Restaurant Recycling, LLC v. Employer Mutual Casualty Company et al
ORDER granting 14 Motion to Dismiss/General(Written Opinion) Signed by Senior Judge David S. Doty on July 14, 2017. (JRC)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 17-7(DSD/SER)
Restaurant Recycling, LLC,
New Fashion Pork, LLP,
Employer Mutual Casualty Company
d/b/a EMC Insurance Companies and
Hamilton Mutual Insurance Company,
Brandon M. Schwartz, Esq., Michael D. Schwartz, Esq. and
Schwartz Law Firm, 600 Inwood Avenue North, Suite 130,
Oakdale, MN, counsel for plaintiff.
David C. Kim, Esq., Dean M. Zimmerli, Esq. and Gislason &
Hunter LLP, 2700 South Broadway, New Ulm, MN, counsel for
Beth A. Jenson Prouty, Esq. and Arthur Chapman, 500 Young
Quinlan Building, 81 South 9th Street, Minneapolis, MN.,
counsel for defendants.
This matter is before the court upon the motion for judgment
on the pleadings by defendants Employer Mutual Casualty Company
Based on a review of the file, record, and proceedings
herein, and for the following reasons, the court grants defendants’
Unless otherwise stated, the court will refer to defendants
collectively as EMC.
This insurance coverage dispute arises out of an underlying
claim by intervenor plaintiff New Fashion Pork (NFP)2 against
plaintiff Restaurant Recycling, LLC and Superior Feed, LLC.3
is a pork producer that owns and operates feed mills where it
blends grain, fat, and other ingredients to create feed for its
ECF No. 9-1 ¶ 6.4
Restaurant Recycling is a manufacturer
and supplier of fat products for animal feed.
Id. ¶ 7.
alleges that, between July 1, 2014, and September 24, 2015,
Restaurant Recycling delivered four shipments of fat products to
NFP that were contaminated with lasalocid and lascadoil. Id. ¶¶ 910.
Lasalocid is a medication regulated by the Food and Drug
Administration that is generally used in chicken and turkey feed,
but it is not approved for use in swine.
Id. ¶ 11.
a byproduct created in the production of lasalocid and is only
approved for use as biofuel.
Id. ¶ 10.
NFP claims that it used Restaurant Recycling’s fat products to
Before NFP was allowed to intervene, see ECF No. 28,
Restaurant Recycling argued that defendants’ motion should be
denied because NFP was a not a party to the action. Because NFP
has intervened, this argument is moot.
Superior Feed is not a party to this action.
The underlying complaint is not attached to an affidavit or
declaration. The court will refer to it by its docket number.
produce feed for its swine and the contaminated feed caused serious
health problems in its swine.
Id. ¶¶ 14-15.
On November 23, 2016,
NFP filed an amended complaint in Ramsey County alleging breach of
contract, breach of implied warranty of merchantability, breach of
implied warranty of fitness for a particular purpose, negligence,
strict liability, and fraud.5
EMC insured Restaurant Recycling under Policy No. 4D5-66-11-15
commercial liability coverage.
See ECF No. 9-2.
contains an absolute pollution exclusion. Specifically, the policy
does not cover: “‘Body injury’ or ‘property damage’ which would not
have occurred in whole or part but for the actual, alleged or
threatened discharge, dispersal, seepage, migration, release or
escape of ‘pollutants’ at any time.”
Id. at 44.
defines “pollutants” as “any solid, liquid, gaseous or thermal
irritant or contaminant, including smoke, vapor, soot, fumes,
acids, alkalis, chemicals and waste. Waste includes material to be
recycled, reconditioned or reclaimed.”
Id. at 38.
On January 3, 2017, Restaurant Recycling filed this action
seeking a declaration that EMC is obligated, pursuant to the
policy, to provide defense and coverage for all claims asserted by
At the hearing, the parties informed the court of a possible
settlement that would resolve the underlying litigation but not the
insurance coverage dispute. On June 22, counsel for Restaurant
Recycling informed the court that the underlying litigation had
been settled for $15,000. See ECF. No. 32.
NFP and for any damages awarded.
Defendants now move for judgment
on the pleadings.
Subject Matter Jurisdiction
Because the underlying litigation was settled for an amount
less than $75,000, the court requested that the parties submit
letters on whether the court retained jurisdiction.
concluded that the settlement agreement did not divest the court of
The court agrees.
