Great Northern Oil Company v. St. Paul Fire and Marine Insurance Company
Supreme Court of Minnesota
189 N.W.2d 404 (1971)
Great Northern (plaintiff) held a business-interruption policy from the defendant insurers with a subrogation clause, then separately contracted with Litwin for construction work containing an exculpatory clause releasing Litwin from business-interruption liability; when Litwin's later negligence caused business-interruption losses, the insurers argued Great Northern's earlier release of Litwin defeated their subrogation rights and thus barred Great Northern's own policy recovery. The trial court granted Great Northern summary judgment, striking the insurers' subrogation defense.
Whether an insured who releases a contractor from liability for causing a loss is precluded from recovering under its own insurance policy for that loss, where the release defeats the insurer's subrogation rights against the contractor.