Preisler v. Gen. Cas. Ins. Co.

• Decision Date: 30 December 2014
• Docket Number: No. 2012AP2521.,2012AP2521.
• Citation: 360 Wis.2d 129,857 N.W.2d 136
• Parties: Tina L. PREISLER and Frederick W. Preisler, Plaintiffs–Co–Appellants–Petitioners, v. GENERAL CASUALTY INSURANCE COMPANY, Regent Insurance Company, Hastings Mutual Insurance Company and Secura Insurance, a mutual company, Defendants–Respondents, Kuettel's Septic Service, LLC, 4–DK Farm, Duke Kuettel, Doug Kuettel, Dale Kuettel and Cheryl Kuettel, Defendants–Appellants–Petitioners. Tina L. Preisler and Frederick W. Preisler, Plaintiffs–Appellants–Petitioners, v. Chartis Specialty Insurance Company f/k/a American International Specialty Lines Insurance Company, Defendant, Rural Mutual Insurance Company, Defendant–Respondent, Phil's Pumping and Fab, Inc., Defendant–Co–Appellant–Petitioner.
• Court: Wisconsin Supreme Court

360 Wis.2d 129

857 N.W.2d 136

Tina L. PREISLER and Frederick W. Preisler, Plaintiffs–Co–Appellants–Petitioners^†

v. GENERAL CASUALTY INSURANCE COMPANY, Regent Insurance Company, Hastings Mutual Insurance Company and Secura Insurance, a mutual company, Defendants–RespondentsKuettel's Septic Service, LLC, 4–DK Farm, Duke Kuettel, Doug Kuettel, Dale Kuettel and Cheryl Kuettel, Defendants–Appellants–Petitioners.

Tina L. Preisler and Frederick W. Preisler, Plaintiffs–Appellants–Petitioners^†

v. Chartis Specialty Insurance Company f/k/a American International Specialty Lines Insurance Company, DefendantRural Mutual Insurance Company, Defendant–RespondentPhil's Pumping and Fab, Inc., Defendant–Co–Appellant–Petitioner.

No. 2012AP2521.

Supreme Court of Wisconsin.

Argued Sept. 12, 2014.

Decided Dec. 30, 2014.

For the defendants-appellants-petitioners, there were briefs by Michael C. Menghini and Herrling Clark Law Firm Ltd., Appleton, and oral argument by Michael C. Menghini.

For the defendant-co-appellant-petitioner, there were briefs by Winston A. Ostrow, Jonathan T. Smies, and Godfrey & Kahn, S.C., Green Bay, and oral argument by Jonathan T. Smies.

For the plaintiffs-co-appellants-petitioners, there were briefs by James A. Olson, P. Scott Hassett, Kathryn A. Harrell, Daniel S. Lenz, and Lawton & Cates, S.C., Madison, and oral argument by James A. Olson.

For defendant-respondent Rural Insurance Company, there was a brief by Christine M. Rice, Matthew J. Van Keulen, and Simpson & Deardorff, S.C., Chicago. Oral argument by Christine M. Rice.

For defendant-respondent Hastings Mutual Insurance Company, there was a brief by William R. Wick, Ryan R. Graff, Katelyn P. Sandfort, and Nash, Spindler, Grimstad & McCracken LLP, Manitowoc, and oral argument by Ryan R. Graff.

For defendants-respondents General Casualty Company of Wisconsin and Regent Insurance Company, there was a brief and oral argument by Jeffrey A. Evans and von Briesen & Roper, S.C., Milwaukee.

For defendant-respondent Secura Insurance, there was a brief and oral argument by Todd Joseph Koback, John P. Runde, and Davczyk & Varline, LLC, Wausau.

Opinion

PATIENCE DRAKE ROGGENSACK, J.

¶ 1 We review a decision of the court of appeals¹ affirming an order of the circuit court² that granted summary judgment to Rural Mutual Insurance Company, Regent Insurance Company and General Casualty Company of Wisconsin. Our review focuses on the interpretation of pollution exclusion clauses in commercial and contractor general liability insurance policies.

¶ 2 We conclude that a reasonable insured would understand that decomposing septage is a “contaminant” and therefore, a “pollutant” as defined in the policies when it has decomposed and seeps into a water supply. Accordingly, we affirm the decision of the court of appeals, which granted summary judgment upon its conclusion that the pollution exclusion clause precluded coverage for harm resulting from the Preislers' water supply's contamination.

¶ 3 We also conclude that the petitioners failed to petition this court for review of the court of appeals dismissal of their claims against Hastings Mutual Insurance Company and Secura Insurance Company on alternative grounds. We decline to consider issues not raised in petitions for review. State v. Bodoh, 226 Wis.2d 718, 737, 595 N.W.2d 330 (1999) ; Wis. Stat. § 809.62 (2011–12).³ Accordingly, those dismissals are not before us.

I. BACKGROUND

¶ 4 This review involves an insurance coverage dispute concerning a pollution exclusion clause commonly found in commercial general liability (CGL) policies. The historic facts are not in dispute.

¶ 5 Fred and Tina Preisler operate a dairy farm and raise cattle. A well drilled in 1972 supplied water for the Preislers' household and farm uses until 2008.

