(Article from Insurance Law Alert, November 2015)
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Reversing a trial court decision, a Wisconsin appellate court ruled that a pollution exclusion endorsement was ambiguous in the context of Legionnaires-related illness claims. Connors v. Zurich Am. Ins. Co., 2015 WL 5972551 (Wis. Ct. App. Oct. 15, 2015).
Connors, an employee of a foundry, brought a direct action against the foundry’s insurer, alleging that cooling towers on his job site contained and dispersed legionella bacteria, resulting in illness. The insurer moved for summary judgment on the basis that a pollution exclusion precluded coverage for the claims. The trial court agreed and granted the motion. The appellate court reversed.
As discussed in our January 2015 Alert, the Wisconsin Supreme Court has enforced standard form pollution exclusions to bar coverage for non-traditional contamination claims (including claims arising from the use of cow manure and septic waste as fertilizer). The appellate court deemed those cases inapposite here, because the policy contained an endorsement with different language. The endorsement set forth the standard pollution exclusion language and also defined four categories of substances as pollutants. The court interpreted this additional language as limiting the scope of “pollutants” and thus concluded that “there is ambiguity as to whether the bacteria alleged to have infected Connors fit into any of the four categories.” The court also found ambiguity in another clause of the endorsement, which provided that the definition of “pollutants” applies regardless of whether the “irritant or contaminant, or the particular form, type of source of the irritant or contaminant . . . is specifically identified or described in this definition . . . .” Although the court acknowledged that this clause might operate to nullify any limiting effect of the four-categories clause, it concluded that the clause should more reasonably be interpreted to require a substance to be similar in kind to those listed in the four categories in order to be a “pollutant.” Emphasizing the importance of policy language in this context, the court expressly noted that if the policy had included only a standard form pollution exclusion, coverage would be barred as a matter of law.
The court reached the same conclusion in Ramos v. Charter Oak Fire Ins. Co., 2015 WL 5972555 (Wis. Ct. App. Oct. 15, 2015), a case involving the same factual allegations, policy language and insurer as in Connors.