Court Opinion

ID: 7805694
Source: CourtListenerOpinion
Date Created: 2022-09-01 16:00:23.597368+00
Date Added: 2024-06-11T16:30:04.657712
License: Public Domain

United States Court of Appeals
                             For the Eighth Circuit
                         ___________________________

                                 No. 21-3046
                         ___________________________

                         Doe Run Resources Corporation

                                      Plaintiff - Appellant

                                         v.

                    St. Paul Fire & Marine Insurance Company

                                     Defendant - Appellee
                                  ____________

                    Appeal from United States District Court
                  for the Eastern District of Missouri - St. Louis
                                  ____________

                            Submitted: April 14, 2022
                            Filed: September 1, 2022
                                 ____________

Before SHEPHERD, ERICKSON, and STRAS, Circuit Judges.
                         ____________

SHEPHERD, Circuit Judge.

       This insurance coverage dispute involves claims for coverage by Doe Run
Resources Corporation against its insurer, St. Paul Fire & Marine Insurance
Company, stemming from multiple lawsuits against Doe Run’s Peruvian subsidiary,
Doe Run Peru, which allege various claims stemming from Doe Run Peru’s alleged
release of toxic chemicals from a metallurgical plant. After an earlier coverage
dispute in state court, where the court determined that a pollution exclusion in St.
Paul’s policy precluded coverage, Doe Run filed this action alleging that additional,
newly discovered facts implicated an exception to the exclusion that was not raised
in the previous state court action. St. Paul filed a motion to dismiss based on issue
and claim preclusion. The district court 1 granted the motion based on issue
preclusion, and Doe Run appeals. Having jurisdiction under 28 U.S.C. § 1291, we
affirm.

                                          I.

      Doe Run is a natural resources company engaged in the mining, milling, and
smelting of lead and lead concentrate. Part of Doe Run’s operations includes a
metallurgical plant in La Oroya, Peru, owned and operated by Doe Run Peru, a
subsidiary of Doe Run. Since 2007, 32 lawsuits have been filed against Doe Run by
individuals who reside in the vicinity of the La Oroya plant, all of which allege that
Doe Run was responsible for the release of toxic chemicals—including lead, arsenic,
cadmium, and sulfur dioxide—into the environment, and that the release of these
chemicals has injured them. The same law firm represents each of the plaintiffs.

      St. Paul issued a general liability insurance policy to Doe Run with
consecutive coverage periods from at least December 31, 2005, to November 1,
2006, and November 1, 2006, to November 1, 2007. Subject to various exclusions
and conditions, the policy broadly provides coverage for bodily injury and property
damage caused by an “event” taking place outside of the United States during the
policy period, as well as coverage for defense costs. As relevant here, the policy
contains a pollution exclusion, which provides:

      We won’t cover injury or damage or medical expenses that result from
      pollution at, on, in, or from any:
      •      protected person’s premises;
      •      waste site; or

      1
       The Honorable Audrey G. Fleissig, United States District Judge for the
Eastern District of Missouri.
                                   -2-
      •     protected person’s work site.

      ...

      But we won’t . . . apply this exclusion to:

      •     bodily injury or property damage that results from your products
            or your completed work, other than waste product or completed
            work; or
      •     premises damages that results from fire.

The policy defines “pollution” as “any actual, alleged, or threatened discharge,
dispersal, escape, migration, release, or seepage of any pollutant.” With respect to
the exception contained in the exclusion, the policy defines “your completed work”
as “your work that is completed, including work that may need service, maintenance,
correction, repair, or replacement, but which is otherwise complete.”

