Beahm v. Pautsch
| Decision Date | 02 December 1993 |
| Docket Number | No. 92-1615,92-1615 |
| Citation | 180 Wis.2d 574,510 N.W.2d 702 |
| Parties | Mary P. BEAHM, Individually and as Special Administrator for Estates of Kenneth R. and David J. Beahm, Plaintiff-Co-Appellant, v. Gary L. PAUTSCH, Valley Forge Insurance Company, Defendants-Appellants, Wilson Mutual Insurance Company, Defendant-Respondent, d Brian D. Braskamp, James A. Pratt, Minnesota Mutual Fire & Casualty Company, Defendants, Norbert F. Mittelstadt, Integrity Mutual Insurance Company, Defendants-Co-Appellants, State of Wisconsin, American Family Mutual Insurance Company, Wisconsin Physician's Service Insurance Corporation, as Administrator for the State of Wisconsin Employee Trust Fund, and the Dean Health Plan, Inc., Defendants, William G. VAN EPERN, and Heritage Mutual Insurance Company, Defendants-Third Party Plaintiffs, Daniel A. Koch, and General Casualty Company of Wisconsin, Third Party Defendants-Co-Appellants, Robert R. Byerly, Defendant-Third Party Plaintiff-Co-Appellant, Becker Motor Service, Inc., Defendant-Third Party Plaintiff, Bestway Motor Freight, Inc., Continental Western Insurance Company, Defendants-Third Party Plaintiffs-Co-Appellants, Continental Western Casualty Company, Defendant-Third Party Plaintiff, v. Daniel KOCH, Estate of Russell W. Kent, by Jelane D. Kent, Personal Representative for the Estate of Russell W. Kent, General Casualty Company of Wisconsin, Jon M. Schiel, Janesville Auto Transport, Roger Smerling, and Farmers Insurance Exchange, Third Party Defendants. |
| Court | Wisconsin Court of Appeals |
Before EICH, C.J., and DYKMAN and SUNDBY, JJ.
This is an action to determine whether Wilson Mutual Insurance Company's farm policy provides coverage for its insured's liability in very unusual circumstances. On April 13, 1989, Wilson Mutual's insured, Brian Braskamp, set fires to burn off "winter" grass on property owned by others, allegedly with their permission. The fires became uncontrollable; smoke blew across State Trunk Highway 151 in Dodge County, obscuring the vision of motorists and contributing to a multi-vehicle accident in which Russell Kent, Kenneth Beahm and David Beahm were killed and plaintiff Mary Beahm was injured. Mary Beahm brought this action on her own behalf and as special administrator for the estates of Kenneth Beahm and David Beahm.
Braskamp and other defendants appeal from a declaratory and summary judgment determining that Wilson Mutual's policy does not cover Braskamp's liability because of the policy's pollution exclusion clause. Wilson Mutual claims that coverage is also excluded by its intentional-act exclusion clause.
We conclude that the Wilson Mutual policy's pollution exclusion clause is ambiguous and must be construed against Wilson Mutual. Therefore, the clause does not exclude coverage for Braskamp's liability. We further conclude that Braskamp's acts were not so dangerous in character that we may infer as a matter of law that he intended to injure or harm others. That inference may only be drawn by the fact finder. We therefore reverse and remand the cause for further proceedings.
THE POLLUTION EXCLUSION CLAUSE
Wilson Mutual's personal liability coverage clause provides:
We pay, up to our limit, all sums for which an insured is liable by law because of bodily injury or property damage caused by an occurrence 1 to which this coverage applies. We will defend a suit seeking damages if the suit resulted from bodily injury or property damage not excluded under this coverage.... [Bold in original.]
By endorsement, Wilson Mutual substituted the following for the policy's pollution exclusion clause:
This policy does not apply to liability which results directly or indirectly from:
the discharge, dispersal, release or escape of smoke, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon the land, the atmosphere or a water course, body of water, bog, marsh, swamp or wetland.
Wilson Mutual argues that this clause unambiguously excludes coverage for Braskamp's liability for the injuries and deaths which occurred when he caused smoke to escape into the atmosphere. It argues syllogistically: Braskamp "discharge[d] ... release[d] or [caused the] escape of smoke ... into or upon the land, [or] the atmosphere ..."; the smoke directly or indirectly caused the deaths of and injuries to the plaintiffs; therefore, the clause excludes coverage for Braskamp's liability. Beahm argues the pollution exclusion clause is ambiguous and must be construed against Wilson Mutual.
