Recent Wisconsin Court of Appeals Decision Addresses the Meaning of “Pollutant” Under the Pollution Exclusion
In Wilson Mutual Insurance Co. v. Falk, the insureds (the “Falks”) were farmers who used manure from their cows as fertilizer for their fields. In 2011, they were notified by the Wisconsin Department of Natural Resources that the manure from their farm had contaminated their neighbors’ water wells. The neighbors also demanded to be compensated for the contamination.
The Falks put Wilson Mutual on notice of the claims. Shortly thereafter, Wilson Mutual filed a lawsuit seeking a declaration that there was no coverage for the contamination of the water wells based on the pollution exclusion. At issue was whether cow manure fell within the definition of “pollutant” under the Wilson Mutual policy.
The pollution exclusion in the Wilson Mutual policy precluded coverage for losses resulting from the “discharge, dispersal, seepage, migration, release, or escape of ‘pollutants’ into or upon land, water, or air” and “any loss, cost, or expense arising out of any . . . claim or suit by or on behalf of any governmental authority relating to testing for, . . . cleaning up, removing, . . . or in any way responding to or assessing the effects of ‘pollutants.’” The policy defined “Pollutant” to mean “any solid, liquid, gaseous . . . irritant or contaminant, including . . . waste. Waste includes materials to be recycled, reclaimed, or reconditioned, as well as disposed of.”
The trial court ruled that cow manure fell within the definition of “Pollutant” because “[a] reasonable person in the position of the Falks would understand cow manure to be waste.” The Wisconsin Court of Appeals reversed. Based on prior Wisconsin case law analyzing the pollution exclusion in various contexts (e.g., carbon monoxide and lead paint), the court stated that the term “Pollutant” must be examined “as understood by a reasonable person in the position of the insured” and that “[a] substance may or may not be a pollutant under the terms of a policy exclusion depending on the context or environment in which the substance is involved.”
Applying these principles, the court held that the pollution exclusion did not apply to cow manure. Specifically, it reasoned that a reasonable farmer would not consider cow manure to be a “pollutant,” an “irritant,” a “contaminant,” or “waste” because it is an nutrient used by farmers to feed their fields. Therefore, cow manure in the hands of a farmer is not “waste,” but a natural fertilizer. Because the definition of “Pollutant” was not satisfied, the court found it unnecessary to address whether the neighbors’ losses were caused by the “discharge, dispersal, seepage, migration, release or escape” of a pollutant.
Falk should not be read to stand for the general proposition that the pollution exclusion is inapplicable to all occurrences involving manure in Wisconsin. Indeed, the court distinguished the Falks from a situation where an “average person” was the insured. From his or her standpoint, an “average person” may consider manure to be a “waste” and the definition of “Pollutant” might be satisfied. In fact, those were nearly the facts in Hirschhorn v. Auto-Owners Insurance Co., 2012 WI 20, in which the Wisconsin Supreme Court held that guano—a mixture of bat feces and urine—fell unambiguously within the definition of “Pollutant” because a “reasonable homeowner would . . . understand bat guano to be a pollutant” and therefore excluded under the pollution exclusion.
The information contained herein is not intended as and should not be construed as legal advice. Please consult with legal counsel before taking any action based on this information.