Taylor Corporation v. XL Insurance America, Inc.

U.S. District Court, District of Minnesota February 6, 2024

Trial Court Opinion

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
TAYLOR CORPORATON,
Civil No. 22-1151 (JRT/TNL)
Plaintiff,

v.
MEMORANDUM OPINION AND ORDER
XL INSURANCE AMERICA, INC., ON DEFENDANTS’ MOTION FOR
WESTPORT INSURANCE CORP., and SUMMARY JUDGMENT
LIBERTY MUTUAL FIRE INSURANCE CO.,

Defendants.

Amran Farah, Gina Tonn, Jeanette M. Bazis, Mark L. Johnson, and Sybil L.
Dunlop, GREENE ESPEL PLLP, 222 South Ninth Street, Suite 2200,
Minneapolis, MN 55402, for Plaintiff.

Daniel J. Millea and Laura W. Bartlow, ZELLE LLP, 500 Washington Avenue
South, Suite 4000, Minneapolis, MN 55415, for Defendants.

In January 2019, Plaintiff Taylor Corporation (“Taylor”)1 discovered that concrete
press pads at its leased printing facility were damaged and unusable. Taylor litigated in
state court against the owner, engineer, and developer of the printing facility. Taylor also
sought coverage for its losses under identical insurance policies issued by Defendants XL
Insurance America, Inc., Westport Insurance Corporation, and Liberty Mutual Fire
Insurance Company (collectively “Insurers”), which Insurers denied. Over the course of

1 The Court refers to Taylor and its subsidiary, Curtis 1000, collectively as “Taylor” herein.
eight agreements, while the state action was proceeding, Insurers extended the time for
Taylor to file this action for denial of coverage by over two years. In February 2021, Taylor

reached a settlement with the engineer of the printing facility and, two years later, it
voluntarily dismissed the press pad claims against the remaining defendants.
Insurers now move for summary judgment, arguing that Taylor should not be
allowed to recover because Taylor extinguished Insurers’ subrogation rights in violation

of the insurance policies and because Taylor should be equitably estopped from
recovering against Insurers. However, the policies’ subrogation provisions require
Insurers to make a payment to invoke Taylor’s obligation to protect their subrogation

rights, and Insurers are unable to meet all elements of equitable estoppel. The Court will
therefore deny Insurers’ motion for summary judgment and grant summary judgment sua
sponte in favor of Taylor on equitable estoppel.
BACKGROUND

I. FACTS
The parties agree that there are no genuine issues of material fact. The Court has
already recounted the underlying facts, which are incorporated by reference and briefly
summarized below. See Taylor Corp. v. XL Ins. Am., Inc., No. 22-1151,

2023 WL 4595708

,
at *1–3 (D. Minn. July 18, 2023).

Taylor contracted with Industrial Equities – River Road, LLC (the “owner”) to lease
a “build-to-suit” printing facility in Fridley, Minnesota (the “Fridley Facility”). (Decl. of
Gina M. Tonn (“Tonn Decl.”) ¶ 2, Ex. 1 at 2, Aug. 9, 2023, Docket No. 74.) The Fridley
Facility was built with specially reinforced, isolated concrete slabs (“Press Pads”) meant
to support Taylor’s Heidelberg printing press equipment. (Id. ¶¶ 22–24; Decl. of Laura W.

Bartlow (“Bartlow Decl.”) ¶ 5, Ex. A (“State Complaint”) ¶¶ 37–39, July 5, 2023, Docket
No. 59.) The owner hired Innovative Structural Solutions, P.A. (the “engineer”) to design
the printing facility, including the Press Pads, to support Taylor’s printing presses.
(Bartlow Decl. ¶ 7, Ex. C (“State Third Party Complaint”) ¶¶ 5–6.)

After unsuccessfully attempting to install a Heidelberg press on one of the Press
Pads, Taylor discovered that the Press Pads were unlevel, which would prevent the
presses from functioning properly and likely cause substantial damage. (Decl. of Janine

R. Matzke (“Matzke Decl.”) ¶¶ 2–3, Aug. 9, 2023, Docket No. 76.) A geo-technical
engineering firm concluded that the soil beneath the Fridley Facility was “not suitable for
support of the printing press foundations.” (Decl. of Bill Conrad (“Conrad Decl.”) ¶ 8, Ex.
3 at 10, July 5, 2023, Docket No. 58.) Consequently, Taylor could not install its Heidelberg

presses at the Fridley Facility, which caused increased costs and delays in its operations.
(Matzke Decl. ¶¶ 4–5.)
Taylor sought to recover damages caused by the Press Pad failure under identical
insurance policies (the “Policies”) issued by Insurers. (Conrad Decl. ¶ 5, Ex. 1; Bartlow

Decl. ¶¶ 9–11, Exs. E–G.) Insurers denied Taylor’s claim in October 2019. (Conrad Decl.
¶ 10, Ex. 5 at 2–3.) Taylor requested that Insurers reconsider, but Insurers did not. (Tonn
Decl. ¶ 2, Ex. 9 at 2; Conrad Decl. ¶ 11, Ex. 6 at 2.)
In June 2019, the owner of the Fridley Facility initiated an action in Minnesota state
court against Taylor for Taylor’s withholding of rent. (See State Complaint ¶¶ 92–101.)

