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  • WisBar News
    March
    08
    2012

    Wisconsin Supreme Court sides with insurance company in bat guano case

    Joe Forward
    Legal Writer

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    March 8, 2012 – Guano happens. In 2007, it happened to a northern Wisconsin home. But the homeowners, forced to demolish the home because of it, aren't covered for the loss, according to a recent decision by the Wisconsin Supreme Court.

    Wisconsin Supreme Court sides with insurance company in bat guano case

    A supreme court majority concluded that “bat guano” is the type of “pollutant” that barred insurance coverage for accidental property loss under a “pollution exclusion" clause.

    By org jforward wisbar Joe Forward, Legal Writer, State Bar of Wisconsin

    Bat guano is not March 8, 2012 – Guano happens. In 2007, it happened to a northern Wisconsin home. But the homeowners, forced to demolish the home because of it, aren’t covered for the loss, according to a recent decision by the Wisconsin Supreme Court.

    Specifically, a majority (5-2) ruled that a homeowners’ insurance policy doesn’t cover losses from bat guano, a pollutant excluded under a pollution exclusion clause.

    “Guano” is a term typically used to describe the excrement of seabirds in South America. In this case, it refers to the excrement of bats in Lake Tomahawk, Wisconsin.

    Joel and Evelyn Hirschhorn live in Florida but owned a vacation home in Lake Tomahawk, arranging monthly inspections and maintenance while not vacationing there. They also maintained a homeowners’ insurance policy with Auto-Owners Insurance Company.

    In May 2007, the Hirschhorns decided to sell the home. At that time, there was no evidence of bats or bat guano, but the real estate broker noticed both by July 2007. The Hirschhorns vacationed there the following month, but experienced a robust and foul odor.

    Another inspection revealed that an accumulation of bat guano in the siding and walls was causing the odor, and full remediation could not be guaranteed. A few months later, and with a notice of total property loss filed, the Hirschhorns demolished the home.

    When the insurance company denied the Hirschhorns’ claim for total loss of property, they sued. Joel Hirschhorn (U.W. Law School, 1967), a prominent criminal defense lawyer in Florida and licensed to practice law in Wisconsin, represented the Hirschhorns’ cause.

    The circuit court ruled against the Hirschhorns. A state appeals court reversed. But in Hirschhorn v. Auto-Owners Ins. Co., 2012 WI 20 (March 6, 2012), a supreme court majority upheld the decision of the circuit court to dismiss the Hirschhorns’ complaint.

    The majority, in an opinion written by Justice Annette Ziegler, concluded that the insurance policy’s “pollution exclusion” clause applied to bar coverage. “[W]e conclude that bat guano falls unambiguously within the policy’s definition of ‘pollutants,’” Justice Ziegler wrote.

    The policy covered accidental physical loss, but not for losses resulting directly or indirectly from certain pollutants. For instance, losses from solid, liquid, gaseous, or thermal “irritants” or “contaminants,” including “waste,” were not covered by the policy.

    According to the appeals court, the “waste” contemplated by the pollution exclusion clause did not clearly include biological excrement, such as bat guano. That made the policy ambiguous.

    “[I]n the context it is presented here, when a person reading the definition arrives at the term ‘waste,’ poop does not pop into one’s mind,” the appeals court explained in its opinion, ruling that ambiguous contracts are construed in favor of coverage.

    But the supreme court majority disagreed, concluding that bat guano was a “pollutant” under the policy, because it is clearly an “irritant” or “contaminant.”

    “Bat guano, composed of bat feces and urine, is or threatens to be a solid, liquid, or gaseous irritant or contaminant,” wrote Justice Ziegler, noting that the noun “waste” is defined as, among other things, “’[t]he undigested residue of food eliminated from the body; excrement.’”

    The court invoked Peace v. Northwestern National Ins. Co., 228 Wis.2d 106, 596 N.W.2d 429 (1999). “In Peace, this court already rejected the argument that the pollution exclusion clause should apply to only industrial-type pollutants,” Justice Ziegler explained.

    The majority of justices thought a reasonable person in the Hirschhorns’ position would understand that bat guano was a “pollutant” contemplated by the policy exclusion.

    The majority rejected the reasoning of the appeals court, which had applied the ejusdem generis (“of the same kind or class”) rule of contract construction to conclude that biological excrement was not in the same class of “pollutants” contemplated by the exclusion policy.

    Dissent

    Chief Justice Shirley Abrahamson wrote a dissenting opinion, joined by Justice Ann Walsh Bradley, concluding that the policy exclusion for pollutants was ambiguous.

    “The majority’s refusal to consider context is baffling,” wrote the chief justice, noting that “waste” has many different meanings. “A reasonable insured reading the insurance policy would draw conclusions about the meaning of ‘waste’ in light of the words that appear near it.”

    Read in context with the pollution exclusion clause as a whole, the dissent argued, would not alert a homeowner that excrement was the type of “waste” that barred coverage. The dissenters would have upheld the court of appeals’ use of the ejusdem generis rule.

    Attorneys

    Joel Hirschhorn of Hirschhorn & Bieber P.A., Coral Gables, Fla., represented the Hirschhorns. Timothy Barber and Arthur Kurtz of Axley Brynelson, Madison, represented Auto-Owners Insurance Company. The Wisconsin Defense Counsel filed an amicus brief in the case.

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