       In 2010, following the filing of several of the aforementioned underlying
lawsuits, Doe Run filed an action in the Circuit Court of St. Louis County against
four insurance companies with which Doe Run had policies and which had denied
Doe Run’s claims for coverage, seeking reimbursement for defense costs incurred
as a result of the underlying lawsuits. As relevant here, in 2012, Doe Run added St.
Paul to the suit, asserting that St. Paul breached the insurance contract and
unreasonably refused to pay and seeking a declaration that St. Paul was obligated to
provide full coverage for defense costs and expenses in connection with the
underlying lawsuits. Both St. Paul and Doe Run moved for summary judgment in
this action, with St. Paul arguing that the pollution exclusion barred coverage and
Doe Run arguing that the pollution exclusion was ambiguous and thus could not bar
coverage. Both the trial court and Missouri Court of Appeals ruled in Doe Run’s
favor. However, on appeal, the Supreme Court of Missouri reversed, holding that
“[t]he pollution exclusion unambiguously bars coverage and St. Paul has no duty to
defend Doe Run for the [underlying] lawsuits.” Doe Run Res. Corp. v. Am.
Guarantee & Liab. Ins., 531 S.W.3d 508, 515 (Mo. 2017) (en banc).

                                         -3-
       After the Supreme Court of Missouri ruled that St. Paul had no duty to defend
Doe Run in the underlying lawsuits, an additional nine lawsuits 2 were filed against
Doe Run, again alleging injuries stemming from Doe Run Peru’s alleged release of
toxic chemicals into the environment. For the first time, at least one of the new
lawsuits made a claim of “negligent performance of a contract or undertaking,”
which was based on the allegation that Doe Run had been negligent in performing
its services as a contractor for Doe Run Peru. Expert discovery later conducted as
part of the underlying lawsuits suggested that other plaintiffs in these suits would
soon assert similar claims against Doe Run for work it completed at the La Oroya
plant as a third-party contractor. Believing that this new claim implicated an
exception to the pollution exclusion for “your completed work,” Doe Run retendered
a request for defense coverage to St. Paul. St. Paul again denied the claim for
coverage, after which Doe Run filed this action in state court, again asserting claims
of breach of contract and an unreasonable refusal to pay and seeking a declaration
that St. Paul had a duty to defend.

       St. Paul removed this action to federal court and filed a motion to dismiss
based on collateral estoppel and res judicata, or issue preclusion and claim
preclusion, respectively. St. Paul asserted that issue preclusion barred this action
because Doe Run was attempting to relitigate an issue conclusively resolved in the
prior state court action and that claim preclusion also barred the action because Doe
Run’s claims could have been and were litigated in the prior state court action. Doe
Run resisted the motion to dismiss, arguing that issue preclusion did not apply
because the issues in this action and the prior state court action were not identical
because the earlier litigation did not consider the exception to the pollution exclusion
and Doe Run had not had a full and fair opportunity to litigate the exception. As to
claim preclusion, Doe Run argued that it did not apply because the claim for
coverage based on the newly filed underlying lawsuits was not a part of the prior
state court action and the new theory of liability had not been raised in the underlying

      2
       These 9 are part of the 32 underlying lawsuits against Doe Run. The 32 total
lawsuits represent 23 filed before the Supreme Court of Missouri rendered its
decision and 9 filed after this decision.
                                          -4-
lawsuits when the state court action was decided, meaning that Doe Run could not
have asserted an argument based on the exception to the exclusion at the time that
action was pending.

       The district court granted the motion to dismiss based on issue preclusion,
concluding that the issues in the prior state court action and this action were identical
and that Doe Run had a full and fair opportunity to be heard. In finding the issues
identical, the district court determined that the prior state court action had resolved
the applicability of the pollution exclusion, which was the same issue that the parties
disputed in this action. The district court noted that, despite Doe Run’s desire to
present new evidence about the applicability of an exception to the pollution
exclusion, its conclusion remained the same because, as this Court has held, new
evidence does not create a new, distinct issue when all events giving rise to the
claims occurred before the filing of the first lawsuit. See Liberty Mut. Ins. Co. v.
FAG Bearings Corp., 335 F.3d 752, 761 (8th Cir. 2003). As to Doe Run’s
opportunity to be heard, the district court noted that, where the parties remain the
same between the different actions, absent a strong showing the contrary, courts
assume that a party had a full and fair opportunity to be heard in the original action.
Concluding that issue preclusion barred the action, the district court declined to
consider whether claim preclusion similarly barred the action and granted the motion
to dismiss. This appeal follows.

                                           II.