Taylor filed counterclaims for breach of the lease and negligence, alleging that the owner
failed to deliver press pads in good operation condition and was negligent in supervising
the construction of the Fridley Facility. (Bartlow Decl. ¶ 6, Ex. B at 32–33.) Taylor also
filed a third-party negligence complaint against the engineer of the Fridley Facility and

the facility’s developer, Industrial Equities, LLP (The “developer”). (See State Third Party
Complaint ¶¶ 53–64, 66–75.)
The Policies’ subrogation provision, which outlines Insurers’ right of recovery

against third parties in the event of a loss, states in relevant part:
Section V. LOSS ADJUSTMENT AND SETTLEMENT

11. SUBROGATION

In the event of any payment made under this “policy”:

a. The Company will be subrogated to all of the
Insured’s rights of recovery against any person or
organization; and

b. The Insured will execute and deliver
instruments and papers and do whatever is necessary
to secure such rights.

The Company will not acquire any rights of recovery
that the Insured has expressly waived prior to a loss,
nor will such waiver affect the Insured’s rights under
this “policy.”
The Insured will do nothing after a loss to prejudice the
subrogation rights of the Company.

. . .

(Bartlow Decl. ¶¶ 9–11, Ex. E at 79, Ex. F at 70, Ex. G at 66.)
While the state action was ongoing, Taylor repeatedly requested that Insurers
extend the Policies’ 12-month suit limitations provisions to preserve Taylor’s ability to
later challenge Insurers’ denial of coverage. (See Bartlow Decl. ¶¶ 9–11, Ex. E at 79, Ex. F
at 70–71, Ex. G at 66.) Insurers granted the extensions for various reasons, including for
reasons related to the progress of litigation in the state court action. For example, Taylor
communicated that it “remain[ed] hopeful that [it] will prevail in [the state action]” and
needed an extension because “the legal process has slowed down.” (Conrad Decl. ¶ 15,
Ex. 12 at 2; see also id. ¶¶ 17, 19–20, Exs. 14, 16–17 (similar requests).)

Insurers’ internal communications considered that if the state court litigation
continued into 2021 and Insurers refused to grant another extension, “it is very likely that
[Taylor] will file suit for this claim to preserve any possible legal activities.” (Conrad Decl.

¶ 15, Ex. 12 at 2.) Furthermore, Insurers contemplated that “If [Insurers] do grant an
extension and [Taylor] prevails against the building owner, [Insurers’] file is closed. If
[Insurers] do grant an extension and [Taylor] does not prevail against the building owner,
that is the question.” (Id.)

Insurers reviewed Taylor’s insurance coverage claim and kept tabs on the state
court litigation between 2020 and 2022. (Decl. of Daniel Millea ¶ 4, Ex. 1 at 3–16, Docket
No. 80.) Insurers’ claim notes indicate that Taylor anticipated being successful in the state
action and that its prospect for recovery against the state action defendants looked good.

(See id.) Ultimately, Insurers granted Taylor’s requests to extend the suit limitations
provisions eight times. (Conrad Decl. ¶¶ 12–13, 16, 18–19, 21, Exs. 7–10, 13, 15–16, 18.)
In effect, Insurers extended the original 12-month suit limitations provisions for an
additional 27 months—to June 1, 2022. (See Conrad Decl. ¶ 21, Ex. 18 at 2.)

In February 2021, Taylor reached a settlement with the engineer and filed a copy
of the settlement agreement with the state court. (Bartlow Decl. ¶ 12, Ex. H.) The
settlement represented roughly twenty-five percent of Taylor’s total damages, (Conrad

Decl. ¶ 18, Ex. 15 at 3.), and eighty percent of the cost of removing and replacing the Press
Pads, as indicated at the hearing on this motion. Taylor mentioned the settlement
agreement to Insurers in April 2021. (See id.)
Insurers granted three of the eight extensions after they were made aware of

Taylor’s settlement with the designer of the Fridley Facility. (Conrad Decl. ¶¶ 18–19, 21,
Exs. 15–16, 18.) Despite their extensions of the suit limitations provision, Insurers were
adamant that their coverage position remained the same and refused to pay. (See, e.g.,
Conrad Decl. ¶ 13, 16, Exs. 10, 13; Tonn Decl. ¶ 2, Ex. 22 at 2.) In May 2022, Taylor initiated

this action against Insurers for their denial of coverage. (See Compl. ¶¶ 24–26, May 2,
2022, Docket No. 1.)
Trial for the state action was scheduled for Spring of 2023. On March 27, 2023,
Taylor filed a pretrial brief in which it stated its intent not to try the claims related to the

Press Pads against the remaining state action defendants because it was not cost-
effective. (Tonn Decl. ¶ 2, Ex. 29 at 7; id. Ex. 31 at 4.) Accordingly, the state court
dismissed the Press Pad claims with prejudice. (Bartlow Decl. ¶ 14, Ex. J at 3.) The state
action then proceeded to a jury trial on the remaining claims, which was attended by

Insurers’ counsel. (Decl. of Heidi L. Karels ¶¶ 2–3, Aug. 9, 2023, Docket No. 77.) Insurers’
counsel did not object to Taylor’s dismissal of the Press Pad claims at the trial or
otherwise. (Id. ¶ 3.)

II. PROCEDURAL HISTORY
Taylor filed this action in May 2022. (See Compl.) The Court granted Taylor’s first
motion for summary judgment that earth movement caused in part by faulty
workmanship and/or settling was covered by the Policies’ earth movement coverage

extension. Taylor Corp.,

2023 WL 4595708

, at *7–8.  While that motion was pending, 
Insurers filed the instant motion for summary judgment.  (Defs.’ Mot. Summ. J., July 5, 
2023, Docket No. 55.)                                                     
                           DISCUSSION                                    

I.   STANDARD OF REVIEW                                                   
    Summary judgment is appropriate when there are no genuine issues of material 
fact, and the moving party can demonstrate that it is entitled to judgment as a matter of 
law.  Fed. R. Civ. P. 56(a).  A fact is material if it might affect the outcome of the case, and 
a dispute is genuine if the evidence is such that it could lead a reasonable jury to return a 
verdict for the nonmoving party.  Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 248

 (1986).  

A court considering a motion for summary judgment must view the facts in the light most 
favorable to the nonmoving party and give that party the benefit of all reasonable 
inferences to be drawn from those facts.  Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,

475 U.S. 574, 587

 (1986).  The nonmoving party may not rest on mere allegations or 

denials but must show, through the presentation of admissible evidence, that specific 
facts exist creating a genuine issue for trial.  Anderson,

477 U.S. at 256

 (discussing Fed. R. 
Civ. P. 56(e)).  “The mere existence of a scintilla of evidence in support of the plaintiff’s 

position will be insufficient; there must be evidence on which the jury could reasonably 
find for the plaintiff.”

Id. at 252

.                                     
    Federal courts may grant summary judgment sua sponte to a nonmoving party 
when the losing party is given sufficient advance notice and an adequate opportunity to 

submit evidence in opposition.  Fed. R. Civ. P. 56(f)(1); Chrysler Credit Corp. v. Cathey,

977 F.2d 447, 449

 (8th Cir. 1992).  Granting summary judgment under these circumstances 
accomplishes the primary objective of Rule 56: expeditious disposition of cases.  Interco 
Inc. v. Nat’l Sur. Corp.,

900 F.2d 1264, 1269

 (8th Cir. 1990).  The requirements of Rule 56(f) 

are met when the losing party moves for summary judgment on the relevant issue 
because that party “obviously expect[s] the district court to make a final ruling” and 
agrees to resolution of the issue “in summary fashion.”  Johnson v. Bismarck Pub. Sch. 
Dist.,

949 F.2d 1000, 1005

 (8th Cir. 1991); see also Lester v. Wildwood Fin. Grp., Ltd.,

205 F.3d 1346

 (8th Cir. 2000).  By raising arguments in support of its own motion for summary 

judgment, the losing party has had an opportunity to develop the record on that issue.  
Johnson,

949 F.2d at 1005

; Barkley, Inc. v. Gabriel Brothers, Inc.,

829 F.3d 1030, 1041

 (8th 
Cir. 2016).                                                               

II.  DEFENDANT’S MOTION FOR SUMMARY JUDGMENT                              
    Insurers argue Taylor is not entitled to recover under the Policies for the alleged 
Press Pad losses for two reasons.  First, because Taylor extinguished Insurers’ subrogation 
rights in violation of the Policies.  Second, because Taylor should be equitably estopped 
from  recovering  against  Insurers  for  the  Press  Pad  claims  because  it  voluntarily 

relinquished those claims in state court.  Neither argument is availing.  
    A.     Taylor’s Obligation to Protect Insurers’ Subrogation Rights   
    In the insurance context, subrogation allows the insurer to stand in the shoes of 
the insured to legally pursue a third party that caused an insurance loss to the insured.  

Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. Agility Fuel Sols. LLC,

618 F. Supp. 3d 812

, 819 
(D. Minn. 2022) (quoting Medica, Inc. v. Atl. Mut. Ins. Co.,

566 N.W.2d 74, 77

 (Minn. 
1997)).  In other words, “when an insurer has paid a loss, the insurer is subrogated in a 
corresponding amount to the insured’s right of action against any third party whose 

wrongful conduct caused the loss.”  Melrose Gates, LLC v. Chor Moua,

875 N.W.2d 814, 818

  (Minn.  2016)  (internal  quotation  marks  and  citation  omitted).    Subrogation  is 
premised on the principle “that no one should be enriched by another’s loss.”  Medica, 
566 N.W.2d at 76–77 (internal quotation omitted).  Ordinarily, policies require that an 
insured do nothing after a loss to impair the insurer’s subrogation rights, unless the 

insurer has erroneously denied coverage.  See 22 Minn. Prac., Ins. L. & Prac. § 3:11 (2023-
2024 ed.); Schwickert, Inc. v. Winnebago Seniors, Ltd.,

680 N.W.2d 79, 86

 (Minn. 2004).   
    In this case, it is undisputed that Insurers do not have actionable subrogation rights 
because they did not pay under the Policies.  See State Farm Mut. Auto. Ins. Co. v. 

Galloway,

373 N.W.2d 301, 305

 (Minn. 1985); RAM Mut. Ins. Co. v. Rohde,

820 N.W.2d 1

, 
5–6 (Minn. 2012).  Instead, the dispute depends on whether Taylor had an obligation to 
protect Insurers’ subrogation rights irrespective of whether Insurers had invoked those 

rights.2                                                                  
    Whether  Taylor  had  an  ongoing  contractual  obligation  to  protect  Insurers’ 
subrogation rights under the Policies is a matter of contract interpretation.  The Court 
applies “general principles of contract interpretation,” giving effect to the parties’ intent 

as reflected in the terms of the insuring contract.  Lobeck v. State Farm Mut. Auto. Ins. 
Co.,

582 N.W.2d 246, 249

 (Minn. 1998); Eng’g & Constr. Innovations, Inc. v. L.H. Bolduc 
Co.,

825 N.W.2d 695, 704

 (Minn. 2013).  The Court construes the terms of the policy 
“according to what a reasonable person in the position of the insured would have 

understood the words to mean rather than what the insurer intended the language to 


    2 At the hearing on this motion, Insurers clarified that they do not challenge Taylor’s 
decision to reach a settlement with the engineer of the Fridley Facility, just its voluntary 
relinquishment of the Press Pad claims.                                   
mean.”  Canadian Universal Ins. Co., Ltd. v. Fire Watch, Inc.,

258 N.W.2d 570, 572

 (Minn. 
1977).                                                                    

    Unambiguous language must be given its plain and ordinary meaning, Midwest 
Family Mut. Ins. Co. v. Wolters,

831 N.W.2d 628, 636

 (Minn. 2013), and ambiguous 
language is construed in favor of the insured, Eng’g & Constr. Innovations,

825 N.W.2d at 705

.  Whether an insurance policy is ambiguous is a question of law.

Id. at 704

.  A policy 

is ambiguous if its language “is susceptible to two or more reasonable interpretations.”  
Carlson v. Allstate Ins. Co.,

749 N.W.2d 41, 45

 (Minn. 2008).             
    The  Policies’  subrogation  provisions  unambiguously  provide  that  Taylor’s 

obligation to protect Insurers’ subrogation rights depends on whether Insurers have 
made a payment under the Policies.  Though the payment condition is structurally 
separated from Taylor’s obligation, it precedes the obligation as the first clause of the 
entire provision.  A reasonable person would understand that the payment condition 

applies to the entire subrogation provision, including Taylor’s obligation.  Furthermore, 
Minnesota law is clear that an insurer must pay benefits to the insured to invoke its 
subrogation rights.  See, e.g., Galloway,

373 N.W.2d at 305

; RAM, 820 N.W.2d at 5–6.  
Thus, absent clear policy language to the contrary, the Court concludes that Taylor only 
has an obligation to protect Insurers’ subrogation rights if Insurers make a payment, 
which they did not do here.3                                              

    B.   Equitable Estoppel                                              
    In Minnesota, a claim for equitable estoppel must satisfy three elements: “(1) that 
promises or inducements were made; (2) that [Insurers] reasonably relied upon the 
promises; and, (3) that [Insurers] will be harmed if estoppel is not applied.”  Hydra–Mac, 

Inc. v. Onan Corp.,

450 N.W.2d 913, 919

 (Minn. 1990); N. States Power St. Paul Credit 
Union v. CUMIS Ins. Soc., Inc., No. 13-0385,

2013 WL 4052675

, at *6 (D. Minn. Aug. 9, 
2013).  The goal of equitable estoppel is “to prevent a party from taking unconscionable 
advantage of his own wrong by asserting his strict legal rights.”  N. Petrochemical Co. v. 

