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 Joe Forward, Legal Writer,
State Bar of Wisconsin
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.
Related article