A contract is ambiguous if it is susceptible of more than one meaning. Wausau Underwriters Ins. Co. v. Dane County, 142 Wis.2d 315, 322, 417 N.W.2d 914, 916 (Ct.App.1987). We conclude that a reasonably well-informed person could accept Wilson Mutual's syllogism, but an equally well-informed person could reject the syllogism and determine that the policy's pollution exclusion clause does not exclude coverage unless the harm or injury is caused by the toxic nature of the substance discharged into the atmosphere--an irritant, contaminant, or pollutant.
Ambiguities in insurance policies are construed against the insurer. School Dist. of Shorewood v. Wausau Ins. Cos., 170 Wis.2d 347, 367, 488 N.W.2d 82, 89 (1992). Moreover, an exclusionary clause in an insurance policy is strictly construed against the insurer. Just v. Land Reclamation, Ltd., 155 Wis.2d 737, 746, 456 N.W.2d 570, 573 (1990). An insurance contract must be interpreted to mean what a reasonable person in the position of the insured would have understood the words of the contract to mean. School Dist. of Shorewood, 170 Wis.2d at 367, 488 N.W.2d at 88-89.
We look first to the language of the insurance contract to determine its meaning and resolve any ambiguity. However, the intent of the pollution exclusion clause cannot be determined solely by examining that language in the context of the entire policy. We therefore consider the nature and purpose of the pollution exclusion clause: "One approach to the interpretation of a policy provision is to try [to] understand the purpose it serves and then to apply the provision in light of its purpose." KENNETH S. ABRAHAM, ENVIRONMENTAL LIABILITY INSURANCE LAW 150 (1991) (hereinafter ABRAHAM). 2
Professor Abraham states that the insurance industry became aware, during the period following a Santa Barbara, California oil spill and passage by Congress of the Clean Air Act in 1970 and the Clean Water Act in 1972, of the exposure it might face under Comprehensive General Liability (CGL) policies. 3 Id. at 156. In response to this concern, predecessors to the Insurance Services Office--the Insurance Rating Board and the Mutual Insurance Rating Bureau--drafted what became the pollution exclusion clause. 4 Id. The 1986 revision of the CGL pollution exclusion clause was intended to clarify that the policy did not cover liability incurred by the insured for pollution damage, whether intended or accidental. 5 Id. at 160-63. Professor Abraham states: "The new exclusion is so broad that it is often termed 'absolute,' even though it does not exclude all pollution-related liability." ABRAHAM at 161.
Although Wilson Mutual did not substitute the CGL pollution exclusion clause for the clause contained in its policy, it did eliminate the "sudden and accidental" exception from its pollution exclusion clause. We conclude that the effect of Wilson Mutual's amendment to its policy was to exclude from coverage the insured's liability for discharging or allowing the escape of pollutants onto the land or into the atmosphere, even if the insured's act was an accident and he or she did not intend the injury or damage which resulted.
It does not follow, however, that the Wilson Mutual policy's pollution exclusion clause excludes coverage for Braskamp's liability for injuries and deaths allegedly resulting from his causing smoke to escape into the atmosphere and across State Trunk Highway 151. The history of the CGL pollution exclusion clause shows that the insurance industry was concerned about liability it faced from environmental accidents such as oil spills and under federal environmental legislation. Nowhere in its history is there any suggestion that the pollution exclusion clause was intended to exclude more than coverage for liability for environmental damage. We adopt the reasoning of the court in Pepper Indus. Inc. v. Home Ins. Co., 67 Cal.App.3d 1012, 134 Cal.Rptr. 904 (1977). In Pepper, gasoline leaked into a city's sewer system, allegedly resulting in an explosion and fire. In rejecting the insurer's argument that the pollution exclusion clause excluded denied coverage for the resulting damage, the California court said:
A fair reading of the endorsement leads to the conclusion it was intended to exclude insurance coverage resulting from pollution and contamination of the environment, be it land, water or the atmosphere. Although the City's sewer and pumping station may reasonably be said to fit into one or more of these categories, the fact remains the City is not claiming its facilities were polluted or contaminated but rather that they were destroyed or damaged by an explosion and fire.
Id. 134 Cal.Rptr. at 908 (emphasis added).
We conclude that Wilson Mutual's pollution exclusion clause excludes coverage only where the injury or damage is caused by the toxic nature of the irritant, contaminant or pollutant which the insured discharges or allows to escape onto land or into the atmosphere. In this case, the harm resulted from the fact that smoke is a semi-opaque substance, not from the fact that smoke may have toxic properties which may...
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