U. S. Fire Ins. Co.,

277 N.W.2d 408, 410

 (Minn. 1979).  In Minnesota, equitable claims are 
generally questions of law for the Court to decide when the evidence is conclusive.  See 
Melrose Gates,

875 N.W.2d at 819

 (“Generally, litigants have no right to a jury trial on the 

merits of equitable claims, and traditionally the judge serves as the trier of fact for such 
claims.”); Grant Cnty. State Bank v. Schultz,

228 N.W. 150, 152

 (Minn. 1929). 
    To begin, Taylor never made a promise or inducement to Insurers as required.  See 
Hydra-Mac,

450 N.W.2d at 919

.  Evidence of fraudulent intent is not required; instead, it 

is sufficient if the party knows the truth, and then makes representations or inducements 


    3 Though the issue of erroneous denial of coverage is outstanding, the Court also notes 
that Minnesota law would also relieve Taylor of any subrogation obligation if it prevails on that 
ground.  See Schwickert,

680 N.W.2d at 86

.                                
intending or reasonably anticipating that the other party will rely and act on them as 
true.4  See Stevens v. Ludlum,

48 N.W. 771, 771

 (Minn. 1891); EEP Workers’ Compensation 

Fund v. Fun & Sun, Inc.,

794 N.W.2d 126, 135

 (Minn. Ct. App. 2011).  Insurers assert that, 
in requesting that Insurers toll the Policies’ 12-month suit limitations provisions, Taylor 
affirmatively advised that it would try the Press Pad claims in the state court action.  The 
record unambiguously demonstrates that some of Taylor’s requests for extension were 

related to the progress of the state court action.  But the record does not show that Taylor 
represented that it would try all its claims in the state court action.  At most, the record 
indicates that Taylor communicated that it was diligently litigating and that it was hopeful 

it would prevail on its claims; Taylor never represented that it intended to try all its claims.  
    Regardless of whether Insurers have established the first element, the Court finds 
the second element is not met.  Insurers must establish that their reliance on Taylor’s 
promises or inducements was reasonable.  Hydra-Mac,

450 N.W.2d at 919

.  This element 

involves two questions: (1) whether Insurers relied on Taylor’s representations; and (2) 
whether that reliance was reasonable.  Anderson v. Minn. Ins. Guar. Ass’n,

534 N.W.2d 706, 709

 (Minn. 1995).  Insurers argue that, acting in reliance on Taylor’s assurances, they 



    4  Though  Taylor  accepted  the  benefits  of  Insurers’  extensions  to  the  Policies’  suit 
limitations provisions, the Court is not persuaded that Taylor’s voluntary waiver of its Press Pad 
claims against the state action defendants constitutes the sort of shifting positions that warrants 
estoppel.  Contra Karnitz v. Wells Fargo Bank, N.A.,

572 F.3d 572

, 574–75 (8th Cir. 2009) (applying 
Minnesota law); Total Petroleum, Inc. v. Davis,

822 F.2d 734

, 736–38 (8th Cir. 1987) (applying 
Missouri law).                                                            
agreed to toll the suit limitations provision eight times—in effect extending the 12-
months period by an additional 27 months.  To the extent Insurers relied on Taylor’s 

representations when deciding to extend the suit limitations provision, a belief that a 
litigant would go to trial at all costs is unreasonable.  Parties often settle; other times, as 
here, they waive claims when the cost of litigation outweighs the potential benefit. 
    Lastly, Insurers have failed to establish that they will be harmed if estoppel is not 

applied.  See Hydra–Mac,

450 N.W.2d at 919

. Insurers maintain that they will be harmed
because Taylor eliminated their ability to recover any payments for the Press Pad losses
against the state action defendants. It is unclear, though, how the purported harm (loss

of subrogation rights) is even remotely related to the extended statutes of limitations.
The trigger for Insurers to be able to invoke their subrogation rights was claim payment,
which in no way relates to the timing of Taylor’s initiation of this action. Indeed, Insurers
had nearly one year between initiation of this action and settlement of the state claims.

That they did not pay and intervene in the state suit during that time to preserve their
subrogation rights shows that they were not harmed by the extended deadline. The
statute of limitations and preservation of subrogation rights are entirely separate
transactions, and Insurers cannot bootstrap the latter to prove harm from the former.

Insurers want to have their cake and eat it too. So long as Taylor was on the hook,
Insurers were happy to let Taylor bear the brunt of litigation and settle for only eighty
percent of the cost of removing and replacing the Press Pads. But with the possibility that
Insurers may instead have to pay out, they protest that same eighty percent is insufficient.
With their opportunity for subrogation coverage gone, Insurers argue they should not be

forced to pay at all. Insurers took a risk by denying coverage while the state action
proceeded, and they must stand by that risk as this action proceeds. Of course, Insurers
may still prevail on the wrongful denial of coverage issue and not have to pay a cent of
the Press Pad costs. But the Court will not hedge for them by applying a post hoc bailout

disguised as equitable estoppel.
Accordingly, the Court will deny Insurers’ motion for summary judgment and,
because both parties expect the Court to rule on the equitable estoppel issue in summary

fashion and both parties have had ample opportunity to brief the issue, the Court will
grant summary judgment sua sponte for Taylor on equitable estoppel.
CONCLUSION
Insurers have failed to establish that they are entitled to summary judgment. The

Policies’ subrogation provisions are clear that Taylor was only obliged to protect Insurers’
subrogation rights after Insurers pay under the Policies, which Insurers did not do. Thus,
Taylor did not extinguish Insurers’ subrogation rights in violation of the Policies when it
voluntarily waived the Press Pad claims against the state action defendants. Furthermore,

Insurers are unable to establish all three elements of equitable estoppel. The Court will
therefore deny Insurers’ motion for summary judgment and instead grant summary
judgment sua sponte for Taylor on the equitable estoppel issue.

