The Wisconsin Court of Appeals will hear oral arguments on a civil insurance case in Douglas County Circuit Court on Tuesday, Aug. 6. The case could set a precedent for how certain insurance terms are interpreted by Wisconsin courts.
The Douglas County case involves environmental contamination at a former manufactured gas plant site in Superior and insurance contracts sold by London Market Insurers to Superior Water, Light and Power Co. covering Dec. 31, 1969, to March 1, 1970.
SWL&P operated the plant at Winter and East First streets from 1889 to 1904 and used it to store manufactured gas from 1929 to 1959, according to court records.
In 2001, the Wisconsin Department of Natural Resources claimed the utility was liable for groundwater contamination associated with the site. SWL&P has since paid for environmental response costs, including measures taken in St. Louis Bay, that could total from $3 million to more than $7 million.
London Market Insurers were notified of the DNR’s claim in 2004. The utility filed a summons and complaint against the insurance company to cover the cleanup costs in 2016, which was amended in 2018.
SWL&P alleged in its complaint that the damage to state waters was caused by one event, the continued exposure of clean groundwater to chemical substances in the subsoil of the property in 1970.
In March 2018, the insurance company filed a motion to dismiss the utility’s amended complaint.
London Market Insurers claimed that since there was no causative “event” during the policy period — just continued exposure — the contamination isn't covered by the policy.
The insurance policies in question provide coverage for third-party property damage, which results from an “occurrence,” defined as “one happening or series of happenings arising out of or caused by one event taking place during the term of this contract.”
The term “event” is not defined.
In August 2018, Douglas County Circuit Court Judge George Glonek denied SWL&P’s motion for partial judgment and dismissed the utility’s complaint.
“The policy language clearly, plainly and unambiguously requires one causative ‘event’ to take place during the term of the insurance contract,” Glonek wrote in his decision. "The court agrees that, according to the definition, the mere migration and continuing exposure of the state's clean groundwater to a previously released contamination in the subsoil of SWL&P's property is not sufficient to trigger coverage under the policy."
No Wisconsin court has interpreted the term “occurrence” as it is defined in the subject policy of insurance, Glonek said, but courts in other states have addressed the issue and held that evidence of a new release or spill during the policy period is required to trigger coverage, not just resulting or continuing damage.
SWL&P appealed the decision, and in March, it was scheduled for oral arguments in Douglas County. According to online records, it will be heard by a three-judge panel.