and causation are often fact questions inappropriate for summary judgment, the district court here was entitled to reject for lack of proof Domtar’s claim that discrete and identifiable events at each site caused the site damages.  In its memorandum, the district court emphasized:  “[Domtar] has had since 1998 to present concrete, specific information regarding the effect these sudden and accidental occurrences had at these sites.  It has had since 1998 to connect the millions of dollars of damages to sudden and accidental events rather than to continuous and on-going operations at the plants.  It has not done so.”

            Thus, the district court did not err by allocating damages under pro rata by the time on the risk and in concluding that the damages at each of the six Domtar sites fail to trigger coverage under respondents’ high-level excess policies.

            C.        Effect of Settlements with Underlying Insurers

            Domtar argues that the district court erred in determining that its settlements with underlying insurers were irrelevant and have no effect on this case.  Domtar reached settlements with at least two underlying insurers, who provided primary and umbrella coverage between 1977 and 1981.  Domtar insists that these settlements “exhausted” the limits of those underlying policies, resulting in respondents’ high level excess policies “dropping down” and becoming “first dollar” coverage.

            Excess policies like the ones issued by respondents provide coverage only in excess of the limits of the underlying insurance policies.  Primary insurance covers liability from zero to certain policy limits, while excess insurance covers liability only after those initial limits are exhausted.  See Cont’l Cas. Co. v. Reserve Ins. Co., 238 N.W.2d 862, 864 (Minn. 1976).  The risks are different, as are the premiums charged for an excess policy.  See Am. Hoist & Derrick Co. v. Employers’ of Wausau, 454 N.W.2d 462, 467 (Minn. App. 1990) (rejecting insured’s “drop-down” argument based, in part, on recognition that excess policy covers different risk from that undertaken by primary insurer), review denied (Minn. June 26, 1990).  Thus, to hold respondents liable for coverage, Domtar still must establish that its damages exceed the limits of the underlying policies, which it failed to do.

              Because Domtar has failed to produce probative, competent evidence to support its claims and to rebut specific facts cited by respondents showing that Domtar’s damages are insufficient to reach respondents’ high-level excess policies, we affirm the district court’s grant of summary judgment to respondents.



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

[1]  Partial summary judgment was previously granted in favor of respondents on the other 50 sites based on pollution exclusions in the policies, with the exception of one American Home policy, effective 1969 to 1970, which continues to involve all 56 sites.


[2] Respondents, American Home Assurance Company and New Hampshire Insurance Company, which are two affiliated companies, will be collectively referred to as “AIG.”  Respondents, Chubb Insurance Company of Canada and Federal Insurance Company, are also affiliated and will be collectively referred to as “Federal.”


[3]  In response to discovery, Domtar submitted slightly amended figures, valid as of September 2002.  Its “Total Estimated Damages” at each site have generally decreased, with the exception of Dawson Creek, where Domtar now estimates that damages will meet or exceed $30,900,000.


[4]  We further note that Domtar’s position on the aggregation issue appears logically inconsistent with its position on the next issue, involving the proper method of allocation of damages, in which Domtar claims that “pro rata by time on the risk” allocation is inappropriate because the damages were caused by “separate and discrete” events over the years at the six sites.  Indeed, the district court here was a bit frustrated by Domtar’s “shotgun” approach and lack of clarity regarding which theory to apply.