ORDER

     Based on the foregoing, and  all the files,  records, and  proceedings  herein,  IT IS 
HEREBY ORDERED that Defendants’  Motion for Summary Judgment [Docket No. 55]  is 
DENIED in part and GRANTED in part to Plaintiff as described herein.  Defendants’ claims 
for equitable estoppel are dismissed with prejudice. 

DATED:  February 6, 2024                                  HY Hebi 
at Minneapolis, Minnesota.                         JOHN R. TUNHEIM 
                                            United States District Judge 

                                    -16-

Trial Court Opinion

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
TAYLOR CORPORATON,
Civil No. 22-1151 (JRT/TNL)
Plaintiff,

v.
MEMORANDUM OPINION AND ORDER
XL INSURANCE AMERICA, INC., ON DEFENDANTS’ MOTION FOR
WESTPORT INSURANCE CORP., and SUMMARY JUDGMENT
LIBERTY MUTUAL FIRE INSURANCE CO.,

Defendants.

Amran Farah, Gina Tonn, Jeanette M. Bazis, Mark L. Johnson, and Sybil L.
Dunlop, GREENE ESPEL PLLP, 222 South Ninth Street, Suite 2200,
Minneapolis, MN 55402, for Plaintiff.

Daniel J. Millea and Laura W. Bartlow, ZELLE LLP, 500 Washington Avenue
South, Suite 4000, Minneapolis, MN 55415, for Defendants.

2023 WL 4595708

,
at *1–3 (D. Minn. July 18, 2023).

against third parties in the event of a loss, states in relevant part:
Section V. LOSS ADJUSTMENT AND SETTLEMENT

11. SUBROGATION

In the event of any payment made under this “policy”:

a. The Company will be subrogated to all of the
Insured’s rights of recovery against any person or
organization; and

b. The Insured will execute and deliver
instruments and papers and do whatever is necessary
to secure such rights.

. . .

extension. Taylor Corp.,

2023 WL 4595708

, at *7–8.  While that motion was pending, 
Insurers filed the instant motion for summary judgment.  (Defs.’ Mot. Summ. J., July 5, 
2023, Docket No. 55.)                                                     
                           DISCUSSION                                    

I.   STANDARD OF REVIEW                                                   
    Summary judgment is appropriate when there are no genuine issues of material 
fact, and the moving party can demonstrate that it is entitled to judgment as a matter of 
law.  Fed. R. Civ. P. 56(a).  A fact is material if it might affect the outcome of the case, and 
a dispute is genuine if the evidence is such that it could lead a reasonable jury to return a 
verdict for the nonmoving party.  Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 248

 (1986).  

A court considering a motion for summary judgment must view the facts in the light most 
favorable to the nonmoving party and give that party the benefit of all reasonable 
inferences to be drawn from those facts.  Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,

475 U.S. 574, 587

 (1986).  The nonmoving party may not rest on mere allegations or 

denials but must show, through the presentation of admissible evidence, that specific 
facts exist creating a genuine issue for trial.  Anderson,

477 U.S. at 256

 (discussing Fed. R. 
Civ. P. 56(e)).  “The mere existence of a scintilla of evidence in support of the plaintiff’s 

position will be insufficient; there must be evidence on which the jury could reasonably 
find for the plaintiff.”

Id. at 252

.                                     
    Federal courts may grant summary judgment sua sponte to a nonmoving party 
when the losing party is given sufficient advance notice and an adequate opportunity to 

submit evidence in opposition.  Fed. R. Civ. P. 56(f)(1); Chrysler Credit Corp. v. Cathey,

977 F.2d 447, 449

 (8th Cir. 1992).  Granting summary judgment under these circumstances 
accomplishes the primary objective of Rule 56: expeditious disposition of cases.  Interco 
Inc. v. Nat’l Sur. Corp.,

900 F.2d 1264, 1269

 (8th Cir. 1990).  The requirements of Rule 56(f) 

are met when the losing party moves for summary judgment on the relevant issue 
because that party “obviously expect[s] the district court to make a final ruling” and 
agrees to resolution of the issue “in summary fashion.”  Johnson v. Bismarck Pub. Sch. 
Dist.,

949 F.2d 1000, 1005

 (8th Cir. 1991); see also Lester v. Wildwood Fin. Grp., Ltd.,

205 F.3d 1346

 (8th Cir. 2000).  By raising arguments in support of its own motion for summary 

judgment, the losing party has had an opportunity to develop the record on that issue.  
Johnson,

949 F.2d at 1005

; Barkley, Inc. v. Gabriel Brothers, Inc.,

829 F.3d 1030, 1041

 (8th 
Cir. 2016).                                                               

II.  DEFENDANT’S MOTION FOR SUMMARY JUDGMENT                              
    Insurers argue Taylor is not entitled to recover under the Policies for the alleged 
Press Pad losses for two reasons.  First, because Taylor extinguished Insurers’ subrogation 
rights in violation of the Policies.  Second, because Taylor should be equitably estopped 
from  recovering  against  Insurers  for  the  Press  Pad  claims  because  it  voluntarily 

relinquished those claims in state court.  Neither argument is availing.  
    A.     Taylor’s Obligation to Protect Insurers’ Subrogation Rights   
    In the insurance context, subrogation allows the insurer to stand in the shoes of 
the insured to legally pursue a third party that caused an insurance loss to the insured.  

Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. Agility Fuel Sols. LLC,

618 F. Supp. 3d 812

, 819 
(D. Minn. 2022) (quoting Medica, Inc. v. Atl. Mut. Ins. Co.,

566 N.W.2d 74, 77

 (Minn. 
1997)).  In other words, “when an insurer has paid a loss, the insurer is subrogated in a 
corresponding amount to the insured’s right of action against any third party whose 

wrongful conduct caused the loss.”  Melrose Gates, LLC v. Chor Moua,

875 N.W.2d 814, 818

  (Minn.  2016)  (internal  quotation  marks  and  citation  omitted).    Subrogation  is 
premised on the principle “that no one should be enriched by another’s loss.”  Medica, 
566 N.W.2d at 76–77 (internal quotation omitted).  Ordinarily, policies require that an 
insured do nothing after a loss to impair the insurer’s subrogation rights, unless the 

insurer has erroneously denied coverage.  See 22 Minn. Prac., Ins. L. & Prac. § 3:11 (2023-
2024 ed.); Schwickert, Inc. v. Winnebago Seniors, Ltd.,

680 N.W.2d 79, 86

 (Minn. 2004).   
    In this case, it is undisputed that Insurers do not have actionable subrogation rights 
because they did not pay under the Policies.  See State Farm Mut. Auto. Ins. Co. v. 

Galloway,

373 N.W.2d 301, 305

 (Minn. 1985); RAM Mut. Ins. Co. v. Rohde,

820 N.W.2d 1

, 
5–6 (Minn. 2012).  Instead, the dispute depends on whether Taylor had an obligation to 
protect Insurers’ subrogation rights irrespective of whether Insurers had invoked those 

rights.2                                                                  
    Whether  Taylor  had  an  ongoing  contractual  obligation  to  protect  Insurers’ 
subrogation rights under the Policies is a matter of contract interpretation.  The Court 
applies “general principles of contract interpretation,” giving effect to the parties’ intent 

as reflected in the terms of the insuring contract.  Lobeck v. State Farm Mut. Auto. Ins. 
Co.,

582 N.W.2d 246, 249

 (Minn. 1998); Eng’g & Constr. Innovations, Inc. v. L.H. Bolduc 
Co.,

825 N.W.2d 695, 704

 (Minn. 2013).  The Court construes the terms of the policy 
“according to what a reasonable person in the position of the insured would have 

understood the words to mean rather than what the insurer intended the language to 


    2 At the hearing on this motion, Insurers clarified that they do not challenge Taylor’s 
decision to reach a settlement with the engineer of the Fridley Facility, just its voluntary 
relinquishment of the Press Pad claims.                                   
mean.”  Canadian Universal Ins. Co., Ltd. v. Fire Watch, Inc.,

258 N.W.2d 570, 572

 (Minn. 
1977).                                                                    

    Unambiguous language must be given its plain and ordinary meaning, Midwest 
Family Mut. Ins. Co. v. Wolters,

831 N.W.2d 628, 636

 (Minn. 2013), and ambiguous 
language is construed in favor of the insured, Eng’g & Constr. Innovations,

825 N.W.2d at 705

.  Whether an insurance policy is ambiguous is a question of law.

Id. at 704

.  A policy 

is ambiguous if its language “is susceptible to two or more reasonable interpretations.”  
Carlson v. Allstate Ins. Co.,

749 N.W.2d 41, 45

 (Minn. 2008).             
    The  Policies’  subrogation  provisions  unambiguously  provide  that  Taylor’s 

obligation to protect Insurers’ subrogation rights depends on whether Insurers have 
made a payment under the Policies.  Though the payment condition is structurally 
separated from Taylor’s obligation, it precedes the obligation as the first clause of the 
entire provision.  A reasonable person would understand that the payment condition 

applies to the entire subrogation provision, including Taylor’s obligation.  Furthermore, 
Minnesota law is clear that an insurer must pay benefits to the insured to invoke its 
subrogation rights.  See, e.g., Galloway,

373 N.W.2d at 305

; RAM, 820 N.W.2d at 5–6.  
Thus, absent clear policy language to the contrary, the Court concludes that Taylor only 
has an obligation to protect Insurers’ subrogation rights if Insurers make a payment, 
which they did not do here.3                                              

    B.   Equitable Estoppel                                              
    In Minnesota, a claim for equitable estoppel must satisfy three elements: “(1) that 
promises or inducements were made; (2) that [Insurers] reasonably relied upon the 
promises; and, (3) that [Insurers] will be harmed if estoppel is not applied.”  Hydra–Mac, 

Inc. v. Onan Corp.,

450 N.W.2d 913, 919

 (Minn. 1990); N. States Power St. Paul Credit 
Union v. CUMIS Ins. Soc., Inc., No. 13-0385,

2013 WL 4052675

, at *6 (D. Minn. Aug. 9, 
2013).  The goal of equitable estoppel is “to prevent a party from taking unconscionable 
advantage of his own wrong by asserting his strict legal rights.”  N. Petrochemical Co. v. 