       Doe Run asserts that the district court erroneously dismissed its complaint
based on issue preclusion, arguing that (1) the district court broadly and improperly
characterized the issues in the current and prior actions, which led it to erroneously
conclude that the issues were identical between cases; (2) Doe Run did not have a
full and fair opportunity to litigate the issue of the exception to the pollution
exclusion; (3) the exception was undisputedly not litigated in the prior state court
action because new developments in the underlying suits rendered the exception
applicable; and (4) under Missouri law, the duty to defend is subject to reassessment
                                          -5-
when new claims or developments create or eliminate potential coverage. Doe Run
also asserts that, even though the district court did not address it, res judicata also
does not apply to bar Doe Run’s claims. “We review de novo the district court’s
grant of a motion to dismiss based on collateral estoppel.” Turner v. U.S. Dep’t of
Just., 815 F.3d 1108, 1111 (8th Cir. 2016) (emphasis omitted).

                                          A.

        Issue preclusion, dictates that “[w]hen an issue of fact or law is actually
litigated and determined by a valid and final judgment, and the determination is
essential to the judgment, the determination is conclusive in a subsequent action
between the parties, whether on the same or a different claim.” Id. (alteration in
original) (citation omitted). In considering whether issue preclusion bars litigation
of an issue, we apply the law from the forum state that rendered the first judgment,
here, Missouri. See A.H. ex rel. Hubbard v. Midwest Bus Sales, Inc., 823 F.3d 448,
453 (8th Cir. 2016). Under Missouri law, courts consider three factors to determine
whether issue preclusion applies:

      (1) whether the issue decided in the prior adjudication was identical to
      the issue presented in the present action; (2) whether the prior
      adjudication resulted in a judgment on the merits; and (3) whether the
      party against whom collateral estoppel is asserted was a party or in
      privity with a party to the prior adjudication.

Liberty Mutual, 335 F.3d at 758 (citation omitted). In addition to these three factors,
in some circumstances, courts also consider a fourth factor: “whether the party
against whom preclusion is asserted had a ‘full and fair opportunity’ to litigate the
issue.” Id. “However, the ‘full and fair opportunity to litigate’ factor was developed
to analyze cases where the parties in the first action are not the same as those in the
second.” Id. (citation omitted). Thus, where the parties are the same between the
two actions, “absent a strong showing to the contrary, we assume that both [parties]
had a full and fair opportunity to litigate the relevant issues.” Id. at 759.

                                         -6-
       The parties dispute only the first and fourth factors. Beginning with the first
factor, whether the issues between the actions were identical, “[d]efining the issue
in the prior litigation is crucial in determining whether issue preclusion is available.”
Id. In general,

      the broader a court defines the issue previously litigated, the more likely
      it is to have preclusive effect in a subsequent litigation. On the other
      hand, by defining the issue narrowly and only in terms of the evidence
      or arguments actually considered by the court, litigants may be
      successful in arguing that the second proceeding involves a new or
      distinct issue not decided in the first.

Id. The district court defined the issues decided by the Supreme Court of Missouri
as follows:

      (1) whether St. Paul had a duty to defend Doe Run in the [underlying]
      lawsuits. In order to resolve that issue, the state court necessarily
      decided the sub-issues of: (2) whether the Pollution Exclusion was
      ambiguous and (3) whether the Pollution Exclusion barred coverage.

R. Doc. 48, at 8-9. Doe Run argues that the district court defined the issue decided
in the previous state court action at an overly broad and expansive level, which
resulted in the district court erroneously concluding that issue preclusion applied.
We disagree. The Supreme Court of Missouri expressly stated what issue it was
considering:

      This case presents an issue of first impression for this Court: whether
      an insurance policy’s general pollution exclusion bars defense coverage
      of a toxic tort claim arising from alleged industrial pollution. Because
      the pollution exclusion is unambiguous and bars coverage, St. Paul does
      not have a duty to defend Doe Run.