“It is well established that the
requirements for diversity jurisdiction must be satisfied only with
respect to the [amount alleged in the complaint at] the time of
Scottsdale Ins. Co. v. Universal Crop Protection All.,
LLC, 620 F.3d 926, 931 (8th Cir. 2010).
events reducing the amount in controversy do not destroy diversity
As a result, the court retains subject matter
Standard of Review
The same standard of review applies to motions under Federal
Rules of Civil Procedure 12(c) and 12(b)(6).
Ashley Cty., Ark. v.
Pfizer, Inc., 552 F.3d 659, 665 (8th Cir. 2009).
Thus, to survive
a motion for judgment on the pleadings, “a complaint must contain
sufficient factual matter, accepted as true, to state a claim to
relief that is plausible on its face.”
Braden v. Wal–Mart Stores,
Inc., 588 F.3d 585, 594 (8th Cir. 2009) (citation and internal
quotation marks omitted).
“A claim has facial plausibility when
the plaintiff [has pleaded] factual content that allows the court
to draw the reasonable inference that the defendant is liable for
the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678
Although a complaint need not contain detailed factual
allegations, it must raise a right to relief above the speculative
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).
“[L]abels and conclusions or a formulaic recitation of the elements
of a cause of action” are not sufficient to state a claim.
556 U.S. at 678 (citation and internal quotation marks omitted).
The court does not consider matters outside of the pleadings
under Rule 12(c).
Fed. R. Civ. P. 12(d).
The court, however, may
consider matters of public record and materials that do not
“necessarily embraced by the pleadings.”
Porous Media Corp. v.
Pall Corp., 186 F.3d 1077, 1079 (8th Cir. 1999) (citation and
internal quotation marks omitted).
In this case, the court
properly considers the insurance policy.
In Minnesota, the interpretation of an insurance policy is a
question of law.6
Am. Family Ins. Co. v. Walser, 628 N.W.2d 605,
The parties do not dispute that Minnesota law applies to the
609 (Minn. 2001).
The court interprets an insurance policy in
accordance with general principles of contract construction, giving
effect to the intent of the parties.
Thommes v. Milwaukee Ins.
Co., 641 N.W.2d 877, 879 (Minn. 2002). The court gives unambiguous
language its plain and ordinary meaning and construes ambiguous
language against the drafter and in favor of the insured.
880; Nathe Bros., Inc. v. Am. Nat’l Fire Ins. Co., 615 N.W.2d 341,
344 (Minn. 2000).
Language is ambiguous if it is “reasonably
subject to more than one interpretation.” Columbia Heights Motors,
However, the court “guard[s] against invitations to find ambiguity
where none exists.”
Metro. Prop. & Cas. Ins. Co. v. Jablonske, 722
N.W.2d 319, 324 (Minn. Ct. App. 2006) (citation and internal
quotation marks omitted).
The insured must first establish a prima facie case of
SCSC Corp. v. Allied Mut. Ins. Co., 536 N.W.2d 305, 311
(Minn. 1995), overruled on other grounds by Bahr v. Boise Cascade
established, the burden shifts to the insurer to prove that a
construes exclusions against the insurer, in light of the insured’s
demonstrates that an exclusion applies, the insured bears the
burden of proving an exception to the exclusion.
SCSC Corp., 536
N.W.2d at 314.
The parties do not address whether Restaurant
Recycling has established a prima facie case of coverage and
instead move directly to whether the absolute pollution exclusion
Restaurant Recycling argues that the pollution exclusion does
not apply because lasalocid can be administered to swine and other
animals at safe levels and, therefore, is not a contaminant.7
court is not persuaded.
The parties agree that a contaminant is defined as “one that
contaminates” and to contaminate is “to make impure or unclean by
contact or mixture.”
Brouse v. Nationwide Agribusiness Ins. Co.,
No. A14-1729, 2015 WL 4507996, at *4 (Minn. Ct. App. July 27, 2015)
(quoting The American Heritage Dictionary of the English Language
406 (3d ed. 1992)).
Although courts should be mindful that “there
must be a limit to the construction of what constitutes an irritant
or contaminant,” Auto-Owners Ins. Co. v. Hanson, 588 N.W.2d 777,
781 (Minn. Ct. App. 1999), the mere fact that a substance is safe
at certain levels does not necessarily exclude it from being a
See League of Minn. Cities Ins. Tr. v. City of Coon
Rapids, 446 N.W.2d 419, 421 (Minn. Ct. App. 1989) (“It defies logic
to suggest that a chemical compound does not qualify as a pollutant
For purposes of this motion, Restaurant Recycling does not
dispute that lascadoil is a pollutant under the policy.
noticeably irritate the human body.
