In Preisler v. Kuettel’s Septic Service, LLC, et al., 2014 WL 114325 (Wisc.App., Jan. 14, 2014), the intermediate level of appellate court in Wisconsin recently held that “septage” – a combination of water, urine, feces, and chemicals that is used as a fertilizer – was “unambiguously a pollutant.” The case involved the scope of comprehensive general liability (“CGL”) coverage, but the CGL policy exclusions at issue were virtually identical to pollution exclusions commonly found in first-party contracts of insurance. The decision is important to property carriers as a result, and it also rejects a number of arguments that first-party insureds frequently make in an effort to limit or avoid the application of such language.
The Preislers owned a dairy farm with cattle, and they used a well to stock a pool on the property. For several years, they had defendant Kuettel’s Septic spray several thousand gallons of septage on their farmland. Kuettel’s Septic was in the business of removing, hauling, storing and disposing of the substance, which comes from septic tanks, grease traps, floor pits, and car washes. It is disposed of by either taking it to a treatment facility or by spreading it on farmland as a fertilizer. It contains high levels of nitrogen.
In 2008, a large algae bloom appeared in the Preislers’ pool and their cattle began to die. Tests subsequently showed that the septage had caused an elevated nitrate level in the well water. The Preislers drilled a new well and then brought suit against Kuettel’s Septic and its CGL carriers, alleging private nuisance, trespass and strict liability and tort. The insurers asserted that pollution exclusions in their policies barred coverage, and both the Circuit Court and the Wisconsin Court of Appeals agreed.
The contracts of insurance all excluded damage caused by the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants. In addition, they all defined the term “pollutant” to mean any solid, liquid, gaseous, or thermal irritant or contaminant including smoke, vapor, soot, fumes, acids, alkalines, chemicals and waste. The appellate court had no difficulty in concluding that septage was “a contaminant, an irritant, and a waste substance” and, therefore, fell within the ambit of the exclusionary language. Read more ›
Of course, when we’re dealing with commercial construction and property insurance, the most significant incentive for “going green” is probably economic. Over time, green buildings can reduce operating costs, improve employee productivity and satisfaction (a happy employee is a productive employee!), enhance asset value and profits, generate a better return on the owner’s investment (e.g., higher rents, sales prices and occupancy rates), reduce liability risks, and optimize the performance of a building during its life-cycle. There are also federal, state or local tax incentives for certain types of green construction.
On November 27, 2013, an intermediate level Texas court handed down an opinion addressing the extent to which a policyholder’s claims for a covered loss survive foreclosure. Peacock Hospitality, Inc. v. Association Casualty Ins. Co., 2013 WL 6188597 (Tex.App. San Antonio) arose after the policyholder Peacock Hospitality (“Peacock”) made claim against its property insurance carrier, Association Casualty Insurance Company (“Association Casualty”), for water damage from frozen pipes at a Holiday Inn. The loss occurred on January 9, 2010.
Adams v. Cameron Mutual Ins. Co., 2013 Ark. 475 (Ark., Nov. 21, 2013) arose after a tornado damaged the Adamses’ home in Mena, Arkansas. Their homeowners insurance carrier, Cameron Mutual Insurance Company, depreciated the entire repair estimate including the labor-only services such as the removal of roof decking, siding, and carpet and vinyl flooring. The policyholders asserted that the contract of insurance did not allow for such depreciation, and they brought a would-be class action against the insurer in the Western District of Arkansas. The federal court then certified the following question to Arkansas’ Supreme Court:
The question came to the forefront in Juan Pinzon and Jaqueline Espitia v. The First Liberty Ins. Corp., 2013 WL 5487027 (M.D.Fla., Sept. 30, 2013), a breach of contract action under a homeowners insurance policy. The insureds contended that their property had suffered damages from sinkhole activity, but First Liberty denied the claim after securing a professional engineer’s report that concluded that “none of the damage at the Pinzon & Espitia residence are [sic] structural damage as defined by the Florida Statutes.” A lawsuit followed. After removal, First Liberty filed for summary judgment and requested that the court apply the narrow five-part definition of “structural damage” adopted in 2011 to the insureds’ claim.