531 S.W.3d at 511. We agree with the district court that the Supreme Court of
Missouri decided the issue of whether St. Paul had a duty to defend Doe Run, which
included the necessary sub-issue of interpretation of the pollution exclusion.
                                          -7-
Because the Supreme Court of Missouri held that St. Paul had no duty to defend,
rather than solely addressing the sub-issue of the pollution exclusion, the district
court did not err in construing the Supreme Court of Missouri’s opinion to have
addressed the broader issue of whether the policy provided coverage for Doe Run’s
claim. See Stark Liquidation Co. v. Florists’ Mut. Ins. Co., 243 S.W.3d 385, 392
(Mo. Ct. App. 2007) (“To extricate itself from a duty to defend the insured, the
insurance company must prove that there is no possibility of coverage.” (citation
omitted) ). We conclude that the issue decided in the prior state court action was
identical to the issue presented in this action: whether the pollution exclusion
excused St. Paul from its duty to defend Doe Run in the underlying lawsuits.

        We now turn to the fourth factor, whether Doe Run had a full and fair
opportunity to be heard. Like the district court, we note that this factor is an
additional, sometimes-added element under Missouri law that was designed to
address situations where the parties in the second litigation were not the same as in
the first. James v. Paul, 49 S.W.3d 678, 684 (Mo. 2001) (en banc) (“The fourth
factor . . . is subject to some misunderstanding. The ‘full and fair opportunity to
litigate the issue in the first suit’ is not a second layer of privity analysis under which
only those in privity who had actual notice and an opportunity to intervene may be
bound by a prior adjudication. Rather, it is a shorthand description of the analysis
required to determine if non-mutual collateral estoppel should be applied. The
principle of non-mutual collateral estoppel, as adopted in Missouri, permits use of a
prior judgment to preclude relitigation of an issue even though the party asserting
collateral estoppel was not a party to the prior case.” (footnote omitted)). And, where
there is no evidence to the contrary, we assume that, where the parties remained the
same, the party against whom issue preclusion is being used had a full and fair
opportunity to be heard in the first action. See Liberty Mutual, 335 F.3d at 765. This
rule is not altered by Doe Run’s claims of newly discovered evidence. Because the
parties remained the same between the two actions and there is nothing in the record
suggesting that Doe Run did not have a full and fair opportunity to be heard in the
prior state court action, we conclude, as did the district court, that Doe Run had “a

                                           -8-
full and fair opportunity to litigate” in the prior action. See James, 49 S.W.3d at
682.

                                           B.

       Despite the presence of all elements of issue preclusion, Doe Run argues that
newly discovered evidence and new claims asserted in the underlying lawsuits
implicate an exception to the pollution exclusion. Thus, according to Doe Run, issue
preclusion cannot bar it from now asserting that this exception applies, and coverage
exists under the policy. We disagree. In Liberty Mutual, we rejected a party’s
argument that newly discovered evidence or a change in events between the initial
and subsequent litigation barred the application of issue preclusion. 335 F.3d at 761.
There, we stated:

      Where the first and second actions are both based on an evaluation of
      the same historical facts, a litigant seeking to introduce newly
      discovered evidence otherwise in existence at the time of the first suit
      may not argue that the facts have changed in the time period between
      the two actions in order to avoid the preclusive effect of the first
      decision.

Id. We also distinguished this scenario from those cases where “courts refused to
apply collateral estoppel because of events that occurred or relationships that
actually changed between the first and second actions.” Id. Here, the same historical
facts underlie all of the litigation related to the alleged release of toxic chemicals at
the La Oroya plant. The only change that occurred between the prior state court
action and this action is a new theory of liability alleged by some plaintiffs in the
underlying lawsuits, and there is no suggestion that this new theory of liability is
based on evidence that was not in existence at the time of the original action. See
id. (concluding that revelation of new evidence that was in existence at the time of
incident giving rise to coverage claim is not the same as a change in underlying
facts). In the absence of subsequent events or circumstances representing an actual
change between the prior state court action and this action, issue preclusion applies.

                                          -9-
       We are similarly unpersuaded by Doe Run’s assertion that issue preclusion
cannot apply because Missouri law dictates that an insurer has an obligation to
reconsider its prior refusal to defend when new claims or facts arise. See Esicorp,
Inc. v. Liberty Mut. Ins. Co., 193 F.3d 966, 969 n.1 (8th Cir. 1999) (“[I]f the insured
later submits an amended pleading or additional facts that suggest the presence of
covered claims, the insurer has an obligation to reconsider its refusal to defend.”).
Here, St. Paul did reconsider Doe Run’s claim for coverage when Doe Run
resubmitted the claim following the nine newly filed lawsuits alleging pollution from
the La Oroya plant, which alleged a new theory of liability.

