Septage Injections, Etc., Into the  Ground Can Be Contamination or
Michael Sean Quinn, Ph.D., J.D., c.p.c.u. . . .
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You may have thought that disputes over pollution exclusions in
first-party policies and Commercial General Policies (or their near
equivalents) were over. But,  No.
The recent case of Preisler v.
General Causality Insurance Company
[plus a bunch more insurance companies],
857 N.W. 136 (Wis., December 30, 214) proves the opposite.  The whole story is not worth telling here,
nor are some of the arguments of the Wisconsin Supreme Court, so I will cut to
the last lap of the chase.
Preislers, dairy
farmers, had across-the-street neighbors—real human person and their
corporations—who/which not only farmed but owned and ran a septic company that
hauled, stored, and disposed of the waste it pumped from grease traps, floor
pits, and car washes, which it combined with the human waste from septic tanks.
(They hired someone else to dispose of the septage. Not even they wanted to do
this so they hired a willing plumber.)  
As the court put it, in case you claim not to know and not able to
figure it out, “Septage is primarily composed of human urine and fecal
material, as well as. . . .”
Eventually, the Preislers complained to their neighbors that the
septage their neighbors injected into the ground at least near them was
adversely affecting—e.g., reducing production of–dairy production, the health
of the cattle, and sometimes terminating their lives.  (In other words, as a teenage boy might put
it, “The shit was killing the cows.”)
There were complaints; various agricultural experiments were tried;
nothing seemed to work; this all lead to a Complaint; a tort and quasi-tort suit
was on; the insurers were notified, coverage was denied on a variety of
grounds, the Preislers added the insurers into their suit against their
neighbors, and the insurers probably filed a declaratory judgment pleading. As
would have been predicted, the insurers won.
Most important here is that one of the reasons coverage was denied was that
the deposits were contaminates and therefore pollution, given the definition of
“pollution” and past court decision on the general topic.
 As is usual in the last near
half century, or so, business insurance policies usually contain pollution
exclusions. (One wonders whether the neighbors of the Preislers asked about it.
If they didn’t ask about it or if they did and were informed about it,  but decided not to buy it, though they could
afford it, what word beginning with the letter “I” comes to mind?)
(Of course, there is such a thing as coverage for pollution, rare
though its use is—even as an endorsement on some other type of policy. Still,
it is actually available for first-party property policies, and it is available
in some liability policies, e.g., those for some companies in the business of
dealing with pollution problems. This would include not only the insureds here
but some engineering and design companies. 
Interestingly, the insureds in this case did not appear to have sought
that coverage.  As one might expect, it
is extremely expensive. Nevertheless, this observation proves the point that
almost every type of insurance is available for anything that is fortuitous.  Naturally, bodily injuries, sickness and
human death resulting from pollution are not normally excluded for health
insurance policies or from life insurance.)
The District Court and the Court of Appeals granted the insurers
summary judgment as to coverage based on the pollution exclusions in the
various policies.  It seems that the
substance complained about while confined to the soil generates nitrates into
the ground water, and other water there, as well as the surface to some extent,
and those are health-harmful, perhaps even to cattle.
The Supreme Court affirmed the two lower courts.  Its review of case and the twists and turns
regarding the meaning and use of the term “pollution” is to be admired,  as is the dissent of the Chief Justice, the
brilliant and famous, Shirley S. Abrahamson.  
(One of the majority’s most interesting point is that under Wisconsin
law if a perfectly normal activity unexpectedly, but rarely, produces something
which might be a pollution under more regular circumstances, perhaps should  not be counted as a pollutant in those rare
circumstances. Obviously, this “rule”—or whatever it is–does not usually apply
to lead paint that gets off the painted-on surface.  Interestingly, this is one of the continuing
sources of pollution related insurance disputes.)
In any case, the Supreme Court ruled that what had happened to the
Preislers was the sort of thing that is encompassed by relevant insuring
but also falls under pollution exclusions.*  It cited many Wisconsin opinions on these
general subjects in its well reasoned, logical opinion, so this case will be a
law school teaching case. (After all, decisions of the Wisconsin Supreme Court
are often regarded as among the most important because of their depth.)
*As a general rule, insurers have insuring agreements—“You are covered,
except when”—and exclusions—“This is a “when. . . .”  Some say there may be “secret” exclusions
hidden elsewhere in the policy, e.g., in an insuring agreement  or in a definition, but courts seldom adopt
this view..
In conclusion, it is worth noting that one of the most important cases
upon the relatively large number upon which the majority relied is a relatively
recent one,  Hirschhorn v. Auto-Owners Ins. Co., 809 N.W.2d 529 (Wis.
2012)(property damage caused by bat guano). Many legal arguments depend
basically on analogies.

Originally posted on 02/12/2015 @ 6:37 pm

Michael Sean Quinn, PhD, JD, CPCU, Etc

Michael Sean Quinn, PhD, JD, CPCU, Etc. (530)

One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.

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