¶ 6 Duke, Doug, Dale, and Cheryl Kuettel live on a farm across the road from the Preislers' farm. From that property, the Kuettels run a farming operation, 4–DK Farm, and a septic pumping service, Kuettel's Septic Service, LLC. Kuettel's Septic hauls, stores, and disposes of the waste it pumps from customers' septic tanks. Kuettel's Septic also collects waste from grease traps, floor pits, and car washes, which it combines with the human waste from septic tanks. Kuettel's Septic periodically hired Phil's Pumping and Fab, Inc. to dispose of septage.⁴

¶ 7 Septage is primarily composed of human urine and fecal material, as well as other materials disposed of in septic tanks, grease interceptors and portable restrooms. See Wis. Admin. Code § NR 113.03(55) (Feb. 2014) (defining septage). Septage contains nitrogen, and when septage is introduced into soil, it decomposes. During that biological process nitrates are formed. Mike O'Leary et al., Understanding Nitrogen in Soils, Univ. of Minn. (2002) http:// www.extension.umn.edu/agriculture/nutrient-management/nitrogen/un derstanding-nitrogen-in-soils/.

¶ 8 When nitrates are created in excess of what plants are able to use, nitrates can leach into water supplies.Id. The presence of nitrates in water supplies is a concern for human health as it may cause health problems in infants and may be implicated as a risk factor associated with chronic health and reproductive problems. Nonpoint Source Pollution Abatement Program Redesign, Nitrate in Groundwater—A Continuing Issue for Wisconsin Citizens 3 (1999). Additionally, high nitrate levels may cause poor appetite or acute nitrogen poisoning in livestock. Id.

¶ 9 Fred Preisler and Duke Kuettel discussed applying septage on the Preislers' farm as fertilizer.

Kuettel's Septic received permission from the Wisconsin Department of Natural Resources (DNR) to apply it. Kuettel's Septic applied septage to the Preislers' farm fields for several years.

¶ 10 In 2008, the Preislers experienced problems with their well water. The Preislers' cattle that drank the water began to die at an uncharacteristic rate. The Preislers further noted a decrease in milk production. August 2008 testing showed the Preislers' well water contained elevated levels of nitrates, which are produced as septage decomposes. The cattle deaths subsided later in 2008 after the Preislers drilled a new well.

¶ 11 The Preislers sued Kuettel's Septic in 2010 and Phil's Pumping in 2011. The cases were consolidated and 4–DK Farm and the individual Kuettels were added. The Preislers alleged negligence in storing and in applying septage resulting in nuisance and trespass. They also alleged the Kuettels were strictly liable for engaging in an abnormally dangerous activity and that Duke Kuettel violated Wis. Stat. § 100.18 by promising compliance with DNR regulations, failing to follow through, and falsifying DNR reports.

¶ 12 The Preislers added the parties' insurers to the suit. Hastings insured Kuettel's Septic under a CGL policy between 1999 and 2005, after which Regent insured Kuettel's Septic (General Casualty Insurance Company did not insure any party, but is affiliated with Regent). Hastings also insured 4–DK Farm under a CGL policy until 2007, after which Secura insured 4–DK Farms. Secura also provided homeowners insurance to individual Kuettels.⁵ Rural insured Phil's Pumping under a CGL policy between 2002 and 2013.

¶ 13 The Rural and Regent policies include similarly worded pollution exclusion clauses. They exclude harm “arising out of the actual, alleged, or threatened discharge, dispersal, seepage, migration, release or escape of ‘pollutants'....” The Rural and Regent policies also define “pollutants” similarly as: “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.”

¶ 14 The insurers moved for summary and declaratory judgment.⁶ The circuit court agreed that the pollution exclusion clause applies to preclude coverage for alleged losses arising out of storage of septage and application of septage to farm fields that is alleged to have caused contamination of the water supply resulting in harm to the Preislers. The Preislers and Kuettels appealed, arguing septage is not a pollutant and therefore, the exclusion does not preclude coverage. The court of appeals affirmed.

¶ 15 On April 17, 2014 we granted the Preislers' and Kuettels' petitions for review. On May 21, 2014, Secura filed a motion for summary disposition in this court on the alternative basis of a limited liability endorsement. Initially, we held the motion in abeyance. We need not address Secura's motion as Secura's liability is not before us as we explain below.

II. DISCUSSION

A. Standard of Review

¶ 16 The Preislers and Kuettels ask the court to review the applicability of the pollution exclusion clause, upon which the circuit court and the court of appeals relied to grant summary judgment dismissing Rural and Regent from this lawsuit. When we review summary judgment, we independently apply the same methodology as the circuit court and the court of appeals. The standards set forth in Wis. Stat. § 802.08 are our guides. Hirschhorn v. Auto–Owners Ins. Co., 2012 WI 20, ¶ 20, 338 Wis.2d 761, 809 N.W.2d 529 (reviewing summary judgment denying coverage for property harm from accumulation of bat guano); Siebert v. Wis. Am. Mut. Ins. Co., 2011 WI 35, ¶ 27, 333 Wis.2d 546, 797 N.W.2d 484 (reviewing summary judgment denying coverage in negligent entrustment claim); Peace v. Nw. Nat'l Ins. Co., 228 Wis.2d 106, 119–20, 596 N.W.2d 429 (1999) (reviewing summary judgment denying coverage for claims arising from ingestion of lead); Donaldson v. Urban Land Interests, Inc., 211 Wis.2d 224, 229–30, 564 N.W.2d 728 (1997) (reviewing summary judgment denying coverage for injuries resulting from buildup of carbon dioxide). Summary judgment “shall be rendered if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment...