Frederick W. Preisler v. Kuettel's Septic Service, LLC
857 N.W.2d 136
Wis.2014Background
- Fred and Tina Preisler's well was contaminated in 2008 by elevated nitrates after neighboring septic hauler Kuettel's Septic (and contractor Phil's Pumping) applied/ stored septage on nearby fields, causing cattle deaths and reduced milk production.
- The Preislers sued the haulers for nuisance, trespass, and negligence; the haulers added their insurers (Rural, Regent, Hastings, Secura) as parties seeking defense/indemnity.
- Rural's and Regent's CGL policies contained standard pollution-exclusion clauses defining "pollutants" to include "any solid, liquid, gaseous or thermal irritant or contaminant...and waste."
- The circuit court and court of appeals granted summary judgment for insurers, holding the pollution exclusion applied; plaintiffs petitioned the Wisconsin Supreme Court on whether decomposing septage is a pollutant when it seeps into a water supply.
- The Supreme Court affirmed as to Rural and Regent: a reasonable insured would regard decomposing septage that seeps into a well as a "contaminant" and thus a "pollutant," so the exclusion bars coverage; alternative dismissals of Hastings and Secura were not reviewed because they weren't raised in the petition for review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether decomposing septage that seeps into a water supply is a "pollutant" under the policy definition | Preisler: Septage is a fertilizer/ordinary product of the septic business and not a pollutant; insureds would reasonably expect coverage for routine septic operations | Insurers: Septage (decomposed, releasing nitrates) is a "contaminant"/"waste," thus a pollutant excluded by the clause | Held: Yes — a reasonable insured would understand decomposing septage seeping into groundwater to be a contaminant and thus a pollutant, so exclusion applies |
| Whether the event constituted an "occurrence" triggering coverage | Preisler/Kuettel: The negligent storage/application (an everyday business activity) is the occurrence, so coverage should apply | Insurers: The seepage into the well (resultant pollution) is the occurrence but is excluded as pollution | Held: Court treated seepage into well as an "occurrence" but the issue was unnecessary to the pollutive-definition holding; nonetheless initial grant of coverage was triggered but then excluded by pollution clause |
| Whether policy language is ambiguous such that it must be construed for coverage | Preisler: Terms like "contaminant" are broad and ambiguous given septage's ordinary use; reasonable insureds could expect coverage | Insurers: Terms are plain; regulatory treatment and dictionary meanings show septage is "waste/contaminant" when it pollutes water | Held: Terms unambiguous here; reasonable insured would not expect coverage for septage that contaminates a well, so no ambiguity in favor of plaintiffs |
| Whether alternative grounds for summary judgment against Hastings and Secura could be reviewed | Plaintiffs: Sought broad review of insurers' dismissals | Hastings/Secura: Court of appeals dismissed on alternative grounds (timing, premises) | Held: Supreme Court declined to consider those alternative grounds because plaintiffs did not raise them in petitions for review; those dismissals stand and are not before the Court |
Key Cases Cited
- Hirschhorn v. Auto-Owners Ins. Co., 338 Wis. 2d 761 (2012) (interpreting pollution exclusion and whether bat guano is a pollutant)
- Peace v. Northwestern Nat'l Ins. Co., 228 Wis. 2d 106 (1999) (lead paint dust is a pollutant once it disperses; use of dictionaries to define "contaminant")
- Donaldson v. Urban Land Interests, Inc., 211 Wis. 2d 224 (1997) (pollution exclusion construed narrowly; exhaled CO2 not a pollutant for coverage purposes)
- American Family Mut. Ins. Co. v. Am. Girl, Inc., 268 Wis. 2d 16 (2004) (definition of "occurrence" and accidental property damage analysis)
- United Coop. v. Frontier FS Coop., 304 Wis. 2d 750 (2007) (soil contamination treated as an "occurrence")
- U.S. Fire Ins. Co. v. Ace Baking Co., 164 Wis. 2d 499 (Ct. App. 1991) (substance may be non-polluting in container but a pollutant once it spreads to cause damage)
- Langone v. Am. Family Mut. Ins. Co., 300 Wis. 2d 742 (2007) (limiting principles for pollution exclusion; comparison to ubiquitous, generally harmless substances)
- Wilson Mutual Ins. Co. v. Falk, 360 Wis. 2d 67 (2014) (related discussion of "occurrence" and reasonable-insured test for pollutants)