Great Northern Oil Co. v. St. Paul Fire & Marine Insurance Co.

In August 1964, Great Northern Oil Company (Great) (plaintiff) obtained an insurance policy with St. Paul Fire and Marine Insurance Company and other insurance companies (defendants). This policy covered business-interruption losses. The insurance policy also included a subrogation clause, which gave the defendants subrogation rights. While this policy was in effect, Great entered into an agreement with Litwin Corporation, Inc. (Litwin) for construction services. The agreement with Litwin had an exculpatory clause that provided that Litwin would not be held responsible for business-interruption losses. In 1967, Litwin’s negligence caused damage to Great’s property. Great sued the defendants, claiming that Litwin’s negligence caused it to suffer a substantial business-interruption loss. The defendants were responsible for business-interruption losses under the terms of the policy. In their answer, the defendants raised the defense that, by releasing Litwin from liability for business-interruption losses, Great had defeated the rights of the defendants to subrogation. As a result, the defendants claimed that Great could not collect under the policy. Great and the defendants cross-moved for summary judgment on the subrogation claim. The trial court granted Great’s motion for summary judgment and struck the defendants’ subrogation defenses. The defendants appealed.