United States Court of Appeals For the Seventh Circuit ____________________ No. 19-3129 WISCONSIN CENTRAL LTD., Plaintiff-Appellant, v. SOO LINE RAILROAD COMPANY, Defendant-Appellee. ____________________

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:16-cv-04271 — Andrea R. Wood, Judge. ____________________

ARGUED SEPTEMBER 25, 2020 — DECIDED MARCH 31, 2021 ____________________

Before RIPPLE, BRENNAN, and ST. EVE, Circuit Judges. BRENNAN, Circuit Judge. Decades ago, railroad company 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. 2 No. 19-3129

The railroads jointly defended and settled responsibility for the investigation and remediation of that site. Then they each sought indemnification from the other. The district court awarded summary judgment to Soo Line for damages, attor- neys’ fees, and costs. On appeal, the railroads dispute when a claim was first asserted, and how much of the cost of defending and settling the matter was related to the rail lines and their operation. In- demnification under the agreement turns on both issues. I. In a 1987 Asset Purchase Agreement (“Agreement”) Wis- consin Central purchased various assets of Soo Line’s Lake States Transportation division, including physical rail lines in Minnesota, Wisconsin, and Michigan (“LST”).1 The Agree- ment provided for a detailed allocation of liability and indem- nification of each party by the other. An initial version of the Agreement had provided that Wisconsin Central would assume all of Soo Line’s liability for environmental claims ex- cept those arising out of Soo Line’s acts or omissions. But Wis- consin Central’s lenders threatened to withdraw from the deal out of concern that future environmental claims might threaten Wisconsin Central’s ability to repay them. In order to assure the lenders and allow the deal to go forward, Soo Line agreed to retain liability and indemnify Wisconsin

1 The Agreement does not use the phrase “Lake States Transportation” and instead lists “LST”—defined only as the lines of railroad listed in an exhibit—as one of the many assets sold to Wisconsin Central. Both parties agree the overall contract was for the sale of assets of the Lake States Transportation division. No. 19-3129 3 Central for “all claims for environmental matters relating to ownership of the Assets or the operation of LST that are as- serted” within ten years of the closing of the deal (the “claim period”).2 This window appears to have been derived from the repayment period of the loans plus extra time to be safe from clawbacks under the bankruptcy code. After the end of the claim period, Wisconsin Central would in turn assume all liability and indemnify Soo Line for any such claims, regard- less of whether Soo Line was at fault. The deal finally closed on October 11, 1987, and the claim period ran through Octo- ber 11, 1997. A few years into the Agreement, local and state authorities discovered contamination in Ashland in what used to be an industrial area but is now a public recreational area called Kreher Park. Running through the park is a railroad right-of- way purchased by Wisconsin Central under the Agreement. The Wisconsin Department of Natural Resources (“WDNR”) identified an old manufactured