Contract Transferring Risk from One Party to Another is Effective

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Wisconsin Central, Ltd. entered into an agreement that included the purchase of rail lines from Soo Line Railroad Company. Part of that agreement allocated responsibility for future environmental liabilities. Years later, contamination was discovered near one of those lines in Ashland, Wisconsin on the shore of Lake Superior. In Wisconsin Central Ltd. v. Soo Line Railroad Company, No. 19-3129, United States Court of Appeals For the Seventh Circuit (March 31, 2021) the Seventh Circuit was asked to reverse a decision of the USDC that Wisconsin Central owed indemnity to Soo Line who had transferred the risk of loss by a decades old agreement.

ZALMA OPINION

For there to be a “claim” under an indemnity contract or an insurance contract, there must be a demand for money or other action such as a PRP letter. A claim was made but it was made after the expiration of the indemnity agreement just as it would have if a claim was made on an insurance contract after it expired.