If that were so, there would
‘pollutants.’”); see also Hastings Mut. Ins. Co. v. Safety King,
Inc., 778 N.W.2d 275, 297 (Mich. Ct. App. 2009) (“Chlorine added as
a disinfectant in a public pool would not usually be considered a
‘contaminant,’ but chlorine added in the same concentration in
someone’s drinking water would be considered a ‘contaminant.’”).
Accordingly, although lasalocid can be administered to swine safely
at some levels, it may still qualify as a contaminant.
Restaurant Recycling next claims that, even if lasalocid is a
contaminant at certain levels, the policy exclusion does not apply
because the underlying complaint fails to allege that the swine
feed contained unsafe or illegal levels of lasalocid.
specifically allege that lasalocid was administered at unsafe or
illegal levels to swine, one may logically conclude from the damage
claimed - such as the death of nursery pigs - that Restaurant
Recycling’s fat product was contaminated with unsafe levels of
See ECF No. 9-1 ¶¶ 14-15.
Because the property damage
in the underlying action was allegedly caused by harmful levels of
lasalocid, the court finds that lasalocid is a pollutant as defined
by the policy.8
All parties agree that the plain meaning of “disperse” is “to
cause to break up” or “to cause to become spread widely.”
v. Indian Harbor Ins. Co., No. 316714, 2015 WL 1069242, *4 (Mich.
Ct. App. Mar. 10, 2015). As alleged, Restaurant Recycling received
contaminated soy oil and blended it with recycled restaurant
Compl. ¶ 25.
NFP then blended the contaminated fat
product with grain to create swine feed. ECF No. 9-1 ¶ 13.
other words, contaminants were dispersed throughout fat and then
dispersed again throughout the swine feed.
Moreover, but for the
dispersal of the contaminants throughout the fat and the swine
feed, NFP’s swine would not have been harmed.
See Townsends of
Ark., Inc. v. Millers Mut. Ins. Co., 823 F. Supp. 233, 240-41
(holding that a pollutant was dispersed when it contaminated
chicken feed and that feed was mixed with other ingredients).9
NFP argues that the contaminants were not dispersed because
Given this finding, the court need not address Restaurant
Recycling’s arguments that lasalocid is not an irritant, chemical,
NFP and Restaurant Recycling argue that because Townsends
was decided after discovery, the court should not resolve the case
at this stage. It fails, however, to cite to any disputed facts
that require the benefit of discovery.
interpretation of an insurance policy is decided as a question of
law. Walser, 628 N.W.2d at 609. Accordingly, discovery is not
needed for the court to apply the plain meaning of an unambiguous
they were never separated from the fat product.
wholly without merit.
This argument is
Under the plain meaning of “disperse,” a
substance need not be spread widely in its pure state; therefore,
whether the contaminants were separated from the fat product is
NFP also argues that the damage to its swine was not
caused by the dispersal of lasalocid and lascadoil but rather by
their presence in the feed.
This argument is likewise frivolous;
the contaminants would not have been present in the feed but for
having been dispersed into the fat product and then into the feed.
Restaurant Recycling also argues that the contaminants were
not dispersed because “disperse” means “to cause to break up” or
“to cause to become spread widely.” Therefore, it asserts, the act
of dispersal must be knowing and intentional.
Recycling cites no cases in support of this argument.
other courts have found a dispersal regardless of an actor’s
See, e.g., Hanson, 588 N.W.2d at 778, 781 (holding that
the flaking of lead paint chips caused by the opening and shutting
of a window constituted a dispersal); Townsends, 823 F. Supp. at
240-41 (holding that a pollutant was dispersed when it contaminated
chicken feed and that feed was mixed with other ingredients).
Further, Restaurant Recycling’s intentions are irrelevant; the
insurance policy only requires that the dispersal be the proximate
cause of the damage. Here, but for Restaurant Recycling’s actions,
the contaminants would not have been dispersed into the fat product
and swine feed. Because the underlying litigation arises out of an
alleged dispersal of a pollutant, the pollution exclusion provision
As a result, EMC has no duty to defend or indemnify
Restaurant Recycling under the insurance policy.
Accordingly, based on the above, IT IS HEREBY ORDERED that:
Defendants’ motion for judgment on the pleadings [ECF No.
14] is granted; and
The case is dismissed with prejudice.
LET JUDGMENT BE ENTERED ACCORDINGLY.
Dated: July, 14 2017
s/David S. Doty
David S. Doty, Judge
United States District Court
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