      We conclude that the district court did not err in granting St. Paul’s motion to
dismiss based on issue preclusion, and because the district court did not err, we need
not consider the parties’ arguments regarding claim preclusion.

                                          III.

      For the foregoing reasons, we affirm the judgment of the district court.

STRAS, Circuit Judge, concurring in the judgment.

      Few doctrines get confused as often as issue and claim preclusion. They each
promote finality, see Sexton v. Jenkins & Assocs., Inc., 152 S.W.3d 270, 274 (Mo.
banc 2004), and occasionally both apply in the same case, see Kesler v. Curators of
the Univ. of Mo., 516 S.W.3d 884, 899 (Mo. Ct. App. 2017).

       But the doctrines differ in one crucial respect. See Taylor v. Sturgell, 553 U.S.
880, 892 (2008); Hollida v. Hollida, 190 S.W.3d 550, 555 (Mo. Ct. App. 2006).
Issue preclusion is about issues: it forecloses “‘successive litigation of an issue of
fact or law actually litigated and resolved in a valid court determination essential to
the prior judgment,’ even if the issue recurs in the context of a different claim.”
Taylor, 553 U.S. at 892 (emphasis added) (quoting New Hampshire v. Maine, 532
U.S. 742, 748–49 (2001)); see also Oates v. Safeco Ins. Co. of Am., 583 S.W.2d 713,
                                         -10-
719 (Mo. banc 1979) (describing issue preclusion). Claim preclusion, by contrast,
is about claims: it “forecloses ‘successive litigation of the very same claim, whether
or not relitigation of the claim raises the same issues as the earlier suit.’” Taylor,
553 U.S. at 892 (emphasis added) (quoting New Hampshire, 532 U.S. at 748); see
also Oates, 583 S.W.2d at 719 (describing claim preclusion).

       This case is about claims, not issues. In the previous Missouri case, Doe Run
sought liability coverage from its insurer, St. Paul Fire & Marine Insurance
Company, because of lead particulate that had leaked into the environment from a
plant it operated in Peru. No Missouri court said a single word about the completed-
work exception, meaning it has never been “actually litigated and resolved.” See,
e.g., Doe Run Res. Corp. v. Am. Guar. & Liab. Ins., 531 S.W.3d 508 (Mo. banc
2017). In other words, the issue is new, so issue preclusion cannot stand in the way.
See Restatement (Second) of Judgments § 27 (Am. Law Inst. 1982); see also
Xiaoyan Gu v. Da Hua Hu, 447 S.W.3d 680, 686–87 (Mo. Ct. App. 2014) (holding
that issue preclusion “does not apply” when a party raises an insurance exclusion it
never litigated in the first action (emphasis added)).

       The claim, on the other hand, is old. These parties have already litigated
whether St. Paul must defend and indemnify Doe Run for the release of lead
particulate into the environment. See Doe Run, 531 S.W.3d at 515. The Missouri
Supreme Court said no. Doe Run lost.

       It does not get a second bite at the apple. Claim preclusion applies when the
old and new claims share four “identities”: (1) the same parties (2) suing in the same
capacity (3) disputing the same cause of action (4) for the same remedy. See King
Gen. Contractors, Inc. v. Reorganized Church of Jesus Christ of Latter Day Saints,
821 S.W.2d 495, 501 (Mo. banc 1991). All four identities are present: Doe Run once
again wants the same coverage from the same insurer for the release of the same
pollutant from the same plant. As Missouri courts have put it, claim preclusion
“unequivocally applies” in this situation because Doe Run “failed to raise” the
completed-work exception “in the prior action for failure to exercise reasonable
                                        -11-
diligence.” Xiaoyan Gu, 447 S.W.3d at 688. For that reason, I concur in the
judgment.
                    ______________________________

                                   -12-