U. S. Fire Ins. Co.,

277 N.W.2d 408, 410

 (Minn. 1979).  In Minnesota, equitable claims are 
generally questions of law for the Court to decide when the evidence is conclusive.  See 
Melrose Gates,

875 N.W.2d at 819

 (“Generally, litigants have no right to a jury trial on the 

merits of equitable claims, and traditionally the judge serves as the trier of fact for such 
claims.”); Grant Cnty. State Bank v. Schultz,

228 N.W. 150, 152

 (Minn. 1929). 
    To begin, Taylor never made a promise or inducement to Insurers as required.  See 
Hydra-Mac,

450 N.W.2d at 919

.  Evidence of fraudulent intent is not required; instead, it 

is sufficient if the party knows the truth, and then makes representations or inducements 


    3 Though the issue of erroneous denial of coverage is outstanding, the Court also notes 
that Minnesota law would also relieve Taylor of any subrogation obligation if it prevails on that 
ground.  See Schwickert,

680 N.W.2d at 86

.                                
intending or reasonably anticipating that the other party will rely and act on them as 
true.4  See Stevens v. Ludlum,

48 N.W. 771, 771

 (Minn. 1891); EEP Workers’ Compensation 

Fund v. Fun & Sun, Inc.,

794 N.W.2d 126, 135

 (Minn. Ct. App. 2011).  Insurers assert that, 
in requesting that Insurers toll the Policies’ 12-month suit limitations provisions, Taylor 
affirmatively advised that it would try the Press Pad claims in the state court action.  The 
record unambiguously demonstrates that some of Taylor’s requests for extension were 

related to the progress of the state court action.  But the record does not show that Taylor 
represented that it would try all its claims in the state court action.  At most, the record 
indicates that Taylor communicated that it was diligently litigating and that it was hopeful 

it would prevail on its claims; Taylor never represented that it intended to try all its claims.  
    Regardless of whether Insurers have established the first element, the Court finds 
the second element is not met.  Insurers must establish that their reliance on Taylor’s 
promises or inducements was reasonable.  Hydra-Mac,

450 N.W.2d at 919

.  This element 

involves two questions: (1) whether Insurers relied on Taylor’s representations; and (2) 
whether that reliance was reasonable.  Anderson v. Minn. Ins. Guar. Ass’n,

534 N.W.2d 706, 709

 (Minn. 1995).  Insurers argue that, acting in reliance on Taylor’s assurances, they 



    4  Though  Taylor  accepted  the  benefits  of  Insurers’  extensions  to  the  Policies’  suit 
limitations provisions, the Court is not persuaded that Taylor’s voluntary waiver of its Press Pad 
claims against the state action defendants constitutes the sort of shifting positions that warrants 
estoppel.  Contra Karnitz v. Wells Fargo Bank, N.A.,

572 F.3d 572

, 574–75 (8th Cir. 2009) (applying 
Minnesota law); Total Petroleum, Inc. v. Davis,

822 F.2d 734

, 736–38 (8th Cir. 1987) (applying 
Missouri law).                                                            
agreed to toll the suit limitations provision eight times—in effect extending the 12-
months period by an additional 27 months.  To the extent Insurers relied on Taylor’s 

representations when deciding to extend the suit limitations provision, a belief that a 
litigant would go to trial at all costs is unreasonable.  Parties often settle; other times, as 
here, they waive claims when the cost of litigation outweighs the potential benefit. 
    Lastly, Insurers have failed to establish that they will be harmed if estoppel is not 

applied.  See Hydra–Mac,

450 N.W.2d at 919

disguised as equitable estoppel.
Accordingly, the Court will deny Insurers’ motion for summary judgment and,
because both parties expect the Court to rule on the equitable estoppel issue in summary

ORDER

     Based on the foregoing, and  all the files,  records, and  proceedings  herein,  IT IS 
HEREBY ORDERED that Defendants’  Motion for Summary Judgment [Docket No. 55]  is 
DENIED in part and GRANTED in part to Plaintiff as described herein.  Defendants’ claims 
for equitable estoppel are dismissed with prejudice. 

DATED:  February 6, 2024                                  HY Hebi 
at Minneapolis, Minnesota.                         JOHN R. TUNHEIM 
                                            United States District Judge 

                                    -16-

Reference

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