In Wilson Mutual v. Falk, et al., 2014 WI 136, 2014, the insureds were owners and operators of a dairy farm in Washington County, Wisconsin, and the defendants were all neighbors of the insureds. In early 2011, the insureds spread liquid cow manure onto their farm fields for the purpose of fertilization. In an attempt to safely apply the manure, the insureds obtained a nutrient management plan prepared by a certified crop agronomist and approved by the Washington County Land and Water Conservation Department.
Subsequently, the Wisconsin Department of Natural Resources (DNR) informed the insureds it had received several well contamination complaints from the insureds’ neighbors. The DNR investigated and concluded that the manure from the insureds’ farm leached into and contaminated wells owned by the injured parties. The contamination made the injured party’s private wells unusable and the water undrinkable.
The insurance company filed a declaratory judgment motion in Washington County against their insureds, the injured parties, and the DNR to determine whether the subject insurance policy covered the manure contamination alleged by the DNR and injured parties.
The Circuit Court concluded the insurance company had no duty to indemnify their insureds stating “Indeed, spreading manure is a form of recycling – one of the actions performed on ‘waste,’ a named pollutant as defined in the Policies… Many substances serve useful purposes in many contexts, yet can be characterized as pollutants in another. Bleach cleans and disinfects a countertop; yet when poured into a stream it is deadly to the fish living in the water. DDT was an effective pesticide; yet it poisoned raptors who ate rodents exposed to it.… A reasonable person in the position of the insureds would understand cow manure to be waste, and thus the pollution exclusion excluded coverage.” The Court of Appeals reversed, concluding that manure is not a pollutant because manure “has long been a normal and necessary part of the operation of a dairy farm,” and to a reasonable farmer is “liquid gold”. The insurance company then petitioned the Wisconsin Supreme Court for a review.
The issue decided by the Wisconsin Supreme Court dealt with whether the pollution exclusion in the insurance company’s General Farm Liability Coverage Policy excluded coverage for harm caused by the seepage of cow manure into wells. Deciding such an issue the Wisconsin Supreme Court held that the pollution exclusion in the subject insurance policy issued to their insureds unambiguously excluded coverage for well contamination caused by the seepage of cow manure. The subject insurance policy excluded general liability coverage for both “bodily injury” and/or “property damage” which results from the actual, alleged, or threatened discharge, dispersal, seepage, migration, release, or escape of “pollutants” into or upon land, water or air. The policy involved stated:
“We” do not pay for a loss if one or more of the following excluded events apply to the loss, regardless of other causes or events that contribute to or aggravate the loss, whether such causes or events act or produce the loss before, at the same time as, or after the excluded event.
(1) “bodily injury” or “property damage” which results from the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of “pollutants” into or upon land, water, or air .…
The Court went on to state “pollutant” is defined earlier in the subject policy as: “any solid, liquid, gaseous, thermal, or radioactive irritant or contaminant, including acids, alkalis, chemicals, fumes, smoke, soot, vapor, and waste. ‘Waste’ includes materials to be recycled, reclaimed or reconditioned, as well as disposed of.”
The insureds sought coverage for each unique well that had been contaminated. Therefore, the Court concluded the occurrence was not the spreading of manure as fertilizer; rather, as an occurrence each time a unique well was contaminated by the cow manure and that the subject insurance policy made an initial grant of coverage because the exposure of manure to each unique well constituted an occurrence under the subject insurance policy. The issue then became whether the substance – in this case manure – is unambiguously a pollutant within the subject insurance policy’s definition when viewed/evaluated from the standpoint of a reasonable insured.
Referring to previous pollution exclusion cases dealing with bat guano, lead paint and linalool in ice cream cones, the Court indicated that they were required to first analyze whether a substance is largely undesirable and not universally present as to the occurrence for which coverage was being sought. Doing so, the Court stated “like bat guano in a home and lead paint chips in home, manure is a unique and largely undesirable substance commonly understood to be harmful when present in a well.” The next issue decided by the Court was whether a reasonable insured would consider the substance causing the harm involved in the occurrence to be a pollutant. Referring to substances determined to be an irritant and being a contaminant, the Court determined that a reasonable insured would consider manure to be a largely undesirable and not a universally present substance in a well, and would also consider cow manure to be a pollutant; with the Court finding that manure is unambiguously a pollutant under those set of circumstances.
The Court stated, in its conclusion, “We hold that the pollution exclusion clause in the subject insurance policy issued to their insureds unambiguously excluded coverage for well contamination caused by the seepage of cow manure and granted the insurance company’s motion for declaratory judgment.”
If you should have any questions regarding this article or insurance defense or coverage in general, please contact Brad Matthiesen at [email protected].